[Federal Register Volume 70, Number 247 (Tuesday, December 27, 2005)]
[Rules and Regulations]
[Pages 76414-76417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-24484]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 22

[WT Docket Nos. 03-103, 05-42; FCC 05-202]


Air-Ground Telecommunications Services

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document the Federal Communications Commission 
(``Commission'') adopts competitive bidding rules for the 800 MHz 
commercial Air-Ground Radiotelephone Service and the 400 MHz general 
aviation Air-Ground Radiotelephone Service. The Commission will auction 
licenses in both of these services in conformity with the general 
competitive bidding rules. The Commission adopts small business 
definitions and bidding credits for the 800 MHz air-ground service and 
concludes that bidding credits are unnecessary for the 400 MHz air-
ground service.

DATES: Effective February 27, 2006.

FOR FURTHER INFORMATION CONTACT: Lynne Milne, Auctions and Spectrum 
Access Division, Wireless Telecommunications Bureau, at 202-418-7055 or 
via e-mail at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Report and Order 
portion of the Order on Reconsideration and Report and Order, FCC 05-
202, in WT Docket Nos. 03-103 and 05-42, adopted on December 8, 2005, 
and released on December 9, 2005. The Commission is concurrently 
publishing a summary of the Order on Reconsideration in the Federal 
Register. The complete text of the Report and Order is available for 
public inspection and copying from 8 a.m. to 4:30 p.m. Monday through 
Thursday or from 8 a.m. to 11:30 p.m. on Friday at the FCC Reference 
Information Center, Portals II, 445 12th Street, SW., Room CY-A257, 
Washington, DC 20554. The Report and Order and related Commission 
documents may also be purchased from the Commission's duplicating 
contractor, Best Copy and Printing, Inc. (BCPI), Portals II, 445 12th 
Street, SW., Room CY-B402, Washington, DC, 20554, telephone 202-488-
5300, facsimile 202-488-5563, or you may contact BCPI at its Web site: 
http://www.BCPIWEB.com. When ordering documents from BCPI please 
provide the appropriate FCC document number (for example, FCC 05-202, 
Report and Order). The full text may also be downloaded at: http://www.fcc.gov. Alternative formats are available to persons with 
disabilities by sending an e-mail to [email protected] or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), or 202-
418-0432 (tty).

Synopsis of the Report and Order

A. Incorporation of the Part 1 Standardized Auction Rules

    1. On December 15, 2004, the Commission adopted a Report and Order 
and Notice of Proposed Rulemaking, WT Docket Nos. 03-103 and 05-42, 70 
FR 19293 (April 13, 2005) and 70 FR 19377 (April 13, 2005). In the 
Notice of Proposed Rulemaking, the Commission proposed to conduct 
auctions of both commercial and general aviation air-ground licenses in 
conformity with the general competitive bidding rules in part 1, 
subpart Q, of the Commission's rules, and substantially consistent with 
the bidding procedures that have been employed in previous Commission 
auctions.
    2. In this Report and Order, the Commission adopts this proposal. 
Because alternative band plans are being made available in the 800 MHz 
air-ground service, with the selection of the final band configuration 
to be determined by applicants' bids in the auction, the determination 
of whether individual applications are mutually exclusive for purposes 
of section 309(j) of the Communications Act will be based on whether 
different applicants have applied for licenses in different band 
configurations as well as on whether different applicants have applied 
for the same licenses. The Commission finds, however, that there is no 
need to change the part 1 competitive bidding rules for the air-ground 
services. These rules will be subject to any modifications to them that 
the Commission may adopt for auctionable services generally.

