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A. 1. a.(1)(a) i) a)#)a [ PcQ)P# ## b, oT9 !#)^ `> XidQ)X#Advanced Legal WordPerfect Learning Guide   u I. A. 1. a.(1)(a) i) a)#)a [ PeQ)P# ## b, oT9 !#)^ `> XifQ)X#   Copyright  Portola Systems, Inc. 1987, 1988`e%APage   I. A. 1. a.(1)(a) i) a)#)a [ PgQ)P# ## b, oT9 !#)^ `> XihQ)X#   Page ``e%)Copyright  Portola Systems, Inc. 1987, 1988 Style 87=@6FInitial Codes for BeginningF*'Ç.7=.EV IJ#)a [ PiQ)P# dn  ## b, oT9  [  I. A. 1. a.(1)(a) i) a)#)a [ PjQ)P# ## b, oT9 #)^ `> XikQ)X#`^e%)Beginning Legal WordPerfect Learning Guide   v I. A. 1. a.(1)(a) i) a)#)a [ PlQ)P# ## b, oT9 #)^ `> XimQ)X#Beginning Legal WordPerfect Learning Guide   v I. A. 1. a.(1)(a) i) a)#)a [ PnQ)P# ## b, oT9 #)^ `> XioQ)X#   Copyright  Portola Systems, Inc. 1987, 1988`e%APage   I. A. 1. a.(1)(a) i) a)#)a [ PpQ)P# ## b, oT9 #)^ `> XiqQ)X#   Page ``e%)Copyright  Portola Systems, Inc. 1987, 1988 Style 97=@6FInitial Codes for Intermediate*'Ç.7=.ET KL#)a [ PrQ)P# dn  ## b, oT9 Њ [  I. A. 1. a.(1)(a) i) a)#)a [ PsQ)P# ## b, oT9 #)^ `> XitQ)X#`e%'Intermediate Legal WordPerfect Learning Guide   z I. A. 1. a.(1)(a) i) a)#)a [ PuQ)P# ## b, oT9 #)^ `> XivQ)X#Intermediate Legal WordPerfect Learning Guide   z I. A. 1. a.(1)(a) i) a)#)a [ PwQ)P# ## b, oT9 #)^ `> XixQ)X#   Copyright  Portola Systems, Inc.`e%APage   I. A. 1. a.(1)(a) i) a)#)a [ PyQ)P# ## b, oT9 #)^ `> XizQ)X#   Page ``e%)Copyright  Portola Systems, Inc. 1987, 1988 2  <dUpdate7=@6FInitial Codes for Update Module*'Ç.7=.Ee MN#)a [ P{Q)P# dn  ##  [ b, oT9 ! I. A. 1. a.(1)(a) i) a)#)a [ P|Q)P# ## b, oT9 !#)^ `> Xi}Q)X#`Ye%%Legal WordPerfect 5.0 Update Class Learning Guide   } I. 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N2 /NARROWBAND PCS CHANNELS IN THE 901-902 MHz BAND0kk0uuk0@0uu0```@```0U0 & &X--Xp & &/ Times New Roman")-.  .2 0SPECTRUM ALREADY AUCTIONEDGGOUNV\r \NVN\]\ ]\VN*]\N] & &0HXEB( w-- -XH0p & &f0 pTimes New RomanU)-.  !2 SPECTRUM PROPOSEDPPX`X`h$P`hPhQWhpTimes New Roman-.  2 | FOR AUCTIONPh`$hh`X0hh & &V[Times New Romans -.   2 `(P)%?% & &Times New Romans -.   2 `0(P)%?% & &FKTimes New Romans -.   2 `(P)%?% & &6;Times New Romans -.   2 `p(P)%?% & &FKTimes New Romans -.   2 `(P)%?% & &Times New Romans -.   2 (P)%?% & &Times New Romans -.   2 (P)%?% & &Times New Romans -.   2 @(P)%?% & &LfTimes New Romans -.   2 0(UP)%Q>& & &f fTimes New Romans -.   2 (UP)%Q>& & &&VTimes New Romans -.  X2 `6(P) = Paired channels (UP) = Unpaired channels%?%?>2%28282881,%Q>&?Q882%28182882+ & &TNPP & ---,< r < r < r W< r < r  < r  < r # < r #K < r < : <  <  <  <  <  <  <  #'<  #2<  #=<  #H<  #S<  #^<  #i <  #t!<  #"<  ##<  #$<  #%<  #&<  =!(WE#X0 PT6U,P#1 P 1=!(3E#X0 PT6U,P#2 P 32=!((E#X0 PT6U,P#3 P 3=!( E#X0 PT6U,P#4 P  4=!(mE#X0 PT6U,P#5 P m5>")x ~ E#X0 PT6U,P#12 P x 12>")  E#X0 PT6U,P#13 P  13>")@ F E#X0 PT6U,P#18 P @ 18>") E#X0 PT6U,P#19 P  19=!(4E#X0 PT6U,P#6 P 46=!(?E#X0 PT6U,P#7 P ?7=!(JE#X0 PT6U,P#8 P J8>")E#X0 PT6U,P#14 P 14>") E#X0 PT6U,P#15 P 15>")E#X0 PT6U,P#16 P 16>")"E#X0 PT6U,P#17 P 17>")'-E#X0 PT6U,P#20 P '20>")28E#X0 PT6U,P#21 P 221>")=CE#X0 PT6U,P#22 P =22>")HNE#X0 PT6U,P#25 P H25>")SYE#X0 PT6U,P#26 P S26=!(: E#X0 PT6U,P#A P A=!( E!E#X0 PT6U,P#B P  B=!(!P"E#X0 PT6U,P#C P !C=!("[#E#X0 PT6U,P#D P "D=!(#f$E#X0 PT6U,P#E P #E=!($q%E#X0 PT6U,P#F P $F=!(%|&E#X0 PT6U,P#G P %G=!(''E#X0 PT6U,P#H P 'H,,K/6#X0 PT6UP#50 kHz channels P 50 kHz channelsw w S@ S@ w w ','ccScSc''C'.r#qX0 PT6UP#300 kHz qP r300 kHzG+2I#qX0 PT6UP#unallocated qP  unallocatedD(/[t#qX0 PT6UP#spectrum qP [spectrumM18u#c#X0 PT6UP#12.5 kHz channels P u12.5 kHz channels4ujuj''$$' ' u$u$]'@$+o{#X0 PT6U,P#901 P o901 ?#*o  #X0 PT6U,P#MHz P o MHz?#*()#X0 PT6U,P#902 P (902?#*( ) #X0 PT6U,P#MHz P ( MHzR6= i #t\X0 PT6UP#Nationwide (Auctioned) \|P  Nationwide (Auctioned)E)0x  P #,JX0 PT6U<P# Regional JdP  x RegionalG+2x X #,JX0 PT6U<P#(Auctioned) JdP  x X (Auctioned)F*1@ $P #,JX0 PT6U<P#Nationwide JdP  @ NationwideF*1@ X $ #,JX0 PT6U<P#(Proposed) JdP  @ X (Proposed)F*14 P #,JX0 PT6U<P#Nationwide JdP  4 NationwideG+24X b #,JX0 PT6U<P#(Auctioned) JdP  4X (Auctioned)F*1 P #,JX0 PT6U<P# Regional JdP   RegionalG+2X 4 #,JX0 PT6U<P#(Auctioned) JdP  X (Auctioned)F*1 oP #,JX0 PT6U<P# Regional JdP   RegionalF*1X o #,JX0 PT6U<P#(Proposed) JdP  X (Proposed)=!( P #,JX0 PT6U<P#M JdP  M=!(X  #,JX0 PT6U<P#T JdP X T=!( 2 #,JX0 PT6U<P#A JdP  A=!(  #,JX0 PT6U<P#N JdP  N=!( s #,JX0 PT6U<P#A JdP  A=!({  #,JX0 PT6U<P#T JdP { T=!( V #,JX0 PT6U<P#I JdP  I=!(^  #,JX0 PT6U<P#O JdP ^ O=!(8 #,JX0 PT6U<P#N JdP N=!(A#,JX0 PT6U<P#W JdP AW=!(#,JX0 PT6U<P#I JdP I=!(##,JX0 PT6U<P#D JdP #D=!(#,JX0 PT6U<P#E JdP E^K ^SK S#K #'K '2K 2'K 'K K K  K  K  ,K ,@$+ !P #,JX0 PT6U<P#MTA JdP  MTA D(/i X " #,JX0 PT6U<P#Response JdP i X ResponseD(/n "2 #,JX0 PT6U<P#Channels JdP n ChannelsF*1H ; ,# #,JX0 PT6U<P#(Proposed) JdP  H ; (Proposed)D(/$ 'P #,JX0 PT6U<P#Regional JdP $ RegionalD(/$X ' #,JX0 PT6U<P#Response JdP $X ResponseD(/$ '2 #,JX0 PT6U<P#Channels JdP $ ChannelsF*1$; y' #,JX0 PT6U<P#(Proposed) JdP  $; (Proposed)kOV,G+#X0 PT6UP#NARROWBAND PCS CHANNELS IN THE 901-902 MHz BAND .P 5/,GNARROWBAND PCS CHANNELS IN THE 901-902 MHz BANDr}V:A#^X0 PT6U~P#SPECTRUM ALREADY AUCTIONED P SPECTRUM ALREADY AUCTIONED#r$M18%#X0 PT6UP#SPECTRUM PROPOSED P SPECTRUM PROPOSEDG+26#z#X0 PT6UP#FOR AUCTION P  FOR AUCTION?#*L*  #X0 PT6U,P#(P) P L* (P)?#** * #X0 PT6U,P#(P) P * * (P)?#* * " #X0 PT6U,P#(P) P  * (P)?#** o #X0 PT6U,P#(P) P * (P)?#** A #X0 PT6U,P#(P) P * (P)?#*' #X0 PT6U,P#(P) P '(P)?#*= #X0 PT6U,P#(P) P =(P)?#*Si#X0 PT6U,P#(P) P S(P)@$+i u"#X0 PT6U,P#(UP) P i (UP)@$+$&#X0 PT6U,P#(UP) P $(UP)rV]z 3#X0 PT6U,P#(P) = Paired channels (UP) = Unpaired channels P <6z(P) = Paired channels (UP) = Unpaired channelsS(xN= '3,,4?P4*+64 N&D " & &$TNPPMicrosoft PowerPoint & TNPPf & &TNPP D 345&--- & &--- & &H---H & &@---@ & &--- & &--- & &H---H & &@EB( w-- -@ & &EB( w-- - & &@---@ & && & &&f & &mTimes New Roman-.   2 P+68 & &*Times New Roman-.   2 P78 & &v*Times New Roman-.   2 P88 & &6"Times New Roman-.   2 Pp1488 & &Times New Roman-.   2 P01588 & &Times New Roman-.   2 P 1688 & &FNTimes New Roman-.   2 P 1788 & &Times New Roman-.   2 P@ 2088 & &Times New Roman-.   2 P 2188 & &@H--"System--@@--' & &--`---' & &fQ@pTimes New Roman,-.  2 50 kHz channelsHH$Hh@$@H@HH@(8 & &---`---' & &,Times New Roman,-.  2 i400 kHz0000E+Times New RomanA-.  2 0 unallocated00+0+**0Times New Roman,-.  2 v]spectrum%0++ 0K & &>Times New RomanA-.   2 930 888Times New Roman,-.   2 FMHzdP2 & &V>Times New RomanA-.   2 931888Times New Roman,-.   2 FMHzdP2 & && + Times New RomanA-.  2 p` Nationwide :#((:(#Times New Roman,-.  2 ` (Auctioned)9($(($( & &  Times New RomanA-.  2 p Regional5$((($Times New Roman,-.  2  (Auctioned)9($(($( & &&  Times New RomanA-.  2 p` Regional5$((($Times New Roman,-.  2 ` (Proposed),(((#( & &6BTimes New RomanA-.   2 pp M9Times New Roman,-.   2 p T'Times New RomanA-.   2 p A. & &ZTimes New Roman,-.   2 N.Times New RomanA-.   2 ]A.Times New Roman,-.   2 T'Times New RomanA-.   2 ITimes New Roman,-.   2 DO.Times New RomanA-.   2 N.Times New Roman,-.   2 W<Times New RomanA-.   2 +ITimes New Roman,-.   2 xD.Times New RomanA-.   2 E' & &---`-Pp--' & &@H---P@p@--' & &--`-Pp--' & &@H---P@p@--' & &@H---P@p@--' & &--`-Pp--' & &F n@Times New Roman,-.  N2 /NARROWBAND PCS CHANNELS IN THE 930-931 MHz BAND0kk0uuk0@0uu0```@```0U0 & &hX--Xhp & &/d Times New Roman؀-.  .2 SPECTRUM ALREADY AUCTIONEDGGOUNV\r \NVN\]\ ]\VN*]\N] & & 0XEB( w-- -X0 p & &f0 pTimes New Roman-.  !2 SPECTRUM PROPOSEDPPX`X`h$P`hPhQWhpTimes New RomanA-.  2 | FOR AUCTIONPh`$hh`X0hh & &EB( w-- -p & &HEB( w-- -Hp & &@EB( w-- -@p & &Times New RomanP-.   2 P2288 & &vbTimes New RomanA-.   2 P2588 & &6"Times New RomanP-.   2 Pp2688 & &`(---$` p & &0`x(--$0P PppPP`p & &n6Times New Roman-.   2  (P)%?% & &&nG6Times New RomanP-.   2 ` (P)%?% & &n'6Times New Roman-.   2 @ (P)%?% & &n6Times New RomanP-.   2  (P)%?% & &CTimes New Roman-.  2 @@ (P)%?% & &^&Times New RomanP-.  *2 (P) = Paired channels %?%?>2%28282881, & &TNPP & ---!Q 8 Q 8 Q 8 sQ 8 Q 8 UQ 8 Q 8 #6Q 8 #Q 8 Q B8 =!(t#"X0 PT6U?P#6 P t6=!(g#"X0 PT6U?P#7 P 7=!(_#"X0 PT6U?P#8 P _8>")#"X0 PT6U?P#14 P 14>")@P#"X0 PT6U?P#15 P @15?#*U#"X0 PT6U?P# 16 P U 16?#*]#"X0 PT6U?P# 17 P  17?#*6#"X0 PT6U?P# 20 P 6 20?#*?