*Pages 1--28 from Microsoft Word - 16346* Federal Communications Commission FCC 99- 179 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of ) ) Amendment of the Commission's ) ET Docket No. 95- 183 Rules Regarding the 37.0- 38.6 GHz and ) RM- 8553 38.6- 40.0 GHz Bands ) ) Implementation of Section 309( j) of the ) PP Docket No. 93- 253 Communications Act -- Competitive ) Bidding, 37.0- 38.6 GHz and 38.6- 40.0 GHz ) Bands ) MEMORANDUM OPINION AND ORDER Adopted: July 14, 1999 Released: July 29, 1999 By the Commission: TABLE OF CONTENTS Error! No table of contents entries found. 1. Commco argues that by dismissing amendments to pending 39 GHz applications filed on or after December 15, 1995, the Commission "improperly amended" its finding in the NPRM and Order that such amendments are "of right." 1 However, Commco's argument ignores the fact that the freeze portion of the NPRM and Order provided notice that such amendments would no longer be accepted for processing. Consequently, although we found that amendments filed prior to the NPRM and Order should be processed "of right," any former right to amend a pending 39 GHz application ended with the release of the NPRM and Order. 2 2. Commco further argues that Sections 101.29( a) 3 and 101.45( f)( 2) 4 of the Commission's Rules provide that an applicant may amend an application "as of right," and that the Commission violated those rules when we dismissed amendments to 39 GHz applications filed on or after December 15, 1995. 5 For the reasons set forth below, we disagree. 1 Commco et al., Joint Petition at 8- 10. 2 See Chadmoore, 113 F. 3d at 241- 42. 3 47 C. F. R. § 101.29( a). 4 47 C. F. R. § 101.45( f)( 2). 5 Commco et al., Joint Petition at 8- 10. 1 Federal Communications Commission FCC 99- 179 2 3. Section 101.29( a) generally states that pending applications that are not designated for the random selection process may be amended "as a matter of right." 6 It is well established that the mere filing of an FCC application vests no rights in an applicant. 7 Moreover, as stated above, any right to amend a pending 39 GHz application ended with the release of the NPRM and Order. 8 We stated in the NPRM and Order that amendments to pending applications would not be accepted for filing on or after December 15, 1995. 9 In addition, Section 101.45( f)( 2) does not provide an applicant with a vested right to amend its application. Rather, it provides an exception to the general rule that pending applications amended by major amendments are considered "newly- filed" and lose their place in the processing line. 10 4. Some parties argue that by dismissing amendments to pending 39 GHz applications intended to resolve mutual exclusivity filed on or after December 15, 1995, the Commission violated Section 309( j)( 6)( E) of the Communications Act. 11 Contrary to those assertions, by dismissing the subject amendments and unripe applications, we did not violate our statutory mandate to "continue to use engineering solutions, negotiation, threshold qualifications, service regulations, and other means in order to avoid mutual exclusivity in application and licensing proceedings." 12 The Commission conducted the instant proceeding in response to a petition for rulemaking where it considered implementing new technical standards for the 39 GHz band, which would require new licensing procedures. 13 It froze new applications for 39 GHz licenses because of its concern that applications filed under the former rules may not conform to the technical and service requirements being considered. 14 For the same reason, it froze certain amendments to pending 39 GHz applications, including those at issue. 15 After a notice and comment period, as required by the APA, 16 the Commission determined that continuing to license the 39 GHz band under the former rules would run contrary to its proposed regulatory overhaul and decided to implement competitive bidding 6 47 C. F. R. § 101.29( a). 7 Chadmoore, 113 F. 3d at 240- 41 (citations omitted). 8 See Chadmoore, 113 F. 3d at 241- 42. 9 NPRM & Order, 11 FCC Rcd at 4990. 10 47 C. F. R. § 101.45( f)( 2). "For the purposes of this section, any application . . . will be considered to be a newly filed application if it is amended by a major amendment . . . except . . . . [when] [t] he amendment resolves frequency conflicts . . . . which would otherwise require resolution by hearing, by comparative evaluation . . . or by random selection . . . provided that the amendment does not create new or additional frequency conflicts. Id. 11 See, e. g., AA& T et al., Joint Petition at 11- 12; CMC Petition at 16- 17; Commco et al., Joint Petition at 10; DCT Petition at 4- 9; No Wire Petition at 2- 4. 12 47 U. S. C. § 309( j)( 6)( E). 13 Freeze Order, 11 FCC Rcd at 1156. 14 Id. 15 NPRM and Order, 11 FCC Rcd at 4988- 89. 16 5 U. S. C. § 553( c). 2 Federal Communications Commission FCC 99- 179 3 for all future 39 GHz licensees. 17 Accordingly, it dismissed "unripe" pending mutually exclusive 39 GHz applications and certain amendments thereto, including amendments which were filed on and after December 15, 1995, to avoid mutual exclusivity with other pending applications. 18 5. As noted in the preceding paragraphs, we have carefully considered our obligations under Section 309( j)( 6)( E) in making our decision to uphold the dismissal of "unripe" pending mutually exclusive 39 GHz applications and amendments. We have also determined, after considering our Section 309( j)( 6)( E) obligations, to process those 39 GHz applications that passed the 30- day public notice period as of the release date of the Freeze Order, November 13, 1995, and all associated amendments of right filed before the release date of the Notice of Proposed Rule Making and Order, December 15, 1995. 19 Further, we will grant those pending applications that are not mutually exclusive with previously- filed applications. 20 6. It has been established by case law that Section 309( j)( 6)( E) does not require us to adhere to an outmoded licensing policy in order to avoid mutual exclusivity. 21 Section 309( j)( 6)( E) merely requires that we take certain measures to avoid mutual exclusivity "within the framework of existing policies." 22 The Commission's decision to adopt competitive bidding procedures for assignment of 39 GHz licenses arose from the changes it made to the service and licensing rules for the 39 GHz band, which were found, pursuant to notice and comment, to serve the public interest. Thus, we conclude that Section 309( j)( 6)( E) does not require us to process the petitioners' amendments, because they were submitted under a regulatory regime that is no longer in effect. Accordingly, we affirm our decision to dismiss all amendments, filed on or after December 15, 1995, including those intended to resolve mutual exclusivity among pending 39 GHz applications. 7. Similarly, we do not believe that Section 309( j)( 6)( E) requires us to process unripe pending mutually exclusive applications, nor are we required to foster settlement agreements among applicants who submitted applications under the former processing rules and policies. Bachow claims that it reduced its channel requests in compliance with the Commission's September 16, 1994, Public Notice, 23 which contained a policy statement that, inter alia, imposed a spectrum cap on applicants for certain 39 GHz services. 24 Bachow states that it was unable to reach agreements to resolve mutually exclusive situations with non- complying applicants before the unripe pending applications were dismissed. 25 Bachow argues 17 Report and Order and Second NPRM, 12 FCC Rcd at 18603- 04. 18 Id. at 18642- 44. 19 See para. 40, infra. The Commission had previously determined that pending 39 GHz applications would be processed only if the 60- day period for filing mutually exclusive applications expired before November 13, 1995. NPRM and Order, 11 FCC Rcd at 4988. 20 See para. 40 infra. 21 DIRECTV, 110 F. 3d at 828. 22 Id. (emphasis added). 23 Public Notice, Mimeo No. 44787 (rel. Sept. 16, 1994) (Public Notice). 24 Bachow Petition at 8. 25 Id. at 8- 10. 3 Federal Communications Commission FCC 99- 179 4 that the Commission should insist that all pending applications conform to the Public Notice before dismissing unripe pending application. 26 We disagree. The Public Notice was issued pursuant to the former regulatory regime, and the fact that some pending applications may have been subject to dismissal due to nonconformance with the Public Notice is inapposite. 26 Id. 4 Federal Communications Commission FCC 99- 179 5 d. Disposition of 39 GHz Applications Meeting the Public Notice Requirement as of November 13, 1995 8. In the NPRM and Order, the Commission expanded upon the Freeze Order by stating that 39 GHz applications would be processed if they were not mutually exclusive with other 39 GHz applications at the time of the Freeze Order, and if the 60- day period for filing mutually exclusive applications expired prior to November 13, 1995. 