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EXECUTIVE SUMMARY p>"(#v 2  XS%-XU III. BACKGROUND   X<&-XX` `  A. Partitioning ` p>"(#v 4"<&0*''ZZb%"Ԍ X-XX` `  B. Disaggregation ` p"(#y 7 à  X-XX` ` C. Limitations on Transfers by Entrepreneur Block Licensees ` p>"(#v 9  X-XU IV. DISCUSSION   X-XX` `  A. Policy Goals ` p!(#p 11  X-XX` `  B. Partitioning ` p"(#s 16  Xv-XX` ` X ` ` 1. License Eligibility p"(#s 16  X_-XX` ` X ` ` 2. Available License Area, Timing, and Financial Obligations p"(#s 18  XH-XX` ` X X a. Nonentrepreneur block licensees p"(#s 19  X1-XX` ` X X b. Licensees with competitive bidding benefits p"(#s 20  X -XX` ` X ` ` 3. License Term p"(#s 28  X -XX` ` X ` ` 4. Construction Requirements p"(#s 31  X -XX` `  B. Disaggregation ` p"(#s 36  X -XX` ` X ` ` 1. Timing of Disaggregation p"(#s 36  X -XX` ` X ` ` 2. Amount of Spectrum to Disaggregate p"(#s 39  X -XX` ` X ` ` 3. Matters Relating to Entrepreneur Block Licensees p"(#s 46  X-XX` ` X ` ` 4. Construction Requirements p"(#s 50  Xy-XX` ` X ` ` 5. License Term p"(#s 57  XK-XU V. RELATED MATTERS   X4-XX` `  A. Combination of Partitioning and Disaggregation ` p"(#s 58  X-XX` `  B. Licensing ` p"(#s 60  X-XX` `  C. Technical and Microwave Relocation Rules ` p"(#s 62  X-XX` `  D. Clearinghouse for Spectrum ` p"(#s 65  X-XU VI. CONCLUSION p"(#s 66  X-XU VII. PROCEDURAL MATTERS   X|-XX` `  A. Regulatory Flexibility Act ` p"(#s 67  Xe-XX` `  B. Ex Parte RulesNonRestricted Proceeding ` p"(#s 68  XN-XX` `  C. Comment Dates ` p"(#s 69  X7-XX` `  D. Initial Paperwork Reduction Act of 1995 Analysis ` p"(#s 71  X -XX` `  E. Ordering Clause ` p"(#s 72  X -XX` `  F. Further Information ` p"(#s 73  X- APPENDIX A " 0*%%ZZ"  X-M- I. INTRODUCTION ă  X- 1. In this Notice of Proposed Rulemaking we propose to modify our broadband personal   communications service (PCS) rules to expand our geographic partitioning provisions to include  X-  all PCS licensees and to permit spectrum disaggregation in the near term.IX9 yO- ԍPartitioning is the assignment of geographic portions of the PCS license along geopolitical or other   boundaries. Disaggregation is the assignment of discrete portions or "blocks" of spectrum licensed to a geographic licensee or qualifying entity. I We also solicit   comment on certain issues relating to these rules. Adoption of our proposals will implement the   =Congressional mandate under Section 257 of the Communications Act of 1934, as amended by  XJ-  =the Telecommunications Act of 1996 ("Communications Act"),dJ9 yO -ԍPub. L. No. 104104,  101, 110 Stat. 56 (1996).d to eliminate entry barriers into   the telecommunications market for small businesses. These proposals also are consistent with the   directive of Section 309(j) of the Communications Act to promote economic opportunity for a   Zwide variety of applicants including small businesses, rural telephone companies, and businesses  X -  owned by members of minority groups and women.J x9 yO-ԍ47 U.S.C.  309(j)(4).J We believe that the proposals made herein   will facilitate the efficient use of broadband PCS spectrum by providing licensees with additional   flexibility to tailor their business strategies, will increase competition by allowing market entry   by new players, and will expedite the provision of broadband PCS service to areas that may not otherwise receive broadband PCS or other wireless services in the near term.  Xd- II. EXECUTIVE SUMMARY ׃  X6- 2. As we regulate broadband PCS spectrum, we continually seek to improve the   jefficiency of spectrum use, eliminate entry barriers, reduce unnecessary regulatory burdens on   Lspectrum users, encourage competition, and provide services to the largest feasible number of  X-users.G9 yO-ԍ47 U.S.C.  332(a).G We believe the proposals we make below meet these goals.  X-3. Accordingly, we propose to modify our broadband PCS rules as follows:  X- A. Partitioning  Xg-   Allow broadband PCS licensees in the A, B, D, and E blocks to partition their license area at any time to entities that meet minimum eligibility requirements. "90*%%ZZ"Ԍ X-   Allow entrepreneur block (C and F) broadband PCS licensees to partition their licensed   geographic area at any time to entities that qualify as entrepreneurs and meet minimum eligibility requirements.  X- ?  Apply our current fiveyear restriction against complete license transfers to partitioning   by entrepreneur block (C and F) broadband PCS licensees to a nonentrepreneur during the first   five years of the license period; after the fiveyear period apply unjust enrichment provisions on a proportional basis.  X1- ]  Establish license term provisions that permit partitioned license holders (partitionees) to  X -  <hold partitioned licenses for the remaining duration of the original licensee's (partitioner) tenyear license term.  X - ]  Establish flexible construction and coverage requirements to ensure expedited access to broadband PCS service in partitioned areas.  X- B. Disaggregation  Xb- Eliminate the January 1, 2000 benchmark and fiveyear buildout requirement for disaggregation.  X- Require that disaggregation be in blocks no smaller than a 1 MHz block of paired frequencies to facilitate the administration of licensing.  X-   Allow broadband PCS licensees in the A, B, D, and E blocks to disaggregate to entities that meet minimum eligibility requirements.  X-   Allow entrepreneur block (C and F) broadband PCS licensees to disaggregate to other eligible entrepreneurs without restriction.  XN- M  Apply our current fiveyear restriction against complete license transfers to disaggregation   by entrepreneur block (C and F) broadband PCS licensees to a nonentrepreneur during the first   five years of the license period; after the fiveyear period apply unjust enrichment provisions on a proportional basis.  X- Establish no new construction requirements for disaggregatees already licensed in   geographic markets and flexible construction requirements for disaggregatees that are market entrants, in order to ensure coverage.  X#- Establish license term provisions that permit licensees receiving disaggregated spectrum to hold their licenses for the duration of the tenyear license term."h$0*%%ZZ(#"Ԍ X-ԙ X Permit the combination of partitioning and disaggregation.(#  X- C. Related Matters  X- Establish an electronic database to make publicly available information about licensed   spectrum, and encourage the development of private clearinghouses and other market solutions   !which would enable entities (particularly small businesses) to access information about  opportunities for partitioning and disaggregation of spectrum in particular geographic areas.  X1-A, III. BACKGROUND ׃  X - A. Partitioning   X - 4. In the Broadband PCS Memorandum Opinion and Order, the Commission declined   to allow general geographic partitioning, noting that licensees might use partitioning as a means  X -  of circumventing construction requirements.[\ 9 yO"- ԍAmendment of the Commission's Rules to Establish New Personal Communications Services, GEN Docket  {O-  No. 90314, Memorandum Opinion and Order, 9 FCC Rcd 4957, 4990,  83 (1994) (Broadband PCS Memorandum  {O-Opinion and Order).[ The Commission observed, however, that a  limited   partitioning scheme might facilitate participation by certain groups, including rural telephone  X{-  companies (rural telcos) and other designated entities, in the provision of broadband PCS.h^{9 {O- ԍId.; see also Implementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket  {O-  No. 93253, Second Report and Order, 9 FCC Rcd 2348, 2391 n.186 (1994) (Competitive Bidding Second Report  {O-and Order).h The   Commission stated that it would consider the issue of geographic partitioning in a future  XM-proceeding to establish competitive bidding rules for broadband PCS.~M9 {O-ԍBroadband PCS Memorandum Opinion and Order, 9 FCC Rcd at 4990,  83.~  X- {5. The Commission established geographic partitioning provisions for rural telcos in the  X-  lCompetitive Bidding Fifth Report and Order.9 yO]- ԍImplementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket No. 93253,  {O%-  Fifth Report and Order, 9 FCC Rcd 5532, 559799  150152 (1994) (Competitive Bidding Fifth Report and Order).   The Telecommunications Act of 1996 for the first time enacted a statutory definition for rural telephone companies.  {O -  hSee 47 U.S.C.  153(37). We adopted this definition for broadband PCS designated entity provisions. See 47 C.F.R.   24.720(e); Amendment of Parts 20 and 24 of the Commission's Rules Broadband PCS Competitive Bidding and  {OI"-  the Commercial Mobile Radio Service Spectrum Cap, WT Docket No. 9659, FCC 96278, Report and Order,   {O#-6266 (released June 24, 1996) (D, E, and F Block Report and Order). In taking this action, we determined that   .partitioning would satisfy Congress' mandate that the Commission provide an opportunity for"0*%%ZZ"  X-  rural telcos to participate at auction and in the provision of broadband PCS. \9 {Oy- zԍCompetitive Bidding Fifth Report and Order, 9 FCC Rcd at 5599,  153; see Competitive Bidding Second  {OC-  hReport and Order, 9 FCC Rcd at 2391 n.186; see also 47 U.S.C.  309(j)(3) (establishing objectives the Commission must consider in promulgating competitive bidding rules).  We also observed   that rural telcos could take advantage of their existing infrastructure to provide broadband PCS  X-  services, thereby speeding service to rural areas. 9 {Oo-ԍCompetitive Bidding Fifth Report and Order, 9 FCC Rcd at 559799,  150152. We therefore decided that rural telcos could   acquire a partitioned license (1) by forming an auction bidding consortium comprised entirely of   Mrural telcos, and partitioning the license(s) won among consortium members; or (2) through  X-  Zprivate negotiation, either before or after an auction.P ~9 {O -ԍId. at 559899,  151.P We required that partitioned areas conform   /to established geopolitical boundaries (such as county lines) and that each area include all   portions of the rural telco's wireline service area that lie within the PCS service area. In   addition, where a rural telco acquires a partitioned license postauction, our rules require that the  X1-  Mpartitioned area be reasonably related to the rural telco's wireline service area.= $19 {O- ?ԍId. Recognizing that a rural telco may require some flexibility in fashioning the areas in which it will   receive partitioned licenses, we decided not to impose a strict rule concerning the reasonableness of the partitioned   ,area. Under our rules, we presume as reasonable a partitioned area that contains no more than twice the population  {OL-of that portion of a rural telco's wireline service area that lies within the PCS service area. Id.= We further   required that every licensee in each partitioned area be responsible for meeting the buildout  X -requirements in its area.:  9 {O-ԍId.:  X - 6. In the Competitive Bidding Further Notice of Proposed Rulemaking, the Commission   Zrequested comment on whether to extend postauction geographic partitioning of broadband PCS  X -  licenses to women and minorityowned businesses.h\ 9 yO- ԍImplementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket No. 93253,  {O-  Further Notice of Proposed Rule Making, 9 FCC Rcd 6775,  4 (1994) (Competitive Bidding Further Notice of  {Oz-Proposed Rule Making).h We observed that allowing these entities   to acquire partitioned licenses may facilitate their ability to participate in the provision of  X{-  broadband PCS.{9 {O -ԍCompetitive Bidding Further Notice of Proposed Rulemaking, 9 FCC Rcd at 6775,  4. Most of the commenters supported our proposal to extend partitioning  Xd-  provisions to women and minorityowned businesses.`XdD9 yOY#- ԍPacific Telesis Comments (filed Sept. 12, 1994); National Paging & Personal Communications Assoc.   (NPPCA) Comments (filed Sept. 12, 1994); U.S. Small Business Administration (SBA) Comments (filed Sept. 12,   1994); Minority Media and Telecommunications Council Comments (filed Sept. 12, 1994). Texas PCS, Inc. was"$0*%% %"  {O-  the only commenter to oppose our partitioning proposal. See Comments of Texas PCS, Inc. (filed September 6, 1994).