#"X0 PT6U?P# 21 P  21z!z!K/6,V^L#X0 PT6UP#50 kHz channels P ,V50 kHz channelsiziC'.( [ #uX0 PT6UP#400 kHz uP ( 400 kHzG+22 #uX0 PT6UP#unallocated uP  2unallocatedD(/ U #uX0 PT6UP#spectrum uP  Uspectrum@$+ -,#"X0 PT6U?P#930 P  -930 ?#* +  #"X0 PT6U?P#MHz P  + MHz?#*~ -"#"X0 PT6U?P#931 P ~ -931?#*~ + " #"X0 PT6U?P#MHz P ~ + MHzG+2 u #`X0 PT6UP#Nationwide `P   Nationwide G+27  #`X0 PT6UP#(Auctioned) `P  7 (Auctioned)F*1 u #`X0 PT6UP# Regional `P   RegionalG+27  #`X0 PT6UP#(Auctioned) `P  7 (Auctioned)F*1_ u #`X0 PT6UP# Regional `P  _ RegionalF*1_7  #`X0 PT6UP#(Proposed) `P  _7 (Proposed)>") *[ #5LX0 PT6UEP# M LgP  M>")[ * #5LX0 PT6UEP# T LgP [ T>") *3 #5LX0 PT6UEP# A LgP  A=!(  #5LX0 PT6UEP#N LgP  N=!(  #5LX0 PT6UEP#A LgP  A=!(  #5LX0 PT6UEP#T LgP  T=!( X #5LX0 PT6UEP#I LgP  I=!(X  #5LX0 PT6UEP#O LgP X O=!(0 #5LX0 PT6UEP#N LgP N=!(0#5LX0 PT6UEP#W LgP 0W=!(  #5LX0 PT6UEP#I LgP I=!( u#5LX0 PT6UEP#D LgP  D=!(u#5LX0 PT6UEP#E LgP uEi` i` ` 6` 6s` s!` !kOVsi+8#X0 PT6UP#NARROWBAND PCS CHANNELS IN THE 930-931 MHz BAND 8P 5/sNARROWBAND PCS CHANNELS IN THE 930-931 MHz BANDV:Ai'#sX0 PT6UP#SPECTRUM ALREADY AUCTIONED P iSPECTRUM ALREADY AUCTIONED# 8M18$#X0 PT6UP#SPECTRUM PROPOSED P SPECTRUM PROPOSEDG+22>"4#X0 PT6UP#FOR AUCTION P  2>FOR AUCTION#Q 8 #Q 8 #Q 8 >")s#"X0 PT6U?P#22 P s22>")#"X0 PT6U?P#25 P 25>")Ue#"X0 PT6U?P#26 P U26kVV }VVk@$+#"X0 PT6U?P# (P) P  (P)@$+#"X0 PT6U?P# (P) P  (P)@$+6V#"X0 PT6U?P# (P) P 6 (P)@$+7#"X0 PT6U?P# (P) P  (P)A%, H#"X0 PT6U?P# (P) P  (P)S7>5~m=#"X0 PT6U?P#(P) = Paired channels P 5~(P) = Paired channels 'xN= '3,,4?5*+5 X&D R & &$TNPPMicrosoft PowerPoint & TNPPf & &TNPP D 345&--- & &h---h & &`(---(` & & ---  & &--- & &h---h & &`(---(` & & EB( w-- -  & &EB( w-- - & &--- & & & &f & &&Times New Roman-.   2 P` 38 & &Times New Roman`-.   2 P  48 & &Times New Roman-.   2 P 58 & &fnTimes New Roman`-.   2 P 1288 & &&.Times New Roman-.   2 P` 1388 & &Times New Roman`-.   2 P  1888 & &Times New Roman-.   2 P 1988 & &--"System-@---' & &--H---' & &&Qb@pTimes New Roman-.  2 `50 kHz channelsHH$Hh@$@H@HH@(8 & &P--$PP & &8--$00 & &---@---' & &--H---' & &Times New Roman-.  2 300 kHz0000E+Times New Roman`-.  2  unallocated00+0+**0Times New Roman-.  2 vspectrum%0++ 0K & &\Times New Roman`-.   2 940 888Times New Roman-.   2 MHzdP2 & &V>Times New Roman`-.   2 941888Times New Roman-.   2 FMHzdP2 & & Times New Roman`-.  (2 p@Nationwide (Auctioned):#((:(#:(#((#( & &GTimes New Roman-.  2 p Regional+  Times New Roman`-.  2  (Auctioned)/    & &Times New Roman-.  2 pP Nationwide. . Times New Roman`-.  2 P (Proposed)$   & &  Times New Roman-.  2 p@ Nationwide:#((:(#Times New Roman`-.  2 @ (Auctioned)9($(($( & &Times New Roman-.  2 p MTA9'.Times New Roman`-.  2 P (Proposed)$   & &---H-Pp--' & & (---P p --' & &--@-Pp--' & &--H-Pp--' & & (---P p --' & &--H-Pp--' & &--@-Pp--' & &F n@Times New Roman-.  N2 /NARROWBAND PCS CHANNELS IN THE 940-941 MHz BAND0kk0uuk0@0uu0```@```0U0 & &h(--(hp & &---p & &VTimes New Roman`-.  .2 SPECTRUM ALREADY AUCTIONEDGGOUNV\r \NVN\]\ ]\VN*]\N] & &`((EB( w-- -((`p & &vpTimes New Roman-.  !2 SPECTRUM PROPOSEDPPX`X`h$P`hPhQWhpTimes New Roman-.  2 L FOR AUCTIONPh`$hh`X0hh & &h---hp & &`(---(`p & & EB( w-- - p & &EB( w-- -p & &Times New Roman-.   2 P 98 & &Times New Roman-.   2 P1088 & &VBTimes New Roman-.   2 P1188 & &Times New Roman-.   2 PP2388 & &Times New Roman-.   2 P2488 & &6ne6Times New Roman-.  2 p50 kHz 888Q2Times New Roman- 2 channels+0*00+% & &@(---$pp@@pp p & &H(--$ @@p & &Times New Roman-.   2 P18 & &JTimes New Roman-.   2 P28 & &V[Times New Roman-.   2 (P)%?% & &Times New Roman-.   2 0(P)%?% & &v{Times New Roman-.   2 (P)%?% & &fTimes New Roman-.   2 (UP)%Q>& & &FTimes New Roman-.   2 (UP)%Q>& & &VTimes New Roman-.  X2  6(P) = Paired Channels (UP) = Unpaired channels%?%?>2%28K82881,%Q>&?Q882%28182882+ & &TNPP & ---# {  {  { h {  { A {  { # { # {  T ?#* #X0 PT6U8P# 3 P  3?#*h  #X0 PT6U8P# 4 P h  4?#* f #X0 PT6U8P# 5 P   5?#*A #X0 PT6U8P# 12 P A  12?#*?#X0 PT6U8P# 13 P  13?#*#X0 PT6U8P# 18 P  18?#*#X0 PT6U8P# 19 P  19##K/6eX#X0 PT6UP#50 kHz channels P e50 kHz channelstte#bebbb77UUC'.#sX0 PT6UP#300 kHz sP 300 kHzG+2MA>#sX0 PT6UP#unallocated sP  MAunallocatedD(/g: #sX0 PT6UP#spectrum sP gspectrum@$+9Qv#X0 PT6U8P#940 P 9940 ?#*9 w#X0 PT6U8P#MHz P 9 MHz?#* ]!#X0 PT6U8P#941 P  ]941?#* _ !#X0 PT6U8P#MHz P  _ MHzR6=*  #}^X0 PT6UP#Nationwide (Auctioned) ^P * Nationwide (Auctioned)E)0 * ? #2KX0 PT6UBP# Regional KfP  * RegionalG+2  #2KX0 PT6UBP#(Auctioned) KfP  (Auctioned)F*1t* b #2KX0 PT6UBP#Nationwide KfP  t* NationwideF*1t b #2KX0 PT6UBP#(Proposed) KfP  t (Proposed)F*1*  #}^X0 PT6UP#Nationwide ^P  * NationwideG+2s  #}^X0 PT6UP#(Auctioned) ^P  s (Auctioned)A%,<*  #2KX0 PT6UBP# MTA KfP <* MTAF*1  #2KX0 PT6UBP#(Proposed) KfP   (Proposed)U U| |7 7  A A # #kOVq*9#X0 PT6UP#NARROWBAND PCS CHANNELS IN THE 940-941 MHz BAND 5P 5/qNARROWBAND PCS CHANNELS IN THE 940-941 MHz BAND5{7 { V:AV//#jX0 PT6UP#SPECTRUM ALREADY AUCTIONED P VSPECTRUM ALREADY AUCTIONED#^5{1M189j",#X0 PT6UP#SPECTRUM PROPOSED P 9SPECTRUM PROPOSEDG+2} #X0 PT6UP#FOR AUCTION P  FOR AUCTION {  { #| { # { >")#X0 PT6U8P# 9 P  9>") #X0 PT6U8P#10 P 10>")kw#X0 PT6U8P#11 P k11>")#X0 PT6U8P#23 P 23>")DP#X0 PT6U8P#24 P D24C'.He"#X0 PT6U8P#50 kHz P He50 kHz D(/e#sX0 PT6UP#channels sP echannelsOO U7 OO=!(~#X0 PT6U8P#1 P ~1=!(p#X0 PT6U8P#2 P 2?#*W  #X0 PT6U8P#(P) P W  (P)?#*R  #X0 PT6U8P#(P) P R (P)?#*+  #X0 PT6U8P#(P) P + (P)@$+  #X0 PT6U8P#(UP) P  (UP)@$+2 J #X0 PT6U8P#(UP) P 2 (UP)rV]} :#X0 PT6U8P#(P) = Paired Channels (UP) = Unpaired channels P <6}(P) = Paired Channels (UP) = Unpaired channels X )K X-w  #XP\  P6Q+XP#Federal Communications Commission`(# FCC 97140 ă  yxdddy )    X-+2 Before the w Federal Communications Commission  X-Washington, D.C. 20554 ă In the Matter ofR) R)  X1-Amendment of the Commission's RulesR)hGEN Docket No. 90314  X -to Establish New Personal CommunicationsR)hET Docket No. 92100 Services, Narrowband PCSR) R)  X -Implementation of Section 309(j) of theR)hPP Docket No. 93253 Communications Act Competitive Bidding,R) Narrowband PCSR)  Xb- REPORT AND ORDER AND  XK- FURTHER NOTICE OF PROPOSED RULEMAKING T T  X-[X` hp x (#%'0*,.8135@8:-of users.^> } {O - xԍ 47 U.S.C.  332(a). See 47 U.S.C.  257 (1996). See also Section 257 Proceeding to Identify and Eliminate  {OI!- xxMarket Entry Barriers for Small Businesses, Notice of Inquiry, GN Docket No. 96113, 11 FCC Rcd 6280 (1996)  {O"-(Market Entry Notice of Inquiry). We believe the modifications and proposals we make below help further these goals. Accordingly, we modify or propose to modify our narrowband PCS rules as follows in  X-this R&O/Further Notice. ",-(-(ZZ"Ԍ X- x3. In the Report and Order, we adopt the following modifications to narrowband PCS service and auction rules:  X-XxWe clarify that Section 24.132 of our rules applies to the regional service areas as well  X-as Major Trading Area (MTA)} yO- x;ԍ Rand McNally is the copyright owner of the MTA/BTA listings, which list the BTAs contained in each MTA  xand the counties within each BTA, as embodied in Rand McNally's Trading Areas System MTA/BTA Diskette, and  xgeographically represented in the Rand McNally 1992 Commercial Atlas and Marketing Guide (the "MTA map"),  x123rd Edition at pp. 3839. The conditional use of Rand McNally's copyrighted material by interested persons is  x;authorized under a blanket license agreement dated February 10, 1994, which covers certain services, including PCS.  xRand McNally organizes the 50 states and the District of Columbia in 47 MTAs and 487 BTAs. For PCS licensing  xJpurposes, we adopted service areas that separated Alaska from the Seattle MTA and added five insular areas: Puerto  xRico, U.S. Virgin Islands, Guam, Northern Mariana Islands and American Samoa. In 1994, the number of BTAs  {O_ - xiwas changed to 493 because Puerto Rico was reconfigured into 2 BTAlike service areas. See Amendment of the  {O) - x<Commission's Rules to Establish New Narrowband PCS, Second Memorandum Opinion and Order, GEN Docket  {O -90314, 9 FCC Rcd 4519, 4523,  18 (1994) (PCS Second MO&O).  