B. Provisions for Designated Entities

    3. The Commission concludes that it is appropriate to offer bidding 
credits in the 800 MHz commercial air-ground service. No commercial 
air-ground license will authorize the use of as much spectrum as other 
nationwide services for which the Commission has declined to adopt 
small business bidding credits. In addition, the Commission continues 
to believe that the operation of a commercial air-ground service may 
require lower capital expenditures than other nationwide services. 
Therefore, the Commission finds that bidding credits should be made 
available to small businesses to assist them with attracting capital.
    4. The Commission adopts its proposed small business definitions 
for the 800 MHz commercial air-ground service. Thus, for this service 
the Commission will define a small business as an entity with average 
annual gross revenues for the three preceding years not exceeding $40 
million, and the Commission will define a very small business as an 
entity with average annual gross revenues for the three preceding years 
not exceeding $15 million. The Commission will offer a 15 percent 
bidding credit for small businesses and a 25 percent bidding credit for 
very small businesses, as set forth in the standardized schedule of 
bidding credits at 47 CFR 1.2110(f)(2). The Commission rejects the 
arguments of Space Data Corporation and AirCell, Inc., in favor of 
higher bidding credit levels than those provided for in 47 CFR 
1.2110(f)(2). The Commission concludes that neither Space Data nor 
AirCell has provided sufficient support for departing from the part 1 
bidding credit schedule in the 800 MHz air-ground service.
    5. The Commission concludes that bidding credits are unnecessary in 
the auction of licenses in the 400 MHz general aviation Air-Ground 
Radiotelephone Service. If in the future the Commission is presented 
with evidence of a need for bidding credits in the 400 MHz air-ground 
service, the Commission will reconsider this issue.

Procedural Matters

A. Congressional Review Act

    6. The Commission will send a copy of the Order on Reconsideration 
and Report and Order in a report to Congress and the Government 
Accountability Office pursuant to the Congressional Review Act.

B. Final Regulatory Flexibility Analysis

    7. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) of the 
possible significant economic impact on a substantial number of small 
entities by the policies and rules proposed in the Notice of Proposed 
Rulemaking (NPRM) was incorporated therein. The Commission sought 
written public

[[Page 76415]]