27 Some parties argue that a 30- day cut- off period -- not a 60- day cut- off period -- is the correct requirement for processing eligibility. 28 Section 309( b) of the Communications Act 29 and Section 101.37( c) of the Commission's Rules (former Section 21.27( c)) 30 state that we may process an application no earlier than 30 days after it has been placed on public notice. Section 101.45( b)( 2) (former Section 21.31( b)) allows competing applications to be filed up to 60 days after the date of the public notice listing the first of the conflicting applications as accepted for filing. 31 Subparts (i) and (ii) explain that the cut- off date is the earlier of two dates: (i) Sixty (60) days after the date of the public notice listing the first of the conflicting applications as accepted for filing; or (ii) One (1) business day preceding the day on which the Commission takes final action on the previously filed application (should the Commission act upon such application in the interval between thirty (30) and sixty (60) days after the date of its public notice). 32 9. We have determined, after further consideration, that those 39 GHz applications that met the 30- day public notice requirement, but not the 60- day period for which mutually exclusive applications may be filed, are not materially different than those applications for which the 60- day period for filing mutually exclusive applications has passed. Specifically, we find that those 39 GHz applications that meet the 30- day public notice requirement are ripe for processing, in accordance with our rules. It is our practice to process applications as soon after the close of the 30- day public notice period as possible. Even though the mounting number of 39 GHz applications created complexities that generally forestalled our processing of those applications until after the 60- day period for filing mutually exclusive applications had passed, we find that those applications became ripe for processing on day 31. Therefore, we will process those 39 GHz applications that passed the 30- day public notice period as of November 13, 1995 and all associated amendments of right filed before December 15, 1995, and grant those applications that are not mutually exclusive with previously- filed applications. We find this action to be in the public interest because it best comports with the plain reading of our rules, and promotes regulatory certainty and consistency. 27 NPRM and Order, 11 FCC Rcd at 4988. 28 See, e. g., AA& T et al., Joint Petition at 13- 15; Biztel Petition at 3- 5; Commco et al., Joint Petition at 14. 29 47 U. S. C. § 309( b). 30 47 C. F. R. § 101.45( b)( 2). 31 47 C. F. R. § 101.45( b)( 2)( i); see 47 U. S. C. § 309( j); McElroy at 255 (1996): "The thirty- day period in [Section] 309( b) . . . simply requires the Commission to wait thirty days before granting . . . applications." 32 47 C. F. R. § 101.45( b)( 2)( i),( ii). 5 Federal Communications Commission FCC 99- 179 6 e. Disposition of 39 GHz Applications not Meeting the Public Notice Requirement as of November 13, 1995 10. Some petitioners also argue, based on McElroy and Kessler, that the Freeze Order announcing that the Commission would no longer accept for filing any applications for new 39 GHz licenses filed on or after November 13, 1995, 33 constitutes an "accelerated cut- off" period requiring us to process all 39 GHz applications on file as of that date. 34 As an initial matter, we note that the Commission did not cut-off the processing of eligible, ripe applications, rather it froze application processing in preparation for a rulemaking proceeding, and later dismissed applications not comporting with our Rules as unacceptable for filing. Further, petitioners misconstrue McElroy and Kessler. At issue in McElroy, was whether certain public notices prevented the 60- day cut- off period for filing of competing applications from commencing because they failed to adequately notify competing applicants by including the phrase "accepted for filing." 35 The Court found that the public notices gave adequate notice and did not prevent the 60- day cut- off period from commencing. 36 11. Petitioners also cite Kessler as a basis for their claim that the Freeze Order imposes an accelerated cut- off date. 37 However, in Kessler, the pertinent issue was whether it was arbitrary and capricious for the Commission to fail to give advance notice of a freeze, and the Court held that it was not. 38 Moreover, the application freeze imposed in Kessler is distinguishable from the 39 GHz application freeze. In the underlying proceeding in Kessler, the Commission decided that it was in the public interest to process pending applications for the following reason: [T] he total number of potential grants that could result from proposals on file . . . was not sufficiently great to frustrate the ends we sought to accomplish through our rulemaking. We decided, therefore, that we could continue to process those cases, without substantial sacrifice of our basic objectives. 39 The Commission then amended its procedural rules "to establish, in effect, a new 'cut- off' date for most pending applications, this new date acting to supersede all previous cut- off lists." 40 This "exceptional treatment" was proposed in an effort "to speed up the disposition of applications where a contest had ceased 33 Freeze Order, 11 FCC Rcd at 1156. 34 See, e. g., AA& T et al., Joint Petition at 13- 18; Bachow Petition at 2- 7; Biztel Petition at 3- 7. 35 McElroy, 86 F. 3d at 255. 36 Id. 37 See, e. g., AA& T et al., Joint Petition at 13- 18; Bachow Petition at 2- 7; Biztel Petition at 3- 7. 38 Kessler, 326 F. 2d at 686. 39 Id. at 685. 40 Id. 6 Federal Communications Commission FCC 99- 179 7 to exist." 41 In the 39 GHz proceeding -- unlike the underlying proceeding in Kessler -- the Commission found the large volume of potential grants of licenses sufficiently great to frustrate the goals of the 39 GHz rulemaking. 42 12. It is well settled that the Commission "is not bound to adhere to a procedure just because it was once adopted." 43 If we find that it is in the public interest to hold in abeyance the acceptance of applications, we may craft a freeze to fit the circumstances. For example, in one proceeding, the Commission suspended acceptance of all new paging applications in conjunction with a proposal to convert from site- by- site licensing of paging channels to licensing on a geographic area basis, 44 and subsequently modified the freeze to give incumbent licensees with operating paging systems the opportunity to file primary site applications for sites that incrementally expand their services areas. 45 Further, in the 220- 222 MHz band proceeding, the Commission imposed a freeze on the filing of initial and modification applications due to the volume of applications, and later lifted the filing window for non- nationwide 220 MHz licensees who sought to obtain modification of their authorizations to relocate base stations. 46 These are but two examples of how the Commission has crafted procedural rules to fit the circumstances. 13. Moreover, applications that do not comport with the 30- day public notice requirement as of the November 13, 1995 Freeze Order are, under our rules, unripe for processing. As discussed above, Section 101.37( c) (former Section 21.27( c)) of the Commission's rules states that we may process an application no earlier than 30 days after it has been placed on public notice. 47 Thus, those applications for which the 30- day public notice period was not completed by the November 13, 1995 Freeze Order are permanently foreclosed from becoming ripe for processing. To find otherwise would defeat the purpose of the processing freeze. In the Report and Order and Second NPRM, the Commission found that because the 39 GHz band is subject to significantly different rules than the ones used previously, the most fair and reasonable approach concerning pending unripe 39 GHz applications was to dismiss them, without prejudice, and allow those applicants to reapply under the new rules. We continue to believe that this approach adequately balances the expectations of applicants with the need for a more efficient and effective system for licensing use of the 39 GHz band. 41 Id. 42 See, e. g., NPRM and Order, 11 FCC Rcd at 4988. 43 Kessler, 326 F. 2d at 685. 44 Revision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of Paging Systems, Notice of Proposed Rule Making, 11 FCC Rcd 3158 (1996). 45 Revision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of Paging Systems, WT Docket 96- 18, First Report and Order, 11 FCC Rcd 16570 (1996). 46 Amendment of Part 90 of the Commission's Rules to Provide for the Use of the 220- 222 MHz Band by the Private Land Mobile Radio Service, GN Docket No. 93- 252, Third Report and Order; Fifth Notice of Proposed Rulemaking, 12 FCC Rcd 10943, n. 10 (1997). 47 47 C. F. R. § 101.37( c). 