service areas. We amend paragraphs (d) and (e) of Section 24.132 to reflect that these rules apply to regional areas. (#  Xa-XxWe decline to provide relief to parties affected by the Canadian Interim Sharing  XJ-Arrangement.J. } {O)-ԍ See Canadian Interim Sharing Arrangement Public Notice, supra, n.1. We believe that parties were fully aware of the agreement at the time the regional narrowband PCS auction commenced and, therefore, relief is not necessary.(#  X -XxWe modify the definition of members of minority groups to conform with the definition used in other contexts.(#  X - XxWe decline to establish an entrepreneurs' block for narrowband PCS similar to our provisions in broadband PCS. (#  Xd-x4. In the Further Notice, we propose changes as set forth below:  X8-XxWe propose to reallocate all of the Basic Trading Area (BTA)E8 } {O-ԍ  See supra, n.6.E channel blocks and some of the MTA channel blocks to create larger service areas. We believe that this reallocation will create additional flexibility for narrowband PCS service providers. In addition, reallocation will serve the public interest and promote competition in the wireless services market. (#  X-XxWe propose to eliminate the restriction on paging response channels that limits eligibility for these channels to incumbent paging licensees. We believe elimination of the eligibility restriction will increase the likelihood of awarding the licenses to those"R ,-(-(ZZ" who value them most highly. (#  X-XxWe propose to channelize and license the remaining one MHz of narrowband PCS spectrum. We believe that licensing this spectrum will facilitate competition by opening the market to new licensees and allowing incumbents to expand their systems. ` ` (#  Xv-XxWe propose to modify our existing construction and minimum coverage requirements for both previouslylicensed and asyet unlicensed narrowband PCS spectrum by allowing licensees to meet a "substantial service" benchmark. We believe that allowing such an option will increase buildout flexibility for narrowband PCS licensees.(#  X -XxWe propose a partitioning scheme similar to that recently adopted for broadband PCS. This scheme will facilitate the efficient use of narrowband PCS spectrum, increase competition, and expedite the provision of narrowband service to areas that may not otherwise receive narrowband PCS or other wireless services in the near term. We also ask whether disaggregation would be appropriate for narrowband PCS.(#  Xb-XxWe propose to simplify ownership disclosure requirements for narrowband PCS auction applicants.(#  X-Additionally, in light of the strict scrutiny standard of review now required under Adarand  X-Constructors, Inc. v. Pe9a, we propose the following modifications to the narrowband PCS auction rules:  X- XxWe propose to limit eligibility for bidding credits and installment payments to small businesses. (#  X-XxWe propose to make bidding credits available on a tiered basis for small businesses. Small businesses with average gross revenues that are not more than $15 million for the preceding three years would receive a 15 percent credit, while small businesses with average gross revenues that are not more than $40 million for the preceding three years would receive a 10 percent credit. (#  X-x5. The Commission makes no representations or warranties about the use of this spectrum. Applicants should be aware that an FCC auction represents an opportunity to become a FCC licensee in this service, subject to certain conditions and regulations. An FCC auction does not constitute an endorsement by the FCC of this service or any particular technologies or products, nor does an FCC licensee constitute a guarantee of business success. Applicants should perform their individual due diligence before proceeding as they would with any new business venture. "U%,-(-(ZZ $"Ԍ X-A III. BACKGROUND X-TP  X-x6. In the PCS First Report and Order, the Commission provided for the operation of  X-new, narrowband PCS in the 900 MHz band. ^} {O6- xԍ Amendment of the Commission's Rules to Establish New Personal Communications Services, First Report  {O- xand Order, GEN Docket No. 90314, 8 FCC Rcd 7162, 7162,  1 (1993) (PCS First Report and Order), on recon.,  {O-Memorandum Opinion and Order, GEN Docket No. 90314, 9 FCC Rcd 1309 (1993) (PCS MO&O). We broadly defined PCS as mobile and fixed communications offerings that serve individuals and businesses, and can be integrated with a  X-variety of competing networks.i } {O. -ԍ Id. at 7164,  13; See also 47 C.F.R.  24.5.i In the PCS First Report and Order, we therefore declined to adopt a restrictive definition of narrowband PCS, such as limiting this category of PCS to  Xc-advanced messaging and paging services, to promote other potential narrowband services.E c} {O -ԍ Id. at 7164,  13.E We also adopted a spectrum allocation and channelization plan, licensing rules, and technical  X5-standards for narrowband PCS.V 5} {O-ԍ Id. at 716471,  1537, 3954.V Consistent with Section 309(j) of the Communications Act of 1934, as amended, we have determined that PCS is subject to competitive bidding in the  X -case of mutually exclusive applications.  } {O\- xԍ Implementation of Section 309(j) Competitive Bidding, Second Report and Order, PP Docket 93253, 9 FCC  {O&-Rcd 2348, 2358,  54 (1994) (Competitive Bidding Second Report and Order).   X -x7. In the Competitive Bidding Second Report and Order, we adopted general  X -competitive bidding rules for auctionable services.L } {Ou-ԍ  Id. at 2358,  5458.L In the Competitive Bidding Third Report  X -and Order, we established competitive bidding rules specifically for narrowband PCS.| } {O-ԍ Competitive Bidding Third Report and Order, 9 FCC Rcd at 2941,  13.| On  X-reconsideration of that Order, we revised certain auction processing rules, expanded special provisions for designated entities in future narrowband auctions, and sought comment on  Xn-additional designated entity provisions for the upcoming narrowband PCS auction.n$} {OC - xԍ Implementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket No. 93253,  {O !- xand Amendment of the Commission's Rules to Establish New Narrowband PCS, GEN Docket 90314, Third  {O!- xMemorandum Opinion and Order and Further Notice of Proposed Rule Making, 10 FCC Rcd 175, 177,  3 (1994)  {O"- x(Competitive Bidding Third MO&O/Further Notice). The term "designated entity" refers to small businesses, rural telephone companies, and businesses owned by minorities and/or women, collectively. Of the three MHz of 900 MHz spectrum allocated for narrowband PCS, two oneMHz blocks are  X@-currently divided into specific channels for immediate licensing.@} {O&-ԍ See 47 C.F.R.  24.129; see also Competitive Bidding Third Report and Order, 9 FCC Rcd at 2944,  9. The remaining one MHz of"@n,-(-(ZZ" narrowband PCS spectrum currently is reserved to accommodate future development of  X-narrowband PCS.3} {Ob-ԍ Id.3  X-x8. The Commission thus far has conducted two auctions for narrowband PCS licenses. As a result of these two auctions, ten nationwide narrowband PCS licenses and six regional narrowband PCS licenses in five different regions (totalling 30 regional licenses) have been  Xv-granted. $vZ} {O - xԍ See Visitors Auction Guide, Broadband Personal Communications Services, December 5, 1994 at Tab VIII  {OK - x("Regional Narrowband PCS Auction Summary, October 26, 1994") (Visitors Auction Guide). The regional  xJnarrowband auction began on October 26, 1994 and closed on November 8, 1994 after 105 rounds. The nationwide narrowband auction commenced on July 25, 1994 and closed after 47 rounds of bidding over a five day period.  Auctions have not yet been conducted for the narrowband PCS spectrum currently  X_-designated for licensing in 51 Major Trading Areas (MTAs)?