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"5^*8FSS$88Sp*8*.SSSSSSSSSS88pppSffoxffxx8Jo]oxfxfS]xff]]A.AFS8SSJSJ.SS..J.xSSSSAA.SJoJJAC.CZ*8888C8SSfSfSfSfSfSooJfJfJfJfJ8.8.8.8.oSxSxSxSxSxSxSxSxS]JfSxSxSxS]JxSfSfSfSfSoJoJfJfJfJxSxSxSxSxSCS8S888SJxSoSAN:*WSASSSSSS.4}}S2S}288]]S88SS8]82N8\\pC`pSS`*8FSS$88Sp*8*.SSSSSSSSSS88pppSffoxffxx8Jo]oxfxfS]xff]]A.AFS8SSJSJ.SS..J.xSSSSAA.SJoJJAC.CZv8S]SS8S888]]:S8A8o]*ASSSS.S8.Sp8SC\228`W*824S}}}Sffffffoffff8888xoxxxxxpxxxxx]fSSSSSSSoJJJJJ....SSSSSSS\SSSSSJS"5^2CRdd$CCdq2C28dddddddddd88qqqYzoCNzoozzC8C^dCYdYdYCdd88d8ddddCN8ddddY`(`l2CCCCPCddYYYYYYzYzYzYzYC8C8C8C8ddddddddddYdddddoddYYYYzYzYzYdddddPdCdCCCdNdoNNF2ZdCYddddd7>d<d<CCYYdCCddCYCdYzzzzCCCCqodYYYYYYYYYYY8888dddddddnddddddd"5^*8]SS.88S_*8*.SSSSSSSSSS88___SxoxxofASoxfx]oxxxxo8.8aS8S]J]J8S].8].]S]]JA8]SxSSJB%BW*8888C8S]xSxSxSxSxSxxJoJoJoJoJA.A.A.A.x]SSSSx]x]x]x]xSxSx]SSxSxSf]xSxSxSxJxJoJoJoJSSS]]C]A]A8A]SSx]AN:*ZS8SSSSSS27}}S2||S}288SSS88SS8S82N8\\_C`_SS`*8]SS.88S_*8*.SSSSSSSSSS88___SxoxxofASoxfx]oxxxxo8.8aS8S]J]J8S].8].]S]]JA8]SxSSJB%BWv8SSSS8]888SS:S8A8xx*8SSSS%S8|2S_8|SC\228`Z*827S}}}SxxxxxxxooooAAAAxx_xxxxxf]SSSSSSxJJJJJ....S]SSSSS\S]]]]S]"5^*A]SS.88S_*8*.SSSSSSSSSS88___SoooxooxASofxxfxo]fxooff8.8_S8SSJSJ8S]..S.]SSSAA.]JoSJA:%:_*8888C8SSoSoSoSoSoSxoJoJoJoJoJA.A.A.A.x]xSxSxSxSx]x]x]x]fJoSxSxSxSfJxSfSoSoSoSoJoJoJoJoJxSxSxS]]CSASA8ASSxSx]AN:*SSASSSSSS,2}}S2||S}288SSS88SS8S82N8\\eC`_SS`*A]SS.88S_*8*.SSSSSSSSSS88___SoooxooxASofxxfxo]fxooff8.8_S8SSJSJ8S]..S.]SSSAA.]JoSJA:%:_v8SSSS8]888SS:S8A8xf*ASSSS%S8|,Se8|SC\228`S*822S}}}SoooooooooooAAAAxxxxxxx_xxxxxffSSSSSSSxJJJJJ....S]SSSSS\S]]]]JS2  ^ R"5^.Gf\\3==\i.=.3\\\\\\\\\\==iii\zzzzzG\zppzfpzzpp=3=i\=\\Q\Q=\f33\3f\\\GG3fQz\QG@(@i.====I=\\z\z\z\z\z\zQzQzQzQzQG3G3G3G3f\\\\ffffpQz\\\\pQ\p\z\z\z\zQzQzQzQzQ\\\ffI\G\G=G\\\fGN@.\\G\\\\\\17\7\7==\\\==\\=\=7N=eeoIji\\j.Gf\\3==\i.=.3\\\\\\\\\\==iii\zzzzzG\zppzfpzzpp=3=i\=\\Q\Q=\f33\3f\\\GG3fQz\QG@(@i=\\\\=f===\\@\=G=p.G\\\\(\=1\o=\Ie77=j\.=77\\zzzzzzzzzzzGGGGipp\\\\\\\QQQQQ3333\f\\\\\e\ffffQ\6?xxxXOXx6X@DQX@.y.C8*X/C\  P6QP.2J=.Xg!&J\  P6Q&Pl2N=.X(&N4  pQ&0J=.XEa&J*f9 xQ&X .P,%XJ,\  P6QJP .I(!X,(\  P6Q,P{,C8*XEVC*f9 xQX l y.G8*X(G4  pQ!z-E8*XdE9 xyQ"1K=.Xdj!&K9 xyQ&.#7PC2X2XP\  P6QXPQ,%XEJ,*f9 xQJX"5^%.77\V%%7J%7777777777%%JJJ7eCCIOCCOO%1I=\IOCOC7=OC\C==++.7%77171771O7777++71I11+,,<%%%%,%77C7C7C7C7C7bII1C1C1C1C1%%%%I7O7O7O7O7O7O7O7O7=1C7O7O7O7=1O7C7C7C7C7I1I1C1C1C1O7O7O7O7O7,7%7%%%71O7hI7+N&:7+777777"RR7!TT7R!%%==7b%%77lb%=n%!N%<<J,?J77?%.77\V%%7J%7777777777%%JJJ7eCCIOCCOO%1I=\IOCOC7=OC\C==++.7%77171771O7777++71I11+,,D0*&&PPx"Ԍ S'ԙ  44 Clarify that an incumbent licensee on the lower 230 channels seeking to modify its system using its 18 dB interference contour may, in the absence of consent from affected incumbents, provide a statement from a certified frequency advisory committee that a modification will not cause interference to adjacent licensees;  S8'  44Specify the operating parameters that incumbent licensees will use to calculate their service area contours and interference contours;  S'  44Conclude that incumbents may not expand their geographic licenses beyond the contours of their individual site licenses to include areas where the EA licensee is not able to operate;  SH '  44Clarify that an incumbent's geographic license area includes, in addition to external base stations that are in operation, any interior sites that are constructed within the applicable construction  S 'period;  S '  44Clarify that even when an incumbent licensee has expanded its operation throughout its 18 dB contour, its interference protection continues to extend only to its 36 dBV/m signal strength contour;  S'  44Affirm that the lower 80 SMR channels will not be redesignated for nonSMR use;  S'  44Clarify that the construction requirements in Section 90.685(b) of the Commission's rules are applicable to all EA licensees on the lower 230 channels without distinction between CMRS and PMRS licensees;  S'  44Clarify that EA licensees on the lower 80 SMR channels and General Category channels may switch between CMRS and PMRS services, provided that channels designated exclusively for  S'SMR use continue to be used only for SMR service;  Sx' C.44 Relocation of Incumbents from the Upper 200 Channels  S('44 Clarify that, for the purpose of determining what facility an EA licensee is responsible for relocating, an incumbent licensee's "system" includes mobile units and a redundant system when necessary to effect a transparent relocation;   S'  44Affirm that our definition of "system" does not include managed systems that are comprised of individual licenses;  S '   44Determine that an EA licensee that relocates an incumbent to a system with a comparable channel capacity, but a different channel configuration, is required to reimburse the incumbent for the increased cost inherent in operating such a system;  Sp#'  44Retain the fiveyear cost recovery period for increased operating costs caused by incumbent licensee relocation; " %0*&&PPv$"Ԍ S'  44Affirm that reimbursement of relocation costs will not be due until the incumbent has been fully relocated and the frequencies are free and clear;  S'  44Decline to revise the time period for relocation negotiations between EA licensees and incumbent licensees;  S'  44Determine that EA licensees are not required to compensate end users for service interruptions caused by realignment and retuning to new frequencies;  S' D. Partitioning and Disaggregation for 800 MHz and 900 MHz Licensees  SH '  44Clarify that our geographic partitioning and spectrum disaggregation rules apply to PMRS licensees in the 800 MHz and 900 MHz SMR services;  S ' E.44 Competitive Bidding Issues  S '  44Affirm our previous determination that the General Category channels and lower 80 SMR  SX'channels of the 800 MHz SMR band are auctionable under Section 309(j) of the Communications Act;  S'  44Clarify that the auction exemption for public safety radio services in Section 309(j)(2) of the Communications Act does not apply to spectrum that has been allocated for SMR use and which the Commission has already determined to be auctionable;  Sh'  44Affirm that licensing in the lower 230 channels will be open to all parties.  S'  44Amend the method by which licenses in the lower 230 channels will be grouped for auction, and direct the Wireless Telecommunications Bureau, pursuant to delegated authority, to determine what licensing groups, if any, should be established for auctioning the lower 230 channels;   Sx'  44Affirm that a bidder's upfront payment will be based on the number of licenses on which a bidder anticipates bidding in any round;  S'  44Affirm that the Commission will not offer installment payment financing for licenses in the lower 230 channels;  S'  44Affirm that the Commission will not adopt gender or minoritybased provisions for auctioning licenses for the lower 230 channels at this time. "80*&&PP"  S'@ III. BACKGROUND ă   S'X4 hp x (#%'0*,.8135@8: . }  {O'ԍSee 47 C.F.R.  90.617, 90.619.] and thus, the term "incumbent licensees," in Section 90.693(a) of our rules, refers to both SMR and nonSMR licensees that obtained licenses or filed applications on or before December 15, 1995.  Sj' ` ` b.  Expansion and Flexibility Rights of Lower Channel Incumbents (#  S'21.` ` Background . In the 800 MHz Second Report and Order, we concluded that while geographic licensing is appropriate for the lower 230 channels, some additional flexibility is appropriate for incumbents on these channels to facilitate modifications and limited expansion of their  S'systems.? }  {O%'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 1910405,  6567. We stated that we would allow incumbents on the lower 230 channels to make system"R ?0*&&PP\"  S'modifications within their interference contours without prior Commission approval.:@}  {Oh'ԍId.: Thus, an incumbent licensee that desires to make modifications to its existing system, such as adding new transmitters and altering its coverage area, will be able to do so with the concurrence of all affected incumbents, so long as such an incumbent does not expand the 18 dB interference contour of its system. Moreover, licensees who do not receive the consent of all incumbent affected licensees, will be able to make similar modifications within their 22 dB signal strength interference contour and licensees who do not desire to make modifications may continue to operate within their existing  S'systems.:AZ}  {O 'ԍId.: We emphasized that the revised interference standard protects incumbents only against EA licensees, not against other incumbents. As such, the protection that one incumbent must provide to  S'another incumbent continues to be governed by section 90.621(b) of our rules.rB}  {O$ 'ԍId. at 19108,  76. See 47 C.F.R.  90.621(b).r In the absence of consent of all affected incumbent licensees, incumbent licensees must locate their stations at least seventy miles from the facilities of any other incumbent or comply with the cochannel separation  S 'standards established in our shortspacing rules.TC\ ~}  {O>'ԍSee 47 C.F.R.  90.621(b)(4) and (b)(6).  See also Amendment of Part 90 of the Commission's Rules to Permit the ShortSpacing of Specialized Mobile Radio Systems Upon Concurrence from CoChannel  {O'Licensees, Report and Order, 6 FCC Rcd 4929 (1991).T  S '22.` `  Discussion. ITA seeks clarification that an incumbent licensee on the lower 230 channels seeking to modify its system may provide, in lieu of consent, a statement from a certified  S 'frequency advisory committee that a modification will not cause interference to adjacent licensees.kD }  yO'ԍITA Petition for Clarification and Reconsideration at 34.k  SX'Mobex and Duke Energy agree with ITA's suggestion that a frequency coordinator should be allowed to authorize an incumbent licensee's permissive modification when the consent of a cochannel licensee  S'is unreasonably withheld.vE2 }  yO'ԍMobex Reply to Opposition at 2; Duke Energy Reply to Opposition at 5.v Mobex further contends, however, that an incumbent licensee should first  S'attempt to obtain the consent of all cochannel licensees.VF }  yOB'ԍMobex Reply to Opposition at 2.V Mobex argues that a cochannel licensee should be permitted to assert its rights against an incumbent licensee by submitting to the Commission  S'and the frequency coordinator contrary information concerning the likelihood of harmful interference.@GR }  {O!'ԍId.@ Nextel opposes ITA's proposal to allow frequency coordinators to authorize incumbent system  S@'modifications.IH@}  yO$'ԍNextel Opposition at 4. I "tH0*&&PP"Ԍ S'23.` ` We agree with those commenters that suggest that an alternative should exist to obtaining the consent of cochannel licensees. Accordingly, we conclude that incumbent licensees seeking to utilize an 18 dB signal strength interference contour shall first seek to obtain the consent of affected cochannel incumbents. When the consent of a cochannel licensee is withheld, an incumbent licensee may submit to any certified frequency coordinator an engineering study showing that interference will not occur, together with proof that the incumbent licensee has sought consent. We believe that this alternative will allow for faster implementation of our modification plan and provide a balance between incumbent licensee flexibility and incumbent licensee protection.  S'24.` ` PCIA requests clarification of the 40/22 dBV/m and 36/18 dBV/m standards by which incumbent licensees on the lower 230 channels may modify their systems. PCIA contends that Section 90.693 of our rules permits different interpretations regarding the way in which an incumbent  S 'licensee calculates its "originallylicensed" signal strength contours.I$ }  yO 'ЍPCIA Petition at 1922. Section 90.693(b) of the Commission's rules reads in part: "An incumbent  {OP 'licensee's service area shall be defined by its originallylicensed 40 dB field strength contour and its  {O'interference contour shall be defined as its originallylicensed 22 dB field strength contour." 47 C.F.R.  90.693(b) (emphasis added).  PCIA states that one interpretation of the section could be that the licensee should utilize maximum effective radiated power  S '("ERP") and maximum height above average terrain ("HAAT"),RJ }  yO$'ЍPCIA Petition at 1922.R while another interpretation could be that the licensee utilize the licensed power and the licensed composite HAAT. PCIA, however, supports a third interpretation: licensees should use the maximum permissible ERP for the composite  SX'HAAT and the actual HAAT along each radial.KKXD}  {O<'ЍId. at 20.K PCIA contends that this interpretation is supported  S0'by our shortspacing criteria in Sections 90.621(b)(4) and (b)(6) of our rules,L0}  {O'ԍId. Subsections 90.621 (b)(4) and (b)(6) establish ERP and antenna criteria for cochannel stations that  {Op'are spaced less than 70 miles apart. See 47 C.F.R.  90.621(b)(4) and (b)(6).  which are cited in  S'Section 90.693.cM2 }  {O'Ѝ See 47 C.F.R.  90.693. c AMTA proposes that the lower 230 channel incumbents be entitled to protection  S'based on the station's maximum ERP and licensed HAAT.XN }  yOD'ԍAMTA Petition for Reconsideration at 6.X Nextel opposes the proposals of PCIA and AMTA. Nextel considers both suggestions to be unjustified departures from longstanding  S'Commission policy that would improperly deny EA licensees access to spectrum.IOT }  yO!'ԍNextel Opposition at 5. I  S@'25.` ` We agree with PCIA that the "originallylicensed" contour should be calculated using the maximum ERP and the actual HAAT along each radial. This interpretation is consistent with our shortspacing separation table in Section 90.621(b)(4) and with Section 90.621(b)(6) of our rules. The shortspacing table protects existing licensees at maximum power, and actual HAAT in the direction of"O0*&&PPK"  S'the cochannel station.rP}  {Oh'ЍSee 47 C.F.R.  90.621(b)(4).  r We believe that these protection criteria will provide more flexibility to  S'incumbent licensees and are consistent with Section 90.693 of our rules.QQZ}  {O'ԍSee 47 C.F.R.  90.693.Q  S'` `  c. Converting SiteSpecific Licenses to Geographic Licenses  S8'26.` ` Background. In the 800 MHz Second Report and Order, we allowed incumbents on the lower 230 channels to combine their sitespecific licenses into single geographic licenses to provide them with the same flexibility and reduced administrative burden that geographic licensing  S'affords to EA licensees.uR}  {ON 'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 19106,  72.u Because we adopted the 18 dB contour rather than the 22 dB contour, where the incumbent licensee has obtained the consent of all affected parties, as the benchmark for defining an incumbent licensee's protected service area, we used the contiguous and overlapping 18 dB contours of the incumbent's previously authorized sites to define the scope of the incumbent's  S" 'geographic license.S" ~}  yO@'ԍWe required that external base stations used to define the incumbent licensee's protected service area be  {O'constructed and placed in operation. Id. at 19106,  72. We stated that once the geographic license has been issued, incumbents will not be required to obtain prior Commission approval or provide subsequent notification to add or modify  S 'facilities that do not extend the licensee's 18 dB interference contour.:T }  {OJ'ԍId.: Additionally, licensees that do not receive the consent of all affected parties may follow the same process utilizing their 22 dB  S 'signal strength contour, rather than the 18 dB contour.:U j }  {O'ԍId.:  SZ'  S2'27.