7 Federal Communications Commission FCC 99- 179 8 f. Emergency Request for Stay 14. DCT filed an Emergency Request for Stay on April 8, 1998, requesting that we stay the decision to dismiss those 39 GHz applications that were not resolved of their mutual exclusivity as of December 15, 1995, and those 39 GHz applications that had not passed the 60- day cut- off period as of November 13, 1995, pending final resolution of all challenges to the Commission's 39 GHz application dismissal policy. Inasmuch as we have carefully reviewed the substance of DCT's request, and in light of today's decision and the absence of prior dismissal of the pending 39 GHz applications subject to this proceeding, we conclude DCT has in fact received the relief it requested. Moreover, there will be no further delay in implementing the dismissal or further processing of the above- referenced applications because this Memorandum Opinion and Order resolves the issues addressed in the petitions for reconsideration. We therefore dismiss DCT's request for stay as moot. B. SERVICE AREAS 15. In the NPRM and Order, we proposed to license all channel blocks in the 39 GHz band using BTAs, and we solicited comments on that proposal. 48 Based on the record as it existed at the time of the release of the Report and Order and Second NPRM, we determined that BTAs were the most appropriate geographic areas for the types of services envisioned for the 39 GHz band. 49 Explicit in this determination was the Commission's expectation that 39 GHz licensees and Rand McNally would execute licensing agreements similar to those in other services. 50 Subsequent to the release of the Report and Order and Second NPRM, new developments concerning Rand McNally's copyright interest in BTAs lead us to conclude that using BTAs as service areas for 39 GHz authorizations could result in extended delays in the 39 GHz licensing process. 51 Thus, on our own motion, after reviewing the current record, we reconsider the service area definitions for the 39 GHz band and will license all channel blocks in the 39 GHz band using Economic Areas (EAs). 52 We believe that licensing the 39 GHz band by EAs will provide ample population coverage and allow licensees the flexibility to provide many different types of services, which will promote an equitable distribution of licenses and services among geographic areas, encourage economic opportunities among a wide variety of applicants, and foster investment in and rapid deployment of new technologies and services. 53 In addition, by using EAs we will better serve the public by avoiding the potential delays in the 48 NPRM and Order, 11 FCC Rcd at 4941- 43. 49 Report and Order and Second NPRM, 12 FCC Rcd at 18610- 12. In reaching the conclusion that BTAs would be the most appropriate service areas for anticipated 39 GHz services, we stated that the record did not indicate that the majority of 39 GHz licensees would seek to provide services over vast geographic areas. Hence, we noted that large service areas such as MTAs would be inappropriate for the 39 GHz band. See Id. at 18611. 50 Report and Order and Second NPRM, 12 FCC Rcd at 18611- 12. 51 Rand McNally is the copyright owner of the Basic Trading Area and Major Trading Area Listing, which lists the counties contained in each BTA. Report and Order and Second NPRM, 12 FCC Rcd at 18610, n. 32 (citation omitted). 52 EAs are delineated by the Regional Analysis Division, Bureau of Economic Analysis, U. S. Department of Commerce. See 47 C. F. R. § 90.7. EAs are larger than BTAs and smaller than MTAs. 53 See 47 U. S. C. § 309( j)( 4)( C). For entities desiring service areas smaller than EAs, we note that we are 8 Federal Communications Commission FCC 99- 179 9 continued licensing of the 39 GHz band under the new licensing approach established in this proceeding. Accordingly, a total of 175 authorizations (172 EAs, and three EA- like areas, covering Guam and Northern Mariana Islands; Puerto Rico and the U. S. Virgin Islands; and American Samoa) will be issued for each 39 GHz channel block. 54 C. CHANNELIZATION PLAN 16. In the Report and Order and Second NPRM, we determined that the 39 GHz spectrum could be used to offer a variety of terrestrial services. 55 TRW, Inc. (TRW) asks that we ensure that some of the global spectrum allocation for fixed satellite services (FSS) on the 39 GHz band remain available for next- generation satellite networks. Specifically, TRW entreats us to limit our 39 GHz spectrum channelization plan for terrestrial wireless services to those frequencies below 39.5 GHz in order to provide a segment of the spectrum above 39.5 GHz for FSS. 56 TRW requests that, at a minimum, we clarify that fixed and mobile service authorizations in the 39 GHz band "will not confer exclusive spectrum rights, and that fixed and mobile licensees should be required to coordinate with satellite operators to facilitate spectrum sharing to the extent feasible." 57 TRW also suggests that a limitation on elevation angles of terrestrial transmitting equipment would "assist spectrum sharing in the 39 GHz band." 58 17. Several parties oppose the TRW Petition, and request that we affirm the current channelization plan and decline to reserve the 39.5- 40.0 GHz band for satellite operators. 59 Both ART and WinStar correctly assert that we have already addressed the issue of reserving the 39.5- 40.0 GHz band for satellite operators. 60 In addition, several parties maintain that sharing between terrestrial and satellite services in this segment of the 39 GHz band is not feasible. 61 WinStar, for example, argues that interference permitting partitioning and disaggregation in the 39 GHz band. See paras. 57- 62, infra. The availability of these options will enhance 39 GHz licensees' flexibility regarding system design and service offerings, which will promote the efficient and diverse use of the 39 GHz band. 54 See 47 C. F. R. § 90.7. 55 Report and Order and Second NPRM, 12 FCC Rcd at 18607. 56 TRW Petition at 5- 8. The 39. 5- 40. 0 GHz band is currently allocated for fixed and satellite services. Report and Order and Second NPRM, 12 FCC Rcd at 18608. 57 TRW Petition at 2, 8. 58 Id. at 10. 59 Alcatel et al. Joint Opposition at 1- 3; ART Opposition at 2- 4; Biztel Opposition at 1- 3; CMC Reply at 4; WinStar Opposition at 1- 3. 60 ART Opposition at 2- 3; WinStar Opposition at 1- 3; Report and Order and Second NPRM, 12 FCC Rcd at 18609. 61 See Alcatel et al. Joint Opposition at 1- 3; ART Opposition at 2- 4; Biztel Opposition at 1- 3; CMC Reply at 4; WinStar Opposition at 1- 3. 9 Federal Communications Commission FCC 99- 179 10 concerns would freeze fixed terrestrial services out of significant areas surrounding proposed satellite earth stations and that terrestrial services would find it impossible to operate under the severe power density and automatic transmission power control sought by satellite operators if TRW's proposal is adopted. 62 These parties, therefore, request that we not revisit our earlier decision to maintain terrestrial primacy in the 39.5- 40.0 GHz band. 18. We find that TRW has not provided a convincing basis for altering our rules for this band. Further, we affirm the conclusion that altering the service designation in the 39.5- 40.0 GHz segment of the band is not in the public interest. As we stated in reaching our initial decision rejecting TRW's request, we believe that it would be too burdensome to "repack" terrestrial users in a portion of the band below 39.5 GHz, because, among other things, existing licensees could be required to purchase new equipment or change frequencies. 63 In addition, we explained that a new terrestrial frequency plan would be required, based on a different transmit/ receiving separation, which would be costly to equipment manufacturers and licensees. 64 Furthermore, due to the potential for interference between contemplated ubiquitous satellite and the in- place high density operating terrestrial systems, altering the current allocation of the 39 GHz band, at the present time, would not serve the public interest and would be inconsistent with the outstanding proposals in the March 24, 1997, Notice of Proposed Rulemaking in IB Docket No. 97- 95. 65 Thus, we conclude that it would not be practical to implement TRW's request, and it is therefore denied. However, we reiterate that our current allocation for the 39 GHz segment of the band contains both fixed and satellite services and, as noted in the Report and Order and Second NPRM, our action here does not constrain our ability to make modifications to the Table of Allocations at a later 62 WinStar Opposition at 2. 63 Report and Order and Second NPRM, 12 FCC Rcd at 18609. 64 Id. 65 Allocation and Designation of Spectrum for Fixed- Satellite Services in the 37. 5- 38. 5 GHz , 40. 5- 41. 5 GHz, and the 48.2- 50.2 GHz Frequency Bands, IB Docket No. 97- 95, Notice of Proposed Rulemaking, 12 FCC Rcd 10130 (1997). On December 23, 1998, the International Bureau subsequently released the following item: Allocation and Designation of Spectrum for Fixed- Satellite Services in the 37. 5- 38. 5 GHz, 40. 