` NPPCA and SBA also encouraged the"d"0*%%ZZ"  X-  Commission to allow small businesses to acquire a partitioned license.Z"9 yO-ԍSBA Comments at 56; NPPCA Comments at 3.Z We presently permit  X-  geographic partitioning for MDS,\9 yOL- ԍAmendment of Parts 21 and 74 of the Commission's Rules With Regard to Filing Procedures in the  {O-  Multipoint Distribution Service and in the Instructional Television Fixed Service, MM Docket No. 94131, Report  {O-and Order, 10 FCC Rcd 9589, 961415,  46, 47 (1995) (MDS Report and Order). General Wireless Communications Service9 yOp - MԍAllocation of Spectrum Below 5 GHz Transferred from Federal Government Use, ET Docket No. 9432,  {O8 -Second Report and Order, 11 FCC Rcd 624, 64648,  5156 (1995). and 800 MHz  X-  ySMR service.$0 9 yO - ԍAmendment of Part 90 of the Commission's Rules to Facilitate Future Development of SMR Systems in  {O{-  the 800 MHz Frequency Band, PR Docket No. 93144, First Report and Order, Eighth Report and Order, and  {OE-  Second Further Notice of Proposed Rule Making, 11 FCC Rcd 1463, 1576,  253 (1995) (800 MHz Second FNPRM) (rural telcos permitted to partition along established geopolitical boundaries). Additionally, we are seeking comment on proposals for partitioning for paging  X-  services,_\9 yO- ԍRevision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of Paging  {OP-  Systems, WT Docket No. 9618, Notice of Proposed Rulemaking, 11 FCC Rcd 3108, 313536,  136138 (1996)  {O-(Paging NPRM)._ 220 MHz service,\@9 yO- ԍAmendment of Part 90 of the Commission's Rules to Provide for the Use of the 220222 MHz Band by the  {Ot-  Private Land Mobile Radio Service, PR Docket No. 89552, Second Memorandum Opinion and Order and Third  {O>-Notice of Proposed Rulemaking, 11 FCC Rcd 188, 274  177, (1995) (220 MHz Third NPRM). 900 MHz SMR service,$d9 yO- ԍAmendment of Parts 2 and 90 of the Commission's Rules to Provide for the Use of 200 Channels Outside   the Designated Filing Areas in the 896901 MHz and the 935940 MHz Bands Allotted to the Specialized Mobile  {O`-  Radio Pool, PR Docket No. 89553, Second Report and Order and Second Further Notice of Proposed Rulemaking,  {O*-10 FCC Rcd 6884, 693940,  14445 (1995) (900 MHz Second FNPRM). 800 MHz SMR service, P9 {O- ԍ800 MHz Second FNPRM, 11 FCC Rcd at 5180,  264268 (seeks comment on tentative conclusion that partitioning should be available to eligible SMR licensees in general, not only for rural telcos).  and 38 GHz  X-fixed pointtopoint microwave service.\9 yO- ԍAmendment of the Commission's Rules Regarding the 37.0 38.6 GHz and 38.6 40.0 GHz Bands, ET  {O -  Docket No. 95183, Notice of Proposed Rulemaking and Order, 11 FCC Rcd 4930, 497273,  8990 (1995) (38  {O!-GHz NPRM) (seeking comment on whether partitioning should be available to all applicants, not just rural telcos). "0*%%ZZ"Ԍ X-  B. Disaggregation    X- k7. Under our current rules, broadband PCS licensees may disaggregate licensed broadband  X-  PCS spectrum after January 1, 2000 if they have met the fiveyear construction requirement.9 yO4- ԍ47 C.F.R.  24.229(d). Licensees of 30 MHz blocks must serve with a signal level sufficient to provide   adequate service to at least onethird of the population in their licensed area within five years of being licensed.   Licensees of 10 MHz blocks must serve with a signal level sufficient to provide adequate service to at least one  quarter of the population in their licensed area within five years of being licensed, or make a showing of substantial service in their licensed area within five years of being licensed. 47 C.F.R.  24.203.    X-  In the Broadband PCS Memorandum Opinion and Order, the Commission reasoned that this limit   Lon spectrum disaggregation for broadband PCS would allow the PCS market to take shape and  Xx-  prevent anticompetitive practices with regard to disaggregation.xx9 {O -ԍBroadband PCS Memorandum Opinion and Order, 9 FCC Rcd 4957, 4985,  69. We indicated, however, that   we would initiate a proceeding at a later date to specify rules for allowing spectrum  XJ-disaggregation.:J 9 {O-ԍId.:  X -  8. Since establishing our policy deferring disaggregation for broadband PCS until the year   2000, several developments have occurred which indicate that a further proceeding to modify the   spectrum disaggregation rules for this service is now warranted. For instance, we recently  X -  xallowed spectrum disaggregation for the in the large lowearth orbiting satellite service.\ 9 yO$- ԍAmendment of the Commission's Rules to Establish Rules and Policies Pertaining to a Mobile Satellite  {O-  JService in the 16101626.5/2483.52500 MHz Frequency Bands, CC Docket No. 92166, Report and Order, 9 FCC  {O-Rcd 5936, 5975,  96 (1994) (Mobile Satellite Service Report and Order). For that   service, licensees may resell 1.6 GHz band spectrum rights and 2.065 MHz segments, and  X -  reassign any smaller portion of 1.6 GHz band spectrum. 9 {O-ԍMobile Satellite Service Report and Order, 9 FCC Rcd at 5975,  96. Moreover, we note that the   Commission has proposed spectrum disaggregation for a variety of services, including commercial  X{-220 MHz,g{R 9 {O~-ԍ220 MHz Third NPRM, 11 FCC Rcd at 274,  177.g LMDS,g {9 {O -ԍ28 GHz Third NPRM, 11 FCC Rcd at 8384,  80.g 38 GHz,c!{v9 {O!-ԍ38 GHz NPRM, 11 FCC Rcd at 494243,  24.c 800 MHz SMR,u"{9 {O4#-ԍ800 MHz Second FNPRM, 11 FCC Rcd at 157879,  257263.u and paging.a#{9 {O$-ԍPaging NPRM, 11 FCC Rcd at 3136,  138.a "{,#0*%%ZZ"Ԍ X-ԙ C. Limitations on Transfers by Entrepreneur Block Licensees  X- 9. We designated frequency blocks C and F as entrepreneurs' blocks to promote   economic opportunities for a wide variety of applicants including small businesses, rural telcos   and businesses owned by members of minority groups and women as required by Section  X-  309(j)(4)(C)(ii) of the Communications Act.$9 {O-ԍCompetitive Bidding Fifth Report and Order, 9 FCC Rcd at 558788,  127. We recognized, however, that the congressionally   mandated objective to provide smaller entities an opportunity to obtain licenses will not be served   [if winning bidders that benefit from bidding credits and installment payment plans immediately  XH-  assign or transfer control of the authorization to entities ineligible for these special provisions.X%HZ9 {OS -ԍId. at 558889,  128129.X   Such a practice would unjustly enrich the auction winners and would undermine the congressional  X -  goal of giving designated entities the opportunity to provide spectrumbased services.:& 9 {O-ԍId.: Therefore, we established rules limiting transfers of entrepreneurs' licenses to nonentrepreneurs.  X -  10. Our present rules prohibit the assignment or transfer of control of a license for the   C and F blocks unless: (1) the application for assignment or transfer of control is filed after five   lyears from the date of the initial license grant; or (2) the assignee or transferee meets the   eligibility criteria set forth in Section 24.709 of the Commission's rules at the time the application   for assignment or transfer of control is filed; or (3) the proposed assignee or transferee holds   other license(s) for frequency Blocks C and F and, at the time of receipt of such license(s), the  XK-proposed assignee or transferee met the eligibility criteria set forth in Section 24.709.'K~9 {Oz-ԍ47 C.F.R.  24.839(d). See D, E, and F Block Report and Order at  8385.  X-3 IV. DISCUSSION ׃  X- A. Policy Goals    X-  11. In this proceeding, we seek to enable a wide variety of broadband PCS applicants,   including small businesses, rural telcos, and businesses owned by members of minority groups   and women, to overcome entry barriers through the creation of smaller, less capitalintensive   .licenses that are within the reach of smaller entities. Moreover, we believe that our proposals,   if adopted, will provide a means for increased access to capital that can be used to construct and   maintain PCS systems. Our proposals here are part of a multiproceeding effort to implement   the Communication Act's mandate to identify and eliminate market entry barriers for   >entrepreneurs and small businesses in the provision and ownership of telecommunications"  '0*%%ZZ"  X-  yservices.#(9 yOy- zԍA "small business" is defined as an entity that, together with its affiliates and persons or entities that hold   Kinterest in such entity and their affiliates, has average gross revenues that are not more than $40 million for the  {O -  preceding three years. 47 C.F.R.  24.720(b)(1); see D, E, and F Block Report and Order at  60. An   h"entrepreneur" is defined as an entity that, together with its affiliates and persons holding interest in such entity and   their affiliates, has average gross revenues that are less than $125 million in each of the last two calendar years and total assets of less than $500 million. 47 C.F.R.  24.709(a).# In this regard, the Commission also has recently issued a Notice of Inquiry seeking   evidence of current and past discrimination experienced by small businesses and businesses owned  X-  by women and minorities or by individual women and minorities.)B9 yO - ԍSection 257 Proceeding to Identify and Eliminate Market Entry Barriers for Small Businesses, GN Docket  {O -No. 96113, Notice of Inquiry, 11 FCC Rcd 6280 (1996). Changing our partitioning   iand disaggregation rules will also help to ensure that broadband PCS licensees have the flexibility they need to provide services most valuable to consumers in a competitive market environment.  Xv- ! 12. The changes we propose here are consistent with our mandate under Section 309(j)   of the Communications Act to utilize auctions to ensure competitive markets with little or no   -opportunity to engage in anticompetitive spectrum warehousing or speculation. In the words of   one recent commenter on our spectrum allocation policy: ". . . if an entity has paid fair value   for spectrum at auction there should be few if any restrictions on its ability to sell or lease all or  X -  part of that spectrum."* 9 yOP- ԍStatement of Wayne Perry, AT&T Wireless Services, Inc., before the FCC En Banc Hearing on Spectrum Policy, at 3 (Mar. 5, 1996). Our proposals thus take into account our special provisions in our   competitive bidding procedures for entities identified in Section 309(j)(4) of the Communications  X -Act.+ 9 {Oz-ԍSee 47 U.S.C.  309(j)(4)(C) and (D);  see also 47 C.F.R.  24.70924.712.  X - _ 13. Since we adopted our present policies permitting only limited partitioning and   disaggregation by broadband PCS licensees, we have completed auctions and granted licenses for   the A and B 30 MHz blocks. The C block auction is recently completed and we anticipate   initiating auctions for the D, E, and F blocks in the near future. The C and F blocks are   designated as entrepreneurs' blocks. Many of the A and B block licensees have announced   <aggressive schedules for system buildout and the initiation of service. Potential concerns about   slow construction and speculation in licenses without system buildout, while not to be dismissed,   .must be viewed in the context of a developing PCS marketplace and the business strategies of   these new licensees. We believe that our proposals address these potential concerns both in   relation to construction requirements to prevent warehousing and with respect to our special competitive bidding provisions for entrepreneurs and small businesses. " +0*%%ZZR"Ԍ X-  14. We expect that there may be significant benefits in broadening our partitioning   provisions to permit geographic partitioning by A, B, D, and E block licensees to any eligible   party. Moreover, in light of the fact that many broadband PCS licensees may meet their fiveyear   .construction obligations early, we believe that it may now be appropriate to revisit our ban on   disaggregation before January 1, 2000 as well as the fiveyear buildout precondition.   Partitioning and disaggregation could allow broadband PCS licensees to tailor their business   strategies and allow them to use the spectrum more efficiently. In addition, we expect that   \partitioning and disaggregation could enable more entities to participate in the provision of   broadband PCS, including small businesses and businesses owned by minorities and women.   xThese entities could speed service to unserved communities and bring competition to other areas.   We also note that partitioning and disaggregation may facilitate the development of socalled   "niche" services which may reflect more efficient use of spectrum and allow market entry by entities that only have the ability to provide service to a limited population.  