` ` Discussion. Entergy Services, Inc. and Delmarva Power (Entergy and Delmarva) contend that incumbents' geographic licenses should include areas where an incumbent's interference contours do not overlap, but where no other licensee could place a transmitter because of our  S'interference protection rules.V }  yOV'ԍEntergy and Delmarva Petition at 5; Entergy and Delmarva Reply to Opposition at 45. We decline to expand an incumbent's geographic license beyond the contours of its individual site licenses. We find that inclusion of areas that are outside of an incumbent's interference contours within the incumbent's geographic license would be contrary to our objective of prohibiting encroachment by incumbents on the geographic area licensee's operations. In  S'our 800 MHz Second Report and Order, we explained that incumbents on the lower 230 channels  S'should have flexibility to modify and expand their systems.W }  {O $'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 1910405,  6568. However, our objective was to provide"W0*&&PP" incumbents with such flexibility without allowing them to encroach on upon EA licensees'  S'operations.wX}  {Oh'ԍSee 800 MHz Second Further Notice, 11 FCC Rcd at 1598,  316.w This approach is consistent with the approach we adopted recently in our paging  S'proceeding.eY^}  {O'ԍSee Revision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of  {O'Paging Systems, WT Docket No. 9618, Memorandum Opinion and Order on Reconsideration and Third Report  {Of'and Order, FCC 9998,  39 (rel. May 24, 1999).e Incumbent licensees seeking to expand their contours may participate in the auction of geographic area licenses, or may seek partitioning agreements with the geographic area licensee.  S8'28.` ` Entergy and Delmarva also seek clarification that an incumbent licensee's geographic license includes authorized but not yet constructed facilities within that geographic licensee's external  S'contour, provided that the specific station's construction deadline has not passed.Z}  yO0 'ԍEntergy and Delmarva Petition at 56; Entergy and Delmarva Reply to Opposition at 23. In the 800 MHz  S'Second Report and Order, we required incumbents seeking to convert sitespecific licenses to geographic licenses to provide evidence that their external base stations are constructed and placed in  St'operation.u[t8}  {OL'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 19106,  72.u We also stated that SMR licensees with sitespecific authorizations continue to have 12 months from the grant date to complete construction and commence service, unless the authorization is  S$ 'part of a system that has received an extended implementation grant.M\$ }  {O'ԍId. at 19096,  38.M We agree with Entergy and Delmarva, and clarify that in defining the scope of an incumbent's geographic license area by the contiguous and overlapping 18 dB contours of its previously authorized sites, we include external  S 'base stations that are already constructed and operationalM] \ }  {O'ԍId. at 19106,  72.M and interior sites that are constructed within  S 'the particular construction period applicable to the incumbent.8 ^ Z }  yO'ԍNonSMR licensees with site specific authorizations are subject to a twelvemonth construction  {O'requirement. See 47 C.F.R.  90.631(e). See also Amendment of Part 90 of the Commission's Rules Concerning  {O'Private Land Mobile Radio Services, WT Docket No. 97153, Report and Order, FCC 999,  20 (rel. February  yOn'19, 1999). Although SMR licensees with sitespecific authorizations are subject to a 12month construction  {O6'requirement, see Implementation of Sections 3(n) and 332 of the Communications Act, Regulatory Treatment of  {O'Mobile Services, GN Docket No. 93252, Third Report and Order, 9 FCC Rcd 7988, 8074,  177 ("CMRS Third  {O'Report and Order"), the Commission modified its rules to allow SMR licensees to request extended implementation authority under Section 90.629. The Commission subsequently eliminated SMR licensees' eligibility for extended implementation authority, and concluded that the termination date for all extended implementation authorizations previously granted to 800 MHz SMR incumbents should be accelerated. The Commission concluded that incumbents should be required to rejustify the need for extended time to construct their facilities, and that incumbents that rejustified their extended implementation authority would be afforded a construction period of the shorter of two years or the remainder of their current extended implementation period,  {OD$'unless the incumbent demonstrated that it needed more than two years. 800 MHz Report and Order, 11 FCC  {O%'Rcd at 152426. See 47 C.F.R.  90.629(e). The Commission's construction requirements for incumbent wide {O%'area 800 MHz licensees was the subject of a recent remand by the U.S. Court of Appeals. See Fresno Mobile"%]0*&&%"  {O'Radio, Inc. v. FCC, 165 F.3d 965 (D.C. Cir., Feb. 5, 1999). Accordingly, the Bureau has temporarily suspended application of the construction timetable for widearea licensees until the Commission conducts a further analysis and establishes new timetables for the buildout of their systems.8 We note additionally, that once the" ^0*&&PPN " geographic license has been issued, facilities that are added within an incumbent's existing footprint and that are not subject to prior approval by the Commission will not be subject to construction  S'requirements.u_}  {O:'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 19096,  38.u  S`'  2. Cochannel Interference Protection    S'29.` ` Background. In our 800 MHz SMR Second Report and Order, we concluded that additional flexibility was needed for lower 230 channel incumbent licensees to facilitate modifications  S'and limited expansion of their systems.M`|}  {O 'ԍId. at 19104,  65.M We determined that additional flexibility for the lower 230 channel incumbent licensee was appropriate because these channels were subject to an application freeze and geographic licensing of these channels would not occur until after the upper 200 channel auction was completed and upper 200 channel incumbent licensees were relocated to the lower  S" 'channels.Ma" }  {O'ԍId. at 19105,  67.M  S '30.` ` Because we adopted an 18 dBV/m standard which gives incumbent licensees greater flexibility to expand, we adopted stricter interference protection criteria to ensure that EA licensees do not interfere with incumbents' operations. Specifically, we further determined that incumbent licensees who currently utilize the 40 dB signal strength contour for their service area contour and 22 dB signal strength contour for their interference contour will be permitted to use their 18 dB signal strength contour for their interference contour as long as they obtain the consent of all affected  S'parties.{b}  {O"'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 1910719108,  75.{ In particular, EA licensees are required to either: locate their stations at least 173 km (107 miles) from the licensed coordinates of any incumbent licensee, or comply with cochannel separation standards based on a 36/18 dBV/m standard, rather than the previously applicable 40/22 dBV/m  Sj'standard.Ecj2 }  {O<'ЍId. E EA licensees must ensure that the 18 dBV/m signal strength contour of a proposed station does not encroach upon the 36 dBV/m signal strength contour of an incumbent licensee's  S'existing stations.:d }  {O~"'ԍId.:  S'31.` ` Discussion. AMTA requests that we clarify the interference protection criteria for lower 230 channel incumbents by stating that incumbent licensees on the lower 230 channels will be protected by EA licensees only on the basis of the 36/18 dBV/m contour analysis of the incumbent's"zV d0*&&PP" existing station, even if an incumbent licensee has expanded its operation throughout its 18 dBV/m  S'contour.Pe}  yO@'ЍAMTA Petition at 56.P AMTA contends that an EA licensee is required only to ensure that its own 18 dBV/m interference contour does not overlap the incumbent licensee's 36 dBV/m service area contour and that interference problems will occur unless incumbent licensees realize that the EAprotected service  S`'area will be limited to a 36 dBV/m contour.Df`X}  {OX'ЍId.D We agree with AMTA and clarify that an incumbent  S8'licensee's protection extends only to its 36 dBV/m signal strength contour. As we stated in our 800  S'MHz Second Report and Order, an EA licensee must ensure that the 18 dBV/m signal strength contour of its proposed station does not encroach upon the 36 dBV/m signal strength contour of an  S'incumbent licensee's existing station.{g}  {ON 'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 1910719108,  75.{ In turn, an EA licensee will have its 36 dBV/m desired signal strength contour protected with an 18 dB ratio, because the undesired signal strength contour limit is 18 dBV/m for incumbent licensees that have obtained the consent of all other affected  SL 'parties.!hL |}  {Oh'ԍId. Thus, we decline to accept ITA's contention that once an incumbent has made modifications within  {O2'its 18 dB contour, EA licensees will be barred from challenging the modification. See ITA Reply at 4.!  S '32.` ` Finally, AMTA requests clarification that our new rules do not diminish the protection afforded licensees operating on sites or in geographic areas for which the Commission has determined  S 'that greater geographic separation between cochannel facilities is required.i }  {O$'ԍAMTA Petition at 7. See 47 C.F.R.  90.621(b)(1), (2), and (3). See also 800 MHz Memorandum  {O'Opinion and Order, 12 FCC Rcd at 9993,  67. We will grant AMTA's request and clarify that where the cochannel separation requirements in Section 90.621(b) of our rules have afforded certain licensees greater interference protection, those standards will continue to apply.  S ' 3.` ` Regulatory Classification of EA Licensees on the Lower 230 Channels (#`  S'33.` `  Background. In the 800 MHz Second Report and Order, we concluded that we would presumptively classify SMR winners of EA licenses on the lower 230 channels as CMRS providers, because we anticipate that most applicants for these licenses will be SMR applicants who seek to  SF'provide interconnected service and thus meet the definition of CMRS.wjF4 }  {O 'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 1910910 83. w However, we stated that we would allow SMR applicants and licensees to overcome this presumption by demonstrating that their  S'service does not meet the CMRS definition. In the 800 MHz Memorandum Opinion and Order, we determined that both SMRs and nonSMRs would be eligible to obtain licenses for the 150 General  S'Category channels.k }  {O%'ԍ800 MHz Memorandum Opinion and Order, 12 FCC Rcd at 1000304  100102. Thus, where an EA license is obtained by a nonSMR operator, the CMRS"X k0*&&PP"  S'presumption is inapplicable.ul}  {Oh'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 19110  84. u In the event that EA licenses are awarded to Public Safety, Industrial/Land Transportation or Business licensees, for example, such licensees will be classified as  S'PMRS providers.;mZ}  {O'ԍId. ;  S`'34.` ` Discussion. Entergy and Delmarva request that we redesignate the lower 80 channels  S8'for nonSMR use, as well as for SMR use.Vn8}  yO 'ԍEntergy and Delmarva Petition at 67.V We decline to do so. When the Commission initially allocated channels in the 800 MHz band, it designated the lower 80 SMR channels for use in SMR systems based on a significant increase in the number of applicants for 800 MHz trunked systems and  S'private users seeking service from SMR operators.So\|}  yO 'ԍ Amendment of Part 90 of the Commission's Rules to Release Spectrum in the 806821/851866 MHz  {O'Bands and to Adopt Rules and Regulations Which Govern Their Use, PR Docket No. 79191, Second Report and  {On'Order, 90 FCC 2d 1281, 1299  51 (1982).S Subsequently, in the 800 MHz First Report and  S'Order, the Commission again concluded that SMR providers' demand for additional spectrum  St'significantly exceeded the demand of nonSMR services.|pt}  {O'ԍ800 MHz First Report and Order, 11 FCC Rcd at 1535  137.| Moreover, although the Commission found that the primary demand for General Category channels came from SMR operators and initially redesignated those channels exclusively for SMR use, on reconsideration, it concluded that nonSMRs  S 'would continue to be eligible for licensing on those channels.~q 2 }  {O'ԍ800 MHz Memorandum Opinion and Order, 12 FCC Rcd at 1000304  101.~ We also anticipate that SMR providers' demand for the lower 80 channels will be increased by geographic area licensing of the upper 200 channels and our mandatory relocation policy. Accordingly, we will not redesignate the lower 80 channels for nonSMR use. We note additionally, that because reallocation of the lower 80  S\'channels for nonSMR use was not an issue initially raised in the 800 MHz Second Report and Order, it is more properly the subject of a separate reallocation proceeding that provides affected parties an opportunity for notice and comment. As such, we find that Entergy and Delmarva's proposal is beyond the scope of this proceeding.  S'35.` ` Entergy and Delmarva also request that we specify that EA licensees in the lower 230 channels classified as PMRS providers are subject to the same construction requirements that are  SF'imposed on EA licensees providing CMRS services.TrF }  yO!'ԍEntergy and Delmarva Petition at 7.T The construction requirements in Section 90.685(b) are applicable to all EA licensees in the lower 230 channels without distinction between  S'licensees classified as CMRS and those classified as PMRS.TsT }  {O$'ԍSee 47 C.F.R.  90.685(b).T Therefore, SMR licensees and nonSMR licensees in the lower 230 channels that are classified as PMRS providers are required to comply"s0*&&PPX" with the coverage requirements or, alternatively, the substantial service standard set forth in Section 90.685(b). We take this opportunity to clarify that to the extent that a nonSMR PMRS licensee uses its channels in a manner that is inconsistent with the population coverage criteria of the rule, it may demonstrate compliance with the alternative substantial service standard.  S8'36.` ` Entergy and Delmarva further request that we clarify that EA licensees are permitted to switch between providing PMRS service and CMRS service in response to evolving  S'communications needs.Tt}  yOP'ԍEntergy and Delmarva Petition at 8.T Our rules permit SMR channels to be used to provide either CMRS or  S'PMRS service.QuX}  {O 'ԍSee 47 C.F.R.  90.617.Q We see no reason why an SMR licensee that obtains an EA license for channels designated for SMR use should be prohibited from switching between CMRS and PMRS service, provided that channels designated exclusively for SMR use continue to be used only for SMR service. Additionally, with respect to the General Category channels, which are designated for both SMR and nonSMR use by both CMRS and PMRS licensees, there is no reason to prohibit an EA licensee from  S 'using the channels for either CMRS service or PMRS service.v }  yO'ЍThe issue of whether the Commission should permit nonSMR channels in the 800 MHz band licensed for PMRS operation to be used for CMRS operation in SMR systems is currently under examination in a  {O'proceeding seeking comment on the impact of the Balanced Budget Act of 1997. See Implementation of  {O'Sections 309(j) and 337 of the Communications Act of 1934 as Amended, WT Docket No. 9987, Notice of  {O'Proposed Rule Making, FCC 9952 (rel. March 25, 1999); Wireless Telecommunications Bureau Incorporates  {Op'Nextel Communications, Inc. Waiver Record into Docket No. 9987, Public Notice, DA 991431 (rel. July 21, 1999).  