5- 41. 5 GHz, and 48. 2- 50. 2 GHz Frequency Bands; Allocation of Spectrum to Upgrade Fixed and Mobile Allocations in the 40.5- 42.5 GHz Frequency Band; Allocation of Spectrum in the 46.9- 47.0 GHz Frequency Band for Wireless Services; and Allocation of Spectrum in the 37.0- 38.0 GHz and 40.0- 40.5 GHz for Government Operations, Report and Order, IB Docket No. 97- 95, 13 FCC Rcd 24649 (1998). 10 Federal Communications Commission FCC 99- 179 11 time. 66 Nor is our action here in any way intended to constrain wireless licensees' ability to deploy satellite earth stations in the 39.5- 40.0 GHz band. 67 D. PERFORMANCE REQUIREMENTS: RENEWAL AND BUILD- OUT 19. Prior to the Report and Order and Second NPRM, 39 GHz licensees were subject to the Part 101 build- out rules, which required station construction within 18 months of the date of license grant. 68 Licensees authorized before August 1, 1996, received a five- year, fixed license term 69 and licensees authorized after August 1, 1996, received a ten- year, fixed license term. 70 Moreover, at that time, neither the Part 21 rules nor the Part 101 rules directly provided for a renewal expectancy at the time of license expiration. However, in the Report and Order and Second NPRM, the Commission determined that, in order to promote flexibility in system design and market development, it would combine the performance standards required at build- out with the requirements for a renewal expectancy into one showing of substantial service at the time of license renewal, in accordance with Section 101.17( a). 71 It further determined, at that time, that the substantial service showing be made 18 months prior to the license expiration date in accordance with Section 101.15( c). 72 20. In pleadings responsive to the Report and Order and Second NPRM, many petitioners ask us to reconsider our decision concerning the incumbent renewal deadline, arguing that the new renewal requirement will promote inequity between the incumbents and new licensees. 73 These parties assert that incumbent 39 GHz licensees will be placed at a disadvantage due to a shorter period of time in which to 66 See Report and Order and Second NPRM, 12 FCC Rcd at 18608- 09. 67 It may be possible and desirable for a licensee to deploy both terrestrial and satellite facilities. For example, terrestrial facilities may be deployed in more densely populated urban areas, while satellite facilities, particularly "gateway" type facilities, may be deployed in sparsely populated rural areas. 68 47 C. F. R. § 101.63. 69 Former Rule 47 C. F. R. § 21.45. 70 47 C. F. R. § 101.67. 71 47 C. F. R. § 101.17( a), as amended, requires 39 GHz licensees to demonstrate substantial service at the time of license renewal. 72 Former Rule 47 C. F. R. § 101.15( c), as amended, required a 39 GHz licensee to file a renewal form 18 months prior to the expiration date of the license sought to be renewed. 73 ART Petition at 4- 7; Biztel Petition at 10- 11; CMC Petition at 3- 6; AA& T et al., Joint Petition 21- 22; see, supra para. 24 for a discussion of license terms. 11 Federal Communications Commission FCC 99- 179 12 meet the performance requirements. 74 ART, for example, contends that the renewal deadline is "antithetical" to our policy of ensuring that licensees have flexibility and time to acquire necessary capital and to build- out their systems. 75 21. We disagree that the renewal requirements adopted in the Report and Order and Second NPRM cause inequity among licensees or are inconsistent with the Commission's stated goals in this proceeding. Due to recent developments, however, we are reconsidering our decision regarding renewal requirements on different grounds. Subsequent to the adoption of the Second Report and Order and NPRM, the Commission streamlined its wireless license application process by implementing an automated licensing system and integrated database for the wireless services. 76 The result of this effort was the Universal Licensing System (ULS). With the deployment of ULS, the Commission intends to "improve the consistency of the Commission's rules across wireless services and provide a single point of reference for applicants" by consolidating the procedural rules governing the filing and processing of wireless applications, including the procedures for license renewal, into Part 1 of the Commission's Rules. 77 In this connection, Section 101.15, which required 39 GHz licensees to file for renewal 18 months prior to the licenses expiration date, was removed and replaced by Section 1.949 of the Commission's Rules. 78 Section 1.949 requires all applications for renewal of station authorization to be filed no later than the license expiration date and no earlier than 90 days prior to the expiration date. 79 A showing of substantial service must also be made at that time that an application for renewal of station authorization is filed. We believe that this approach better comports with our goal in this proceeding of promoting flexibility in system design and market development. Further, this approach conforms to the Commission's intention to promote consistency across the wireless services. Thus, under the new ULS guidelines 39 GHz licensees are not required to comply with the 18 month filing requirement in former Section 101.15, but rather should refer to Section 1.949 for license renewal requirements. 80 We clarify, however, that the substantial service 74 See, e. g., AA& T et al., Joint Petition at 21- 22; ART Petition at 4- 7. 75 ART Opposition at 5. ART also contends that the renewal deadline would be disadvantageous to those licensees who intend to utilize point- to- multipoint technology. It contends that the necessary equipment is still in the beta testing stage and won't be commercially viable until very close to the first substantial showing deadline. Id. at 6. 76 In the Matter of the Biennial Regulatory Review -- Amendment of Parts 0, 1, 13, 22, 24, 26, 27, 80, 87, 90, 95, 97, and 101 of the Commission's Rules to Facilitate the Development and Use of the Universal Licensing System in the Wireless System in the Wireless Telecommunications Services, WT Docket No. 98- 20, Report and Order, FCC 98-23 (adopted September 17, 1998, released, October 21, 1998) (ULS Report and Order). 77 Id at para. 56. 78 Former Rule 47 C. F. R. § 101.15; 47 C. F. R. § 1.949 [added]. 79 47 C. F. R. § 1.949; Licensees should also be aware that 47 C. F. R. § 101.65( b) was revised in order to discontinue the reinstatement procedures for expired licenses. License authorizations will automatically terminate on the specified expiration date, unless a timely application for renewal is filed. 47 C. F. R. § 1.955; see also ULS Report and Order, FCC 98- 234 at para. 95- 101. 80 In the Matter of the Biennial Regulatory Review -- Amendment of Parts 0, 1, 13, 22, 24, 26, 27, 80, 87, 90, 95, 97, and 101 of the Commission's Rules to Facilitate the Development and Use of the Universal Licensing System in the Wireless System in the Wireless Telecommunications Services, WT Docket No. 98- 20, Memorandum Opinion and 12 Federal Communications Commission FCC 99- 179 13 performance requirement under Section 101.17( a) remains the performance standard for the 39 GHz band and must be demonstrated upon license renewal. 81 22. Biztel asks that we amend Section 101.63( a) to reflect that 39 GHz licensees are exempted from compliance with Section 101.63( a) 's build- out requirement of mandatory operation within 18 months from the initial date of license grant, in light of the new performance standard under Section 101.17( a). 82 We find that this clarification comports with our determination in the Report and Order and Second NPRM, 83 and, thus, we amend Section 101.63( a) to read as follows: Each Station, except in Local Multipoint Distribution Services and the 38.6- 40.0 GHz band, authorized under this part must be in operation within 18 months from the initial date of grant. 84 23. Finally, AA& T et al., Joint Petitioners, seek clarification that incumbent service areas, and not just individual links, will be protected from the operations of those who obtain their licenses by competitive bidding. 85 Accordingly, we clarify that Section 101.147( u)( 2) -- which compels applicants to be aware of any grandfathered links within their EA -- protects all incumbent service areas from the operations of licensees who receive their licenses by competitive bidding. 86 Thus, Section 101.147( u)( 2) will be modified to read: Applications filed pursuant to Section 101.1206 shall identify any pre- existing rectangular service area authorizations that are located within, or are overlapping with, the EA for which the license is sought, and the provisions of Section 101.103 shall apply for purposes of frequency coordination between any authorized rectangular service area( s) and EA service area( s) that are geographically adjoining and overlapping. 87 Order, FCC 99- 139 ( rel. June 28, 1999). 81 See 47 C. F. R. § 101.17( a). 82 BizTel Petition at 10- 11. 