X - m15. We believe that our proposals will facilitate market entry by parties who may lack   -the financial resources for participation in PCS auctions, including small businesses. In this way,   our proposals are consistent with the mandate of Section 257 to lower entry barriers into the PCS   /market for smaller businesses and the directive of Section 309(j) to promote participation in   spectrumbased services by a broad range of diverse entities. In addition, we believe that the   proposals we make here address a concern we have expressed previously lack of access to  X4-  Zcapital on the part of entities otherwise qualifying for entrepreneurs' block licenses.,49 {O-ԍSee, e.g., Competitive Bidding Fifth Report and Order, 9 FCC Rcd at 557273,  96. We believe   that these proposals, if implemented, will promote technological advancement, and participation   by diverse entities, as well as facilitate the efficient use of broadband PCS spectrum, increase   competition, and expedite the provision of broadband PCS to areas that may not otherwise receive broadband PCS or other wireless services in the near term.  X- vB. Partitioning   X|-X 1. License Eligibility (#  XN- 16. For the A, B, D, and E blocks, we propose to relax our broadband PCS geographic   partitioning rules, as discussed below, to allow vany party to acquire a license for a partitioned   jgeographic service area that meets the eligibility requirements to be a broadband PCS licensee.   In proposing to expand our geographic partitioning provisions to such entities, we remind these  X-  parties of the continuing applicability of our spectrum aggregation rules.x-Z9 {O"-ԍSee D, E, and F Block Report and Order at  94107. x We tentatively   conclude that a more liberal partitioning policy would allow spectrum to be used more efficiently," -0*%%ZZ"   speed service to underserved areas, and increase competition. Commenters are invited to discuss the merits of our proposal.  X- ?17. Under our current rules, only rural telcos are eligible to receive a partitioned license.   ZAs discussed above, we previously determined that our geographic partitioning scheme provides   sufficient means to ensure participation by rural telcos in the provision of broadband PCS. The   partitioning proposals we make here would apply to rural telcos as well as other parties seeking   partitioned licenses. We therefore solicit comment on whether liberalizing the geographic   =partitioning rules would lessen rural telcos' ability to participate in the provision of broadband   PCS. We observe that rural telcos have an advantage in constructing a PCS system within their   service areas. We note that rural telcos can build upon their existing infrastructure to rapidly   deploy PCS, and thus are more likely to be interested in providing PCS to rural areas. To the   0extent that other entities may also be interested in bringing service to underserved rural   communities, we tentatively conclude that our rules should facilitate competition in these areas. We solicit comment on these tentative conclusions.  X-X 2. Available License Area, Timing, and Financial Obligations (#  Xb- "18. We propose that any partitioning of broadband licenses be required to be along   county lines in the same manner that rural telcos must partition along county lines under our   current rules. We tentatively conclude that requiring partitioning of licenses to be along county   jlines would reduce the administrative burden on the Commission and minimize our interference   coordination concerns. For example, the Commission has traditionally established market areas   (including MTAs and BTAs) along county lines and has developed its licensing database to   accommodate those kinds of market designations. Commenters are invited to address the merits   of our proposal, and whether other geopolitical boundaries may be appropriate. Where a service   Marea does not naturally fall along county lines, parties would be free to seek a waiver of our proposed requirement. We solicit comment on the appropriate criteria for such waivers.  Xe-` `  a. Nonentrepreneur block licensees   X7- 19. As discussed above, we believe that there may be significant advantages in   broadening our partitioning rules to permit A, B, D, and E block broadband PCS licensees to   partition a portion of their license area to any qualifying entity at any time after receiving a   license. We therefore propose that all licensees in the A, B, D, and E blocks be permitted at any   time to partition their license area along county lines. We tentatively conclude that our proposal   zwould advance the public interest by affording licensees greater flexibility. Commenters are   ?invited to discuss whether the Commission should impose any limitations on the size of geographic area that these nonentrepreneur block licensees would be allowed to partition."" -0*%%ZZf!"Ԍ X-ř` `  b. Licensees with competitive bidding benefits  X- 20. Small businesses face certain barriers to entry into the broadband PCS market that   -changes in our partitioning rules may address. Providing licensees with the flexibility to partition   ?their geographic service areas would create smaller areas that could be licensed to small   businesses, including those entities which may not have had the resources to participate   successfully in spectrum auctions. We recognize as well that partitioning may provide a funding   source that would enable licensees to buildout their systems and provide the latest in   Ztechnological enhancements to the public. The changes in the partitioning rules we propose here   thus implement in part the requirement of Section 257 of the Telecommunications Act of 1996,   in that we identify the financial factors discussed above as barriers to market entry and propose   =to eliminate them through changes in our regulations governing partitioning. We must remain   Mvigilant, however, against unjust enrichment as we provide opportunities to a wide array of   entities for the provision of PCS. We believe that we must ensure that licensees that have   benefitted from special bidding provisions are not permitted to become unjustly enriched by   immediately partitioning a portion of their license area to parties that do not qualify for such benefits.  Xb- n21. Frequency blocks C and F are designated as entrepreneurs' blocks to promote   economic opportunities for a wide variety of applicants including small businesses, rural telcos,   and businesses owned by members of minority groups and women as required by Section  X-  309(j)(4)(C)(ii) of the Communications Act..9 {O-ԍCompetitive Bidding Fifth Report and Order, 9 FCC Rcd at 558788,  127. We propose that an entrepreneur block licensee   Lbe permitted to partition at any time to other parties that would be eligible for licenses in those  X-  blocks, (i.e., to an entity that either holds other entrepreneur block licenses and thus at the time   Mof auction satisfied the entrepreneur block criteria, or that satisfies the criteria at the time of   Lpartitioning.) We believe that allowing entrepreneurs and small businesses to partition and/or   disaggregate their licenses to other qualified entrepreneurs and small businesses will help attain   the Congressional objective of ensuring that entrepreneurs and small businesses have an opportunity to participate in PCS.  XP- 22. We seek comment on the treatment of installment plan payments for winning auction   bids owed by partitioning licensees. For example, should an entrepreneur block licensee who  X"-  partitions to another entrepreneur be required to repay, on an accelerated basis, a portion of the   joutstanding principal balance owed under an installment payment plan? We seek comment on   how this should be calculated. If we decide not to require payment of some amount of the   -outstanding principal balance for an entrepreneur block license as a condition for approval of the   partitioning application, what other alternative conditions could we impose to ensure that the   partitioning licensee continues to meet its financial obligation to the United States government?"! Z.0*%%ZZ "   kWe seek comment on whether the partitionee should be required to guarantee payment of a portion of the partitioner's obligation.  X- 23. We tentatively conclude that we should apply some form of unjust enrichment   requirements to a partitioning licensee that has received bidding credits or is paying its winning   auction bid through installment plan payments when the partitionee qualifies as an entrepreneur,  Xv-  but would receive less favorable installment plan payments./v9 {O-ԍSee, e.g., Competitive Bidding Fifth Report and Order, 9 FCC Rcd at 5591, 5594,  134, 141. We seek comment on whether the   unjust enrichment requirements in this case should be on a proportional basis, and how such payments should be calculated.  X - 24. We further propose to apply our current fiveyear restriction against complete license   transfers to prohibit partitioning and/or disaggregation by an entrepreneur block licensee to a non X -  entrepreneur during the first five years of the license period.T0 Z9 {O-ԍSee 47 C.F.R.  24.839(d).T This holding requirement was   established to ensure that entrepreneurs did not take advantage of special entrepreneur block  X -  provisions by immediately transferring control of licenses to nonentrepreneurs.1 9 {O[- ԍCompetitive Bidding Fifth Report and Order, 9 FCC Rcd at 558889,  128129; D, E, and F Block Report  {O%-and Order at  84. We believe that   applying this holding period to partitioning and disaggregation will ensure our objective that   entrepreneurs and small businesses continue to participate as PCS licensees for substantial periods   of time, and through that participation obtain experience and profits that will enable their long term participation in communications industries.  X4- @25. We tentatively conclude that after the fiveyear holding period we should apply   /unjust enrichment payments as a condition for approval of an application for a partitioning   transfer of an entrepreneur block license to a nonentrepreneur. These unjust enrichment   provisions would include accelerated payment of bidding credits, unpaid principal, and accrued   unpaid interest, and would be applied on a proportional basis. We seek comment on how such   unjust enrichment amounts should be calculated, especially in light of the difficulty of devising   a methodology or formula that will differentiate the relative market value of the opportunities to   provide service to various partitioned areas within a geographic or market area. We seek   comment on whether we should consider the price paid by the partitionee in determining the percentage of the outstanding principle balance to be repaid.  X7- 26. We seek comment on what the respective obligations of the participants in a   partitioning transfer should be, and whether each party should be required to guarantee all or a   0portion of the partitionee's original auctionsrelated obligation in the event of default or" H10*%%ZZ["   bankruptcy by any of the parties to the partitioning transfer. We seek comment on whether the   ypartitioner (the original licensee) should have a continuing obligation with respect to the entire   kinitial geographic area. Alternatively, should the parties have available a choice of options,   ranging, for example, from an accelerated payment based on purchase price to a guarantee for   Za larger payment by one party in the event another party defaults? Parties are invited to comment   on whether the partitioning parties should be able to determine which party has a continuing obligation with respect to the original licensed area.  