S ' #X\  P6G;/P#X01Í ÍX01Í Í#&a\  P6G;g!&P#  S 'C. Relocation of Incumbents from the Upper 200 Channels  S '   SX' 1.` ` Relocation Negotiations    S'37.` `  Background. In the 800 MHz First Report and Order, the Commission established procedures for the mandatory relocation of incumbent licensees from the upper 200 to the lower 230  S'channels on the 800 MHz SMR band.zw2 }  {O'ԍ800 MHz First Report and Order, 12 FCC Rcd at 1510,  7379.z The Commission established a threephase process for the  S'relocation of incumbents.x\ }  {O'ԍId. at 150910,  7779. See also "Wireless Telecommunications Bureau Announces the Commencement of the Voluntary Negotiation Period for the Relocation of Incumbent Licensees in the 800 MHz  {O!'Band," Public Notice, DA 99283 (rel. December 4, 1998) ("Negotiation Period Public Notice").  Phase I comprises a oneyear voluntary negotiation period that commenced on December 4, 1998. In the initial oneyear voluntary period, the EA licensee and  SB'incumbents may negotiate any mutually agreeable relocation agreement.myB}  {O$'ԍSee Negotiation Period Public Notice at 1.m If no agreement is reached in the voluntary negotiation period, the EA licensee may initiate Phase II, which is a oneyear"zy0*&&PP" mandatory negotiation period during which the parties are required to negotiate in "good faith." The  S'Phase II negotiation period commences on December 4, 1999.z}  {O@'ԍSee Negotiation Period Public Notice at 12. See also 800 MHz Memorandum Opinion and Order on  {O 'Reconsideration, 12 FCC Rcd at 9972,  52. If the parties still fail to reach an agreement, the EA licensee may then initiate Phase III, which is an involuntary relocation of the  S'incumbent's system. Phase III will commence on December 4, 2000.o{$}  {OL'ԍSee Negotiation Period Public Notice at 2. o The Commission determined that incumbents on the upper 200 channels would not be subject to mandatory relocation unless the EA licensee provided the incumbent with "comparable facilities" without any significant disruption in  S'the incumbent's operations.|}  {Of 'ԍ800 MHz First Report and Order, 12 FCC Rcd at 1508,  74; 800 MHz Second Report and Order, 12  yO0 'FCC Rcd at 19122,  119.  S'38.` ` Before an EA licensee may request involuntary relocation of an incumbent licensee's system, the EA licensee must: (a) guarantee payment of all costs of relocating the incumbent licensee to a comparable facility; (b) complete all activities necessary for placing the new facilities into operation, including engineering and frequency coordination, if necessary; and (c) build and test the  S 'new system.} }  {O'ԍ800 MHz First Report and Order, 12 FCC Rcd at 1510,  79. See 47 C.F.R.  90.699(c). The Commission further determined that the relocation of an incumbent licensee must be conducted in such a fashion that there is a "seamless" transition from the incumbent licensee's upper 200 channel to its lower 230 channel (i.e., no significant disruption in the incumbent licensee's  S 'operations).u~ }  {O'ԍ800 MHz First Report and Order, 12 FCC Rcd at 1510,  79. u  SX'39.` ` In the 80 0 MHz Second Report and Order, the Commission defined comparable facilities as facilities that will provide the same level of service as the incumbent licensee's existing  S 'facilities.{ 4 }  {O'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 19112,  89.{ Because we concluded that the determination of whether facilities are comparable should be made from the perspective of the end user, we identified four factors relevant to this determination:  S'system, capacity, quality of service and operating costs.q }  {O 'ԍId. at  90. See 47 C.F.R.  90.699(d).q  Sj'40.` ` Discussion. Nextel and SBT suggest that the twoyear negotiation period is too long  SB'and, therefore, seeks a shorter period.lBX }  yO:#'ЍNextel Opposition at 9; SBT Petition at 19.l Mobex and Duke Energy oppose a shorter negotiation period. Mobex and Duke Energy maintain that the twoyear time period is necessary to enable parties to reach a reasonable transaction, but that a shorter time frame may not permit both incumbents and EA"0*&&PP"  S'licensees enough time to engage in meaningful negotiations prior to involuntary relocation.x}  yOh'ԍMobex Reply to Opposition at 3; Duke Energy Reply to Opposition at 78.x We  S'agree with Mobex and Duke Energy. In the 800 MHz Memorandum Opinion and Order on  S'Reconsideration, the Commission reduced the twoyear mandatory negotiation period to one year, concluding that a oneyear voluntary negotiation period and a oneyear mandatory negotiation period would provide parties with the flexibility to negotiate voluntarily while ensuring that relocation occurs  S<'expeditiously.<X}  {O4'ԍ800 MHz Memorandum Opinion and Order on Reconsideration, 12 FCC Rcd at 9972,  52. This approach is consistent with the Commission's decision in broadband PCS to adopt a oneyear voluntary negotiation period and a oneyear mandatory negotiation period for the C, D, E, and F blocks. Accordingly, we decline to further reduce the negotiation period for incumbents and EA licensees in the upper 200 channels. Moreover, on December 4, 1998, the Bureau announced  S'the commencement of the voluntary negotiation period.*\}  {O& 'ԍSee "Wireless Telecommunications Bureau Announces the Commencement of the Voluntary Negotiation  {O 'Period for the Relocation of Incumbent Licensees in the 800 MHz Band," Public Notice, DA 99283 (rel. December 4, 1998). * Further revision of the time period for negotiation would cause an undue administrative burden on licensees and the Commission.  S$ '41.` ` SBT requests that the Commission establish a time period after which an incumbent  S 'may terminate relocation negotiations if it does not reach agreement with the EA licensee.N }  yO'ԍ\ SBT Petition at 19.N SBT's proposal would thus allow an incumbent that is subject to mandatory relocation to avoid being relocated if it could not agree with the EA licensee within a specified time. We decline to adopt SBT's proposal. We believe that our phased negotiation plan provides adequate protection of  S\'incumbent licensees' interests. In the 800 MHz Memorandum Opinion and Order, we reduced the mandatory negotiation period to one year for the purpose of minimizing the period of uncertainty concerning relocation. Allowing incumbents to circumvent the involuntary relocation phase by terminating the relocation process would be fundamentally inconsistent with our decision to clear incumbents from the upper 200 channel blocks so that EA licensees can implement their wide area systems. By providing incumbents with the ability to terminate the relocation process after a certain period of time, we would encourage some incumbents to refrain from negotiating in good faith. We see no need to upset the balance we previously established between the interests of EA licensees and relocated incumbents.  S' 2.` ` Comparable Facilities   S~'` ` a. System  S.'42.` ` In the 80 0 MHz Second Report and Order, the Commission defined "system" functionally from the end user's point of view. A system is comprised of base station facilities that operate on an integrated basis to provide service to a common end user, and all mobile units"0*&&PP"  S'associated with those base stations.u}  {Oh'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 19112,  91.u A system can include multiplelicensed facilities that share a common switch or are otherwise operated as a unitary system, provided that an end user has the ability  S'to access all such facilities.BZ}  {O'ԍId. B Although we defined "system" broadly to provide incumbent licensees flexibility to continue meeting their customers' needs, we specifically excluded from our definition facilities that are operationally separate and managed systems that are comprised of individual  S8'licenses.K8}  {O 'ԍId. at 19112, n.189.K  S'43.` `     Discussion. AMTA and PCIA seek clarification of our definition of "system."h~}  {O 'ԍAMTA Petition at 45; PCIA Petition at 68.h PCIA notes that the SMR relocation process will involve the reprogramming of mobile units, which  S'will cause service interruption to customers.L}  yOH'ԍPCIA Petition at 68.L PCIA believes the harm due to such disruption can be minimized through the use of a redundant mobile system, in addition to a redundant backbone (i.e.,  SH 'repeater equipment and antennas).@H }  {O'ԍId. at 8.@ PCIA thus requests confirmation that the costs of a redundant  S 'mobile system and redundant backbone are recoverable relocation costs. In addition, SBT contends  S 'that our definition of "system" should extend to control and roamer units.G 2 }  yO'ԍSBT Petition at 1314.G  S '44.` ` We agree with PCIA that our definition of "system" should include redundant mobile units and a redundant backbone when necessary to effect a relocation that is transparent to the end  SX'user. In the 80 0 MHz Second Report and Order, we stated that it may be necessary for the incumbent licensee to operate the old system and the new system simultaneously to ensure a seamless  S 'transition.v  }  {Ol'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 19122,  119.v We also recognized, however, that EA licensees and incumbents may agree upon  S'alternative means to avoid a substantial disruption in service.NT }  {O'ԍId. at 19122,  119.N Therefore, we believe that the costs of redundant mobile units and redundant systems are reimbursable costs, but only to the extent that they are necessary to avoid a substantial disruption in service.  Sj'  SB'45.` ` With respect to SBT's request that we include control stations and roamer units in our definition of "system," we decline to engage in a specific detailed analysis of the various individual components that potentially could be included in a system. Because our definition of system is defined functionally from the end user's point of view, EA licensees are required to look to the"0*&&PPe" function of a specific component and consider whether the equipment in question is part of a unitary system providing service to the end user. Individual components, such as control stations and roamer units, must meet these requirements to appropriately fall within our definition.  S`'46.` ` In the 800 MHz Second Report and Order, our definition of system did not include  S:'managed systems that are comprised of individual licenses.s:}  {O'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 19112, n.189.s AMTA requests that we reconsider this decision and define an integrated system to include separately licensed but commonly managed  S' systems in which users are able to manually access multiple base stations.RZ}  {O 'ԍAMTA Petition at 45.R We decline to expand our definition of "system" to include commonly managed systems that are comprised of individual licenses. To the extent that a manager operates separately licensed facilities as a unitary system that could meet our definition of "system," such operation would be likely to conflict with the licensees' obligation under Section 310(d) of the Communications Act to retain exclusive responsibility for the  S" 'operation and control of authorized facilities.L" }  {O'ԍ47 U.S.C.  310(d). See also 47 C.F.R.  90.403 (requiring licensees to exercise sufficient direction and  yOx'control of authorized facilities to assure compliance with applicable statutory and regulatory provisions);   {O@'Intermountain Microwave, 12 FCC 2d 559, 560, 24 Rad. Reg. (P&F) 983 (1963) (establishing six factors to determine whether an unauthorized transfer of control has taken place in violation of Section 310(d) of the Communications Act). L And, as noted above, to the extent that such facilities  S 'are kept operationally separate, they are excluded from our definition of "system."    S '    S '` ` b.  Capacity (#  SZ'47.` ` Background. To comply with our capacity requirements, an EA licensee must provide an incumbent licensee with equivalent channel capacity. We defined channel capacity as the same  S 'number of channels with the same bandwidth that is currently available to the end user.u }  {OJ'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 19112,  92.u If a different channel configuration is used, it must have the same overall capacity as the original  S'configuration.:2 }  {O'ԍId.: Accordingly, comparable channel capacity requires equivalent signaling capability,  S'baud rate and access time.M }  {O'ԍId. at 19113,  92.M  SB'48.` ` Discussion. Genesee argues that a definition of comparable facilities must take into account that the incumbent licensees of the upper 200 channels were originally granted 450 kHz spacing between channels such that a fivechannel SMR system could be operated with an RF  S'transmitter/receiver on one antenna.GV }  yO%'ԍGenesee Petition at 2.G Genesee contends that it is possible for EA licensees to offer to"0*&&PPX" retune an incumbent licensee's channels by placing the channels together at one end of the upper 200  S'channel block, with much closer spacing between channels.:}  {O@'ԍId.: Genesee argues that it will be difficult to operate a new radio system with very close frequencies, and as an example, states that a ten channel system in which channels are spaced closer together could require a more powerful transmitter and  S`'five antennas rather than one or two.B`Z}  {OZ'ԍId. at 23.B  S'49.` ` We do not believe that retuning requires the exact channel spacing that the incumbent licensee had on the upper 200 channels. Because of the large number of incumbent licensees presently licensed on the lower 230 channels, we believe that some relocated licensees will not receive the exact channel spacing that the relocated licensees had on the upper 200 channels. We emphasize, however, that in these situations, the EA licensee must configure the system in a way that does not compromise channel capacity and must reimburse the incumbent for the increased cost of operating the  S 'reconfigured system.Y }  {O'ԍSee paragraphs 5051, infra.Y  S '  S '` `  c. Operating Costs   S '` `  i.Increased Operating Costs  S0'50.` ` Background. In the 800 MHz Second Report and Order, we defined operating costs as  S 'costs that affect the delivery of services to the end user.u ~}  {O('ԍ800 MHz Second Report and Order, 12 FCC Rcd at 19113,  94.u We stated that if the EA licensee provides facilities that entail higher operating costs than the operating cost of the incumbent's previous system, and the cost increase is a direct result of the relocation of the system, the EA licensee must  S'compensate the incumbent licensee for the difference.;}  {OB'ԍId. ;  SB'51.