83 Report and Order and Second NPRM, 12 FCC Rcd at 18622- 18626. 84 47 C. F. R. § 101.63( a). 85 AA& T et. al. Joint Petition at 21- 23; see also Winstar Opposition at 6- 7 in support of AA& T et. al. 86 47 C. F. R. § 101.147( u)( 2). 87 Id. 13 Federal Communications Commission FCC 99- 179 14 E. LICENSING RULES 1. Antenna Requirements 24. The Commission requires fixed stations operating at 932.5 MHz or higher to utilize transmitting and receiving antennas meeting or exceeding the appropriate performance standards in order to avoid frequency interference. 88 Thus, it generally requires the use of either Category A antennas, or, in areas not subject to frequency congestion, Category B antennas. 89 However, in the Report and Order and Second NPRM, the Commission did not require utilization of Category A antennas and, in fact, advocated the use of a variety of antennas, including omni- directional and sectored antennas, in order to promote the entry of point- to- multipoint users in the 39 GHz band and to allow those users more flexibility in meeting service demands. 90 It stated, however, that if a licensee utilizing an antenna other than a Category A antenna causes interference which cannot be resolved among the licensees involved that licensee must resolve the interference by replacing its antenna with a Category A antenna, or one with better performance. 91 One petitioner asks that we exclude omni- directional or sectored antennas from directional Category A or B radiation pattern requirements, reasoning that the interference replacement requirement confers secondary status upon point- to- multipoint users employing those types of antennas. 92 25. As discussed in the Report and Order and Second NPRM, we permit various types of antennas for use in the 39 GHz band because Category A directional antenna may be too restrictive to fulfill the requirements of diverse system configurations in the 39 GHz band. 93 We clarify, however, that Category A and B radiation pattern requirements do not apply to wide- beam antennas, such as omni- directional and sectored antennas. Point- to- multipoint licensees should benefit from this rule modification because the omni- directional and sectored antennas "represent a more cost- effective and technically suitable alternative to traditional narrowbeam Category A antennas when deployed in a point- to- multipoint configuration." 94 However, in the event that interference difficulties arise as a result of the use of wide- beam antennas and are not resolved by the licensees, we reserve the right to employ any reasonable method necessary to resolve the interference, including requiring the use of better performing antennas. 88 47 C. F. R. § 101.115( c). 89 47 C. F. R. § 101.115( c) defines the performance standards required for Category A and B antennas. Category A antennas have a higher performance standard, for example they radiate less energy in the side lobes, thereby lessening the chance for interference. 90 Report and Order and Second NPRM, 12 FCC Rcd at 18632. 91 Id. 92 Comsearch Petition at 5. 93 Report and Order and Second NPRM, 12 FCC Rcd at 18631. 94 Id. at 18632. 14 Federal Communications Commission FCC 99- 179 15 2. Frequency Coordination and Power Flux Density Limit 26. In the Report and Order and Second NPRM, in order to facilitate coordination between 39 GHz licensees licensed in adjoining areas, the Commission adopted interim frequency coordination procedures, but declined to establish final rules concerning maximum field strength or power flux density (PFD) limits pending the results of the National Spectrum Management Association (NSMA) interference study. 95 We decided, in the interim, that it was in the public interest to continue to use the frequency coordination procedures in Section 101.103( d) of our rules, as amended, with the following modifications: (1) neighboring co- channel and adjacent channel licensees must coordinate within 16 kilometers of an adjacent service area boundary, and (2) licensees that receive coordination notifications must respond within 10 days, as opposed to the 30 days afforded under the former rules. 96 27. Several petitioners express concern regarding the interim coordination boundaries and notification response time. 97 First, regarding coordination boundaries, one party contends that a coordination distance of 16 km for 39 GHz services is not enough to preclude the possibility of harmful interference, and suggests that a distance of 50 km be used. 98 WinStar disagrees, maintaining that the frequency coordination measures are interim in nature and that "it would be counterproductive to adopt [permanent] interference measures" prior to analyzing the results of the NSMA study. 99 We concur with WinStar as we have received no notice of difficulties to date with the interim rule, nor to our knowledge, have incumbent licensees experienced complications. Therefore, we find that it is in the public interest to retain the interim rule requiring licensees to coordinate frequency interference within 16 kilometers of an adjacent service area boundary, pending the conclusion and analysis of the NSMA study. 100 28. Second, ART and WinStar request a reduction in notification response time, with ART requesting a decrease from 10 to 5 business days. 101 ART argues that 5 business days would better facilitate the ability of a licensee to determine the impact of an interference problem and to rapidly meet customer 95 Id. at 18632- 33. 96 Id. at 18633- 34; see also UlS Report and Order, FCC 98- 234 at para. 84- 88. 47 C. F. R. Section 101.103( d) was revised pursuant to the ULS Report and Order to require frequency coordination to be completed prior to filing an application for regular authorization, or a major amendment to a pending application, or any major modification to a license. Id. Applicants and licensees should refer to 47 C. F. R. § 1.929 of the Commission's Rules for a classification of major and minor filings. 97 See, e. g., ART Petition at 4- 5; Comsearch Petition at 2- 5; WinStar Petition at 7- 8; see also ART Opposition at 7; Fixed Section Opposition at 2- 3. 98 Comsearch Petition at 2- 4. 99 WinStar Opposition at 5- 7. 100 We have previously found that the propagation characteristics of the 39 GHz spectrum requires a 16 Km coordination distance between neighboring systems. Report and Order and Second NPRM, 12 FCC Rcd at 18634. 101 ART Petition at 4- 5; see also WinStar Opposition at 6, maintaining that "a shorter response time is necessary to facilitate rapid service installation schedules." 15 Federal Communications Commission FCC 99- 179 16 needs. 102 We are not persuaded that a shorter response time will necessarily decrease burdens on licensees and Commission staff. We also are concerned that a five- day response time could unduly burden coordination notice recipients by forcing them to rush a response without having sufficient time to fully consider the relevant technical data of the proposed operation. Thus, we conclude that a reduction in the notification response is not warranted at this time. 3. Partitioning and Disaggregation 29. In the Report and Order and Second NPRM, the Commission stated that all entities eligible to hold 39 GHz licenses should be permitted to partition and disaggregate spectrum within the 39 GHz band. 103 It stated that these options would enhance 39 GHz licensee flexibility with respect to system design and service offerings. 104 Some petitioners incorrectly read these rules to mean that these options are not available to incumbent licensees. 105 We, therefore, clarify that all 39 GHz licensees, including incumbents and those who obtain their 39 GHz license by competitive bidding, may partition and disaggregate. 30. Although the Report and Order and Second NPRM did not address the issue of combined partitioning and disaggregation agreements, WinStar requests that we permit this type of arrangement. 106 The Commission has previously allowed such combinations in other services and has found that providing licensees such flexibility promotes "competitive service offerings, encourages new market entrants, and ensures quality service to the public." 107 Therefore, in keeping with the underlying purpose of this proceeding, i. e., to promote flexibility both in system design and service, and to encourage new entrants into the market, we permit all 39 GHz licensees to enter into combined partitioning and disaggregation agreements. 31. In addition, in the Report and Order and Second NPRM, the Commission decided to allow partitioning according to county boundaries or geo- political subdivisions. 108 WinStar requests that licensees be allowed to partition along any licensee defined service area arguing that requiring partitioning along geo- political subdivision boundaries is "unduly restrictive and will diminish the utility of licensees' 102 ART Petition at 4- 5. 103 Report and Order and Second NPRM, 12 FCC Rcd at 18634- 18636. 104 Id. 105 See, e. g., Winstar Petition at 1- 3. 