_F} {OV-ԍ  See supra, n.6.? and 493 Basic Trading Areas  XH-(BTAs).H} {O-ԍ Competitive Bidding Third Report and Order, 9 FCC Rcd at 2952,  28. See 47 C.F.R.  24.102. In addition, the 204 MTA licenses and 1,968 BTA licenses designated as unpaired  X1-response channels have not been auctioned.m1j } {OL-ԍ Id. at 2952,  29. See also 47 C.F.R.  24.129. m  X -x9. In the Competitive Bidding Third MO&O/Further Notice, the Commission proposed to redesignate channels 25 and 26, which currently are licensed on a BTA basis, as regional  X -licenses with the same service areas described in Section 24.102 of the Commission's rules. } {O-ԍ  Competitive Bidding Third MO&O/Further Notice, 10 FCC Rcd at 209,  77; see also 47 C.F.R. 24.102. The proposed redesignation of channels 25 and 26 was an outgrowth of our concern that designated entities interested in narrowband PCS licenses may desire service areas larger than  X-MTAs and BTAs. } {O-ԍ Competitive Bidding Third MO&O/Further Notice, 10 FCC Rcd at 228,  122. In this connection, we recognized that over half of the bidders who participated in the nationwide auction would have qualified for an entrepreneurs' block license  Xd-if it had been available.3d } {O5 -ԍ Id.3 Thus, we sought comment on whether we should redesignate some or all of the channels licensed on a BTA basis, including the response channels licensed on a BTA basis, to be licensed on an MTA basis, or take other means to achieve larger license  X-areas.3} {O$-ԍ Id.3 We also permitted MTA and BTA service areas to be aggregated up to and including  X-nationwide coverage.3D} {O&-ԍ Id.3 In response to the Competitive Bidding Third MO&O/Further Notice,",-(-(ZZd"  X-the Commission received 14 comments and 4 reply comments.  } yOy-ԍ Appendix C provides the full and abbreviated names of the parties filing comments and reply comments. In addition, in response to a Public Notice seeking additional comments on the Commission's narrowband PCS  X-entrepreneurs' block proposals,%X} {O- xԍ See Public Notice, "Additional Comment Sought on the Commission's Narrowband PCS Entrepreneur's Block  {O-Proposals," DA 941560 (rel. Dec. 21, 1994) (Entrepreneur's Block Public Notice).% we received eight comments and three reply comments.   X- IV. REPORT AND ORDER Đ Xv-TP  X_- A. Service Rules  X1-x 1. Power and Antenna Height Limits  X -  X -x 10. Background. In the PCS MO&O we created regional service areas for  X -narrowband PCS.U } {OS-ԍ PCS MO&O, 9 FCC Rcd at 4522,  14.U Section 24.132 of our rules, which govern power and antenna height limits, currently applies to MTA and BTA service areas and does not mention regional service  X -areas.J F} {O-ԍ See 47 C.F.R.  24.132.J  X-x 11. Discussion. We clarify that Section 24.132 of our rules applies to the regional service areas as well as MTA service areas. We amend paragraphs (d) and (e) of Section 24.132 to reflect that these rules apply to regional areas. Regional base stations, in addition to MTA base stations, must operate at reduced heights and power limits near service area borders in order to protect adjacent licensees from interference. In addition, we clarify that a narrowband PCS licensee holding a license for the same channel in an adjacent region or MTA is not required to reduce height and power to protect itself.  X- x2. Canadian Interim Sharing Arrangement  X-x 12. Background. On September 22, 1994, the United States and Canada entered into an interim sharing arrangement with respect to use of narrowband PCS channels in border  X~-areas.~ ~} {O#-ԍ See Canadian Interim Sharing Arrangement Public Notice, supra, n.1~ Under the Canadian Interim Sharing Arrangement ("Sharing Arrangement"), MTA and BTA licensees on certain narrowband PCS channels are not permitted to locate base stations within 75 miles of the U.S./Canadian border. These licensees are further prohibited from operating mobile stations in a manner that causes interference to the primary Canadian"9 j ,-(-(ZZ"  X-channels.4!} {Oy-ԍ Id. 4 Because the Sharing Arrangement was not yet finalized before the regional narrowband PCS auction bidder package was released on August 22, 1994, the Sharing Arrangement was not included in the bidder package. However, by Public Notice, the Commission announced the Sharing Arrangement five days prior to the commencement of the  X-regional narrowband PCS auction on October 26, 1994.3"Z} {O-ԍ  Id.3 Additionally, a Public Notice released December 21, 1994 invited comment on the effect of the Sharing Agreement on  Xv-narrowband PCS licensing.|#v} {O -ԍ See Entrepreneur's Block Public Notice, supra, n.29.|  XH-x 13. Comments. In response to the December 21 Public Notice, PCSD asserts that the Commission should give relief to affected parties because the Sharing Arrangement adversely  X -affects the value of the affected licenses.?$ ~} yOI-ԍ PCSD Comments at 79.? No other parties commented on this issue.  X -x 14. Discussion. We conclude that special relief for parties affected by the Sharing Arrangement is not necessary. Over the next year the Commission will negotiate vigorously with Canada for full coordination and accommodation of narrowband PCS license winners. Moreover, parties were fully aware of the Sharing Arrangement at the time of the regional auction, given that a Public Notice concerning it was released before the regional narrowband  Xy-auction commenced.%y} {O8- x<ԍ The regional narrowband auction commenced October 26, 1994, supra, n.19. See also Canadian Interim  {O-Sharing Arrangement Public Notice, supra, n.1. We believe that the operating restrictions resulting from the Sharing Arrangement are matters that should have been considered by potential bidders in their valuation of the licenses for competitive bidding purposes.  X- B. Auction Rules  X- x1. Establishment of Entrepreneurs' Block  X- x15. Background. In authorizing the Commission to use competitive bidding under Section 309(j) of the Act, Congress mandated that the Commission "ensure that small businesses, rural telephone companies, and businesses owned by members of minority groups  X|-and women are given the opportunity to participate in spectrumbased services."G&|j } yO$-ԍ 47 U.S.C.  309(j)(4)(D).G Congress also mandated that we utilize competitive bidding to promote economic opportunity and competition and ensure that the new and innovative technologies are readily accessible to the"N &,-(-(ZZ"  X-American people.G'} yOy-ԍ 47 U.S.C.  309(j)(4)(C).G When deciding which provisions to adopt to encourage designated entity participation in particular services, we have closely examined the specific characteristics of the service and have adopted a mix of provisions designed to balance the objectives of Congress set forth in Section 309(j). Thus, we have adopted measures designed to enhance the ability of designated entities to acquire licenses and to increase competition in the provision of wireless services generally. In narrowband PCS, for instance, we have provided installment payments for small businesses and bidding credits for minorityowned and womenowned businesses. In broadband PCS, we designated certain spectrum blocks for entrepreneurs' block licenses and provided bidding credits and installment plans for certain designated entities. In the 900 MHz Specialized Mobile Radio (SMR) service, we provided bidding credits, installment payments, and reduced down payments for small businesses. Most recently, we adopted provision for bidding credits and installment payments for the paging  X -services.%(( X} {O- xԍ See Revision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of Paging  {O- xSystems/Implementation of Section 309(j) of the Communications Act Competitive Bidding, Second Report and  {O- xOrder and Further Notice of Proposed Rulemaking, WT Docket No. 9618, PP Docket No. 93253, FCC 9759 (rel.  {OS-Feb. 24, 1997),  165187 (Paging Second Report and Order).%  X -    X -x16. In the Competitive Bidding Third MO&O/Further Notice, the Commission proposed servicespecific modifications to our competitive bidding rules for the award of narrowband PCS licenses with MTA and BTA service areas. In an effort to facilitate designated entity participation in providing narrowband PCS, we proposed to reserve both BTA frequency blocks and up to four MTA frequency blocks for bidding exclusively by entities with annual gross revenues of no more than $125 million in the preceding two years  X6-and total assets of no more than $500 million ("entrepreneurs' blocks").z)6H} {O/-ԍ  Competitive Bidding Third MO&O/Further Notice, 10 FCC Rcd at 208,  74.z The entrepreneurs' block proposal would have added channels 21 and 25 to the channels allocated for MTA and  X-BTA licenses for which designated entity provisions applied.