XH- 27. We tentatively conclude that our proposals to permit partitioning in the manner   <described above would allow broadband PCS spectrum to be used most efficiently, speed service   to unserved or underserved areas, and facilitate competition. Our proposal to permit partitioning   by entrepreneur block licensees, including small businesses, to similarly qualified parties also   jwould ensure that these entities retain a significant presence in the market, consistent with our  X -  objectives in establishing eligibility for these blocks.2 9 {ON-ԍCompetitive Bidding Fifth Report and Order, 9 FCC Rcd at 55735579,  97110. Moreover, we tentatively conclude that   -our proposal to relax the partitioning provisions may help small business licensees compete more   effectively in the areas they retain and assist in the elimination of entry barriers to the PCS   market. We observe, for example, that these entities may apply any revenues gained from   partitioning towards the cost of constructing their systems and marketing their service. We solicit comment on this analysis of the intended effects of our proposals.  X4-X 3. License Term (#  X- 28. Under our rules, a broadband PCS licensee is authorized to provide service for ten  X-  .years from the date of initial license grant.F3Z9 yO-ԍ47 C.F.R.  24.15.F A licensee may submit an application to renew its   license for an additional license term, and is afforded a renewal expectancy if it can demonstrate   >that it has provided "substantial" service during its past license term and has substantially  X-  @complied with applicable Commission rules, policies, and the Communications Act.H49 yOE-ԍ47 C.F.R.  24.16. H   "Substantial" service has been defined as service which is "sound, favorable, and substantially  X|-above a level of mediocre service which might just minimally warrant renewal.":5|z9 {O -ԍId.:  XN- 29. We propose that a partitionee be authorized to hold its license for the remainder of   the partitioner's original tenyear license term. We tentatively conclude that this approach is   appropriate because a licensee, through partitioning, should not be able to confer greater rights"  50*%%ZZ"   than it was awarded under the terms of its license grant. Moreover, we tentatively conclude that   this approach would be the simplest to administer. We also observe that this approach is similar  X-  to the partitioning provisions we recently adopted for MDS69 {OK-ԍMDS Report and Order, 10 FCC Rcd at 9614,  46; 47 C.F.R.  21.931. as well as the existing broadband   [PCS partitioning provisions for rural telcos. In addition, this proposal is consistent with other   licensing rules applicable to commercial mobile radio services (CMRS) for the license term of   a transferee or assignee of a license for a complete service area for paging, narrowband PCS, and  Xv-broadband PCS. 7 vZ9 yO - /ԍWe note, however, that in the cellular context, the partitioned license term runs anew from the date the   transfer request is granted. Also, historically, in the SMR, PCP (private carrier paging) and business radio services,   and services at 220 MHz, an assignee or transferee may hold the license for the remainder of the original license term or the term may begin from the date the transfer or assignment is granted.  We solicit comment on this tentative conclusion.  XH- 30. We also propose that a partitionee be afforded the same renewal expectancy as an  X1-  MTA or BTA licensee.P81B9 {O$-ԍSee 47 C.F.R.  24.16.P Specifically, a partitionee would be granted a preference at a   comparative renewal proceeding if it can demonstrate that it has provided "substantial" service   during its past license term and has substantially complied with applicable Commission rules,  X -  =policies and the Communications Act.:9 9 {Oq-ԍId.: We observe that this approach is consistent with our proposed construction requirements, discussed below. We invite comment on this proposal.  X -X 4. Construction Requirements (#  Xy- 31. In the Broadband PCS Memorandum Opinion and Order, we found that broadband   PCS would likely be a highly competitive service and that licensees would have incentives to  XM-  construct facilities to meet the service demands in their licensed areas.:Mf 9 {Od-ԍBroadband PCS Memorandum Opinion and Order, 9 FCC Rcd at 5018,  154. Nevertheless, we   imposed minimum construction requirements to expedite service to the public and promote  X-  .efficient use of the spectrum.:; 9 {O-ԍId.: Specifically, the Commission required 30 MHz broadband PCS   zlicensees to construct facilities that provide coverage to onethird of the population of their   yservice area within five years of the initial license grant and twothirds of the population within  X-  ten years.d< 9 {O$-ԍId. at 5018,  155; 47 C.F.R.  24.203.d Ten MHz licensees are required to provide coverage to onefourth of the service"<0*%%ZZ"   area's population within five years or, alternatively, they may submit a showing to the  X-Commission demonstrating that they are providing "substantial" service.=9 {Ob-ԍBroadband PCS Memorandum Opinion and Order, 9 FCC Rcd at 5018,  155.  X- 32. As discussed above, when we originally declined to allow general partitioning by   broadband PCS licensees, we were concerned that licensees might use partitioning as a means to  X-  circumvent our construction requirements.Q>Z9 {O-ԍSee id. at 4990,  83. Q We tentatively conclude that to avoid this result both   the partitioner and partitionee should be subject to coverage requirements that ensure that both   portions of a partitioned licensing area will receive service. Our proposal would facilitate   partitioning by offering a choice between two different buildout options, which could be   negotiated between the partitioner and partitionee. Applicants would then select in their assignment and transfer applications the construction option they would be obligated to meet.   X - ` 33. Under the first option, a partitionee would be obligated to satisfy the same   construction requirements as the original licensee within its partitioned area, regardless of when   it acquired the partitioned license. A partitionee of a 30 MHz broadband PCS license, for   example, would be obligated to provide service to at least onethird of the population in its   partitioned license area within five years of the underlying license term and twothirds of the   =population in its partitioned license area by the end of the tenyear license term. A partitionee   of a 10 MHz broadband PCS license would have to provide service to at least onequarter of the   =population in its partitioned licensed area or make a showing of substantial service at the five  year benchmark. We observe that this approach is consistent with our present construction  X-requirements for rural telcos.J?9 yO-ԍ47 C.F.R.  24.714(e).J Commenters are invited to discuss the merits of this option.  X- !34. As a second option, we propose more modest buildout requirements for a partitioned   jarea where the original licensee has met its fiveyear buildout requirements and certifies that it   zwill meet the tenyear coverage requirements for its entire license area. Because the original   zlicensee maintains its original coverage commitment with respect to the entire licensing area   <under this option, we believe the partitionee should be subject to a relaxed buildout requirement.   Specifically, we propose that partitionees must only satisfy the substantial service requirement for   [renewal expectancy for its partitioned area by the end of the original tenyear license term. For   [example: an A Block licensee who meets its fiveyear buildout requirements within three years   after receiving its license, may, in its partitioning application, certify that it will meet the tenyear   kcoverage requirement for its original license. In this scenario, the partitionee would only be   .required to meet the substantial service requirement for its partitioned area at the end of the A Block licensee's original tenyear license term."|?0*%%ZZ<"Ԍ X- ԙ"35. We tentatively conclude that establishing flexible buildout requirements would   Lencourage partitioning to entities that have a sincere interest in providing broadband PCS and   would thereby expedite the provision of service to areas that otherwise may not receive it as   Kquickly. We also observe that this option may facilitate partitioning agreements, especially in the   klatter portion of a license term, by acknowledging licensees' efforts to bring broadband PCS   service to their licensed areas. We solicit comment on this buildout proposal. Commenters are   Lalso invited to address what buildout requirements should apply where a licensee partitions a portion of its license area after the initial tenyear license term has expired.  X1- vB. Disaggregation   X - 1. Timing of Disaggregation   X - }#36. Section 24.229(d) permits a broadband PCS licensee who has met the fiveyear  X -  construction requirement to assign portions of its licensed PCS spectrum after January 1,v 2000.J@ 9 yO7-ԍ47 C.F.R.  24.229(d).J  X -  In the Broadband PCS Memorandum Opinion and Order, we stated that allowing immediate   ?disaggregation of spectrum before that time may impede competition in the provision of  X{-  broadband PCS.~A{X9 {O-ԍBroadband PCS Memorandum Opinion and Order, 9 FCC Rcd at 4985,  69.~ We also concluded that we should give the market an opportunity to develop  Xd-before permitting licensees to disaggregate a portion of their spectrum.:Bd9 {O-ԍId.:  X6- $37. We now believe that these decisions may no longer be warranted. To the extent that   disaggregation would enable other entities to provide broadband PCS service within geographic   market areas, we tentatively conclude that our rules should facilitate rather than impede entry by   new competitors. In addition, we tentatively conclude that our current prohibitions on   disaggregation may constitute a barrier to market entry for small businesses which may lack the   resources to participate successfully in auctions for 30 MHz and 10 MHz broadband PCS   spectrum blocks. In furtherance of the mandate prescribed by Section 257 of the   Telecommunications Act of 1996, we propose to eliminate such market entry barriers by making   ychanges in our disaggregation rules as discussed below. We seek comment on these tentative conclusions.  X9- _%38. We propose to allow spectrum disaggregation prior to January 1, 2000, and to   eliminate the condition that the licensee must satisfy our fiveyear buildout requirements before   disaggregating. We invite comment on whether to retain our fiveyear buildout requirement   before allowing disaggregation. Commenters should discuss whether our goals of elimination of"|B0*%%ZZ<"   market entry barriers, efficient spectrum use, expedited access to broadband PCS service, and   .competition would be better served by eliminating this restriction. Specifically, we propose to   \allow nonentrepreneurs to disaggregate to other qualified entities at any time, and to allow   entrepreneurs to disaggregate to other qualified entrepreneurs at any time, but entrepreneurs   would be restricted from disaggregating spectrum to nonentrepreneurs until after the fiveyear   Mholding period. Commenters should discuss whether any alternate restrictions on allowing disaggregation may be appropriate.  XH-X 2. Amount of Spectrum to Disaggregate (#  X - P&39. In our Broadband PCS Memorandum Opinion and Order, we established six  X -  jfrequency blocks of spectrum for licensed broadband PCS.C 9 {O~ -ԍId. at 4970,  26. An additional 20 MHz of spectrum is allocated for unlicensed PCS services. Id.ģ Three of the blocks (A, B, and C)   ]each have 30 MHz of spectrum, while the remaining blocks (D, E, and F) have 10 MHz of  X -  spectrum each.:D Z9 {O-ԍId.: We determined that our broadband PCS spectrum allocation plan would   facilitate the rapid deployment of broadband PCS and enable broadband PCS licensees to compete  X -  fully with other commercial mobile radio services.LE 9 {OF-ԍId. at 4981,  58.L We determined that 30 MHz blocks of   kspectrum would facilitate competition and the rapid development and implementation of the   fullest range of PCS services and ensure that PCS is more fully competitive with other mobile  Xd-  -radio services.;Fd~9 {O-ԍId. ; In addition, we observed that 10 MHz licensees may be able to provide services   ranging from specialized, "niche" applications to services comparable to those now provided by   Kcellular systems, through the use of advanced digital techniques, such as Code Division Multiple  X-  Access (CDMA) and Time Division Multiple Access (TDMA), and micro-cellular technology.LG9 {O-ԍId. at 4981,  60.L   We also concluded that 10 MHz blocks, on their own and in combination with other 10 and 30   MHz blocks, may support a variety of PCS services and could allow cellular licensees, who have   limited eligibility for PCS participation within their cellular service areas, to obtain a PCS license  X-and have the ability to possibly augment their cellular service in this manner.;H9 {O!