comment on the proposals in the NPRM, including comment on the IRFA. No 
comments were submitted specifically in response to the IRFA. The 
Commission nonetheless discusses certain comments below. This present 
Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.
Need for, and Objectives of, the Report and Order
    8. In this Report and Order (R&O) the Commission adopts competitive 
bidding rules for the 800 MHz commercial Air-Ground Radiotelephone 
Service and the 400 MHz general aviation Air-Ground Radiotelephone 
Service. Such rules are necessary because, under section 309(j) of the 
Communications Act, 47 U.S.C. 309(j), the Commission is required to 
choose among mutually exclusive applications for spectrum licenses 
using competitive bidding, except in certain cases not applicable here. 
The Commission has revised its rules governing the four megahertz of 
dedicated spectrum in the 800 MHz commercial Air-Ground Radiotelephone 
Service and intends to make new licenses available in this service. If 
mutually exclusive applications are filed for these licenses, the 
Commission will be required to resolve such applications by competitive 
bidding. The Commission also has pending before it nine groups of 
mutually exclusive applications for licenses in the 400 MHz general 
aviation Air-Ground Radiotelephone Service, and it will schedule an 
auction to resolve these applications. In addition to adopting its 
proposal in the Notice of Proposed Rulemaking to apply its general part 
1 competitive bidding rules to both the 800 MHz commercial air-ground 
service and the 400 MHz general aviation air-ground service, the 
Commission adopts bidding credits for small businesses in the 800 MHz 
commercial air-ground service in order to help small entities attract 
capital to participate in the 800 MHz air-ground auction.
Summary of Significant Issues Raised by Public Comments in Response to 
the IRFA
    9. No comments were submitted specifically in response to the IRFA.
Description and Estimate of the Number of Small Entities to Which the 
Rules Will Apply
    10. The RFA directs agencies to provide a description of, and, 
where feasible, an estimate of, the number of small entities that may 
be affected by the rules adopted herein. The RFA generally defines the 
term ``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A ``small business concern'' is one which: (1) Is independently 
owned and operated; (2) is not dominant in its field of operation; and 
(3) satisfies any additional criteria established by the Small Business 
Administration (SBA).
    11. The SBA has not developed a specific small business size 
standard for the Air-Ground Radiotelephone Service. The SBA has, 
however, developed a small business size standard for wireless firms 
within the two broad economic census categories of ``Paging'' and 
``Cellular and Other Wireless Telecommunications.'' Under both SBA 
categories, a wireless business is small if it has 1,500 or fewer 
employees. For the census category Cellular and Other Wireless 
Telecommunications, Census Bureau data for 1997 show that there were 
977 firms in this category that operated for the entire year. Of this 
total, 965 firms had employment of 999 or fewer employees, and an 
additional 12 firms had employment of 1,000 employees or more. Thus, 
under this second category and size standard, the majority of firms can 
be considered small. In addition, annual FCC data show that 437 
carriers have reported that they are engaged in the provision of 
``wireless telephony,'' which includes cellular service, personal 
communications service, and specialized mobile radio telephony. The 
Commission has estimated that 260 of these are small, under the SBA 
small business size standard. Finally and more specifically, the 
Commission has determined that currently there are 11 licensees in the 
Air-Ground Radiotelephone Service, and it estimates that almost all of 
them qualify as small under the SBA small business size standard for 
``Cellular and Other Wireless Telecommunications.''
    12. As the Commission proposed in the NPRM, it adopts small 
business size standards specific to the 800 MHz commercial Air-Ground 
Radiotelephone Service. Thus, the Commission defines a small business 
as an entity with average annual gross revenues for the three preceding 
years not exceeding $40 million, and it defines a very small business 
as an entity with average annual gross revenues for the three preceding 
years not exceeding $15 million. The Commission sought consultation 
regarding these size standards with the SBA, as required by the Small 
Business Act, 15 U.S.C. 632(a)(2)(c), and 13 CFR 121.901-903. On 
January 26, 2005, the SBA indicated that these size standards appeared 
reasonable and that it had no specific comments. See Letter from Gary 
M. Jackson, Assistant Administrator for Size Standards, U.S. Small 
Business Administration, to Gary D. Michaels, Deputy Chief, Auctions 
and Spectrum Access Division, Wireless Telecommunications Bureau, 
Federal Communications Commission, dated January 26, 2005. No parties 
filed comments opposing these size standards. On September 19, 2005, 
the SBA approved the Commission's request to adopt these small business 
size standards for the commercial air-ground service. See Letter from 
Hector V. Barreto, Administrator, U.S. Small Business Administration, 
to Gary D. Michaels, Deputy Chief, Auctions and Spectrum Access 
Division, Wireless Telecommunications Bureau, Federal Communications 
Commission, dated September 19, 2005.
    13. The Commission does not know how many entities interested in 
providing commercial air-ground service fall within these definitions. 
For purposes of this FRFA, the Commission assumes that a significant 
percentage of such entities will be small businesses or very small 
businesses under these definitions. The Commission has not adopted 
small business size standards specific to the 400 MHz general aviation 
Air-Ground Radiotelephone Service. The Commission therefore will use 
SBA's small business size standard applicable to ``Cellular and Other 
Wireless Telecommunications,'' i.e., an entity employing no more than 
1,500 persons, for the 400 MHz general aviation air-ground service. As 
noted above, there are 11 licensees in the Air-Ground Radiotelephone 
Service. Ten of these operate in the general aviation Air-Ground 
Radiotelephone Service, and the Commission estimates that all or almost 
all of them qualify as small under the SBA small business size 
standard. In addition, as noted above, the Commission has pending 
before it nine groups of mutually exclusive applications for licenses 
in the 400 MHz general aviation Air-Ground Radiotelephone Service; 
these nine groups include six applicants that are not already licensees 
in the general aviation Air-Ground Radiotelephone Service. As with the 
licensees in this service, the Commission estimates that all or almost 
all of these six applicants qualify as small under the SBA small 
business size standard. The Commission also estimates that all or 
almost all of any future applicants in the 400 MHz