*^} {O- xԍ See Competitive Bidding Third Report and Order, 9 FCC Rcd at 297071,  72. A 25 percent bidding credit  {O]- xwas already available to businesses owned by women and minorities bidding on, inter alia, all MTA licenses on  {O'-channels 19, 22, and 24 and all BTA licenses on channel 26. See 47 C.F.R.  24.129. The Commission later sought additional comment on proposals for establishing narrowband PCS entrepreneurs' blocks in light of: (1) the results of the regional narrowband PCS auction; and (2) the Commission's  X-reconsideration of its broadband PCS entrepreneurs' block rules in the Competitive Bidding  X-Fifth Memorandum Opinion and Order.p+ } {O_$-ԍ See Entrepreneur's Block Public Notice, supra, n.29.p   X-x17. Comments. AirTouch and PCIA oppose the establishment of an entrepreneurs' block for narrowband PCS. AirTouch argues that the outcome of the nationwide narrowband"k +,-(-(ZZ" PCS auction does not warrant an entrepreneurs' block in future MTA/BTA auctions and that the Commission's proposal (which would set aside 65% of the total narrowband spectrum) is  X-excessive.C,} yOK-ԍ AirTouch Comments at 67.C PageNet argues that any redesignation of paging response channels to  X-entrepreneurs' blocks would be unfair to existing paging licensees.B-X} yO-ԍ PageNet Comments at 34.B AirTouch believes designated entities can win licenses without an entrepreneurs' block because (1) of their success in regional narrowband auctions; (2) smallersized service areas (MTAs/BTAs) will be less expensive and thereby less capital intensive to acquire; and (3) the success of a designated entity (InstaCheck Systems) in the regional auctions shows that such companies can garner licenses with an installment payment option as the only special provision for  X1-designated entities.C.1} yO -ԍ AirTouch Comments at 59.C PCIA agrees with the comments of AirTouch.=/1x} yOZ-ԍ PCIA Comments at 2.=  X -x18. In contrast, SBA, SJPM, Essence, and PRTC all support establishment of  X -entrepreneurs' blocks for narrowband PCS.0 } yO-ԍ SBA Comments at 23; SJPM Comments at 1; Essence Comments, at 5 and 12; PRTC Comments at 2. AIDE asserts that, given the lack of designated entity success in the nationwide PCS auction, the Commission should designate all the existing frequency blocks eligible for bidding credits along with one additional MTA and one  X -additional BTA, as part of the entrepreneurs' block.=1 } yO-ԍ AIDE Comments at 3.= MMTC endorses an entrepreneurs' block and, in the alternative, recommends adopting a "first option" procedure which would give designated entities an opportunity to bid on certain licenses first and open bidding to  Xb-others only if a minimum bid is not met.E2b( } yO;-ԍ MMTC Reply Comments at 34.E American Paging supports adoption of provisions  XK-to increase opportunities for women and minorities.H3K } yO-ԍ American Paging Comments at 1.H PageMart believes that the Commission should adopt more limited entrepreneurs' blocks so that mediumsized companies will have a  X-chance to enter the market.A4H } yO"-ԍ PageMart Comments at 4.A Pagenet opposes any redesignation of paging response channels  X-to entrepreneurs' blocks on the basis that it would be unfair to existing paging licensees.B5} yO$-ԍ Pagenet Comments at 34.B BMJ&D opposes AIDE's request to reserve even more blocks for entrepreneurs. If adopted, BMJ&D asserts that the entrepreneurs' block should include at most one BTA. " h5,-(-(ZZ"Ԍ X-x19. Discussion. Upon review of the record before us, we will not establish an entrepreneurs' block for narrowband PCS similar to our provisions in broadband PCS. We agree with AirTouch's view that the results of the narrowband regional auction demonstrate that bidding credits and installment payments alone can facilitate participation by designated entities in the competitive bidding process, as well as securing licenses for the provision of narrowband PCS. Additionally, we have the experience of other auctions, such as 900 MHz SMR, where we did not have an entrepreneurs' block but, nonetheless, had many successful  X_-designated entity applicants.6_} {O- xjԍ  See Press Release, "Wireless Telecom Bureau Releases Progress Report" (rel. March 5, 1997) (Wireless  {O -Bureau Progress Report). x` `  X1-x20. Also, we consider narrowband PCS to be less capital intensive than broadband PCS, thereby making it more likely that small businesses, for example, can acquire the financing to win these licenses, particularly for MTAs. Thus, we conclude there is no need to insulate designated entities from other bidders and that bidding credits coupled with installment payments should satisfy our obligations under Section 309(j) of the Communications Act as they have in so many other auctions. We also point out that our partitioning proposal could provide for designated entities to acquire narrowband PCS licenses postauction. Moreover, narrowband PCS licensees are free to transfer and assign licenses immediately (unlike broadband PCS), providing further flexibility to acquire licenses post  Xb-auction.M7b$} {O7-ԍ See 47 C.F.R.  24.839(d).M   X4- x2. Definition of Minority Groups  X-x21. Background. As discussed infra at  6164, we propose to modify our designated entity rules to provide race and genderneutral provisions and establish eligibility criteria based on size. However, even if these modifications are adopted in the future, we will continue to request bidder information on the FCC Form 175 as to minority and/or womenowned status, in addition to small business status, in order to monitor whether we have accomplished substantial participation by minorities and women through the broad provisions available to small businesses. Currently, the narrowband PCS rules define "members of minority groups" as "individuals of AfricanAmerican, Hispanicsurnamed, American Eskimo,  XP-Aleut, American Indian and Asian American extraction."@8P} yO!-ԍ 47 C.F.R.  24.320.@ In response to numerous inquiries, we revised this definition in our broadband PCS rules to conform with the definition used in  X"-other contexts.9^"F} {O%- xԍ See Implementation of Section 309(j) of the Communications Act Competitive Bidding, Fifth Memorandum  {O%- xOpinion and Order, PP Docket No. 93253, 10 FCC Rcd 403, 432,  52 (1994) (Competitive Bidding Fifth  {O&- xMemorandum Opinion and Order) (citing Broadcast Equal Employment Opportunity Rules and FCC Form 395, 70"&8,-(-(&"  xFCC 2d 1466, 1473 (1979); 47 C.F.R.  1.1621(b); 47 U.S.C.  309(i)(3)(c)(ii); Race and Ethnic Standards for Federal Statistics and Administration Reporting, OMB Statistical Policy Directive No. 15 (1977)).  Thus, Section 24.720(i) of our rules for broadband PCS now defines"" 9,-(-(ZZz" members of minority groups to include "Blacks, Hispanics, American Indians, Alaskan  X-Natives, Asians, and Pacific Islanders."C: } yO-ԍ 47 C.F.R.  24.720(i).C  X-x22. Discussion. In the Competitive Bidding Fifth Memorandum Opinion and Order, we noted that we would make the same definitional correction made in the broadband PCS  X-context to the definition of minority groups used in the narrowband PCS auction rules.;} {O -ԍ Competitive Bidding Fifth Memorandum Opinion and Order, 10 FCC Rcd at 432,  52, n.123. We also recently amended our general competitive bidding definition of minority, Section  Xa-1.2110(b)(2), to adopt this definition of minority.<&aB} {OT- x#X\  P6G;IP#э See Amendment of Part 1 of the Commission's Rules Competitive Bidding Proceeding, Order, Memorandum  {O- xOpinion and Order and Notice of Proposed Rule Making, WT Docket No. 9782, FCC 9760 at  15 (rel. Feb. 28,  {O- xw1997) (Part One NPRM). In this proceeding, the Commission seeks comment on the establishment of uniform rules for all auctionable services. Thus, in an effort to maintain consistency throughout our auction rules for various services, we revise the definition of "members of minority groups" in our narrowband PCS auction rules to include "Blacks, Hispanics, American Indians, Alaskan Native, Asians, and Pacific Islanders."    