-ԍId. ;  X- {'40. Personal communications requirements are changing rapidly as our society becomes   more mobile and the demand for near instantaneous communications and universal access"~4 H0*%%ZZP"  X-  increases.!I9 yOy- ԍAmendment of the Commission's Rules to Establish New Personal Communications Services, GEN Docket  {OA-No. 90314, Notice of Proposed Rulemaking and Tentative Decision, 7 FCC Rcd 5676, 5687,  25 (1992). ! We believe that PCS will provide competition to existing mobile services, including   cellular, paging and SMR. As originally envisioned, PCS services and devices would include   advanced forms of cellular telephone service, advanced digital cordless telephone service, portable   facsimile services, wireless PBX services, and wireless local area network (LAN) services, among  X-others.|J"9 {Ow-ԍBroadband PCS Second Report and Order, 8 FCC Rcd at 7712,  22. |  Xv- m(41. Because our current rules simply defer any disaggregation to the year 2000 at the   earliest, they do not address the issue of the amount of spectrum which a licensee may  XH-  disaggregate.QKH9 {O -ԍSee 47 C.F.R.  24.229.Q We seek comment on and proposals for the amount of spectrum that a licensee  X1-  should be required to retain if we allow disaggregation on a more expedited basis.L1F9 yO(- [ԍWe note that the licensee receiving the disaggregated spectrum would still have to comply with our spectrum aggregation rules. We seek   comment generally concerning whether some restriction or limit should be placed on the amount of spectrum a licensee may disaggregate or the timing of such disaggregation.  X - {)42. We propose that licensees disaggregate frequencies in accordance with the pairings  X -  yspecified in our rules.OM 9 yO -ԍ47 C.F.R.  24.229(a), (b).O We also tentatively conclude that some grouping of frequency pairs is   preferable for administrative purposes, otherwise the database necessary to track authorizations   could become too cumbersome and complex and processing could be delayed or prone to error.   iWe tentatively conclude that for these purposes, we will not permit disaggregation for broadband   }PCS in blocks smaller than a 1 MHz block of paired frequencies, thus requiring the  XK-  disaggregating licensee to retain a minimum of 1 MHz.NK. 9 yO*-ԍAn application for assignment or transfer would be needed to dispose of the last 1 MHz of spectrum. We seek comment on this tentative   yconclusion. We request that commenters suggesting alternative approaches provide technical justifications and other relevant support in responding to this issue.  X- 1*43. We seek comment on whether we should require broadband PCS licensees to be   licensed for more than a minimum of 1 MHz to provide broadband PCS services as originally  X-  jenvisioned in the Broadband PCS Second Report and Order. We note that the description of   Kpotential broadband PCS services differentiates broadband from narrowband services and served" N0*%%ZZ"  X-  =in part as a justification for the spectrum size of the broadband PCS license blocks.O9 {Oy- kԍSee Broadband PCS Second Report and Order, 8 FCC Rcd at 7726,  58 (10 MHz is sufficient for viable operation of many forms of PCS services). We seek   comment on whether and how we should clarify or modify our description of broadband PCS for   purposes of defining a minimum amount of spectrum to provide such services. We also request   Mcomment on what amount is the minimum amount of spectrum which a disaggregatee could   ]utilize for the provision of broadband type services. We seek comment generally on the   ^relevance of the distinction between broadband and narrowband for purposes of our disaggregation rules.  XH- +44. We believe that our rules relating to spectrum caps may have some impact on our   decision making on disaggregation. Our present spectrum cap rules limit PCS licensees to 45  X -  MHz of aggregated spectrum in PCS, cellular, or SMR.P "9 {O - ԍD, E, and F Block Report and Order at  94 (maintaining the 45 MHz CMRS spectrum cap and eliminating the 35 MHz cellular/PCS spectrum cap and the 40 MHz PCS spectrum cap). The 45 MHz cap was meant as a   Mminimally intrusive means of ensuring that the mobile communications marketplace remains  X -competitive and retains incentives for efficiency and innovation.qQ |9 {O-ԍCMRS Third Report and Order, 9 FCC Rcd at 8100,  238. q  X - ,45. We tentatively conclude that elimination of our current prohibitions on broadband   PCS disaggregation would be consistent with our recent elimination of the cellular/PCS cross  .ownership rule and the 40 MHz PCS spectrum cap and retention of 45 MHz cap, because such   actions would facilitate market transfers of spectrum among cellular and PCS licensees while   maintaining a provision to ensure a diversity of service providers. We request comment on this   tentative conclusion and generally on the impact of the present 45 MHz spectrum cap upon our proposals.   X-X 3. Matters Relating to Entrepreneur Block Licensees (#   X- -46. In light of our discussion above about the benefits that licensee flexibility to   disaggregate can provide, we now propose to allow all entrepreneur block licensees to   disaggregate to similarly qualifying parties at any time without restriction, and to parties not   eligible for entrepreneur block licenses after a fiveyear holding period. We tentatively conclude   <that if we permit an entrepreneur block licensee to disaggregate to a nonentrepreneur entity after   [the fiveyear holding period, the disaggregating entrepreneur block licensee will be required to   repay the unjust enrichment provisions on a proportional basis. These unjust enrichment   provisions would include accelerated payment of bidding credits, unpaid principal, and accrued   unpaid interest, and would be applied on a proportional basis. We seek comment on how such" Q0*%%ZZz"   kunjust enrichment amounts should be calculated. We seek comment on whether we should   ]consider the price paid by the disaggregating party in determining the percentage of the outstanding principle balance to be repaid.  X- .47. We seek comment on what the respective obligations of the participants in a   disaggregation transfer should be, and whether each party should be required to guarantee all or   a portion of the disaggregatee's original auctionsrelated obligation in the event of default or   bankruptcy by any of the parties to the disaggregation transfer. We seek comment on whether   the disaggregator (the original licensee) should have a continuing obligation with respect to the   Kentire initial license. Alternatively, should the parties have available a choice of options, ranging,   for example, from an accelerated payment based on purchase price to a guarantee for a larger   payment by one party in the event another party defaults? Parties are invited to comment on   whether the disaggregating parties should be able to determine which party has a continuing obligation with respect to the original licensed area.  X - /48. We tentatively conclude that if we permit an entrepreneur block licensee to   >disaggregate to an entrepreneur that would not qualify for the same level of benefits as the   disaggregating licensee, the disaggregating entrepreneur block licensee will be required to repay   a portion of the unjust enrichment provisions as they apply to a full assignment of a license. We   seek comment on whether this should be a proportional amount of its bidding credits, unpaid   principal, and accrued unpaid interest to the U.S. Treasury, and how the amounts should be   calculated. Finally, we seek comment on what provisions, if any, we should adopt to address the   =situation of an entrepreneur block licensee's disaggregation followed by default in payment of a winning bid at auction.  X- 049. We seek comment on whether we should have different requirements for entrepreneur   block licensees and for nonentrepreneur block licensees regarding the amounts of spectrum which a licensee must retain or may disaggregate, and on what those requirements should be.  Xe-X 4. Construction Requirements (#   X7- 150. As discussed above, we require broadband PCS licensees to satisfy certain   =construction requirements. Specifically, our rules require 30 MHz broadband PCS licensees to   construct facilities that provide coverage to onethird of the population of their service area within  X-  five years of the initial license grant and twothirds of the population within ten years.R9 {Ok!-ԍ47 C.F.R.  24.203(a); Broadband PCS Memorandum Opinion and Order, 9 FCC Rcd at 501819,  155. Ten   MHz licensees are required to construct facilities that provide coverage to onefourth of the"ZR0*%%ZZ"   service area's population within five years or, alternatively, they may submit a showing to the  X-Commission demonstrating that they are providing "substantial" service.S9 {Ob-ԍ47 C.F.R.  24.203; Broadband PCS Memorandum Opinion and Order, 9 FCC Rcd at 501819,  155.   X- !251. To address the concerns raised in the Broadband PCS Memorandum Opinion and  X-  Order about anticompetitive incentives to disaggregate and engage in spectrum warehousing, we   xpropose two construction buildout options to apply to entities receiving disaggregated spectrum   that do not already possess a broadband PCS license in the same geographic service area. Such   japplicants seeking to receive disaggregated spectrum would select the construction option for   which they would be obligated to meet in their assignment and transfer applications. As   discussed below, we tentatively conclude that our proposal would prevent licensees from warehousing spectrum and would enable new entrants to provide service.  X - 352. Similar to our partitioning proposal, under the first option, a disaggregatee entering   the geographic market would be obligated to satisfy the same construction requirements as the   licensee, regardless of when it acquired the disaggregated spectrum. For example, an entity that   jacquires spectrum from a 30 MHz broadband PCS licensee (an A, B, or C block licensee) would   <be obligated to provide service to at least onethird of the population in the MTA or BTA license   Marea within five years of the underlying license term and twothirds of the population in the   license area by the end of the tenyear license term. An entity that acquires spectrum from a 10   MHz broadband PCS licensee (a D, E, or F block licensee) would have to provide adequate   service to at least onequarter of the population in the BTA license area or make a showing of   xsubstantial service at the fiveyear benchmark. We tentatively conclude that this approach would   prevent spectrum warehousing and ensure expedited access to broadband PCS services. Commenters are invited to discuss the merits of this option.  X- o453. As a second option, we propose a modified buildout requirement after the   disaggregating licensee has met its fiveyear buildout requirement and certifies that it will meet   ithe tenyear construction requirement by the end of its license term. Specifically, we propose that   a disaggregatee must only satisfy our fiveyear buildout requirements for the license area by the   end of the original tenyear license term. We tentatively conclude that this buildout option will   facilitate the rapid introduction of broadband PCS service and increase spectrum efficiency. We   <seek comment on this approach. Commenters are also invited to address whether these buildout   requirements should apply where a licensee disaggregates a portion of its spectrum after the initial tenyear license term has expired.  X- l554. We propose to require, as a precondition for approving a proposed disaggregation,   ycertifications from both the disaggregator and the disaggregatee that the time remaining before   the tenyear construction benchmarks is sufficient for the disaggregator and disaggregatee to meet"!ZS0*%%ZZ "   the pertinent construction benchmark for their respective licenses. This proposal would ensure   against delay in the buildout of PCS, and place all parties on notice that the construction   requirements must be considered during the negotiations. In addition, disaggregatees must file   maps and other supporting documents showing compliance with the construction requirements  X-within the appropriate fiveyear and tenyear bench marks of the date of their initial licenses.T9 {O-ԍSee 47 C.F.R.  24.203(c); Broadband PCS Memorandum Opinion and Order, 9 FCC Rcd at 5019,  156.   