` ` Discussion. Genesee asserts that relocating an incumbent licensee to channels with spacing of less than 250 kHz separation may require a higher power transmitter and larger antennas,  S'thereby resulting in increased operating costs.M}  yO4 'ԍGenesee Petition at 4.M Genesee contends that we failed to provide for these  S'increased costs.:2 }  {O"'ԍId.: We disagree. As noted above, EA licensees are required to reimburse incumbents  S'for increases in operating costs that are directly related to the relocation. In the 800 MHz Second  S|'Report and Order, we also explained that operating costs associated with the relocation might consist of either increased recurring costs associated with the replacement facilities or increased maintenance"V 0*&&PP"  S'costs.u}  {Oh'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 19113,  94.u Accordingly, if a higher power transmitter or larger antennas are necessitated by relocation, the incumbent should be compensated for any additional rental payments, increased utility fees, or increased maintenance costs associated with the new transmitter or antennas.  S'   S`'` `  ii. Cost Recovery Period   S'52.` ` Background. While we concluded in the 800 MHz Second Report and Order that EA licensees should be responsible for increased operating costs caused by relocation, we noted that  S'identifying whether increased costs are attributable to relocation becomes more difficult over time.PZ}  {O 'ԍId. at 1911314,  95.P We therefore determined not to impose this obligation indefinitely, but stated that the EA licensees  Sr'obligation to pay increased costs will end five years after relocation has occurred.:r}  {O 'ԍId.: We further concluded that a five year payment period appropriately balances the interest of EA licensees and  S" 'relocated incumbents.&" ~}  {O@'ЍId. This approach is consistent with the approach we have adopted for microwave relocation. See Amendment to the Commission's Rules Regarding a Plan for Sharing the Costs of Microwave Relocation, WT  {O'Docket No. 95157, First Report and Order and Further Notice of Proposed Rulemaking, 11 FCC Rcd. 8825,   {O'31 (1996) (Microwave Relocation Cost Sharing First Report and Order).  S '53.` ` Discussion. Chadmoore and Genesee argue that EA licensees should be required to  S 'reimburse relocated incumbent licensees for at least a tenyear period.y l }  yO'ЍChadmoore Reply to Opposition at 67; Genesee Petition at 45.y They maintain that because communication systems are put into service by operators, licensees expect a tenyear life cycle for most communication systems, and it is only equitable that an EA licensee should assume new  S2'recurring expenses in excess of existing recurring expenses for a tenyear period.:2 }  {O'ԍId.: Nextel disagrees  S 'and supports a threeyear limitation on repayment of recurring expenses.R  }  yO8'ЍNextel Opposition at 8.R Nextel argues that any payments beyond a threeyear period would be purely speculative and beyond the realm of our cost  S'reimbursement parameters.D}  {Ox!'ЍId.D  Sj'54.` ` We reject Chadmoore and Genesee's arguments and decline to lengthen the cost recovery period from a fiveyear period to a tenyear period. Although some communications equipment may have a tenyear life expectancy, that fact alone does not justify lengthening the period for reimbursement of increased operating and maintenance costs. We continue to believe that five"0*&&PP" years is a sufficient period for the EA licensees to be responsible for increased operating costs caused by relocation. A fiveyear time period will facilitate the speedy resolution of relocation issues. Because a determination of whether increased costs are attributable to relocation becomes more difficult over time, maintaining this fiveyear period will prevent EA licensees from being overburdened with costs which may not be attributable to relocation.  S'55.` ` Further, we believe the rationale we provided in the Microwave Relocation Cost  S'Sharing First Report and Order is equally applicable to the relocation of SMR facilities.}  {OR'ԍMicrowave Relocation Cost Sharing First Report and Order, 11 FCC Rcd at 8843,  31. The fiveyear cost recovery period is not unfair to incumbent licensees because, after five years, many incumbent licensees would have been forced to bear some of these costs themselves if they had not  St'been relocated by the EA licensee.ltZ}  {On 'ԍId. We noted that increased rents was one such cost.l We also noted that a fiveyear period is sufficient because it provides incumbent licensees adequate time to budget, plan and allocate resources to meet these  S$ 'expenses upon the expiration of the fiveyear period.:$ }  {O'ԍId.:  S '56.` ` Thus, we remain convinced that the fiveyear cost recovery period strikes an appropriate balance between the interests of the EA licensees and the incumbent licensees. Because the fiveyear period is not unfair to EA licensees, we also decline to reduce the period to three years  S\'as requested by Nextel.H\~}  yOz'ԍNextel Opposition at 8.H We disagree that costs incurred beyond a threeyear period would be  S4'"speculative and beyond the realm of [the] cost reimbursement parameters.":4}  {O'ԍId.: Thus, the cost recovery  S 'period will remain at five years.  S'X3.X` ` Other Payment Issues q(#`   Sl'` ` a. Timing of Payments to Incumbents (#`  SD'  S'57.` ` Background. In the 800 MHz Second Report and Order, we stated that reimbursement payments for relocation are due (a) when the incumbent licensee has been fully relocated, and (b) the  S'frequencies are free and clear.v}  {O!'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 19123,  124.v  S~'58.` ` Discussion. AMTA and PCIA contend that incumbent licensees should be reimbursed  SV'for the cost of relocation as those expenses are incurred.hV2 }  yO(%'ԍPCIA Petition at 910; AMTA Reply to Opposition at 24.h We disagree, and reiterate that payment of relocation costs will not be due until the incumbent has been fully relocated and the frequencies are". 0*&&PP"  S'free and clear. We continue to believe that this approach promotes a more expeditious relocation process by establishing a definite time at which reimbursement is due. EA licensees have made substantial payments to serve their markets. Thus, they have a large financial incentive to relocate the incumbent licensees, construct their facilities, and begin operating. We believe that this approach strikes an appropriate balance between the rights and responsibilities of EA licensees and incumbent licensees during the course of the relocation. We further note that parties are free to negotiate when reimbursement of relocation costs will occur, and may agree to reimbursement as such expenses are incurred.  S'   S'` ` b. Compensable Costs  SH '59.` `   Background . In the 800 MHz Second Report and Order, we concluded that reimbursable relocation costs could include incumbent transaction expenses such as legal and  S 'consulting fees, configuration of antennas, increased rental space, and administrative costs. }  {Ob 'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 19120122,  115, 118.  * However, because we wanted to encourage a fast relocation process free of disputes, we determined  S 'that the bulk of compensable costs should be tied as closely as possible to actual equipment costs.[ Z}  {O'ԍId. at 19121122,  118.[ Therefore, we required EA licensees to reimburse incumbents only for those transaction expenses that  SZ'are directly attributable to the relocation, subject to a cap of two percent of the hard costs involved.BZ}  {O'ԍXId.(#B  S '60.` ` Discussion. Genesee maintains that the Commission did not provide compensation to the end user for service interruptions when vehicle radio units are out of service for realignment and  S'retuning to the new frequencies.Q~}  yO'ЍGenesee Petition at 4.Q Genesee questions how the Commission will compel end users to  S'comply with mandatory retuning without providing any incentives for end users to cooperate.@}  {O@'ԍId. at 6.@ We reject Genesee's suggestion to compensate end users of incumbent licensee systems, because such compensation would be inconsistent with our determination that the bulk of compensable costs should be tied as closely as possible to the licensee's actual equipment costs. The Commission's purpose is not to compel end users to receive service from one licensee as opposed to another licensee. Our goal in mandating relocation is to promote competition, provide SMR licensees with flexibility to deploy multiple technologies, establish regulatory symmetry among similar CMRS licensees and ensure that use of the 800 MHz SMR spectrum is in the public interest.  SR'   S*'D.Partitioning and Disaggregation for 800 MHz and 900 MHz Licensees  S'61.` ` Background. In the 800 MHz Second Report and Order, the Commission adopted flexible partitioning and disaggregation rules for all licensees in the 800 MHz and 900 MHz SMR"0*&&PP" services. Specifically, the Commission extended partitioning to all incumbent and EA licensees on both the upper 200 and lower 230 channels of the 800 MHz SMR service and to all incumbent and  S'Major Trading Area (MTA) licensees on the 200 channels of the 900 MHz service.z}  {O'ԍSee 800 MHz Second Report and Order, 12 FCC Rcd at 19134,  156.z Similarly, the Commission concluded that all incumbent and EA licensees in the 800 MHz SMR service and all incumbent and MTA licensees in the 900 MHz SMR service should be allowed to disaggregate portions of their spectrum.   S'62.` ` Discussion. Entergy and Delmarva request clarification that our geographic partitioning and spectrum disaggregation rules apply to PMRS licensees in the 800 MHz and 900 MHz  S'SMR services. In the 800 MHz Second Report and Order, we determined that our partitioning and  Sr'disaggregation rules should apply to all licensees in all SMR channel blocks.rZ}  {Ol 'ԍId. at 1912829,  141. See 47 C.F.R.  90.813, 90.911.ą We made no distinction on the basis of licensees' regulatory classification as PMRS or CMRS, and we see no reason to prohibit PMRS licensees on either SMR channels or General Category Channels from partitioning and disaggregating spectrum. Application of the partitioning and disaggregation rules to PMRS licensees will result in more efficient use of the spectrum by allowing licensees to transfer part of their spectrum to a party that more highly values it.  S '  SZ' E. Competitive Bidding Issues  S ' 1.` ` Auctionability  S'63.` `  Background. In the 800 MHz Second Report and Order, we concluded that competitive bidding is an appropriate licensing mechanism for the General Category and lower 80  Sl'channels of the 800 MHz SMR service.l}  {O'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 1915319154,  228229. We concluded that the 800 MHz SMR service satisfies the criteria set forth by Congress for determining when competitive bidding should be used. We noted that competitive bidding will further the public interest requirements of the Communications Act by promoting rapid deployment of services, fostering competition, recovering a portion of the value of the  S'spectrum for the public, and encouraging efficient spectrum use.@~}  {O'ԍId.@ We further noted that under Commission rules a diverse group of applicants including incumbent licensees and potential new providers of this service will be able to participate in the auction process because we have decided not  ST'to restrict eligibility for EA licenses.:T}  {O"'ԍId.: Finally, we adopted special provisions for small businesses  S,'seeking EA licenses.\,}  {On$'ԍId. at 1915219153,  224227.\ "4 0*&&PPh"Ԍ S'64.` `    Discussion. Several petitioners request that the Commission use procedures other than  S'competitive bidding to license 800 MHz SMR.}  yOB'ԍSBT Petition at 14; UTC Comments at 23; ACSC Petition at 7; ITA Petition at 46. In essence, petitioners contend that this band does not fit within the Congressional criteria for auctions because the General Category and lower 80 channels of the 800 MHz SMR band do not meet the original statutory criteria governing  Sb'auctionability contained in Section 309(j) of the Communications Act,%zbX}  yOZ'ЍUnder 47 U.S.C.  309(j), as originally enacted by the Omnibus Budget Reconciliation Act of 1993 (the "Budget Act"), the Commission was authorized to grant initial licenses through competitive bidding if mutually exclusive applications are accepted for filing, the principal use of the spectrum is a subscription service, and the system of competitive bidding promotes the objectives of 47 U.S.C.  309(j)(3). These objectives include: (i) development and rapid deployment of new technologies and services; (ii) avoiding processing delays and excessive concentration of licenses; (iii) promoting economic opportunity; and (iv) the efficient use of the  {O 'spectrum. 47 U.S.C 309(j)(3). See ACSC Petition at 7.% or the criteria as amended by  S:'the enactment of the Balanced Budget Act of 1997.:}  yOt'ԍBalanced Budget Act of 1997, P.L. No. 10533, 111 Stat. 251 (1997), to be codified in relevant part at 47 U.S.C.  309(j)(1), (2) ("Balanced Budget Act"). In opposition to the petitioners, Nextel supports  S'the Commission's decision to license 800 MHz SMR by competitive bidding.i }  yO'ԍNextel Opposition to Petitions for Reconsideration at 3.i  S'65.` ` We reaffirm our conclusion that competitive bidding is the appropriate tool to resolve mutually exclusive license applications for the General Category and lower 80 channels of the 800  Sr'MHz SMR service.}r }  yO'ЍSBT also seeks clarification on the method that we would use to assign licenses for partitioned or disaggregated 800 MHz and 900 MHz band spectrum that is returned to the Commission when a licensee's failure to meet the applicable construction or coverage requirement results in the automatic cancellation of its license. SBT Petition at 8. Our decision to implement geographic area licensing and competitive bidding in these bands applies both to spectrum being licensed for the first time and spectrum returned to the Commission when an existing license is cancelled. } No commenters raise any new arguments that persuade us to change our conclusion that making the 800 MHz SMR spectrum available for public use through auction will lead, most efficiently and effectively, to the deployment of new technologies and services to the public. We continue to believe that competitive bidding furthers the public interest by promoting rapid development of service, fostering competition, recovering a portion of the value of the spectrum for  S 'the public, and encouraging efficient spectrum use.$ }  {OD 'ԍSee 800 MHz Second Report and Order, 12 FCC Rcd at 1915419156,  229233; 800 MHz First  {O!'Report and Order, 11 FCC Rcd at 1540,  149. See Fresno Mobile Radio, Inc. v. FCC, 165 F.3d 965, 97071 (D.C. Cir. 1999) (Commission acted within its discretion in deciding to award geographic area licenses in the 800 MHz band by auction).  SZ'66.` ` Several petitioners contend that Section 309(j)(6)(E) of the Communications Act prohibits the Commission from conducting an auction unless it first attempts alternative licensing"2 0*&&PP"  S'mechanisms to avoid mutual exclusivity.Y}  yOh'Ѝ47 U.S.C.  309(j)(6)(E) provides: "Nothing in this subsection, or in the use of competitive bidding, shall... be construed to relieve the Commission of the obligation in the public interest to continue to use engineering solutions, negotiation, threshold qualifications, service regulations, and other means in order to avoid  {O'mutual exclusivity in application and licensing proceedings." See SBT Petition at 1415; Entergy/Delmarva Petition at 3; ACSC Petition at 67; ITA Petition at 79; UTC Comments at 23.Y The Commission has previously construed Section 309(j)(6)(E) to mean that it has an obligation to attempt to avoid mutual exclusivity by the methods  S'prescribed therein only when it would further the public interest goals of Section 309(j)(3).