X -  V. FURTHER NOTICE OF PROPOSED RULEMAKING ĐTP  X - A. Service Rules  X-  X{-x 1. Service Area Reallocation  XM-x23. Background. We believe that a flexible framework for narrowband PCS channelization will foster our goals of universality, speed of deployment, diversity of services,  X-and competitive delivery.g=0 } {O-ԍ PCS First Report and Order, 8 FCC Rcd at 7165,  19.g In the PCS First Report and Order, we found that a mix of paired, unpaired, and varying bandwidths would provide the most flexible solution for  X-meeting the stated needs of narrowband PCS providers.3> } {Of"-ԍ  Id.3 We determined that while there appears to be interest in providing narrowband PCS services across a wide range of local, regional, and nationwide licensed service areas, the bulk of demand is for large regional or  X-nationwide licensed service areas.E?T } {O&-ԍ Id. at 7166,  26.E"?,-(-(ZZp"Ԍx  X-x24. Thus, in the PCS First Report and Order, we set aside the majority of  X-narrowband PCS spectrum for nationwide and MTAbased licensing.3@} {OM-ԍ Id.3 In addition, we  X-recognized that a variety of narrowband PCS services could be offered on a local level.EAZ} {O-ԍ Id. at 7167,  27.E As a result, our initial channelization plan for narrowband PCS consisted of 26 channels allocated as follows: 11 channels for nationwide use, 13 channels for use on an MTA basis, and two  Xx-channels for use on a BTA basis.Bx} {O - xzԍ Id; see also PCS MO&O, 9 FCC Rcd at 1310,  7. See Appendix F for charts depicting narrowband channelization plans. We also set aside eight unpaired channels with BTA service areas for use by existing 900 MHz paging licensees as acknowledgement or response  XJ-channels.gCJF} {OA-ԍ PCS First Report and Order, 8 FCC Rcd at 7167,  26.g  X -x25. In the PCS MO&O, we modified our initial channelization plan in two respects. First, we determined that while regional service areas based on MTAs contain sufficient population and geographic area to support economically viable PCS services, there was a continued need for an additional category of licenses with a service area smaller than a  X -nationwide area, but larger than an individual MTA.UD } {OK-ԍ PCS MO&O, 9 FCC Rcd at 1311,  14.U Therefore, we designated six paired channels for licensing in five large regions to better reflect the technologies and business  X-plans of the licensees desiring to implement large regional narrowband PCS systems.3Ej } {O-ԍ  Id.3 Second, we determined that licensing some of the eight unpaired channels for use by existing paging licenses on an MTA basis would make it easier for operators of local and regional  XO-paging systems to upgrade and coordinate their operations.EFO } {O-ԍ Id. at 1312,  16.E Thus, four of the paging response channels are currently licensed using MTA service areas and four using BTA service  X!-areas.3G! } {O`!-ԍ Id.3  X-x26. In the Competitive Bidding Third MO&O/Further Notice, the Commission proposed to redesignate channels 25 and 26, which currently are licensed on a BTA basis, as regional licenses with the same service areas described in Section 24.102 of the Commission's" G,-(-(ZZ"  X-rules.H} {Oy-ԍ  Competitive Bidding Third MO&O/Further Notice, 10 FCC Rcd at 209,  77; see also 47 C.F.R. 24.102. The proposed redesignation of channels 25 and 26 was an outgrowth of our concern that designated entities interested in narrowband PCS licenses may desire service areas larger  X-than MTAs and BTAs.IZ} {O-ԍ Competitive Bidding Third MO&O/Further Notice, 10 FCC Rcd at 228,  122. In this connection, we recognized that over half of the bidders who participated in the nationwide auction would have qualified for an entrepreneurs' block license  X-if it had been available.3J} {OA -ԍ Id.3 Thus, we sought comment on whether we should redesignate some or all of the channels licensed on a BTA basis, including the response channels licensed on a BTA basis, to be licensed on an MTA basis, or take other means to achieve larger license  X_-areas.3K_~} {O -ԍ Id.3 We also permitted MTA and BTA service areas to be aggregated up to and including  XH-nationwide coverage.3LH} {O -ԍ Id.3  X1-   X -x27. Comments. Comments were mixed on the issue of reallocating BTA service areas into larger service areas. Many commenters argued that BTA license areas are too small to support the implementation of narrowband PCS. American Paging asserts that implementation  X -of narrowband PCS on a BTA basis is impractical, and suggests MTA service areas instead.MM } yO(-ԍ American Paging Comments at 3, n.2.M The Personal Communications Industry Association ("PCIA") supports American Paging's proposal and argues that BTAs do not afford licensees the optimum combination of coverage  X-and construction costs necessary for new entrants to be competitive in the market.<N2 } yOs-ԍ PCIA Comment at 3.< PCIA also contends that BTAs would burden designated entities with the additional complexity and transaction costs of aggregating licenses to achieve the minimum service area needed to  XK-establish a viable messaging alternative.3OK } {O-ԍ Id.3 AirTouch Paging urges the Commission to license  X4-the remaining narrowband PCS spectrum on an MTAorgreater basis.IP4T } yO9!-ԍ AirTouch Paging Comments at 13.I Essence Communications ("Essence") asserts that the Commission should aggregate BTA licenses to  X-create nationwide licenses within the entrepreneurs' block.BQ} yO$-ԍ Essence Comments at 89.B PageMart contends that the Commission should aggregate the remaining BTA and MTA licenses or, in the alternative,"tQ,-(-(ZZc"  X-permit combinatorial bidding on those licenses.DR} yOy-ԍ PageMart Comments at 911.D PageMart argues that mediumsized firms  X-easily could be squeezed out of the regional competition altogether.ASX} yO-ԍ PageMart Comments at 5.A PageMart also argues that the Commission should redesignate some of the response channels to create larger service  X-areas to assist existing paging licensees in upgrading their networks.9T} {OT-ԍ Id. at 9.9 PageMart further asserts that service providers cannot achieve the necessary economies of scale to offer  X-advanced paging with local service alone.4Uz} {O -ԍ  Id. 4  X_-x28. By contrast, PCS Development Corporation ("PCSD"), a minoritycontrolled small business that successfully bid for narrowband regional licenses, and Mobile Telecommunications Technologies Corporation ("Mtel") contend that redesignation of BTA blocks to MTA blocks would be fundamentally unfair to the successful bidders such as PCSD  X -and Mtel in the regional narrowband auction.?V } yO-ԍ Mtel Comments at 24.? PCSD argues that designated entities interested in areas larger than the BTAs had ample opportunity to bid in the regional auctions. Thus, PCSD contends, giving designated entities yet another opportunity to gain larger service  X -areas would place PCSD and other winners at a disadvantage.?W } yO -ԍ PCSD Comments at 23.? Other commenters maintain that the Commission should not reallocate any narrowband PCS spectrum on a regional or nationwide basis because the BTA channel blocks afford smaller companies a meaningful  Xy-opportunity to participate in the provision of narrowband PCS.Xy, } {OV- xԍ See, e.g., PCSD Comments at 23; Mtel Comments at 45; PCIA Comments at 4; PageMart Comments at 5; USIMTA/USIPCA Comments at 6. Mtel contends that the results of the regional auction demonstrate that there is no need to reallocate channels, and that the nationwide narrowband auction results, which were unique, should not be used as a  X4-basis for revising the current allocations.=Y4 } yOk -ԍ PCIA Comments at 6.= Mtel further contends that the prices bid at the narrowband regional auction demonstrate that licensee interest, as reflected by bid prices, has not been reduced despite the availability of only smaller service/license areas. According to Mtel, this lends further support to the argument that no demonstration of need for larger  X-service areas has been made.=Z} yO%-ԍ Mtel Comments at 6.