Xv- N655. If a licensee fails to meet the construction requirements, we propose that the license   Lof the disaggregator or disaggregatee revert back to the Commission without further action by   the Commission. This will ensure timely provision of service. In light of the fact that the   disaggregator and disaggregatee are each licensees, their prospective construction requirements   iare independent from each other and failure to satisfy one construction requirement will not affect the renewal of the other.  X - O756. For disaggregatees already possessing a broadband PCS license in a geographic   service area, we propose no new construction requirements, on the premise that these licensees   are already subject to coverage requirements under their existing licenses. We seek comment on   ythis proposal. We seek comment on the construction requirements, if any, that should apply to   other CMRS licensees receiving disaggregated broadband PCS spectrum, how we should   recognize the different licensing schemes and service areas in applying such requirements, and   -whether some specified amount of disaggregated spectrum should serve as a threshold to trigger coverage requirements.  X- 5. License Term   X- 857. We propose a similar license term for disaggregation as we have for partitioning, i.e.,   ythat a disaggregatee would be authorized to hold its license for the disaggregated spectrum for   \the remainder of the disaggregator's original tenyear license term. As with partitioning, we   believe this approach is appropriate because a licensee, through disaggregation, should not be able   to bestow greater rights than it was awarded under the terms of its license grant. We seek   comment, however, on whether administrative efficiency and convenience for licensees support   a limited exception to this general rule. Specifically, we seek comment on whether a licensee   kacquiring spectrum in the geographic area in which it is an existing broadband PCS licensee   ]should be allowed to apply its original license term to the newlyacquired spectrum. For   .example, should an F Block licensee obtaining spectrum from the A Block licensee in the same   market retain the F Block license term? In addition, we propose that a disaggregatee be afforded   the same renewal rights as an MTA or BTA licensee. A disaggregatee would be granted a   preference at a comparative renewal proceeding if it can demonstrate that it has provided   "substantial" service during its past license term and has substantially complied with applicable"!ZT0*%%ZZ "  X-  <Commission rules, policies, and the Communications Act.FU9 yOy-ԍ47 C.F.R.  24.16.F We invite comment on this proposal,   =and we solicit comment on how to apply this renewal standard in cases where a disaggregatee has acquired the disaggregated license near the end of the original license term. _  X-Z V. RELATED MATTERS ׃  Xv- A. Combination of Partitioning and Disaggregation    XH- !958. Should we adopt the proposals set forth above for partitioning and disaggregation,   broadband PCS licensees and other qualifying entities may desire to use in _combination our   partitioning and disaggregation rules to enter or increase their presence in a market or to expand   !or enhance service options. Our goal is to provide for a robust PCS service that is fully   Lcompetitive and spectrum efficient in order to ensure quality service to the public. We believe   that the proposals for partitioning and disaggregation we make here are consistent with those goals.  X- :59. We thus tentatively conclude that we should permit combinations of partitioning and   /disaggregation, subject to the rules we have proposed for each. We seek comment on this   proposed approach. Specifically, we invite comment on whether the benefits of allowing   /licensees to combine disaggregation and partitioning as described above outweigh factors   supporting continuation of our current rules. Finally, in those situations where the combination   -of partitioning and disaggregation is allowed under our proposed rules, we propose to implement   the rules proposed for partitioning in the event there is a conflict in the application of our rules.   We seek comment on where such conflicts might arise and generally on our overall approach to the combination of partitioning and disaggregation addressed herein.  X- B. Licensing   X|- ;60. For ease of administration and to lessen the burden on applicants by adopting new   yfiling requirements, we propose to follow existing partial assignment procedures for broadband   PCS licenses in reviewing requests for geographic partitioning, disaggregation, or a combination  X7-  of both.QV7X9 {O@ -ԍSee 47 C.F.R.  24.839.Q Thus, the licensee must file an FCC Form 490 that is signed by both the licensee and  X -  qualifying entity.WW 9 {O"-ԍSee 47 C.F.R.  24.839(b)(1).W The qualifying entity would also file an FCC Form 430 unless a current FCC   Form 430 is already on file with the Commission. An FCC Form 600 would be filed by the   qualifying entity to receive authorization to operate in the market area which is being partitioned"|W0*%%ZZ<"   or to modify an existing station of the qualifying entity to include the new/additional market area being partitioned. We seek comment on our proposed licensing rules.  X- N<61. Any requests for a partitioned license or disaggregated spectrum would contain the   >FCC Forms 490, 430, and 600 and be filed as one package under cover of the FCC Form 490.  X-  Parties are invited to comment on whether any additional procedures should be required.>X9 {O-ԍSee id.> A   =broadband PCS disaggregatee must file FCC Form 430 qualifying it as a common carrier unless   a current FCC Form 430 is already on file with the Commission. An FCC Form 600 should be   filed by the disaggregatee to receive authorization to operate in the market area which is covered   by the disaggregated spectrum or to modify an existing station of the disaggregatee to include the   ]new/additional spectrum being disaggregated. Any requests for a partitioned license or   [disaggregated spectrum should contain the FCC Forms 490, 430, and 600 as stated and be filed   .as one package under cover of the FCC Form 490. Parties are invited to comment whether any additional procedures should be required.  X - C. Technical and Microwave Relocation Rules   Xy- ]=62. In the Broadband PCS Second Report and Order, the Commission adopted minimal   technical standards to allow PCS to develop in the most rapid, economically feasible and diverse  XM-  manner._Y\MZ9 yOX- MԍAmendment of the Commission's Rules to Establish New Personal Communications Services, GN Docket  {O -  No. 90314, Second Report and Order, 8 FCC Rcd 7700, 775578,  135186 (1993) (Broadband PCS Second  {O-Report and Order). _ Specific technical standards were prescribed to the extent necessary to avoid harmful  X6-  interference.Z6~9 {Oe-ԍBroadband PCS Second Report and Order, 8 FCC Rcd at 775578,  135186. We also encouraged industry groups to consider ways of ensuring that PCS users,   service providers, and equipment manufacturers could incorporate roaming, interoperability and  X-other important features in the most efficient and least costly manner.M[9 {O-ԍId. at 7756,  138.M  X- N>63. We tentatively conclude that our current technical rules with respect to service area   boundary limits and protections, which provide for coordination and negotiation among licensees,   should be maintained and applied to partitioned license areas, which, as discussed above, would   divide along geopolitical boundaries. We seek comment on this tentative conclusion. We seek   comment on whether any modifications to our technical rules are needed to accommodate our   Lpartitioning and disaggregation proposals. Specifically, we seek comment on what changes, if any, are needed in our interference and other operational rules? "9[0*%%ZZ"Ԍ X- ?64. We recently adopted a plan for the sharing of costs for relocating fixed microwave  X-  facilities operating in the 2 GHz band allocated to broadband PCS.\Z9 yOb- \ԍAmendment of the Commission's Rules Regarding a Plan for Sharing the Costs of Microwave Relocation,  {O*-  WT Docket No. 95157, FCC 96196, First Report and Order and Further Notice of Proposed Rulemaking, __ FCC Rcd __, (released Apr. 30, 1996) (summarized in 61 Fed. Reg. 24470 (May 15, 1996)). Under this plan, later   lentrant PCS licensees will be required to pay reimbursement obligations when they have   benefitted from the spectrumclearing efforts of another party, according to a costsharing formula   that takes into account the amounts paid to relocate a particular microwave link and the number  X-  of PCS licensees that would have interfered with the link.\]9 {O( -ԍId. at  7177 and Appendix A.\ We tentatively conclude that a new   entrant PCS licensee who gains its license through partitioning or disaggregation should be treated   <as any other subsequent PCS licensee for purposes of the relocation costsharing plan, including   eligibility for installment plan payments if the transferee would be eligible for an installment plan  X1-  Kequivalent to that enjoyed by the transferring licensee,X^1|9 {O^-ԍSee id. at A22 A23 ( 43).X unless the reimbursement obligations to   >which they would be subject have already been paid by the transferring licensee. We seek comment on this approach.  X - D. Clearinghouse for Spectrum   X - !@65. From time to time, the Commission receives requests for limited or discrete amounts   of spectrum, sometimes for small geographic areas. We seek comment on whether establishing   >an electronic database to make more readily accessible the information in the Commission's   possession about licensed PCS spectrum would lower market entry barriers, consistent with the   mandate of Section 257 of the Telecommunications Act of 1996, or otherwise be in the public   interest. We request comment on how we can encourage the creation of private information   zclearinghouses on available spectrum, and what procedures could be utilized to assist small   businesses in obtaining available licenses or spectrum from licensees to meet very limited or   -defined telecommunications needs. We also seek comment on how the Commission can promote   =information clearinghouses or other market solutions so that the public can be informed about   spectrum availability in particular geographic areas or excess or available spectrum that could be disaggregated in minimum amounts.  X|-}/ VI. CONCLUSION ׃  XN- NA66. We believe that our partitioning and disaggregation proposals are consistent with a   procompetitive deregulatory national policy framework and will promote the rapid creation of   a competitive market to deliver broadband PCS services to the largest number of consumers. " ^0*%%ZZz"   These proposals are designed to meet the Congressional objectives of opening telecommunications   markets to competition, providing advanced technologies and services efficiently and quickly, and   identifying and eliminating market entry barriers for entrepreneurs and other small businesses in the provision and ownership of telecommunications services. a  X-. VII. PROCEDURAL MATTERS ׃  X_- A. Regulatory Flexibility Act   X1- B67. With respect to this Notice of Proposed Rulemaking, an Initial Regulatory Flexibility   LAnalysis is contained in Appendix A. As required by Section 603 of athe Regulatory Flexibility   MAct, the Commission has prepared an Initial Regulatory Flexibility Analysis of the expected   impact on small entities of the proposals suggested in this document. Written public comments   are requested on the Initial Regulatory Flexibility Analysis. In order to fulfill the mandate of the   Contract with America Advancement Act of 1996 regarding the Final Regulatory Flexibility   Analysis we ask a number of questions in our Initial Regulatory Flexibility Analysis regarding   the prevalence of small businesses in the broadband PCS industry. Comments on the Initial   Regulatory Flexibility Analysis must be filed in accordance with the same filing deadlines as  Xd-  =comments on the Notice of Proposed Rulemaking, but they must have a separate and distinct   heading designating them as responses to the Initial Regulatory Flexibility Analysis. The  X8-  ]Secretary shall send a copy of this Notice of Proposed Rulemaking, including the initial   Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business   [Administration in accordance with section 603(a) of the Regulatory Flexibility Act. Pub. L. No.  