-Nz}  {O'ԍSee DIRECTV, Inc. v. FCC, 110 F.3d 816, 828 (D.C. Cir. 1997) ("Nothing in  309(j)(6)(E) requires the  {O 'FCC to adhere to a policy that it deems outmoded 'to avoid mutual exclusivity in ... licensing proceedings'"); 800  {O^ 'MHz Second Report and Order, 12 FCC Rcd at 19104, 19154  62, 230; 800 MHz Memorandum Opinion and  {O( 'Order, 12 FCC Rcd at 1000910  115 (Section 309(j)(6)(E) does not prohibit Commission from conducting an  {O 'auction without first attempting alternative licensing mechanisms to avoid mutual exclusivity). See also  {O 'Amendment of the Commission's Rules Regarding the 37.038.6 GHz and 38.640.0 GHz Bands, Report and  {O 'Order and Second Notice of Further Rule Making, 12 FCC Rcd 18600, 18647,  101 (1997) (previous rules that  yOP'arguably avoided mutual exclusivity were no longer adequate for other reasons). - In the course of this proceeding, we have evaluated the appropriateness of various licensing mechanisms for the 800 MHz SMR service. For example, we found that "firstcome, firstserved" licensing in the 800  S8'MHz SMR service (as a means to avoiding mutual exclusivity) leads to processing delays.t8 }  {Oh'ԍ800 MHz First Report and Order, 11 FCC Rcd at 1541,  150.t For the General Category and lower 80 channels of the 800 MHz SMR frequency band, the use of geographic area licensing combined with competitive bidding will provide for expeditious resolution of the large  S'number of applications that are expected."}  {O'ԍCMRS Third Report and Order, 9 FCC Rcd at 8140,  34142. See also 800 MHz Second Report and  {OL'Order, 12 FCC Rcd at 1908788,  1012.  Sp'67.` ` We do not agree with the contention of some petitioners that the administrative procedures associated with assigning geographic area licenses through auctions are not as efficient as  S 'sitespecific licensing.d ~}  yO>'ԍPCIA Petition at 3; Delmarva/Entergy Petition at 3.d We previously addressed the advantages to both the Commission and  S 'licensees of geographic area licensing.{ }  {O'ԍCMRS Third Report and Order, 9 FCC Rcd at 80428044,  9597.{ Petitioners do not raise any new arguments that would persuade us to reconsider the adoption of EA licensing for the 800 MHz SMR service. We again emphasize that geographic area licensing offers a flexible licensing scheme that eliminates the need for many of the complicated and burdensome licensing procedures that hampered SMR development in  SX'the past.:X}  {O#'ԍId.: Therefore, we reject once again other licensing procedures for the lower 800 MHz SMR spectrum. By determining that it would not be in the public interest to implement other licensing"0!20*&&PP" schemes or processes that avoid mutual exclusivity, the Commission has fulfilled its obligation under  S'Section 309(j)(6)(E).e^}  {O@'ԍSee Revision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of  {O 'Paging Systems, WT Docket No. 9618, Memorandum Opinion and Order on Reconsideration and Third Report  {O'and Order, FCC 9998,  11 (rel. May 24, 1999).e  S'68.` ` In the 800 MHz Second Report and Order, we concluded that mutually exclusive applications for the lower 80 and General Category Channels were auctionable under the auction  S:'authority provided the Commission by the 1993 Budget Act.:}  {O 'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 1915319156,  228234. This conclusion is unchanged by the Balanced Budget Act of 1997, which amended Section 309(j) to expand the Commission's auction  S'authority.}  yO 'ԍBalanced Budget Act of 1997, Pub. L. No. 10533,  3002, 111 Stat. 251 (1997) (amending 47 U.S.C.   {O '309(j)). See also Fresno Mobile Radio, Inc. v. FCC, 165 F.3d 965, 97071 (D.C. Cir. 1999). The Commission is now required to assign initial licenses by competitive bidding  S'whenever mutually exclusive applications are accepted for filing, with certain limited exceptions.Y^}  {O<'ԍSee 47 U.S.C.  309(j)(1), (2). See also Implementation of Sections 309(j) and 337 of the  {O'Communications Act of 1934, as amended, WT Docket No. 9987, Notice of Proposed Rulemaking, FCC 9952,  {O'14 FCC Rcd 5206 (1999) ("BBA NPRM"). Y We have concluded in other proceedings that the revised statute does not require us to reexamine our determinations that specific services or frequency bands were auctionable under the more restrictive  SJ 'definition of the 1993 Budget Act.fFJ }  {O'ԍSee BBA NPRM at  24 (stating that consistent with previous proceedings, the NPRM will not reexamine the Commission's previous determinations that specific services or frequency bands were auctionable under the 1993 Balanced Budget Act); Amendment of the Commission's Rules Concerning Maritime  {OD'Communications, PR Docket No. 92257, Third Report and Order and Memorandum Opinion and Order, 13 FCC Rcd 19853, 1988283 at  6061 (1998) (earlier finding that public coast service is subject to competitive bidding is unchanged by Balanced Budget Act); Amendment of Part 90 of the Commission's Rules to Adopt  {O'Regulations for Automatic Vehicle Monitoring Systems, PR Docket No. 9361, Second Report and Order, 13 FCC Rcd 15182, 1518788  9 (1998).f  S '69.` ` ACSC and UTC contend that the Commission failed to grant emergency road service providers and other public safety licensees an exemption from the 800 MHz auction, contrary to  S 'Section 309(j)(2) of the Communications Act. }  {OX 'ԍACSC Petition at 23; UTC Comments at 45. See  47 U.S.C.  309(j)(2). Section 309(j)(2) identifies classes of licenses that are exempt from the competitive bidding process, including licenses for public safety radio services. The Balanced Budget Act of 1997 defined public safety radio services to include "private internal radio services used by State and local governments and non-government entities, and including emergency road services provided by not-for-profit organizations, that (i) are used to protect the safety  S'of life, health, or property; and (ii) are not made commercially available to the public."M}  yO"&'ԍ47 U.S.C.  309(j)(2)(A).M We have""00*&&PP" previously determined that the public safety radio services exemption does not entitle individual users  S'to remove licenses from auctions licensing simply by claiming a public safety use.?Z}  yO@'ԍAmendment of Part 90 of the Commission's Rules to Adopt Regulations for Automatic Vehicle  {O'Monitoring Systems, PR Docket No. 9361, Order on Reconsideration of the Second Report and Order, FCC 993, 14 FCC Rcd 1339, 1343,  6 (Jan. 21, 1999).? Thus, contrary to ACSC's contentions, the exemption does not apply to spectrum that is allocated for SMR use and  S'which has already been determined to be auctionable.}  {O'ԍSee 800 MHz Memorandum Opinion and Order on Reconsideration, 12 FCC Rcd at 1000304,  100102. We emphasize, however, that the Commission is committed to making available sufficient spectrum to accommodate efficient, effective telecommunications facilities and services to satisfy public safety communications needs into the 21st century. To this end, the Commission commenced a rulemaking proceeding to evaluate and plan for present and future public safety communications requirements, and recently reallocated for public  S'safety services 24 MHz of spectrum between 746 and 806 MHz.D}  {O'ԍSee The Development of Operational, Technical and Spectrum Requirements For Meeting Federal, State and Local Public Safety Agency Communications Requirements Through the Year 2010, WT Docket No. 9686,  {O6'First Report and Order and Third Notice of Proposed Rulemaking, FCC 98191, 14 FCC Rcd 152 (1998);  {O'Reallocation of Television Channels 6069, the 746806 MHz Band, ET Docket No. 97157, Report and Order, 12 FCC Rcd 22953 (1998).  Sp' 2.` ` Eligibility  S '70.` `  Background. In the 800 MHz Second Report and Order and the 800 MHz  S 'Memorandum Opinion and Order we concluded that General Category and lower 80 channels would be licensed on a geographic basis and subject to competitive bidding to resolve mutually exclusive  S 'applications. }  {OF'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 1908619088,  812; 800 MHz SMR  {O'Memorandum Opinion and Order, 12 FCC Rcd at 1000310004,  101. Earlier, in the 800 MHz SMR First Report and Order, we concluded based on comments in the proceeding and on our licensing records that the primary demand for General  S^'Category channels came from SMR operators.t^V }  {OT'ԍ800 MHz First Report and Order, 11 FCC Rcd at 1535,  137.t When we froze General Category licensing in 1995,  S6'we noted that the number of SMR applications for these channels had risen markedly6}  {O'ԍLicensing of General Category Frequencies in the 806809.750/851854.750 MHz Bands, Order, 10 FCC Rcd 13190 (1995). and, as such, we believed that such activity is itself an indication that demand for the spectrum exists. Moreover, as a result of geographic area licensing on the upper 200 channels, there is a substantial demand for General Category channels among legitimate small SMR operators, including incumbents that relocate from the upper 200 channels. "n#B0*&&PP "Ԍ S'71.` `  Discussion. Based on the factors discussed above, and on the more extensive record developed in the course of the 800 MHz proceeding, we continue to believe that the lower 80 and General Category channels of 800 MHz SMR service should be licensed through our competitive bidding process and open to all parties, as opposed to incumbents solely, consistent with all recent  S`'auctions.`}  {O'ԍSee generally, 800 MHz First Report and Order, 800 MHz Memorandum Opinion and Order, and 800  {M'MHz Second Report and Order. Thus, we disagree with the parties that contend that the Commission should limit  S8'participation in the 800 MHz SMR auction to SMR and/or nonSMR incumbents.~8"}  yO'ԍPCIA Petition at 3; Entergy/Delmarva Petition at 3; PCIA Reply Comments at 1.~ PCIA, for example, believes that the Commission should limit eligibility for geographic area licenses to those incumbent licensees who provide coverage to 70% of their market areas. It further argues that the  S'rules adopted in the Second Report and Order will encourage the filing of applications for anti-competitive or speculative purposes, which may result in high license costs and degradation of  Sr'service to the public.Fr}  yO'ԍPCIA Petition at 36.F We have fully considered PCIA's proposal but have determined that we will maintain open eligibility and the requirement that incumbents participate in competitive bidding regardless of the extent of their coverage. We believe that open eligibility will foster competition and result in a diverse group of 800 MHz SMR providers, and that the competitive bidding process will adequately deter speculation. These rules are consistent with the rules for other CMRS services, and encourage the participation of diverse providers that are serious enough to meet the requirements of the competitive bidding process.  S2'72.` ` We also reject petitioners' view that our approach will harm the interests of non S 'commercial licensees by requiring them to compete for spectrum with commercial systems.m B}  yO'ԍACSC Petition at 34; ITA at 67; UTC Reply Comments at 23.m As we  S'noted in the 800 MHz Second Report and Order, there are several ways in which nonSMRs can  S'benefit from our geographic licensing rules.o}  {O.'ԍ800 MHz Second Report and Order at 1908719088,  12.o For example, noncommercial operators may not only apply individually for geographic area licenses, but may also participate in joint ventures (with other noncommercial operators or with commercial service providers) or obtain spectrum through partitioning and disaggregation to meet their spectrum needs. We also expect that geographic area licensing of SMR and General Category spectrum will free up nonSMR spectrum in the 800 MHz band, providing more options for noncommercial operators where availability of General Category  S'spectrum is limited.:d }  {O!'ԍId.: Finally, we are continuing with our initiatives to provide sufficient spectrum  S'for noncommercial operations through our Refarming proceeding.Z }  yO:$'ԍReplacement of Part 90 by Part 88 to Revise the Private Land Mobile Radio Services and Modify the  {O%'Policies Governing Them, PR Docket No. 92235, Second Report and Order, FCC 9761, 12 FCC Rcd 14307  yO%'(1997); The Development of Operational, Technical and Spectrum Requirements for Meeting Federal, State and"%0*&&%" Local Public Safety Agency Communication Requirements Through the Year 2010, WT Docket No. 9686,  {OX'Second Notice of Proposed Rulemaking, FCC 97373, 12 FCC Rcd 17706 (1997). "$"0*&&PP"Ԍ S'ԙ73.` ` Entergy/Delmarva ask that the Commission clarify that nonSMRs are eligible to bid  S'on the lower 80 channels.R"}  yO'ԍEntergy/Delmarva Petition at 67.R As discussed above (see  71, supra), the auction of lower 80 channels is  S'open to all parties with no limit on eligibility.}  yO'ԍAlthough nonSMR operators are eligible to hold licenses in the lower 80 SMR channels, these channels  {O'continue to be designated for SMR use only. See supra paragraph 34. While we conclude that nonSMRs are eligible for licensing, we emphasize that this in no way affects our decision to license the General Category and lower 80 channels geographically, with mutually exclusive applications resolved through competitive  S:'bidding with open eligibility. We have not altered our conclusion in the 800 MHz First Report and  S'Order and the 800 MHz Memorandum Opinion and Order that General Category and lower 80 channels are subject to competitive bidding under Section 309(j).  S' 3.` ` Competitive Bidding Design  SN ' ` ` a. License Grouping  S '74.` `  Background. In the 800 MHz Second Report and Order, we stated that to expedite the process of auctioning the lower 80 and General Category EA licenses, we would auction these licenses using the five regional groups that were used for the regional narrowband Personal  S 'Communications Services (PCS) auction: Northeast, South, Midwest, Central, and West.v }  {O4'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 19157,  238.v  S8'75.` `  Discussion. On reconsideration, we amend the method by which we will group licenses for auction. While we continue to believe that licenses should be grouped for competitive bidding purposes in a manner that will reduce the administrative burden on auction participants, particularly small businesses, we will not use the five regional groups based on Basic Trading Areas that were used in the regional narrowband PCS auction. Instead, we will direct the Bureau to  Sp'determine, pursuant to its delegated authority,|p}  {O'ԍSee Amendment of Part 1 of the Commission's Rules Competitive Bidding Proceeding, WT Docket  {Ox'No. 9782, Order, Memorandum Opinion and Order and Notice of Proposed Rule Making, FCC 9760, 12 FCC  {OB'Rcd 5686, 5697,  16 (1997) ("Part 1 Order"); Amendment of Part 1 of the Commission's Rules Competitive  {O 'Bidding Procedures, WT Docket No. 9792, Third Report and Order and Second Further Notice of Proposed  {O 'Rule Making, FCC 97413, 13 FCC Rcd 374, 44849,  125 (1997) ("Part 1 Third Report and Order"). The Bureau has the discretion to establish and vary the sequence in which the lower 80 and General Category  {Oh"'licenses will be auctioned. See 47 C.F.R.  90.903(a) (1997).| what groups, if any, should be established for auctioning the lower 80 and General Category EA licenses. The Balanced Budget Act of 1997 provides that "before the issuance of bidding rules," the Commission must provide adequate time for" %0*&&PP"  S'parties to comment on proposed auction procedures.