= X` hp x (#%'0*,.8135@8:-expensive to implement than anticipated.y> {O-ԍ Competitive Bidding Third MO&O/Further Notice, 10 FCC Rcd at 181,  9.y Thus, we deferred our decision regarding auction  X'-design for the paging response channels.3' {Oz-ԍ Id.3 x  X-x857. Discussion. We propose to auction the paging response channels in one simultaneous multiple round auction but reserve the option of auctioning these channels with the remaining narrowband PCS licenses. We now have the experience necessary to conduct a large simultaneous multiple round auction in an administratively efficient manner. In addition, in balancing the advantages of simultaneous multiple round bidding with the greater complexity that this method entails, we believe that it is the most appropriate auction methodology for these auctions, because of the high value of most narrowband PCS licenses and the significant interdependence between spectrum blocks and geographic regions. We note also that the potential reallocation of the MTA and BTA channels and paging response"A4 ,-(-(ZZ" channels discussed above, makes a single simultaneous multiple round auction even more administratively feasible. We seek comment on this proposal.  X-  X-x 4. Auction Design for Reserved Spectrum  X-x958. We seek comment on the manner in which we should auction the one MHz of reserved spectrum. Specifically, we seek comment on whether we should use our current narrowband PCS rules, as set forth in Part 24, or whether other rules should be adopted to auction this spectrum. In addition, we seek comment on whether or not we should auction the reserve spectrum in conjunction with other narrowband spectrum. We additionally seek comment on whether there should be any special provisions for small businesses, and if so, whether to adopt the small business size definition and the special provisions proposed herein.  X -(See  6164, infra.)   X -D. Treatment of Designated Entities  X<Xx 1. Overview of Adarand Constructors, Inc. v. Pe9a (#  Xe-x:59. Background. We have employed in our narrowband PCS auction rules a wide range of special provisions and eligibility criteria designed to meet the statutory objectives of providing opportunities to small businesses, rural telephone companies, and businesses owned  X -by members of minority groups and women, collectively known as "designated entities."_  {O-ԍ See generally 47 U.S.C.  309(j)(3)(4)._  Notably, the special provisions adopted for designated entities in the two narrowband PCS auctions completed thus far produced varied results. In the nationwide narrowband PCS auction, we provided a 25 percent bidding credit for businesses owned by members of  X-minority groups and/or women.wZ {O-ԍ Competitive Bidding Third Report and Order, 9 FCC Rcd at 2970,  72.w No designated entities won licenses in this auction. Although other factors could have caused this result, the bidding credit of 25 percent proved insufficient to assist designated entities in obtaining nationwide narrowband PCS licenses when no other provisions were provided. We considered the results of the nationwide narrowband auction when contemplating the provisions that would govern the regional narrowband PCS auction and raised the bidding credit to 40 percent for businesses owned by  X:-members of minority groups and/or women.z: {O!-ԍ Competitive Bidding Third MO&O/Further Notice, 10 FCC Rcd at 201,  58.z In addition, we implemented an installment  X#-payment plan for businesses owned by members of minority groups and women.}\#~ {OR$- xԍ See Implementation of Section 309(j) of the Communications Act Competitive Bidding, Order on  {O%- xReconsideration, 9 FCC Rcd 5306 at  8 (1994) (Order on Reconsideration). Installment payment plans already were provided for small businesses bidding on regional licenses.} Designated entities were more successful in the regional narrowband PCS auction, winning all" ,-(-(ZZ" of the licenses for which a bidding credit was provided for designated entities. In total, designated entities won 11 of the 30 licenses offered in the regional narrowband auction. Specifically, four of the nine winners in the entire auction were designated entities that qualified as small businesses owned by members of minority groups and/or women.  X-x;60. At the time our narrowband PCS rules were adopted an intermediate scrutiny  Xv-standard of review was applied to federal race and genderbased programs.gv {O-ԍ Metro Broadcasting v. FCC, 497 U.S. 547, 56465 (1990).g In Adarand, the Supreme Court held that all racial classifications, whether imposed at the federal, state or local government level, must be analyzed by a reviewing court under a strict scrutiny standard of review. This standard requires such classifications to be narrowly tailored to further a  X -compelling governmental interest.L Z {O' -ԍ Adarand, 115 S. Ct. at 2113.L In VMI, the Supreme Court reviewed a state program containing gender classification and held it was unconstitutional under an intermediate  X -scrutiny standard of review.|  {O-ԍ United States v. Commonwealth of Virginia, __U.S. __, 116 S.Ct. 2264 (1996).| This standard requires that "[p]arties who seek to defend genderbased government action must demonstrate an exceedingly persuasive justification for  X -that action." ~ {O- xԍ VMI, 116 S. Ct. at 2274 (citing J.E.B. v. Alabama ex rel. T. B., 511 U.S. 127, 13637 & n.6 (1994) and  {O-Mississippi Univ. for Women v. Hogan, 458 U.S. 718, 724 (1982)). Under this test, the government must show "at least that the [challenged] classification serves important governmental objectives and that the discriminatory means  X-employed are substantially related to the achievement of those objectives." {O- xԍ Id. at 2275 (quoting Mississippi Univ. for Women, 458 U.S. at 724 (quoting Wengler v. Druggists Mutual  {O-Ins. Co., 446 U.S. 142, 150 (1980)). While the Supreme Court has not directly addressed constitutional challenges to federal genderbased  Xf-programs since Adarand and VMI,f6  {OM- xԍ But see Lamprecht v. FCC, 958 F.2d 382, 391, 393 n.3 (D.C. Cir. 1992), a preAdarand/VMI decision in  x which Justice Thomas (a member of the D.C. Circuit panel to which the case was presented) invokes the  x"exceedingly persuasive justification" standard in striking down a federal genderpreference policy. As the dissent  {O- xin Lamprecht confirmed, Justice Thomas applied "the more exacting scrutiny of Justice O'Connor's dissent [in Metro,  {Oq- xK497 U.S. at 60231]," id. at 404 (Mikva, C.J., dissenting), which formed the core of Justice O'Connor's majority  {O; -opinion in Adarand. our review of the relevant broad language in VMI indicates that the Court does not differentiate between federal and state official actions in its  X:-equal protection analysis.O: {O#- xJԍ "Since [Reed v. Reed, 404 U.S. 71 (1971)], the Court has repeatedly recognized that neither federal nor state  {Ok$- xygovernment acts compatibly with the equal protection principle when a law or official policy denies . . . equal  {O5%- xopportunity . . . ." VMI, 116 S. Ct. at 2275 (emphasis added); "To summarize the Court's current directions for cases  {O%- x,of official classification based on gender: . . . the reviewing court must determine whether the proffered justification  {O&- xis exceedingly persuasive." Id. (emphasis added). See also Heckler v. Mathews, 458 U.S. 728, 74445 (1984)"&,-(-(&"  xZ(reviewing a federal statute containing gender classification under the same standard the Court used to review the  {OX-state statute in Mississippi Univ. for Women); Califano v. Westcott, 443 U.S. 76, 85 (1979) (same).O Similarly, the Adarand decision definitively eliminated any": ",-(-(ZZH" distinction between federal and state racebased programs in setting its strict scrutiny standard  X-of judicial review.L" {O-ԍ Adarand, 115 S. Ct. at 2113.L Therefore, we conclude that any genderbased preference maintained in  X-the narrowband PCS auction rules would need to meet the VMI intermediate scrutiny standard of review.  X-x<61. Discussion. The Adarand decision potentially affects three race and genderbased  Xz-measures in our narrowband PCS auction rules and proposals."z {O - xԍ In the Competitive Bidding Third Report and Order, we also adopted a tax certificate program for minority  xKand womenowned businesses under 26 U.S.C.  1071. 9 FCC Rcd at 2976,  81. Congress subsequently repealed  xSection 1071. H.R. 831, 104th Cong. 1st Sess.  2. As a result of this action by Congress, the specific tax certificate provision in our narrowband rules is void. First, our attribution rules enable an applicant in which women or minorities hold 50.1 percent of the equity while another investor holds 49.9 percent of the equity to obtain special status as a business owned  X5-by minorities or women.5 {O-ԍ Competitive Bidding Third MO&O/Further Notice, 10 FCC Rcd at 198,  4950. Second, businesses owned by minorities or women and small businesses owned by minorities or women receive larger bidding credits than other designated  X -entities.? 