X-96354, 94 Stat. 1164, 5 U.S.C.  601 et seq. (1981).  X- B. Ex Parte RulesNonRestricted Proceeding   X- C68. This is a nonrestricted notice and comment rule making proceeding. Ex parte  X-  presentations are permitted except during the Sunshine Agenda period, provided they are  Xo-  disclosed as provided in Commission rules. See generally 47 C.F.R.  1.1201, 1.1203, and 1.1206(a).  X,- C. Comment Dates   X- 2D69. Pursuant to applicable procedures set forth in Sections 1.415 and 1.419 of the   kCommission's rules, 47 C.F.R.  1.415 and 1.419, interested parties may file comments on or   before 21 days after date of publication in the Federal Register, and reply comments on or before   36 days after date of publication in the Federal Register. To file formally in this proceeding, you   must file an original and four copies of all comments, reply comments, and supporting comments.   LIf you want each Commissioner to receive a personal copy of your comments, you must file an   original plus nine copies. You should send comments and reply comments to Office of the"t$^0*%%ZZ(#"   Secretary, Federal Communications Commission, Washington, D.C. 20554. Comments and reply   comments will be available for public inspection during regular business hours in the FCC   [Reference Center of the Federal Communications Commission, Room 239, 1919 M Street, N.W., Washington, D.C. 20554.  X- nE70. Written comments by the public on the proposed and/or modified information   ycollections are due 21 days after date of publication in the Federal Register. Written comments   must be submitted by the Office of Management and Budget (OMB) on the proposed and /or   modified information collections on or before 60 days after date of publication in the Federal   \Register. In addition to filing comments with the Secretary, a copy of any comments on the   information collections contained herein should be submitted to Dorothy Conway, Federal   MCommunications Commission, Room 234, 1919 M Street, N.W., Washington D.C. 20554, or   via the Internet to dconway@fcc.gov and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 17th Street, N.W., Washington D.C. 20503 or via the Internet to fain_t@al.eop.gov.  X - D. Initial Paperwork Reduction Act of 1995 Analysis   Xy- #F71. This Notice of Proposed Rulemaking contains either a proposed or modified   [information collection. As part of its continuing effort to reduce paperwork burdens, we invite   the general public and the Office of Management and Budget (OMB) to take this opportunity to  X6-  comment on the information collections contained in this Notice of Proposed Rulemaking, as   required by the Paperwork Reduction Act of 1995, Pub. L. No. 10413. Public and agency  X -  comments are due at the same time as other comments on this Notice of Proposed Rulemaking;  X-  NOMB comments are due 60 days after the date of publication of this Notice of Proposed  X-  /Rulemaking in the Federal Register. Comments should address: (a) whether the proposed   Ncollection of information is necessary for the proper performance of the functions of the   Commission, including whether the information shall have practical utility; (b) the accuracy of   the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the   information collected; and (d) ways to minimize the burden of the collection of information on   ]the respondents, including the use of automated collection techniques or other forms of information technology.  X*- E. Ordering Clause   X- kG72. Authority for issuance of this Notice of Proposed Rulemaking is contained 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). "!^0*%%ZZ "Ԍ X- F. Further Information   X- H73. For further information concerning this proceeding, contact David Nall or Mika Savir at (202) 4180620 (Commercial Wireless Division, Wireless Telecommunications Bureau). ` `  hh,FEDERAL COMMUNICATIONS COMMISSION ` `  hh,William F. Caton ` `  hh,Acting Secretary  X - ` ` l ă" ^0*%%ZZ "  X- AAPPENDIX A ă  X- INITIAL REGULATORY FLEXIBILITY ANALYSIS ă  X- Regulatory Flexibility Act ă   2As required by Section 603 of the Regulatory Flexibility Act, the Commission has   prepared an Initial Regulatory Flexibility Analysis (IRFA) of the expected impact on small  X_-  entities of the policies and rules proposed in this Notice of Proposed Rulemaking. Written public   Lcomments are requested on the IRFA. Comments must be identified as responses to the IRFA  X3-  and must be filed by the deadlines for comments on the Notice of Proposed Rulemaking provided above in section VII(C).  X - 0 Reason for Action: This rulemaking proceeding was initiated to secure comment on   proposals to modify our broadband PCS rules to permit partitioning and disaggregation for all  X -  >Part 24 licensees. The proposals advanced in the Notice of Proposed Rulemaking are also   designed to implement Congress' goal of giving small businesses the opportunity to participate in the provision of spectrumbased services in accordance with 47 U.S.C.  309(j)(4)(D).  XQ-  Objectives: The Commission proposes changes to its rules for broadband PCS that are   intended to facilitate the efficient use of broadband PCS spectrum, increase competition, and   expedite the provision of broadband PCS service to areas that may not otherwise receive   broadband PCS or other wireless services in the near term. These proposals seek to increase the   level of small business participation in the provision of broadband PCS. The Commission   proposes to allow broadband PCS licensees in the nonentrepreneurs' blocks to partition any   iportion of their geographic license area to entities that are eligible to be broadband PCS licensees.   <The Commission further proposes to allow entrepreneurs' block licensees to partition any portion   >of their licensed geographic area to entities that qualify as entrepreneurs and are otherwise   eligible to be broadband PCS licensees. Additionally, the Commission proposes to eliminate the   January 1, 2000 benchmark for disaggregation, and allow disaggregation any time after the   broadband PCS licensee meets the fiveyear buildout requirement. Specifically, the Commission   proposes to allow broadband PCS licensees in the nonentrepreneurs' blocks to disaggregate   spectrum to entities that are eligible to be broadband PCS licensees. The Commission proposes   to allow entrepreneurs' block licensees to disaggregate to another entrepreneur, otherwise   =qualified to be a broadband PCS licensee. Additionally, the Commission proposes to establish   license terms that permit partitionees to hold partitioned licenses and disaggregatees to hold   disaggregated spectrum for the remaining duration of the original tenyear license term. The   Commission also proposes to establish construction requirements to ensure expedient access to   broadband PCS service in partitioned areas to ensure coverage and increase spectrum efficiency.   Finally, the Commission proposes to allow licensees to combine partitioning and disaggregation under limited circumstances."n$^0*%%ZZ(#"Ԍ X- ԙ Legal Basis: The proposed action is authorized under 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), as amended.  X- = Reporting, Recordkeeping, and Other Compliance Requirements: The proposals  X-  under consideration in this Notice of Proposed Rulemaking include the possibility of imposing   reporting and recordkeeping requirements for small businesses seeking licenses through the   proposed partitioning and disaggregation rules. The information requirements would be used to   determine if the licensee is a qualifying entity to obtain a partitioned license or disaggregated   spectrum. This information will be a onetime filing by any applicant requesting such a license.   The information will be submitted on the FCC Forms 490 (or 430 and/or 600 filed as one   package under cover of the Form 490) which are currently in use and have already received OMB   clearance. We estimate that the average burden on the applicant is three hours for the   information necessary to complete these forms. We estimate that 75 percent of the respondents   y(which may include small businesses) will contract out the burden of responding. We estimate   that it will take approximately 30 minutes to coordinate information with those contractors. The   \remaining 25 percent of respondents (which may include small businesses) are estimated to   employ inhouse staff to provide the information. Applicants (including small businesses) filing   kthe package under cover of FCC Form 490 electronically will incur a $2.30 per minute online   charge. Online time would amount to no more than 30 minutes. We estimate that 75 percent   {of the applicants may file electronically. We estimate that applicants contracting out the   ?information would use an attorney or engineer (average of $200 per hour) to prepare the information.  X- Federal Rules Which Overlap, Duplicate or Conflict With These Rules: None.  X-  Description, Potential Impact, and Number of Small Entities Involved: The rule   Lchanges proposed in this proceeding will affect all small businesses which avail themselves of   jthese rule changes, including small businesses currently holding broadband PCS licenses who   -choose to partition and/or disaggregate, and small businesses who may acquire licenses through   partitioning and/or disaggregation. The Commission is required to estimate in its Final   Regulatory Flexibility Analysis the number of small entities to which a rule will apply, provide   La description of such entities, and assess the impact of the rule on such entities. To assist the   Commission in this analysis, commenters are requested to provide information regarding how   many total broadband PCS entities, existing and potential, would be affected by the proposed  X -  /rules in the Notice of Proposed Rulemaking. In particular, we seek estimates of how many   Mbroadband PCS entities, existing and potential, will be considered small businesses. "Small   business" is defined as a firm that has revenues of less than $40 million in each of the last three   calendar years. This definition was used in the PCS CBlock auction and approved by the Small"# ^0*%%ZZG""  X-  Business Administration. _9 {Oy- ԍSee Implementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket No.  {OC-93253, Fifth Report and Order, 9 FCC Rcd 5532, 5608,  175 (1994).  We seek comment as to whether this definition is appropriate in this   Zcontext. Additionally, we request each commenter to identify whether it is a small business under   this definition. If the commenter is a subsidiary of another entity, this information should be provided for both the subsidiary and the parent corporation or entity.  The broadband PCS spectrum is divided into six frequency blocks designated A through   F. The Commission has auctioned broadband PCS licenses in blocks A, B, and C. We do not   have sufficient information to determine whether any small businesses within the SBAapproved   definition bid successfully for licenses A or B block auctions. There were 89 winning bidders   that qualified as small businesses in the C block PCS auctions. Based on this information, we   conclude that the number of broadband PCS licensees affected by the rules proposed in this  X -  Notice of Proposed Rulemaking includes the 89 winning bidders that qualified as small entities in the block C broadband PCS auction.  We estimate up to 10,370 PCS licensees or potential licensees could take the opportunity   ]to partition and/or disaggregate a license or obtain a license through partitioning and/or   disaggregation. This estimate is based on the total number broadband PCS licenses auctioned and   Lsubject to auction, 2,074, and our estimate that each license would probably not be partitioned   and/or disaggregated to more than five parties. We note that the A and B blocks each consist of   51 MTA licenses (a total of 102 licenses) and the C, D, E, and F blocks each consist of 493 BTA  X6-  ]licenses (a total of 1,972 licenses).