[[Page 76416]]

general aviation Air-Ground Radiotelephone Service will be small under 
the SBA small business size standard.
Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
    14. The R&O does not establish new reporting, recordkeeping, or 
other compliance requirements but extends the Commission's existing 
part 1 competitive bidding rules to the Air-Ground Radiotelephone 
Service. Applicants for air-ground licenses will therefore be required 
to file a short-form application on FCC Form 175 to participate in 
auctions, and auction winners will be required to file a long-form 
application on FCC Form 601. While these application requirements are 
new with respect to applicants in the air-ground services, they are the 
same application requirements the Commission has applied to other 
auctionable services for a number of years.
Steps Taken To Minimize Significant Economic Impact on Small Entities, 
and Significant Alternatives Considered
    15. The RFA requires an agency to describe any significant 
alternatives that it has considered in developing its approach, which 
may include the following four alternatives (among others): ``(1) The 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance and reporting requirements under the rule for such small 
entities; (3) the use of performance rather than design standards; and 
(4) an exemption from coverage of the rule, or any part thereof, for 
such small entities.''
    16. The Commission has taken significant steps to assist small 
entities. For instance, the Commission has adopted its proposal to 
auction both 800 MHz commercial and 400 MHz general aviation air-ground 
licenses in conformity with the general competitive bidding rules set 
forth in part 1, subpart Q, of the Commission's Rules. The Commission 
believes that use of these well-established rules provides consistent 
guidance, reduces burdens on bidders and the Commission, and avoids 
undue delay in the provision of services.
    17. In addition, to provide opportunities for small entities to 
participate in the 800 MHz commercial air-ground auction, the 
Commission offers bidding credits to small businesses (entities with 
average annual gross revenues for the three preceding years not 
exceeding $40 million) and very small businesses (entities with average 
annual gross revenues for the three preceding years not exceeding $15 
million). The bidding credits adopted are 15 percent for small 
businesses and 25 percent for very small businesses. These bidding 
credits are consistent with the Commission's standardized schedule of 
bidding credits at 47 CFR 1.2110(f)(2). One party, Verizon Airfone 
Inc., filed comments opposing the adoption of bidding credits in the 
800 MHz commercial air-ground auction. Two parties, AirCell, Inc., and 
Space Data Corporation, filed comments requesting higher bidding 
credits than those the Commission adopts. The Commission concludes that 
bidding credits are appropriate for the 800 MHz commercial air-ground 
service and that AirCell, Inc., and Space Data Corporation have not 
provided sufficient support for departing from the Commission's part 1 
bidding credit schedule, which the Commission has used effectively 
since 1997 to promote the participation of small businesses in auctions 
and whose predictability is helpful to small businesses in the business 
planning and capital fundraising process.
    18. No parties filed comments on the issue of whether small 
business bidding credits would be appropriate for the 400 MHz general 
aviation Air-Ground Radiotelephone Service. As discussed in the R&O, 
general aviation air-ground licenses are generally held by relatively 
small businesses, and larger telecommunications providers do not 
routinely apply for them. Moreover, the initial auction for the nine 
general aviation licenses for which the Commission has received 
applications will be limited to those parties with applications already 
on file. Given these circumstances, the Commission concludes that 
bidding credits are unnecessary in the auction of these licenses. If in 
the future the Commission is presented with evidence of a need for 
bidding credits in the 400 MHz air-ground service, it will reconsider 
this issue, but it finds no need for bidding credits in this service 
under current circumstances.
    19. Concerning compliance burdens, the Commission notes that the 
requirement of filing applications on appropriate forms is necessary in 
order to ensure that applicants are qualified to participate in 
auctions and hold licenses. Certain information required on FCC Form 
175 is also necessary to ensure that only applicants that qualify as 
small businesses or very small businesses receive the bidding credits 
offered to such entities. The Commission has reduced the burden of the 
application process wherever possible by requiring limited information 
on FCC Form 175 and requiring more complete information only from 
auction winners on FCC Form 601.
Report to Congress
    20. The Commission will send a copy of this R&O, including this 
FRFA, in a report to be sent to Congress pursuant to the Congressional 
Review Act. In addition, the Commission will send a copy of this R&O, 
including this FRFA, to the Chief Counsel for Advocacy of the Small 
Business Administration. A copy of this R&O and FRFA (or summaries 
thereof) will be published in the Federal Register.