}  yOh'ԍBalanced Budget Act of 1997,  3002(a)(1)(B)(iv) (codified at 47 U.S.C.  309(j)(3)(E)(i)). It has been the Bureau's practice to issue a Public Notice seeking comment on auctionspecific operational issues well in advance of the  S'application deadline for each auction.=X}  {O'ԍSee, e.g., Location and Monitoring Service Spectrum Auction Scheduled for December 15, 1998;  {Or'Comment Sought on Reserve Prices or Minimum Opening Bids and Other Auction Procedural Issues, Public  {O<'Notice, 13 FCC Rcd 15501 (1998); 156162 MHz VHF Public Coast Station Spectrum Auction Scheduled for December 3, 1998; Comment Sought on Reserve Prices or Minimum Opening Bids and Other Auction  {O'Procedural Issues, Public Notice, 13 FCC Rcd 17612 (1998).= We therefore conclude that the Bureau, under its existing delegated authority and in accordance with the Balanced Budget Act of 1997, should seek further comment on license grouping and auction sequence, prior to the start of the 800 MHz auction.  S' ` ` b. Upfront Payments  S'76.` `  Background. Currently, applicants have the option to check "all markets" on their shortform applications but submit an upfront payment to cover only those licenses on which they actually intend to bid in any one round. Permitting the selection of "all markets" gives bidders the flexibility to pursue backup strategies in the event they are unable to obtain their first choice of licenses.  S '77.` `  Discussion. PCIA contends that permitting bidders to check the "all markets" box creates artificial mutual exclusivity contrary to the requirements of Section 309(j)(6)(E) of the  S 'Communications Act. }  {O0'ԍSee also 47 U.S.C.  309(j)(6)(E).#X\  P6G;/P#у It also argues that, since bidders' upfront payments need only correspond to the "largest combination of activity units on which the bidder anticipates being active in any single  S0'round,"0}  {Or'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 1916319164,  257258. the ability to check the "all markets" box encourages the participation of speculators in the  S'auctions.N4 }  yO'ԍPCIA Petition at 1618.N To deter speculation, they suggest that the Commission should require each bidder to (1) specify licenses on which it seeks to bid, and (2) submit an upfront payment corresponding to the total  S'licenses specified.h }  {O'#X\  P6G;/P#эId. at 17.h In opposition, Nextel argues that to adopt PCIA's proposal would be contrary to  S'the public interest.oV }  yO!'#X\  P6G;/P#эNextel Opposition at 6.o "h&0*&&PP"Ԍ S'78.` ` We will not adopt the proposal recommended by PCIA. The Commission has expressly rejected identical arguments made by commenters that opposed use of the "all markets"  S'box.J}  yO@'#C\  P6Q/P#эRevision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of Paging  {O'Systems, Second Report and Order and Further Notice of Proposed Rulemaking, 12 FCC Rcd 2732, 2793,  126 (1997).J A bidder must submit an upfront payment sufficient to meet the eligibility requirements for any combination of licenses on which it might wish to bid in a round. This rule forces bidders to  S`'make a payment that reflects their level of interest and protects against speculation. Moreover, we continue to believe that bidders should have the flexibility to pursue backup strategies if they are unable to obtain their first choice of licenses. As demonstrated by all recent auctions, providing  S'bidders flexibility is crucial to an efficient auction and optimum license assignment.e}  {O '#C\  P6Q/P#эSee id.e Because petitioners do not raise any arguments that have not been previously considered and rejected by the Commission, we will retain the current rules, which permit use of the "all markets" box and require an upfront payment that corresponds to the number of licenses on which a bidder anticipates bidding in any one round.  S ' ` ` c. Delegated Authority  S '  S '79.` ` Background. In the 800 MHz Second Report and Order, the Commission delegated to the Bureau the authority to implement many of the Commission's rules pertaining to auctions  SZ'procedures.Z}  {O'#X\  P6G;/P#эSee 800 MHz Second Report and Order, 12 FCC Rcd at 1915819164,  241258. This included the authority to conduct auctions; administer applications, payment,  S2'licenses grant and denial procedures; and determine upfront and down payment amounts.{26}  {O'#X\  P6G;/P#э5 U.S.C.  551 et seq.{  S'80.` `  Discussion. SBT argues that any action by the Wireless Telecommunications Bureau to determine stopping rules and upfront payment amounts, pursuant to the Commission's delegation of authority, is a violation of the Administrative Procedures Act ("APA"), on the grounds that such  Sj'determinations are substantive.nj}  yO'#X\  P6G;/P#эSBT Petition at 1718.n We disagree. Section 0.131 of the Commission's rules explicitly states that the Bureau has delegated authority to develop, recommend and administer policies,  S'programs and rules concerning auctions of spectrum for wireless telecommunications.pX }  yO '#X\  P6G;/P#э47 C.F.R.  0.131(c).p In our Part 1 rulemaking, we clarified that pursuant to 0.131 of our rules, the Chief of the Wireless Telecommunications Bureau has delegated authority to implement all of the Commission's rules  S'pertaining to auctions procedures.Z }  {O*$'#X\  P6G;/P#эSee Part 1 Order at  16, where we noted that the Bureau should, to the extent possible, carry out its duties under this authority through the use of orders, public notices, bidder packages, notices disseminated through the electronic bidding system, and other reasonable means and with the benefit of public comment where"%0*&&%" appropriate. We also noted that the such Bureau actions would be subject to review by the full Commission.  {OX'See also Part 1 Third Report and Order 13 FCC Rcd at 454455,  139.  This includes the authority to choose competitive bidding designs"'"0*&&PP" and methodologies, such as simultaneous multiple round auction or oral outcry auctions and remote electronic bidding or onsite bidding; conduct auctions; administer application, payment, license grant  S'and denial procedures; and determine upfront and down payment amounts.a"}  {Or'#X\  P6G;/P#эId.a These kinds of decisions do not fall under the prohibited activities, set forth in Section 0.331 of the Commission's rules, which include acting upon complaints, petitions, requests, applications for review and notices of proposed  S8'rulemaking.m8}  yO '#X\  P6G;/P#э47 C.F.R.  0.331.m We conclude that the Commission's delegation of authority to the Bureau is valid as it concerns inherently procedural rather than substantive issues and is, therefore, in compliance with our  S'rules.b\D}  {O '#C\  P6Q/P#эSee Amendment of Part 0 of the Commission's Rules to Reflect a Reorganization Establishing the  {O'Wireless Telecommunications Bureau and to Make Changes in Delegated Authority of Other Bureaus, Order, FCC 95213, 10 FCC Rcd 12751 (1995).b Furthermore, the Commission's delegation of authority is in compliance with the APA.  S'Pursuant to 5 U.S.C.  553(b), an agency may modify procedural rules without notice and comment.mh }  yO'#C\  P6Q/P#э5 U.S.C.  553(b).m Because the actions delegated to the Bureau are procedural in nature and do not affect the substantive rights of interested parties, the Commission's delegation of authority falls within that exception.  S ' 4.` ` Treatment of Designated Entities  S ' ` ` a. Installment Payments  S '81.` `  Background. In the 800 MHz Second Report and Order, the Commission deferred to our Part 1 proceeding the decision on whether to adopt installment payments in the lower 80 and  S2'General Category channels.2 }  {O'#X\  P6G;/P#э800 MHz Second Report and Order, 12 FCC Rcd at 1917019171,  279. The Commission determined in its Part 1 Third Report and Order, released in December of 1997, that installment payments should not be used in the immediate future as  S'a means of financing smallbusiness participation in our auction program. }  {O'#X\  P6G;/P#эSee Part 1 Third Report and Order, 13 FCC Rcd at 399400,  38.  S'82.` `  Discussion. AMTA contends that the Commission should retain installment payments for the lower 80 and General Category 800 MHz SMR licenses on the grounds that installment payments are the most significant option for the provision of meaningful small business participation in the spectrum auctions as they allow SMR operators to pay for the license out of the profits  S'generated through the provision of SMR service.}  {O%'#X\  P6G;/P#эAMTA Petition at 1012; AMTA Reply to Opposition at 12. See also SBT Reply to Opposition at 45. "(0*&&PP"Ԍ S' ę83.` ` In the Part 1 Third Report and Order, the Commission considered its use of installment payment plans for future auctions. On the basis of the record in that proceeding and the record developed on installment payment financing for the broadband PCS C block service and on recent decisions eliminating installment payment financing for LMDS and 800 MHz SMR (upper 200 channels), we concluded that, until further notice, the Commission should no longer offer such plans  S:'as a means of financing small businesses and other designated entities seeking spectrum licenses.:}  {O'#X\  P6G;/P#эPart 1 Third Report and Order, 13 FCC Rcd at 400,  40. We note that this conclusion was subject to our request for comment in the Second Further Notice of  S'Proposed Rulemaking portion of the Part 1 Third Report and Order on installment payment issues and means other than bidding credits and installment payments by which the Commission might facilitate  S'the participation of small businesses in our spectrum auction program.;Z}  {O 'ԍId. ;  SL '84.` ` We have carefully considered the use of installment payment plans for 800 MHz SMR  S$ 'licensees. On the basis of our experience as outlined in the Part 1 Third Report and Order,y$ }  {O'ԍSee Part 1 Third Report and Order, 13 FCC Rcd at 399400,  38.y we believe that the public interest is best served by going forward with the auction of the lower 80 and General Category channels without extending installment payments to licensees. In place of installment payments, we established larger bidding credits to provide for the interests of small  S 'business bidders. ~}  {O'#X\  P6G;/P#э800 MHz Second Report and Order, 12 FCC Rcd at 19170,  277. We believe that our adoption of the larger bidding credit both fulfills the mandate of Section 309(j) to provide small businesses with the opportunity to participate in auctions and ensure  S6'that new services are offered to the public without delay.6}  {O'ԍSee Fresno Mobile Radio, Inc. v. FCC, 165 F.3d 965, 971 (D.C. Cir. 1999) (upholding Commission's decision to eliminate installment payment program with respect to 800 MHz SMR licenses).  S'  S'   ` ` b. Designated Entity Provisions  S'85.` `  Background. In the Second Further Notice, we sought comment on the type of designated entity provisions that should be incorporated into our competitive bidding procedures for  SH'the lower 80 and General Category channels.Hj }  {OR'#Xj\  P}G; 2XP## X\  P}G;/P# Second Further Notice, 11 FCC Rcd at 1620,  374. We requested comment on the possibility that, in addition to small business provisions, separate provisions for women and minorityowned entities should be adopted for the lower 80 and General Category channels. We requested that commenters discuss whether the capital requirements of the 800 MHz SMR service pose a barrier to entry by minorities and women and whether overcoming such a barrier, if it exists, would constitute a  S'compelling governmental interest. }  {O%'#Xj\  P}G; 2XP## X\  P}G;/P# Id. at 16241625,  384385. We also urged the parties to submit evidence about patterns or actual cases of discrimination in the 800 MHz SMR industry or in related communications services. "X) 0*&&PP"Ԍ  S'86.` ` In the 800 MHz Second Report and Order, the Commission determined that it had not developed a record sufficient to sustain gender and minoritybased measures in the lower 80 and  S'General Category licenses based on the standard established by the Adarand decision.J}  {O'#Xj\  P}G; 2XP## X\  P}G;/P# Adarand Constructors, Inc. v. Pe9a, 115 S.Ct. 2097 (1995) (constitutionality of all governmentimposed racial classifications determined under a "strict scrutiny" standard of review).J Additionally, we noted the record was insufficient to support any genderbased provisions under the intermediate  S<'scrutiny standard established in the VMI decision.D&<"}  {O'#Xj\  P}G; 2XP## X\  P}G;/P# See United States v. Virginia, 518 U.S. 515 (1996) (Reviewing the singlesex admission policy of the Virginia Military Institute, the Supreme Court held that genderbased government action is subject to the  {O 'intermediate scrutiny standard of review); see also J.E.B. v. Alabama ex. re. T.B., 511 U.S. 127 (1994);  {OZ 'Mississippi University for Women v. Hogan, 458 U.S. 718 (1982). D Based upon the record in that proceeding, we  S'adopted bidding credits solely for applicants qualifying as small businesses.Q}  {O 'ԍSee 47 C.F.R.  90.910.Q We believed these provisions would provide small businesses with a meaningful opportunity to obtain licenses for the lower 80 and General Category channels. Moreover, many women and minorityowned entities are small businesses and will therefore qualify for these provisions. As such, these provisions met Congress' goal of promoting wide dissemination of licenses in this spectrum.   S& '87.` ` Discussion. SBT contends that, by placing the burden of proof regarding past discrimination on the commenters, the Commission violated its congressionallymandated obligation to give small businesses, rural telephone companies, and businesses owned by members of minority  S 'groups and women the chance to participate in the provision of spectrumbased services.H }  yO'#X\  P6G;/P#эSBT Petition at 18. SBT also contends that the Commission's failure to obtain approval of the small  {O'business size standards for the lower 80 and General Category channels tolls the effectiveness of the 800 MHz  {O'Second Report and Order. SBT Supplement to Petition at 3. We disagree. First, SBT cites no authority, and we know of none, that supports their contention. Second, we note that on August 10, 1999, the Small Business  {O'Administration ("SBA"), by letter, approved the small business size standards adopted in the 800 MHz Second  {O'Report and Order for the lower 80 and General Category channels. See Letter from Aida Alvarez, Administrator, Small Business Administration, to Thomas J. Sugrue, Chief, Wireless Telecommunications Bureau, Federal Communications Commission (Aug. 10, 1999). We  S 'disagree. Subsequent to the Budget Act, the Supreme Court issued the Adarand and VMI decisions, which raised legal uncertainty as to whether special auction provisions for minorities and women could withstand a constitutional challenge. In order to determine whether adequate evidence exists to support such provisions, the Commission's Office of Communications Business Opportunities ("OCBO") commenced a series of studies to examine the minority and female ownership of  S'telecommunications and electronic mass media facilities in the United States ("OCBO Studies).