`6$9 {O - =ԍRand McNally organizes the 50 states and the District of Columbia into 47 MTAs and 487 BTAs. See Rand  {O-  hMcNally, Inc., Commercial Atlas & Marketing Guide, 123rd Edition, pp. 3839 (1992). For PCS licensing purposes   the Commission separated Alaska from the Seattle MTA and added five insular areas: Puerto Rico, U.S. Virgin  {Og-  Islands, Guam, Northern Mariana Islands, and American Samoa. See Amendment of the Commission's Rules to  {O1-  Establish New Personal Communications Services, GEN Docket No. 90314, Memorandum Opinion and Order, 9 FCC Rcd 4957, 4969,  24 (1994). Currently the C and F block licensees and potential   Zlicensees (holding a total of 986 licenses) must be small businesses or entrepreneurs with average   igross revenues over the past three years of less than $125 million. Under the proposed rules they   will be permitted to partition and/or disaggregate to other qualified entrepreneurs. The A, B, D,   and E block licensees and potential licensees (holding a total of 1,088 licenses) will also be permitted under the proposed rules to partition and/or disaggregate to small businesses.  At present, there have been no auctions held for the D, E, and F blocks of broadband PCS   yspectrum. The Commission anticipates a total of 1,479 licenses will be awarded in the D, E, and   F block PCS auctions, which are scheduled to begin on August 26, 1996. Eligibility for the F   block licenses is limited to entrepreneurs with average gross revenues of less than $125 million.   LHowever, there is no basis upon which to estimate the number of licenses that will be awarded"9!`0*%%ZZ{"   to small businesses, nor is there a basis for an estimate as to how many small businesses will win   LD or E block licenses. Given the fact that nearly all radiotelephone companies have fewer than   L1,000 employees, and that no reliable estimate of the number of D, E, and F block licensees can   =be made, we assume, for purposes of this IRFA that all of the licenses will be awarded to small   \businesses. We believe that it is possible that a significant number of the up to 10,370 PCS   licensees or potential licensees who could take the opportunity to partition and/or disaggregate   a license or who could obtain a license through partitioning and/or disaggregation will be small businesses.  X1- i Any Significant Alternatives Minimizing the Impact on Small Entities Consistent  X -  wwith the Stated Objectives: The proposals advanced in the Notice of Proposed Rulemaking are   =designed to implement Congress' goal of giving small businesses, as well as other entities, the   opportunity to participate in the provision of spectrumbased services. The impact on small  X -  Lentities in the proposals in the Notice of Proposed Rulemaking is the opportunity to enter the Broadband PCS market through the partitioning and disaggregation proposals herein.  X- The rule changes proposed in the Notice of Proposed Rulemaking by the Commission are   consistent with the Communication Act's mandate to identify and eliminate market entry barriers   Lfor entrepreneurs and small businesses in the provision and ownership of telecommunications   services, and the mandate under Section 309(j) of the Communications Act of 1934, as amended,   to utilize auctions to ensure that small, minority and womenowned businesses and rural telephone   companies have an opportunity to participate in the provision of spectrumbased services. The  X -  Commission's proposals in this Notice of Proposed Rulemaking, if implemented, will facilitate   .market entry by parties who may lack the financial resources for participation in PCS auctions,   including small businesses. These proposals, if implemented, will promote technological   advancement and participation by diverse entities, as well as facilitate the efficient use of   broadband PCS spectrum. The alternative to the Commission's proposal to allow geographic   =partitioning would be to maintain the status quo and only permit rural telephone companies to   utilize partitioning through forming an auction bidding consortium comprised entirely of rural   !telephone companies or through private negotiation postauction. Limiting geographic   partitioning to rural telephone companies would not permit other small businesses to obtain   partitioned licenses or to partition to other parties, and thus would not promote the participation   kof small businesses in the provision of PCS. The Commission also noted that the proposed   partitioning policy would allow spectrum to be used more efficiently, speed service to underserved areas, and increase competition.  X - In this Notice of Proposed Rulemaking, the Commission observed that initially general   Zpartitioning by broadband PCS licensees was not permitted because of the concern that licensees   might use partitioning as a means to circumvent construction requirements. The Commission   tentatively concludes that both the partitioner and partitionee should be subject to coverage   .requirements that ensure that both portions of a partitioned licensing area will receive service. "r$"`0*%%ZZ(#"   The Commission proposes facilitating partitioning by offering a choice between two different   ybuildout options, which could be negotiated between the partitioner and partitionee. The first   option proposed by the Commission would require a partitionee to satisfy the same construction   requirements as the original licensee within its partitioned area, regardless of when it acquired   the partitioned license. This approach is consistent with the present construction requirements  X-  for rural telephone companies.Ja9 yO-ԍ47 C.F.R.  24.714(e).J The second option proposed by the Commission would apply   .where the original licensee has met its fiveyear buildout requirements and certifies that it will   meet the tenyear coverage requirements for its entire license area. Specifically, the Commission   zproposes that partitionees must only satisfy the substantial service requirement for renewal   expectancy for its partitioned area by the end of the original tenyear license term. The   xCommission tentatively concludes that these proposed flexible buildout requirements, if adopted,   will encourage partitioning to entities that have a sincere interest in providing broadband PCS and   will thereby expedite the provision of service to areas that otherwise may not receive it as quickly.  lThe Commission considered the fact that many broadband PCS licensees may meet their   Lfiveyear buildout construction obligation early, and therefore proposes revisiting the current   prohibition on disaggregation. The Commission considered the alternative, requiring PCS   ilicensees to wait until January 1, 2000 before disaggregating, and noted that this would not permit   small businesses to disaggregate or obtain disaggregated spectrum and therefore, would not promote an efficient use of spectrum.  \The Commission is proposing to allow partitioning and/or disaggregation by entrepreneurs   xonly to other qualified entrepreneurs for five years, to ensure the objective that entrepreneurs and   small businesses continue to participate as PCS licensees for substantial periods of time, and   through that participation obtain experience and profits that will enable their long term   participation in communications industries. The Commission is proposing to apply proportional   /unjust enrichment provisions for partitioning and disaggregation by entrepreneurs to non  entrepreneurs after the fiveyear period. The alternative to this proposal, would be to either   <prohibit partitioning by entrepreneurs or to allow entrepreneurs who have benefitted from special   bidding provisions to become unjustly enriched by immediately partitioning a portion of their   license area to parties that do not qualify for such benefits. The Commission also noted that   allowing partitioning and/or disaggregation by entrepreneurs only to other qualified entrepreneurs   Zfor five years is consistent with the Commission's rule allowing license transfers by entrepreneurs  X-only to other entrepreneurs in the first five years of the license period.JbX9 yO"-ԍ47 C.F.R.  24.839(d).J "#b0*%%ZZ"Ԍ !The Commission believes that allowing entrepreneurs and small businesses to partition   and/or disaggregate their licenses to other qualified entrepreneurs and small businesses, and   allowing all nonentrepreneurs to partition and/or disaggregate to any qualified party (including   small businesses) will help attain the Congressional objective of ensuring that small businesses   have an opportunity to participate in the provision of broadband PCS. These proposals will   enable a wide variety of applicants, including small businesses, to overcome entry barriers in the provision and ownership of telecommunications services.  XH- This Notice of Proposed Rulemaking solicits comment on a variety of alternatives discussed herein. Any significant alternatives presented in the comments will be considered. " $b0*%%ZZ"  A  A   Y-N#Xw PE37=9XP# SEPARATE STATEMENT ciOF  Y-kCOMMISSIONER SUSAN NESS l  Y-lU  W_-Re: Geographic Partitioning and Spectrum Disaggregation by Commercial Mobile Radio Service Licensees  Y1- I support the substance of this item but want to interject a cautionary note. Our proposal to permit disaggregation and partitioning of the personal communications services band is sound. Most importantly, it would enable more small businesses to "get a piece of the action" by operating within a limited geographic area or on a slice of spectrum. Many smaller players often lack the resources to provide service to areas as large as the Major Trading Areas and Basic Trading Areas that were the geographic building blocks in our auctions. Some of those who successfully bid on MTA and BTA licenses may not need 100 percent of their licensed spectrum blocks to provide their intended services. The  Y4-changes proposed in this Notice may permit these two situations to be reconciled, thereby enabling more entrepreneurs to participate in providing services and facilitating more and better services to be delivered to rural and other lesspopulated geographic areas. I support these proposed changes to our rules. Nevertheless, I want to signal a note of caution about the frequency of rule changes. Earlier today we adopted changes to our rules that permit PCS and other commercial mobile radio service providers to provide any and all fixed services in addition to mobile services, consistent with our technical regulations. As with our disaggregation and partitioning proposals, these are revisions which I support. But, taken together, the changes proposed herein, the PCS service revisions adopted today, and the other service and auction rule changes we have adopted over the past several months constitute a substantial modification of our rules in midstream after some but not all of the licenses have been auctioned, and before the licensees have had a chance to implement the business plans pursuant to which they bid for their licenses. Flexibility and new ideas are always welcome, but constancy is also a virtue. Regulatory uncertainty has the potential to undermine our services and our auctions by generating confusion on the part of service providers and the financial community. We can always improve upon our rules. But I hope that we do not get in the habit of repeatedly rewriting the rules before the ink is dry and they have had a chance to be applied in the marketplace. In my view, absent a compelling need, our rules should remain in place at least through initial construction periods. "(%b0*0*0*!*"Ԍ A We are approaching the point where marketplace behavior may begin to reflect the assumptions that our rules will continue to evolve every few months and that therefore there is no need to comply with those that have already been promulgated. That would be grossly unfair to those who diligently follow the rules as written. We are already too close to that point now, and I trust that we will not go beyond it.