106 WinStar Petition at 4- 5. 107 See Amendment of Part 90 of the Commission's Rules to Facilitate Future Development of SMR Systems in the 800 MHz Frequency Band, GN Docket No. 93- 252, Second Report and Order, 12 FCC Rcd 19079, 19150 (1997) (SMR Order); In the Matter of Geographic Partitioning and Spectrum Disaggregation by Commercial Mobile Radio Services Licensees, WT Docket No. 96- 148, Report and Order and Further Notice of Proposed Rule Making, 11 FCC Rcd 21831, 21866 (1997) (PCS Order). 108 Report and Order and Second NPRM, 12 FCC Rcd at 18635; see 47 C. F. R. § 101.56( a)( 1). 16 Federal Communications Commission FCC 99- 179 17 partitioning abilities." 109 We agree with WinStar's concern and will observe the policy -- as established in the PCS Order -- of allowing licensees to determine the area to be partitioned. 110 Therefore, Section 101.56( a)( 1) 111 is amended as follows: The holder of a EA authorization to provide service pursuant to the competitive bidding process and any incumbent licensee of rectangular service areas in the 38.6- 40.0 GHz band may enter into agreements with eligible parties to partition any portion of its service area as defined by the partitioner and partitionee. Alternatively, licensees may enter into agreements or contracts to disaggregate any portion of spectrum, provided acquired spectrum is disaggregated according to frequency pairs. 32. WinStar also raised the issue of whether licensees utilizing bidding credits should be permitted to partition and disaggregate their spectrum in the same manner as licensees not eligible for such provisions, and favored permitting partitioning and disaggregation by such licensees, subject to our unjust enrichment rules. 112 We concur. We have permitted licensees utilizing bidding credits to partition and disaggregate their spectrum in other services, and we find no reason not to allow 39 GHz licensees to have the same opportunity. 113 By this action, we encourage the participation of those who desire individual links, smaller service areas, or smaller spectrum blocks in the provision of 39 GHz service. Thus, we will amend Section 101.56( i) accordingly. F. SECOND NOTICE OF PROPOSED RULE MAKING 33. In the Second NPRM, the Commission sought comment on the appropriate provisions to prevent unjust enrichment and ensure effective implementation of partitioning and disaggregation in the 39 GHz service. 114 It also sought comment on how to calculate the unjust enrichment payments for 39 GHz licensees that are awarded bidding credits and subsequently partition or disaggregate to a business not qualifying for bidding credits or not qualifying for the same level of bidding credits, and asked commenters to address whether the unjust enrichment payments should be calculated on a proportional basis. 115 34. Subsequent to our issuance of the Second NPRM, we adopted a provision in Part 1 of the Commission's Rules for all auctionable services that provides a uniform approach for calculating unjust 109 WinStar Petition at 6. 110 PCS Order, 11 FCC Rcd at 21847. In the PCS Order, the Commission determined that requiring geographic partitioning by county lines may not necessarily be "reflective of market realities and may otherwise inhibit partitioning." Id. 111 47 C. F. R. § 101.56( a)( 1). 112 WinStar Petition at 5- 6. 113 See, e. g., SMR Order, 12 FCC Rcd 19079, 19148 (1997). 114 Report and Order and Second NPRM, 12 FCC Rcd at 18668- 69. 115 Id. 17 Federal Communications Commission FCC 99- 179 18 enrichment payments in the context of partitioning and disaggregation. 116 Since we received no comments addressing the issue of calculating unjust enrichment payments, we will adopt the uniform procedures set forth in Sections 1.2111( d) 117 and 1.2111( e) 118 of our rules for the 39 GHz service and amend Section 101.56( i) accordingly. As a result, we will calculate unjust enrichment payments using population to determine the relative value of the partitioned area and the amount of spectrum disaggregated to determine the relative value of the disaggregated spectrum. 119 Population will be calculated based upon the latest available census data. The Commission has consistently adopted this approach for other wireless services, including most recently LMDS. 120 For purposes of applying our unjust enrichment payments when a combined partitioning and disaggregation is proposed, we will use a combination of both population of the partitioned area and amount of spectrum disaggregated to make these pro rata calculations. IV. PROCEDURAL MATTERS A. Regulatory Flexibility Act 35. The Supplemental Final Regulatory Flexibility Analysis, pursuant to the Regulatory Flexibility Act, see 5 U. S. C. § 604, is contained in Appendix B. B. Ordering Clauses 36. This action is taken pursuant to authority found in Sections 4 (i), 257, 303( r) and 309( j) of the Communications Act of 1934, as amended, 47 U. S. C. §§ 154 (i), 257, 303( r), and 309( j) and Sections 0.131 and 1.429 of the Commission's Rules, 47 C. F. R. §§ 0.131 & 1.429. For the reasons set forth above, we take the following actions. 37. IT IS ORDERED that, the Petitions for Reconsideration filed by ELAR Cellular and BizTel, Inc., ARE DISMISSED IN PART and DENIED IN PART. 116 See Amendment of Part 1 of the Commission's Rules -- Competitive Bidding Procedures, WT Docket No. 97-82, Third Report and Order and Second Further Notice of Proposed Rulemaking, 13 FCC Rcd 374, 434 (1997) (adopting 47 C. F. R. § 1.2111( e)). 117 47 C. F. R. § 1.2111( d). 118 47 C. F. R. § 1.2111( e). 119 As provided in our rules, the unjust enrichment payment will be reduced over time. See 47 C. F. R. § 1.2111( d)( 2). 120 Rulemaking to Amend Parts 1, 2, 21 and 25 of the Commission's Rules to Redesignate the 27.5 - 29.5 GHz Frequency Band to Reallocate the 29.5 - 30.0 GHz Frequency Band, to Establish Rules and Policies for Local Multipoint Distribution Service and for Fixed Satellite Service, FCC 98- 77, CC Docket No. 92- 297, ¶ 25, Fourth Report and Order, (released May 6, 1998); see also In the Matter of Geographic Partitioning and Spectrum Disaggregation by Commercial Mobile Radio Services Licensees; Implementation of Section 257 of the Communications Act -- Elimination of Market Entry Barriers, Broadband PCS Report and Order, FCC 96- 474, WT Docket No. 96- 148, Report and Order and Further Notice of Proposed Rulemaking, 11 FCC Rcd at 21881- 2 (1996). 18 Federal Communications Commission FCC 99- 179 19 38. IT IS FURTHER ORDERED that, the Petitions for Reconsideration submitted by AA& T et al., (filed Mar. 9, 1998), Advanced Radio Telecom (filed Mar. 9, 1998), Bachow, et al. (filed Mar. 9, 1998), Biztel, Inc, (filed Feb. 20, 1998), Columbia Millimeter Communications, L. P. (filed Mar. 9, 1998), Commco L. L. C., et al. (filed Mar. 9, 1998), Comsearch (filed Mar 6, 1998), DCT Transmission, L. L. C. (filed Mar. 9, 1998), No Wire LLC (filed Dec. 4, 1997), James W. O'Keefe (filed Mar 9, 1998), TRW Inc. (filed Feb. 20, 1998), and WinStar (filed Mar. 9, 1998) ARE HEREBY GRANTED IN PART AND DENIED IN PART. 39. IT IS FURTHER ORDERED that the Emergency Petition for Stay filed by DCT Transmission, L. L. C. IS HEREBY DISMISSED as moot. 40. IT IS FURTHER ORDERED that Part 101 of the Commission's Rules IS AMENDED as specified in Appendix C, effective 60 days after publication in the Federal Register. This action is taken pursuant to Sections 4( i), 303( c), 303( f), 303( g), 303( r) and 309( j) of the Communications Act of 1934, as amended, 47 U. S. C. §§ 154( i), 303( c), 303( f), 303( g), 303( r) and 309( j). 41. IT IS FURTHER ORDERED that the Commission's Office of Public Affairs, Reference Operations Division, SHALL SEND a copy of this Memorandum Opinion and Order, including the Supplemental Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary 19 Federal Communications Commission FCC 99- 179 20 APPENDIX A PARTIES FILING PETITIONS FOR RECONSIDERATION OF THE COMMISSION'S JANUARY 17, 1997 MEMORANDUM OPINION AND ORDER ELAR Cellular (ELAR) BizTel, Inc. (BizTel) PARTIES FILING PETITIONS FOR RECONSIDERATION OF THE COMMISSION'S REPORT AND ORDER AND SECOND NPRM AA& T Wireless Services, Cambridge Partners, Inc. , Linda Chester, HICAP Networks, Inc., Paul R. Likins, PIW Development Corporation, SMC Associates, Southfield Communications LLC, Wireless Telco (AA& T et al.) Advanced Radio Telecom Corporation (ART) Bachow and Associates, Inc., and Bachow Communications, Inc. (Bachow) Biztel, Inc., (Biztel) Columbia Millimeter Communications, L. P. (CMC) Commco, L. L. C., Plaincom, Inc., Sintra Capital Corporation, Eric Sterman (Commco et al.) Comsearch DCT Transmission, L. L. C., (DCT) No Wire L. L. C., (No Wire) James W. O'Keefe (O'Keefe) TRW, Inc. (TRW) WinStar Communications, Inc. (WinStar) PARTIES FILING OPPOSITIONS TO PETITIONS FOR RECONSIDERATION Advanced Radio Telecom Corp. (ART) Alcatel Network System, Inc., Digital Microwave Corporation, Harris Corporation- Farinon Division (Alcatel et. al.) Biztel, Inc. (Biztel) Fixed Point- to- Point Communications Section, Wireless Communications Division, of the Telecommunications Industry Association (Fixed Section) WinStar Communications, Inc. (WinStar) PARTIES FILING REPLIES TO THE OPPOSITIONS Columbia Millimeter Communications, L. P. (CMC) TRW, Inc., Lockheed Martin Corporation (TRW) James O'Keefe (O'Keefe Reply) LATE FILED COMMENTS Alcatel Network System, Inc., Digital Microwave Corporation, Harris Corporation- Farinon Division (Alcatel et. al.) 20 Federal Communications Commission FCC 99- 179 21 APPENDIX B REGULATORY FLEXIBILITY ACT Supplemental Final Regulatory Flexibility Analysis Memorandum Opinion and Order As required by the Regulatory Flexibility Act, see 5 U. S. C. § 603 (RFA), an Initial Regulatory Analysis (IRFA) was incorporated into the Notice of Proposed Rulemaking and Order (NPRM and Order) in this proceeding. 