}  yO#'ԍStudies currently underway include demographic reviews of the sale and transfer of wireless facilities and broadcast stations. Until completion of the OCBO Studies, it is premature to formulate even tentative conclusions as to the sufficiency of the ownership data being compiled to justify provisions for minority and women"p* 0*&&PP"ԫowned entities. In light of the Supreme Court's decisions, the Commission considered its statutory obligations to (1) award spectrum licenses expeditiously and to promote the rapid deployment of new services to the public without judicial delays, and (2) disseminate licenses among a wide variety of  S'applicants, including designated entities.&}  {O'ԍSee Amendment of Part 1 of the Commission's Rules Competitive Bidding Procedures, Third Report  {O'and Order and Second Further Notice of Proposed Rule Making, WT Docket No. 9782, 13 FCC Rcd 374, 472475,  174178 (seeking comment on how to modify our designated entity provisions consistent with the  {OL'standards set forth in Adarand and VMI.) The designated entity bidding credits adopted for the 800  S`'MHz service are gender and minorityneutral but specifically target small businesses.~`}  {O 'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 1916719168,  271. ~ Auction results indicate that many of the small businesses participating in auctions are also women and minorityowned, therefore effectively furthering Congress' objective of disseminating licenses among a  S'wide variety of applicants.H}  {O '#X\  P6G;/P#эSee FCC Report to Congress on Spectrum Auctions,WT Docket No. 97150, Report, FCC 97353 (rel. October 9, 1997) at 28.   S'E  V. CONCLUSION א\  SH '88.` ` We believe that the revisions and clarifications of our rules adopted in this  S 'Memorandum Opinion and Order on Reconsideration are necessary to finalize our implementation of a new licensing framework for SMR systems that strikes a fair and equitable balance between the competing interests of 800 MHz SMR licensees who seek to provide local service and those desiring to provide geographic area service. We further believe that the revisions and clarifications of our rules will facilitate the rapid implementation of widearea licensing in the SMR service and advance the public interest by fostering the economic growth of competitive new services.  S ' VI. P  ROCEDURAL MATTERS Đ S'\  ` `   S'A.Regulatory Flexibility Act  Sj'89.` ` As required by the Regulatory Flexibility Act (RFA), the Commission has prepared a Supplemental Final Regulatory Flexibility Analysis (Supplemental FRFA) of the possible impact on  S'small entities of the changes in its rules adopted in this Memorandum Opinion and Order on  S'Reconsideration.C}  yO6 'ԍ5 U.S.C.  604.C The Supplemental FRFA is set forth in Appendix C. The Office of Public Affairs,  S'Reference Operations Division, will send a copy of the Memorandum Opinion and Order on  S'Reconsideration, including the Supplemental FRFA, to the Chief Counsel for Advocacy of the Small Business Administration, in accordance with the RFA.  S2' "+2 0*&&PPR"Ԍ S'&H'zu1&B.Paperwork Reduction Act of 1995 Analysis  S' 90.` ` This Memorandum Opinion and Order on Reconsideration contains a modified information collection that the Commission is submitting to the Office of Management and Budget requesting clearance under the Paperwork Reduction Act of 1995.  S:'  S'C.Further Information  S' 91.` ` For further information concerning this Memorandum Opinion and Order on  S'Reconsideration, contact Donald Johnson or Scott Mackoul, Policy and Rules Branch, Commercial Wireless Division, Wireless Telecommunications Bureau at (202) 4187240 or Gary D. Michaels, Auctions and Industry Analysis Division, Wireless Telecommunications Bureau at (202) 4180660.   S '&S VII. ORDERING CLAUSES Đ\  S '92.` ` Authority for issuance of this Memorandum Opinion and Order on Reconsideration is contained in Sections 4(i), 303(r), and 309(j) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 303(r), 309(j).  S'93.` ` Accordingly, IT IS ORDERED that the petitions for reconsideration or clarification filed by the parties listed in Appendix A ARE GRANTED IN PART to the extent provided herein, and otherwise ARE DENIED.  Sp'94.` ` IT IS FURTHER ORDERED that the Commission's rules ARE AMENDED as set  SH'forth in Appendix B. IT IS FURTHER ORDERED that the provisions of this Memorandum Opinion  S"'and Order on Reconsideration and the Commission's rules, as amended in Appendix B, SHALL  S'BECOME EFFECTIVE 60 days after publication of this Memorandum Opinion and Order on  S'Reconsideration in the Federal Register.  S'95.` ` IT IS FURTHER ORDERED that the Commission's Office of Public Affairs,  S`'Reference Operations Division, SHALL SEND a copy of this Memorandum Opinion and Order on  S:'Reconsideration, including the Supplemental Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. ` `  hhCqFEDERAL COMMUNICATIONS COMMISSION ` `  hhCqMagalie Roman Salas ` `  hhCqSecretary "",0*&&PP!"  S' WAPPENDIX A  S'GList of the Parties ă  S`'Petitions for Reconsideration American Mobile Telecommunications Association, Inc. ("AMTA") Automobile Club of Southern California ("ACSC") City of Los Angeles Police Department ("LAPD") Entergy Services, Inc. and Delmarva Power (collectively, "Entergy/Delmarva") Genesee Business Radio Systems, Inc. ("Genesee") Industrial Telecommunications Association, Inc. ("ITA") Personal Communications Industry Association ("PCIA") Small Business in Telecommunications ("SBT")  S 'Supplement to Petitions for Reconsideration Small Business in Telecommunications ("SBT")  S'Opposition to Supplement to Petitions for Reconsideration Nextel Communications, Inc. ("Nextel")  S@'  S'Opposition to Petitions Nextel Communications, Inc. ("Nextel")  S('Replies to Opposition American Mobile Telecommunications Association, Inc. ("AMTA") Automobile Club of Southern California ("ACSC") Chadmoore Wireless Group, Inc. ("Chadmoore") Duke Energy ("Duke") Mobex Communications, Inc. ("Mobex") Personal Communications Industry Association ("PCIA")  S 'Small Business in Telecommunications ("SBT")  S"'Comments on Petitions for Reconsideration Industrial Telecommunications Association, Inc. ("ITA") UTC ("UTC") "%-0*&&PP$"Ԍ S'ÙEx Parte Filings  S'American Mobile Telecommunications AssociationhOctober 29, 1998(#  S'American Petroleum Institute ("API") hhCXqXMarch 24, 1999(#  S`'Chadmoore Wireless Group, Inc. hhCXqXOctober 21, 1997(#  S8'Chadmoore Wireless Group, Inc. hhCXqXNovember 21, 1997(#  S'Industrial Telecommunications AssociationqXJuly 15, 1999(#  S'Nextel Communications, Inc.` XhhCXqXNovember 14, 1997   *(#  S'Nextel Communications, Inc. ` XhhCXqXApril 10, 1998(#  S'Personal Communications Industry AssociationhFebruary 11, 1999(#  Sp'Personal Communications Industry AssociationhJuly 15, 1999(#  SH 'Personal Communications Industry Association hSeptember 29, 1999(#  S 'UTCXX` ` X XXhhCXqXJanuary 30, 1998(# "H$.0*&&PP""  S'Z APPENDIX B  S' #&a\  P6G;g!&P#\ _'Final Rules\ 1 A. 1. a.(1)(a) i) a) 1. 1. 1. a.(1)(a) i) a)  S8' Part 90 of Chapter 1 of Title 47 of the Code of Federal Regulations is amended as follows:  S'  S's PART 90 PRIVATE LAND MOBILE RADIO SERVICES ă  1. Section 90.615 is revised to read as follows:  S '  90.615 Spectrum Blocks available in the General Category for 800 MHz SMR General Category Table 1 " 806821/851866 MHz Band Channels (150 Channels):  S0'Spectrum Block XChannel Nos.(#  S'DXX` ` X X1 through 25(#  S'D1` `  26 through 50  S'EXX` ` X X51 through 75(#  S'E1` `  76 through 100  Sh'FXX` ` X X101 through 125(#  S@'F1` `  126 through 150  S' 2. Section 90.619 is amended by revising paragraphs (a)(5), (b)(8), (b)(9), (b)(10), and (b)(11) to read as follows:  Sx'  SP' 90.619` ` Frequencies available for use in the U.S./Mexico and U.S/Canada border areas. (#`  S(' (a) * * *  (5) * * * TABLE 4A - UNITED STATES-MEXICO BORDER AREA, SMR AND GENERAL CATEGORIES 806-821/851-866 MHZ BAND (95 CHANNELS)  EABased SMR Category (83 Channels)  S"'Spectrum Block XXhhCOffset Channel Nos.(#h  SH$'A` ` X XhhC398399400(#  S %'BXX` ` X XXhhC429431433435437439469471473475477479(#h" %/0*&&PPB$"Ԍ S'CXX` ` X XXhhC509511513515517519549551553555557559589591593595597599(#h  S'GXX` ` X XXhhC229272349(#h  S'HXX` ` X XXhhC230273350(#h  S`'IXX` ` X XXhhC231274351(#h  S8'JXX` ` X XXhhC232278352(#h  S'KXX` ` X XXhhC233279353(#h  S'LXX` ` X XXhhC234280354(#h  S'MXX` ` X XXhhC235309358(#h  S'NXX` ` X XXhhC236310359(#h  Sp'O` `  hhC237311360  SH 'PXX` ` X XXhhC238312389(#h  S 'QXX` ` X XXhhC239313390(#h  S 'RXX` ` X XXhhC240314391(#h  S 'SXX` ` X XXhhC269318392(#h  S 'TXX` ` X XXhhC270319393(#h  S 'UXX` ` X XXhhC271320394(#h  SX'VXX` ` X XXhhC228268308348388(#h General Category (12 Channels)  S'Spectrum Block XXhhCOffset Channel Nos.(#h  Sh'DXX` ` X XXhhC275315(#h  S@'D1` `  hhC355395  S'EXX` ` X XXhhC276316(#h  S'E1` `  hhC356396  S'FXX` ` X XXhhC277317(#h  S'F1` `  hhC357397  (b) * * * (8) * * * TABLE 12 " SMR AND GENERAL CATEGORIES95 Channels [Regions 1, 4, 5, 6] EABased SMR Category (90 Channels)  S!'Spectrum Block XXhhCChannel Nos.(#h  Sp#'AXX` ` X XXhhCNone(#h  SH$'BXX` ` X XXhhC463 through 480(#h  S %'CXX` ` X XXhhC493 through 510, 523 through 540, 553 through 570, 583 through 600(#h"%00*&&PP$"Ԍ S'G through V` ` X XXhhCNone(#h General Category (5 Channels)  S`'Spectrum Block XXhhCChannel Nos.(#h  S'D` `  hhCNone  S'D1XX` ` X XXhhC30(#h  S'EXX` ` X XXhhC60(#h  S'E1` `  hhC90  Sp'FXX` ` X XXhhC120(#h  SH 'F1` `  hhC150 (9) * * * TABLE 16SMR AND GENERAL CATEGORIES60 Channels [Region 2] SMR Category (55 Channels)  S'Spectrum Block XXhhCChannel Nos.(#h  Sh'AXX` ` X XXhhCNone(#h  S@'BXX` ` X XXhhCNone(#h  S'CXX` ` X XXhhC518 through 528, 536 through 546, 554 through 564, 572 through 582, 590 through 600(#h  S'G through V` ` X XXhhCNone(#h General Category (5 Channels)  S('Spectrum Block XXhhCChannel Nos.(#h  S'DXX` ` X XXhhC18(#h  S'D1` `  hhC36  S'EXX` ` X XXhhC5472(#h  S`'E1` `  hhC90  S8'FXX` ` X XXhhCNone(#h  S 'F1` `  hhCNone "%10*&&PP$"Ԍ(10) * * * TABLE 20" SMR AND GENERAL CATEGORIES (135 Channels) [Region 3] SMR Category (120 Channels)  S'Spectrum Block XXhhCChannel Nos.(#h  S'AXX` ` X XXhhC417 through 420(#h  Sp'BXX` ` X XXhhC421 through 440, 457 through 480(#h  SH 'CXX` ` X XXhhC497 through 520, 537 through 560, 577 through 600(#h  S 'G through V` ` X XXhhCNone(#h General Category (15 Channels)  S 'Spectrum Block XXhhCChannel Nos.(#h  S0'DXX` ` X XXhhC383940(#h  S'D1` `  hhC158159  S'EXX` ` X XXhhC787980(#h  S'E1` `  hhC160198  S'FXX` ` X XXhhC118119120(#h  Sh'F1` `  hhC199200 (11) * * * TABLE 24(REGIONS 7,8) SMR AND GENERAL CATEGORIES " 190 Channels SMR Category (172 Channels)  S'Spectrum Block XXhhCChannel Nos.(#h  S'AXX` ` X XXhhC389 through 400(#h  S'BXX` ` X XXhhC425 through 440, 465 through 480(#h  S`'CXX` ` X XXhhC505 through 520, 545 through 560, 585 through 600(#h  S8'GXX` ` X XXhhC155229269309349(#h  S 'HXX` ` X XXhhC156230270310350(#h  S 'IXX` ` X XXhhC157231271311351(#h  S!'JXX` ` X XXhhC158232272312352(#h  S"'KXX` ` X XXhhC159233273313353(#h  Sp#'LXX` ` X XXhhC160234274314354(#h  SH$'MXX` ` X XXhhC195235275315355(#h  S %'NXX` ` X XXhhC196236276316356(#h  S%'OXX` ` X XXhhC197237277317357(#h"%20*&&PP$"Ԍ S'PXX` ` X XXhhC198238278318358(#h  S'QXX` ` X XXhhC199239279319359(#h  S'RXX` ` X XXhhC200240280320360(#h  S'SXX` ` X XXhhC225265305345385(#h  S`'TXX` ` X XXhhC226266306346386(#h  S8'UXX` ` X XXhhC227267307347387(#h  S'VXX` ` X XXhhC228268308348388(#h General Category (18 Channels)  Sp'Spectrum Block XXhhCChannel Nos.(#h  S 'DXX` ` X XXhhC35 through 37(#h  S 'D1` `  hhC38 through 40  S 'EXX` ` X XXhhC75 through 77(#h  S 'E1` `  hhC78 through 80  S 'FXX` ` X XXhhC115 through 117(#h  SX'F1` `  hhC118 through 120 * * * * * *  3. Section 90.621 is amended by revising paragraph (b) introductory text, and paragraphs (b)(1) and (b)(3) to read as follows:  S'  90.621` ` Selection and assignment of frequencies. (#` * * * * * (b) Stations authorized on frequencies listed in this Subpart, except for those stations authorized pursuant to paragraph (g) of this section and EAbased and MTAbased SMR systems, will be afforded protection solely on the basis of fixed distance separation criteria. For Channel Blocks A, through V, as set forth in Section 90.917(d), the separation between co-channel systems will be a minimum of 113 km (70 mi) with one exception. For incumbent licensees in Channel Blocks D through V, that have received the consent of all affected parties or a certified frequency coordinator to utilize an 18 dBV/m signal strength interference contour (see Section 90.693), the separation between cochannel systems will be a minimum of 173 km (107 mi) The following exceptions to these separations shall apply: (1) Except as indicated in paragraph (b)(4) of this section, no station in Channel Blocks A through V shall be less than 169 km (105 mi) distant from a cochannel station that has been granted channel exclusivity and authorized 1 kW ERP on any of the following mountaintop sites: Santiago Peak, Sierra Peak, Mount Lukens, Mount Wilson (California). Except as indicated in paragraph (b)(4) of this section, no incumbent licensee in Channel Blocks D through V that has received the consent of all affected parties or a certified frequency coordinator to utilize an 18 dBV/m signal strength interference contour shall be less than 229 km (142 mi) distant from a cochannel station that has been"%30*&&PP$" granted channel exclusivity and authorized 1 kW ERP on any of the following mountaintop sites: Santiago Peak, Sierra Peak, Mount Lukens, Mount Wilson (California). * * * * * (3) Except as indicated in paragraph (b)(4) of this section, stations in Channel Blocks A through V that have been granted channel exclusivity and are located in the State of Washington at the locations listed below shall be separated from cochannel stations by a minimum of 169 km (105 mi). Except as indicated in paragraph (b)(4) of this section, incumbent licensees in Channel Blocks D through V that have received the consent of all affected parties or a certified frequency coordinator to utilize an 18 dBV/m signal strength interference contour, have been granted channel exclusivity and are located in the State of Washington at the locations listed below shall be separated from cochannel stations by a minimum of 229 km (142 mi). Locations within one mile of the geographical coordinates listed in the table below will be considered to be at that site. * * * * *  t4. Section 90.683 is revised to read as follows:  S'  90.693` ` Grandfathering provisions for incumbent licensees.  S' (a) General Provisions. These provisions apply to "incumbent licensees", all 800 MHz licensees authorized in the 806821/851866 MHz band who obtained licenses or filed applications on or before December 15, 1995.  S'(b) Spectrum Blocks A through V. An incumbent licensee's service area shall be defined by its originallylicensed 40 dBV/m field strength contour tand its interference contour shall be defined as  S'its originallylicensed 22 dBV/m field strength contour. The "originallylicensed" contour shall be calculated using the maximum ERP and the actual height of the antenna above average terrain (HAAT) along each radial. Incumbent licensees are permitted to add, remove or modify transmitter sites within their original 22 dBV/m field strength contour without prior notification to the Commission so long as their original 22 dBV/m field strength contour is not expanded and the station complies with the Commission's shortspacing criteria in  90.621(b)(4) through 90.621(b)(6). Incumbent licensee protection extends only to its 40 dBV/m signal strength contour. Pursuant to the minor modification notification procedure set forth in 1.947(b), the incumbent licensee must notify the Commission within 30 days of any changes in technical parameters or additional stations constructed that fall within the shortspacing criteria. See 47 C.F.R.  90.621(b).  