C. Paperwork Reduction Act of 1995

    21. The Order on Reconsideration and Report and Order does not 
contain either new or modified information collection requirements 
subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-
13. In addition, therefore, it does not contain any new or modified 
``information collection burden for small business concerns with fewer 
than 25 employees,'' pursuant to the Small Business Paperwork Relief 
Act of 2002, Public Law 107-198, 44 U.S.C. 3506(c)(4).

Ordering Clauses

    22. Pursuant to the authority contained in sections 1, 4(i), 11, 
303(r) and (y), 308, 309, and 332 of the Communications Act of 1934, as 
amended, 47 U.S.C. 151, 154(i), 161, 303(r), 303(y), 308, 309, and 332, 
this Order on Reconsideration and Report and Order is hereby adopted.
    23. Pursuant to sections 4(i), 303(c), 303(r), and 309(j) of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(c), 
303(r) and 309(j), part 22 of the Commission's Rules is amended as 
specified in Appendix B of the Report and Order, effective 60 days 
after publication in the Federal Register.
    24. The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of this Order On 
Reconsideration and Report and Order, including the Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects in 47 CFR Part 22

    Communications common carriers, Radio.



[[Page 76417]]


Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Rule Changes

0
For the reasons discussed in the preamble, the Federal Communications 
Commission amends 47 CFR part 22 as follows:

PART 22--PUBLIC MOBILE SERVICES

0
1. The authority citation for part 22 continues to read as follows:

    Authority: 47 U.S.C. 154, 222, 303, 309 and 332.

0
2. Add Sec.  22.881 to read as follows:


Sec.  22.881  Air-Ground Radiotelephone Service subject to competitive 
bidding.

    Mutually exclusive initial applications for general aviation Air-
Ground Radiotelephone Service licenses and mutually exclusive initial 
applications for commercial Air-Ground Radiotelephone Service licenses 
are subject to competitive bidding. The general competitive bidding 
procedures set forth in part 1, subpart Q, of this chapter will apply 
unless otherwise provided in this subpart.

0
3. Add Sec.  22.882 to read as follows:


Sec.  22.882  Designated entities.

    (a) Eligibility for small business provisions in the commercial 
Air-Ground Radiotelephone Service.
    (1) A small business is an entity that, together with its 
affiliates, its controlling interests and the affiliates of its 
controlling interests, has average gross revenues that are not more 
than $40 million for the preceding three years.
    (2) A very small business is an entity that, together with its 
affiliates, its controlling interests and the affiliates of its 
controlling interests, has average gross revenues that are not more 
than $15 million for the preceding three years.
    (b) Bidding credits in the commercial Air-Ground Radiotelephone 
Service.
    (1) A winning bidder that qualifies as a small business, as defined 
in this section, or a consortium of small businesses may use a bidding 
credit of 15 percent, as specified in Sec.  1.2110(f)(2)(iii) of this 
chapter, to lower the cost of its winning bid on a commercial Air-
Ground Radiotelephone Service license.
    (2) A winning bidder that qualifies as a very small business, as 
defined in this section, or a consortium of very small businesses may 
use a bidding credit of 25 percent, as specified in Sec.  
1.2110(f)(2)(ii) of this chapter, to lower the cost of its winning bid 
on a commercial Air-Ground Radiotelephone Service license.

[FR Doc. 05-24484 Filed 12-23-05; 8:45 am]
BILLING CODE 6712-01-P