121 The Commission sought written public comment on the proposals in the NPRM and Order, including comment on the IRFA. A Final Regulatory Flexibility Analysis (FRFA) was incorporated in the Report and Order and Second Notice of Proposed Rule Making in this proceeding in ET Docket No. 95- 183. 122 This present Supplemental FRFA, associated with the present Memorandum Opinion and Order (MO& O), reflects revised or additional information to that contained in the FRFA. 123 This supplemental FRFA conforms to the RFA. 124 A. Need for, and Objectives of, the Memorandum Opinion and Order This MO& O addresses petitions for reconsideration and clarification received in response to the Report and Order and further simplifies and corrects the rules implemented in the Report and Order. This MO& O reconsiders the service area definitions established in the Report and Order and determines to license all channel blocks in the 39 GHz band using Economic Areas (EAs). In the Report and Order, the Commission determined to license all channel blocks in the 39 GHz band using Basic Trading Areas (BTAs). However, due to recent developments concerning Rand McNally's copyright interests in BTAs, the Commission has determined that the public interest would be better served by licensing all 39 GHz channel blocks using Economic Areas (EAs) as the authorized service areas. 125 The MO& O further modifies the Commission's geographic partitioning provisions and permits the use of partitioning and disaggregation by parties taking advantage of bidding credits under our competitive 121 Amendment of the Commission's Rules Regarding the 37.0- 38.6 GHz and 38.6- 40.0 GHz Bands, ET Docket No. 95- 183, Notice of Proposed RuleMaking and Order, 11 FCC Rcd 4930 (1995) (NPRM and Order). 122 Amendment of the Commission's Rules Regarding the 37.0- 38.6 GHz and 38.6- 40.0 GHz Bands, ET Docket 95- 183, Report and Order and Second Notice of Proposed Rule Making, 12 FCC Rcd 18600 (1997) (Report and Order and Second NPRM). 123 The instant MO& O also addresses petitions for reconsideration of a prior Memorandum Opinion and Order released on January 17, 1997 (Jan. 17 MO& O). The prior Jan. 17 MO& O modified the interim filing and processing rules for the 39 GHz band. However, in the instant MO& O, the Commission promulgates no additional rules, and our action does not affect the previous analysis. 124 See 5 U. S. C. § 604. 125 EAs are delineated by the Regional Analysis Division of Economic Analysis, U. S. Department of Commerce. See 47 C. F. R. § 90.7. 21 Federal Communications Commission FCC 99- 179 22 bidding licensing rules. In the NPRM, we proposed a partitioning scheme with respect to rural telephone companies. Then, in the Report and Order, the Commission determined that the option of partitioning should be made available to all entities eligible to be licensees in the 39 GHz band. The Commission also concluded that all 39 GHz licensees should be permitted to disaggregate their spectrum blocks. In the MO& O, we have clarified that incumbent licensees may partition and disaggregate their non- EA licenses. We have allowed all 39 GHz licensees to enter into and/ or combine existing partitioning and disaggregation agreements and we have permitted licensees to define their own partitioning boundaries along licensee service areas in order to encourage new entrants, including small businesses, into the market. We will enable licensees utilizing bidding credits to partition and disaggregate, subject to unjust enrichment provisions. In the MO& O, the Commission reconsiders its decision regarding license renewal. In the Report and Order, the Commission required a showing of substantial service 18 months prior to the license expiration date. The MO& O, however, directs 39 GHz licensees to comport with the recently implemented Part 1 rules governing license renewal provided in Section 1.949 of the Commission's Rules. 126 Section 1.949 requires all applications for renewal of station authorization to be filed no later than the license expiration date and no sooner than 90 days prior to the expiration date. 127 Finally, the Commission considered various petitions for reconsideration relating to the dismissal of pending 39 GHz applications and coordination requirements. The rule changes made herein are generally minor in nature and are focused on eliminating confusion and promoting the public interest. B. Summary of Significant Issues Raised by Public Comments in Response to the Final Regulatory Flexibility Analysis No petitions were filed in direct response to the FRFA. In general, the 12 petitions for reconsideration of the Report and Order, five opposition to petitions and two replies were not directly related to small entities. However, one petition raised several issues that might affect small entities concerning partitioning and disaggregation. In particular, this party requested that the Commission allow the combination of partitioning and disaggregation agreements and permit 39 GHz licensees to define their own boundaries for partitioning, as opposed to partitioning according to county lines or geo- political subdivisions. 128 Further, Winstar requested that licensees utilizing bidding credits be permitted to partition and disaggregate their spectrum, subject to the unjust enrichment provisions of the Commission. 129 C. Description and Estimate of the Small Entities to Which Rules Will Apply In the previous FRFA in this proceeding, we determined in detail the description and estimate of the following small entities subject to these rules from the FRFA: cellular licensees, Broadband PCS licensees, 126 47 C. F. R. § 1.949; see also In the Matter of Biennial Regulatory Review -- Amendment of Parts 0, 1, 13, 22, 24, 26, 27, 80, 87, 90, 95, 97, and 101 of the Commission's Rules to Facilitate the Development and Use of the Universal Licensing System in the Wireless Telecommunications Services, WT Docket No. 98- 20, Report and Order, FCC 98- 23 (adopted September 17, 1998, released, October 21, 1998) (ULS Report and Order). 127 47 C. F. R. § 1.949. 128 Winstar Petition at 4- 7. 129 Winstar Petition at 5- 6. 22 Federal Communications Commission FCC 99- 179 23 and Point- to- Point or Point- to- Multipoint licensees. 130 We include the following revision of the estimate for broadband PCS Licensees: The broadband PCS spectrum is divided into six frequency blocks designated A through F, and the Commission has held auctions for each block. The Commission defined "small entity" for Blocks C and F as an entity that has average gross revenues of less than $40 million in the three previous calendar years. 131 For Block F, an additional classification for "very small business" was added and is defined as an entity that, together with their affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years. 132 These regulations defining "small entity" in the context of broadband PCS auctions have been approved by the SBA. 133 No small businesses within the SBA approved definition bid successfully for licenses in Blocks A and B. There were 90 winning bidders that qualified as small entities in the Block C auctions. A total of 93 small and very small business bidders won approximately 40% of the 1,479 licenses for Blocks D, E, and F. 134 Based on this information, we conclude that the number of small broadband PCS licensees will include the 90 winning C Block bidders and the 93 qualifying bidders in the D, E, and F blocks, for a total of 183 small entity PCS providers as defined by the SBA and the Commission's auction rules. D. Description of the Projected Reporting, Recordkeeping, and Other Compliance Requirements There are no general reporting or recordkeeping requirements proposed or adopted in this MO& O. E. Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered The use of EAs as authorized service areas will better serve the public interest. Specifically, EAs will provide ample population coverage and allow small businesses the flexibility to provide a variety of services. Further, the use of EAs will promote an equitable distribution of licenses among various geographic areas and promote economic opportunity among a wide variety of applicants. Finally, those licensees seeking service areas smaller than EAs may partition or disaggregate. The minor partitioning and disaggregation rule changes implemented herein will further facilitate market entry by small entities who may lack the financial resources for participation in the auctions, including small businesses. By permitting flexible partitioning and disaggregation, small businesses will be 130 Report and Order and Second NPRM, 12 FCC Rcd at 18677- 18679. 131 See Amendment of Parts 20 and 24 of the Commission's Rules -- Broadband PCS Competitive Bidding and the Commercial Mobile Radio Service Spectrum Cap, Report and Order, FCC 96- 278, WT Docket No. 96- 59, paras. 57- 60. (released June 24, 1996), 61 FR 33859 (July 1, 1996), see also 47 C. F. R. § 24.720( b). 132 See Amendment of Parts 20 and 24 of the Commission's Rules -- Broadband PCS Competitive Bidding and the Commercial Mobile Radio Service Spectrum Cap, Report and Order, FCC 96- 278, WT Docket No. 96- 59, para. 60. (released June 24, 1996), 61 FR 33859 (July 1, 1996). 133 See, e. g., Implementation of Section 309( j) of the Communications Act -- Competitive Bidding, PP Docket No. 93- 253, Fifth Report and Order, 9 FCC Rcd 5532, 5581- 5584 (1994). 134 FCC News, Broadband PCS, D, E, and F Block Auction Closes, No. 71744 (rel. Jan. 14, 1997). 23 Federal Communications Commission FCC 99- 179 24 able to obtain licenses for smaller service areas and smaller amounts of spectrum tailored to meet the needs of their proposed service. Finally, allowing geographic partitioning of 39 GHz licenses defined by the parties along licensed service areas, rather than only by county lines or geo- political subdivisions, will permit small businesses to enter the marketplace. The license renewal procedures governed by Section 1.949 of the Commission's Rules better comport with the Commission's goal of promoting flexibility in system design and market development Further, this approach fosters uniformity across the wireless services. The Commission will send a copy of the MO& O, including this SFRFA, in a report to be sent to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996. 135 In addition, the Commission will send copy of the MO& O, including the SFRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the MO& O and SFRFA (or summaries thereof) will be published in the Federal Register. 136 Report to Congress: The Commission will send a copy of the Memorandum Opinion and Order, including this FRFA, in a report to be sent to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996, see 5 U. S. C. § 801( a)( 1)( A). In addition, the Commission will send a copy of the Memorandum Opinion and Order, including FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the Memorandum Opinion and Order and FRFA (or summaries thereof) will also be published in the Federal Register. See 5 U. S. C. § 604( b). 135 See 5 U. S. C. § 801( a)( 1)( A). 136 See 5 U. S. C. § 604( b). 24 Federal Communications Commission FCC 99- 179 25 APPENDIX C A. Part 1 of Chapter 1 of Title 47 of the Code of Federal Regulations is amended as follows: PART 1 - PRACTICE AND PROCEDURE 1. The authority citation for Part 1 continues to read as follows: Authority: Secs. 4, 303, 48 Stat. 1066, 1082, as amended: 47 U. S. C. Sections 154, 303: Implement, 5 U. S. C. Sections 552 and 21 U. S. C. 853a, unless otherwise noted. 2. Revise paragraph (a)( 9) to Section 1.2102 to read as follows: § 1.2102 Eligibility of applications for competitive bidding. (a) * * * (9) Economic Area licenses in the 38.6- 40.0 GHz band. * * * * B. Part 101 of Chapter 1 of Title 47 of the Code of Federal Regulations is amended as follows: PART 101 FIXED MICROWAVE SERVICES 1. The authority citation for Part 101 continues to read as follows: Authority: Sec. 4 and 303 of the Communications Act of 1934, as amended, 47 U. S. C. Sections 154 and 303, unless otherwise noted. * * * * 2. Amend § 101.17 to revise paragraph (a) as follows: §101.17 Performance Requirements for the 38.6- 40.0 GHz frequency band. (a) All 38.6- 40.0 GHz band licensees must demonstrate substantial service at the time of license renewal. A licensee's substantial service showing should include, but not be limited to, the following information for each channel for which they hold a license, in each EA or portion of an EA covered by their license, in order to qualify for renewal of that license. The information provided will be judged by the Commission to determine whether the licensee is providing service which rises to the level of "substantial." * * * * 3. Amend § 101.56 to revise paragraphs (a)( 1), (b), (d)( 1), (d)( 2), (f), (g), (h), and (i) to read as follows: 25 Federal Communications Commission FCC 99- 179 26 § 101.56 Partitioned Services Areas (PSAs) and Disaggregated Spectrum (a)( 1) The holder of an EA authorization to provide service pursuant to the competitive bidding process and any incumbent licensee of rectangular service areas in the 38.6- 40.0 GHz band may enter into agreements with eligible parties to partition any portion of its service area as defined by the partitioner and partitionee. Alternatively, licensees may enter into agreements or contracts to disaggregate any portion of spectrum, provided acquired spectrum is disaggregated according to frequency pairs. * * * (b) The eligibility requirements applicable to EA authorization holders also apply to those individuals and entities seeking partitioned or disaggregated spectrum authorizations. * * * (d)( 1) When any area within an EA becomes a partitioned service area, the remaining counties and geopolitical subdivision within that EA will be subsequently treated and classified as a partitioned service area. (d)( 2) At the time an EA is partitioned, the Commission shall cancel the EA authorization initially issued and issue a partitioned service area authorization to the former EA authorization holder. * * * (f) The duties and responsibilities imposed upon EA authorization holders in this part, apply to those licensees obtaining authorizations by partitioning or spectrum disaggregation. (g) The build- out requirements for the partitioned service area or disaggregated spectrum shall be the same as applied to the EA authorization holder. (h) The license term for the partitioned service area or disaggregated spectrum shall be the remainder of the period that would apply to the EA authorization holder. (i) Licensees, except those using bidding credits in a competitive bidding procedure, shall have the authority to partition service areas or disaggregate spectrum. * * * * * 26 Federal Communications Commission FCC 99- 179 27 [Amend § 101.63 to revise paragraph (a) to read as follows: § 101.63 Period of Construction; Certification of Completion of Construction Each Station, except in Local Multipoint Distribution Services and the 38.6- 40.0 GHz band, authorized under this part must be in operation within 18 months from the initial date of grant. * * * 4. Add new section § 101. 64 to read as follows: § 101.64 Service areas. Service areas for 38.6- 40.0 GHz service are Economic Areas (EAs) as defined below. EAs are delineated by the Regional Economic Analysis Division, Bureau of Economic Analysis, U. S. Department of Commerce. The Commerce Department organizes the 50 States and the District of Columbia into 172 EAs. Additionally, there are four EA- like areas: Guam and Northern Mariana Islands; Puerto Rico and the U. S. Virgin Islands; American Samoa. and the Gulf of Mexico. A total of 175 authorizations (excluding the Gulf of Mexico EA- like area) will be issued for each channel block in the 39 GHz band. * * * * 5. Amend § 101.103 to revise paragraph( i)( i) to read as follows: § 101.103 Frequency coordination procedures. * * * * (i)( i) When the licensed facilities are to be operated in the band 38,600 MHz to 40,000 MHz and the facilities are located within 16 kilometers of the boundaries of an Economic Area, each licensee must complete the frequency coordination process of subsection 101.103( d) with respect to neighboring EA licensees and existing licensees within its EA service area that may be affected by its operation prior to initiating service. In addition to the technical parameters listed in subsection 101.103( d), the coordinating licensee must also provide potentially affected parties technical information related to its subchannelization plan and system geometry. * * * * 6. Amend § 101.147 to revise paragraph (u)( 2) to read as follows: § 101.147 Frequency assignments * * * (u)( 2) Applications filed pursuant to Section 101.1206 shall identify any pre- existing rectangular service area authorizations that are located within, or are overlapping with, the EA for which the license is sought, and the provisions of Section 101.103 shall apply for purposes of frequency coordination between any 27 Federal Communications Commission FCC 99- 179 28 authorized rectangular service area( s) and EA service area( s) that are geographically adjoining and overlapping. * * * * * 28