S '(c) Special Provisions for Spectrum Blocks D through V. Incumbent licensees that have received the consent of all affected parties or a certified frequency coordinator to utilize an 18 dBV/m signal strength interference contour shall have their service area defined by their originallylicensed 36 dBV/m field strength contour and their interference contour shall be defined as their originally SN$'licensed 18 dBV/m field strength contour. The "originallylicensed" contour shall be calculated using the maximum ERP and the actual HAAT along each radial. Incumbent licensees seeking to utilize an 18 dBV/m signal strength interference contour shall first seek to obtain the consent of affected co"%40*&&PP$"ԫchannel incumbents. When the consent of a cochannel licensee is withheld, an incumbent licensee may submit to any certified frequency coordinator an engineering study showing that interference will not occur, together with proof that the incumbent licensee has sought consent. Incumbent licensees are permitted to add, remove or modify transmitter sites within their original 18 dBV/m field strength contour without prior notification to the Commission so long as their original 18 dBV/m field strength contour is not expanded and the station complies with the Commission's shortspacing criteria  S'in  90.621(b)(4) through 90.621(b)(6). Incumbent licensee protection extends only to its 36 dBV/m signal strength contour. Pursuant to the minor modification notification procedure set forth in 1.947(b), the incumbent licensee must notify the Commission within 30 days of any changes in technical parameters or additional stations constructed that fall within the shortspacing criteria. See 47 C.F.R.  90.621(b).  SH '  S ' (d) Consolidated License.  S '(1) Spectrum Blocks A through V. Incumbent licensees operating at multiple sites may, after grant of EA licenses has been completed, exchange multiple site licenses for a single license,  S 'authorizing operations throughout the contiguous and overlapping 40 dBV/m field strength contours of the multiple sites. Incumbents exercising this license exchange option must submit specific information on Form 601 for each of their external base sites after the close of the 800 MHz SMR auction. The incumbent's geographic license area is defined by the contiguous and overlapping 22 dBV/m contours of its constructed and operational external base stations and interior sites that are constructed within the construction period applicable to the incumbent. Once the geographic license is issued, facilities that are added within an incumbent's existing footprint and that are not subject to prior approval by the Commission will not be subject to construction requirements. .  S'(2) Special Provisions for Spectrum Blocks D through V. Incumbent licensees that have received the consent of all affected parties or a certified frequency coordinator to utilize an 18 dBV/m signal strength interference contour operating at multiple sites may, after grant of EA licenses has been completed, exchange multiple site licenses for a single license. This single site license will authorize operations throughout the contiguous and overlapping 36 dBV/m field strength contours of the multiple sites. Incumbents exercising this license exchange option must submit specific information on Form 601 for each of their external base sites after the close of the 800 SMR auction.  S' The incumbent's geographic license area is defined by the contiguous and overlapping 18 dBV/m contours of its constructed and operational external base stations and interior sites that are constructed within the construction period applicable to the incumbent. Once the geographic license is issued, facilities that are added within an incumbent's existing footprint and that are not subject to prior approval by the Commission will not be subject to construction requirements.  S>' "%50*&&PP$"Ԍ5. Section 90.903 is amended by revising paragraph (b) to read as follows:  S'  90.903 Competitive bidding mechanisms. ` `  * * * * *  S'(b) Grouping. All EA licenses for Spectrum Blocks A through V will be auctioned simultaneously, unless the Wireless Telecommunications Bureau announces, by Public Notice prior to the auction, an alternative method of grouping these licenses for auction.  Sr'* * * * *` `    SJ '#X\  P}G;/P##&a\  P}G;g!&P# " 60*&&PP "  S'  S'WAPPENDIX C \  S'  Supplemental Final Regulatory Flexibility Analysis Đ\  Q8'ă  1. 1. 1. a.(1)(a) i) a) 1 A. 1. a.(1)(a) i) a)1. As required by the Regulatory Flexibility Act (RFA), 5 U.S.C.  603, an Initial Regulatory  S'Flexibility Analysis (IRFA) was incorporated in the Second Further Notice of Proposed Rulemaking  S'(Second Further Notice) in this proceeding.&}  yO* 'X` hp x (#%'0*,.8135@8:"'ԍPCIA Petition at 3; Entergy/Delmarva Petition at 3; PCIA Reply Comments at 1.~ PCIA, for example, believes that the Commission should limit eligibility for geographic area licenses to those incumbent licensees who provide coverage to 70 percent of their market areas. It further argues that the rules adopted in the"j9t0*&&PP%"  S'800 MHz Second Report and Order will encourage the filing of applications for anti-competitive or  S'speculative purposes, which may result in high license costs and degradation of service to the public.F}  yOB'ԍPCIA Petition at 36.F  S'  S'9. Two petitioners contended that the Commission should retain installment payments for the lower 80 and General Category 800 MHz SMR licenses on the grounds that installment payments are the most significant option for the provision of meaningful small business participation in the spectrum auctions as they allow SMR operators to pay for the license out of the profits generated through the  S'provision of SMR service.X}  {O '#X\  P6G;/P#эAMTA Petition at 1012; AMTA Reply to Opposition at 12. See also SBT Reply to Opposition at 45. In the Part 1 Third Report and Order, released in December of 1997, the Commission subsequently determined that installment payments should not be used in the immediate  S'future as a means of financing smallbusiness participation in the auction program.^}  {O& '#X\  P6G;/P#эAmendment of Part 1 of the Commission's Rules Competitive Bidding Procedures, WT Docket No.  {O '9792, Third Report and Order and Second Further Notice of Proposed Rule Making, FCC 97413, 13 FCC Rcd  {O'374, 399400,  38 (rel. December 31, 1997) ("Part 1 Third Report and Order").  SL ' 10. Finally, one petitioner argued that, in addition to small business provisions, separate bidding credit provisions for women and minorityowned entities should be adopted for the lower 80  S 'and General Category channels.D }  yO'ԍSBT Petition at 18.D   S ' C. Description and Number of Small Entities to Which the Rules Will Apply  S\' 11. The RFA directs agencies to provide a description of and, where feasible, an estimate of  S4'the number of small entities that may be affected by our rules.J4}  yOt'ԍ5 U.S.C.  603(b)(3). J The RFA generally defines the term "small entity" as having the same meaning as the terms "small business," "small organization," and  S'"small governmental jurisdiction."R0 }  yO'ԍ5 U.S.C.  601(6). R In addition, the term "small business" has the same meaning as  S'the term "small business concern" under the Small   Business Act.? }  yO'ԍ5 U.S.C.  601(3) (incorporating by reference the definition of "small business concern" in 15 U.S.C. 632). Pursuant to the RFA, the statutory definition of a small business applies "unless an agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity for public comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definition(s) in the Federal Register." 5 U.S.C.  601(3).? A small business concern is one which: (1) is independently owned and  H operated; (2) is not dominant in its field of operation; and (3)  Sl'satisfies any additional criteria established by the Small Business Administration (SBA).elp}  yO|%'ԍSmall Business Act, 15 U.S.C.  632 (1996).e A small"l:0*&&PP" organization is generally "any notforprofit enterprise which is independently owned and operated and  S'is not dominant in its field."J yO@'ԍ5 U.S.C.  601(4). J Nationwide, as of 1992, there were approximately 275,801 small  S'organizations.X yO'ԍ1992 Economic Census, U.S. Bureau of the Census, Table 6 (special tabulation of data under contract to Office of Advocacy of the U.S. Small Business Administration). "Small governmental jurisdiction" generally means "governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than  S`'50,000."G` yO 'ԍ5 U.S.C.  601(5). G As of 1992, there were approximately 85,006 such jurisdictions in the United States.~`@ yO@ 'ԍU.S. Dept. of Commerce, Bureau of the Census, "1992 Census of Governments." ~ This number includes 38,978 counties, cities, and towns; of these, 37,566, or 96 percent, have populations  S'of fewer than 50,000.@ yO'ԍId.@ The Census Bureau estimates that this ratio is approximately accurate for all governmental entities. Thus, of the 85,006 governmental entities, we estimate that 81,600 (91 percent) are small entities.  Sp'  12. The rules adopted in the Memorandum Opinion and Order on Reconsideration will affect all small entities that hold or seek to acquire 800 MHz SMR licenses. Under these rules, Economic Area (EA) licenses will be granted on a market area basis, instead of sitebysite, and mutually exclusive applications will be resolved through competitive bidding procedures. As noted, a FRFA  S 'was incorporated into the 800 MHz Second Report and Order. In that analysis, we described the small  S 'entities that might be significantly affected at that time by the rules adopted in the 800 MHz Second  S 'Report and Order. Those entities include existing 800 MHz SMR operators and new entrants into the 800 MHz SMR market. To ensure the more meaningful participation of small business entities in the auction for geographic area 800 MHz SMR licenses, the Commission, adopted a twotiered definition  S'of small businesses in the 800 MHz Second Report and Order. A very small business will be defined as an entity that, together with its affiliates and controlling principals, has average gross revenues for the three preceding years of not more than $3 million. A small business will be defined as an entity that, together with affiliates and controlling principals, has average gross revenues for the three preceding years of not more than $15 million. The Small Business Administration (SBA) has  SJ'approved these definitions for the lower 80 SMR channels and General Category channels.J`  {OJ'ԍSee Letter from Aida Alvarez, Administrator, Small Business Administration, to Thomas J. Sugrue, Chief, Wireless Telecommunications Bureau, Federal Communications Commission (Aug. 10, 1999).  S' 13. Based on the revised channelization plan adopted in the Memorandum Opinion and Order  S'on Reconsideration, the Commission anticipates that a total of 3,850 EA licenses will be auctioned in the lower 230 channels of the 800 MHz SMR service. This figured is derived by multiplying the total  S'number of EAs (175)GZ  yO%'X` hp x (#%'0*,.8135@8:(+X(X(PPj!"Ԍ S's24. Several petitioners asked the Commission to limit participation in the 800 MHz SMR auction to SMR and/or nonSMR incumbents. The Commission specifically considered and rejected a proposal to limit eligibility for geographic area licenses to incumbents providing coverage to 70 percent or more of their market areas. In rejecting these proposals, we concluded that market forces, not regulation, should determine participation in competitive bidding for geographic area licenses. We concluded that the competitive bidding process will adequately deter speculation and that open eligibility will foster competition and result in a diverse group of 800 MHz SMR providers, including  S'small businesses.y)~ {OP'ԍMemorandum Opinion and Order on Reconsideration at Section IV.E.2.y  S' s25. In the 800 MHz Second Report and Order, we stated that to expedite the auctioning of EA licenses for the lower 230 channels, we would auction these licenses using the five regional groups that were used for the regional narrowband Personal Communications Services (PCS) auction. On reconsideration, we clarify the method by which we will group licenses for auction. While we continue to believe that licenses should be grouped for competitive bidding purposes in a manner that will reduce the administrative burden on auction participants, particularly small businesses, we will not use the five regional groups based on Basic Trading Areas that were used in the regional narrowband PCS auction. Instead, we direct the Bureau to seek comment on license groupings and determine, pursuant to its delegated authority, what groups, if any, should be established for auctioning the lower 80 and General Category EA licenses.  S's26. The Commission declined to reconsider its decision in the Part 1 Third Report and Order*Z {O'ԍSee Part 1 Third Report and Order, 13 FCC Rcd 374, 399402,  3840 (1997). to suspend the availability of installment payment financing for small businesses participating in the  S'auction of the lower 230 channels of the 800 MHz SMR service.{+~ {O 'ԍMemorandum Opinion and Order on Reconsideration at Section IV.E.4.a.{ To balance the impact of this  Sl'decision on small businesses, in the 800 MHz Second Report and Order,v,l~~ {O'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 19170,  277.v the Commission established larger bidding credits for qualifying entities. We believe that the larger bidding credit will provide small businesses with adequate opportunities to participate in the 800 MHz SMR auction. s  S's27. We have also rejected one petitioner's contention that the Commission is required to  S'incorporate gender and minoritybased provisions into its competitive bidding procedures. Recent U.S. Supreme Court decisions have created legal uncertainty on whether special auction provisions for minorities and women could withstand a constitutional challenge. The designated entity bidding credits adopted for the 800 MHz service are gender and minorityneutral but specifically target small  S'businesses.~-~ {O#'ԍ800 MHz Second Report and Order, 12 FCC Rcd at 1916719168,  271. ~ Auction results indicate that many of the small businesses participating in auctions are"?-+X(X(PP'" also women and minorityowned, therefore effectively furthering Congress' objective of disseminating  S'licenses among a wide variety of applicants..~ {O@'#X\  P6G;/P#эSee FCC Report to Congress on Spectrum Auctions,WT Docket No. 97150, Report, FCC 97353 (rel. October 9, 1997) at 28.  S' F. Report to Congress  S8's28. The Commission will send a copy of the Memorandum Opinion and Order on  S'Reconsideration, including this Supplemental FRFA, in a report to Congress pursuant to the Small  S'Business Regulatory Enforcement Fairness Act of 1996.V/"~ {O 'ԍSee 5 U.S.C.  801(a)(1)(A).V In addition, the Commission will send a  S'copy of the Memorandum Opinion and Order on Reconsideration, including this Supplemental FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the  Sv'Memorandum Opinion and Order on Reconsideration and Supplemental FRFA (or summaries thereof)  SP 'will also be published in the Federal Register.P0P ~ {O'ԍSee 5 U.S.C.  604(b).P