0  {O-ԍ Id. at  58.? Finally, the Competitive Bidding Third MO&O/Further Notice proposes that small businesses owned by minorities or women receive the most favorable installment payment  X -options available.$  {ON- x,ԍ Competitive Bidding Third MO&O/Further Notice, 10 FCC Rcd at 21920,  9497. In this reconsideration  {O- xhof the Competitive Bidding Third Report and Order, we proposed that businesses owned by women and/or minorities  xwould be able to make interestonly payments for three years (as opposed to only the first two years for all other small businesses). The purpose of these provisions was to address the lack of access to  X -capital problem that our record showed women and minorities face.  {O#- x<ԍ See Competitive Bidding Third Report and Order, 9 FCC Rcd at 297172,  7576; see also Competitive  {O-Bidding Fifth Report and Order, 9 FCC Rcd at 557980.   X-x=62. We tentatively conclude that the present record in support of our racebased narrowband PCS rules lack sufficient evidentiary support to withstand strict scrutiny. We seek comment on our tentative conclusion and whether our provisions promote a compelling governmental interest and, more particularly, whether compensating for discrimination in lending practices and in practices in the communications industry constitutes such an interest. We also ask interested parties to comment on nonremedial objectives that could be furthered by the minoritybased provisions of our rules and whether they could be considered compelling governmental interests, such as increased diversity in ownership and employment"! ,-(-(ZZ" in the communications industry or increased industry competition. In commenting, we ask parties to submit statistical data, personal accounts, studies, or any other data relevant to the entry of specific racial groups into the field of telecommunications. Examples of relevant evidence could include discrimination against minorities trying to obtain FCC licenses; discrimination against minorities seeking positions of ownership or employment in communications or related businesses; discrimination against minorities attempting to obtain capital to start up a telecommunications enterprise, including terms and conditions; and discrimination against minorities operating telecommunications businesses, including treatment by vendors and suppliers.  X -x>63. With respect to our genderbased provisions, we seek comment on whether there are remedial or nonremedial goals that would satisfy the "important governmental objective" requirement of the intermediate scrutiny standard. Are our genderbased rules "substantially related" to the achievement of such objectives? Just as we requested above, in addressing evidence to support the narrowband racebased provisions, we ask parties to submit statistical data, personal accounts, studies, or any other data relevant to the entry of women into the field of telecommunications. We are also interested in supplementing the current record to support race and genderbased provisions in our other rules. In this regard, the Commission initiated a comprehensive rule making proceeding to explore market barriers to women and minorityowned businesses, as well as small businesses, pursuant to Section 257 of the  X4-Communications Act.p4 {O-ԍ See generally, Market Entry Notice of Inquiry, supra, n.5.p The record created in response to this R&O/Further Notice will also be incorporated into that docket.  X-x?64. Based on our tentative conclusions, we propose to offer only race and genderneutral provisions for narrowband PCS. We propose that bidding credits and installment payments should be made available to small businesses including those owned by minorities and women. x` `  X~-Xx 2. Eligibility for Bidding Credits and Installment Payments (#  XP-x` ` a. Small Business Definition  X"-x@65. Background. In the Competitive Bidding Second Memorandum Opinion &  X -Order, we stated that we would define eligibility requirements for small businesses on a servicespecific basis, taking into account the capital requirements and other characteristics of  X-each particular service.Z {O#-ԍ Competitive Bidding Second Memorandum Opinion & Order, 9 FCC Rcd at 7269,  145. In the recently adopted Part One NPRM, we proposed to continue  X -this practice.[  {Oi&-ԍ Part One NPRM, FCC 9760 at  3240.[ Once small business eligibility requirements are defined, however (i.e., on a  X!-service specific basis) we proposed in the Part One NPRM to adopt uniform schedules of"!"~,-(-(ZZ " bidding credits and installment payments that would determine the level of benefits provided to small businesses. For the regional narrowband PCS and broadband PCS auctions, we believed that buildout and operational costs would be high and adopted a small business  X-threshold of $40 million.C$ yO4- xԍ Specifically, for the purposes of narrowband PCS, we defined a small business as any firm, together with  xaffiliates and certain large investors, with average gross revenues for the three preceding years of less than $40  {O- x,million. Competitive Bidding Third MO&O/Further Notice, 10 FCC Rcd at 196,  46; see also Competitive Bidding  {O-Fifth Report and Order, 9 FCC Rcd at 5608,  175 (establishing $40 million threshold for broadband PCS).C More recently, we have adopted a "tiered" approach for determining small business eligibility. For instance, for the 900 MHz SMR service we adopted a twotiered system for determining eligibility for bidding credits, reduced down  Xv-payments, and installment payment plans.v {O -ԍ  See 900 MHz Second Order on Reconsideration, 11 FCC Rcd at 2700,  153.  XH-xA66. Discussion. We propose to limit eligibility for bidding credits and installment payments to small businesses. We propose a "twotiered" approach in defining small  X -businesses, based on a $40 million and $15 million definition.|\ F {O- xԍ In response to our proposal for entrepreneurs' blocks in the Competitive Bidding Third MO&O/Further  {O- xkNotice, parties varied in their suggestions regarding the appropriate financial threshold for eligibility. See USIMTA/USIPCA Comments at 2; PCSD Reply Comments; AIDE Comments at 6. | Currently, we have a $40 million small business definition. Businesses with gross revenues of not more than $40  X -million may have significantly greater difficulty in obtaining capital than larger enterprises. j  {O-ԍ See Competitive Bidding Third MO&O/Further Notice, 10 FCC Rcd at 19596,  45. At the same time, a company with $40 million in revenue is sufficiently large that it could  X -survive in a competitive wireless communications market.3  {Ok-ԍ Id.3 We believe that "small businesses," as defined by our proposal, will be at a disadvantage in competing against large companies. Accordingly, we propose to enhance special provisions for small businesses by creating an additional category, very small business entities, with a $15 million threshold. x  XK-xB67. We seek comment on these proposals. Specifically, are $40 million and $15 million appropriate thresholds? Are such tiers necessary to ensure that small businesses, including those owned by minorities and women, have the opportunity to participate in providing service on an MTA, regional, and nationwide basis? Should the thresholds be higher or lower, based on the types of companies that are likely to benefit from the special provisions proposed below? Also, should different definitions of small businesses be used for different channel blocks? For example, should the threshold for nationwide licenses be higher than the threshold for regional licenses? x` `  X|-x` ` b. Attribution "e# ,-(-(ZZ"Ԍ X-xC68. Background. To ensure that only bona fide small businesses avail themselves of the special provisions provided to them, the narrowband PCS rules require us to consider the gross revenues of the applicant, its affiliates, and all "attributable" investors in the applicant on a cumulative basis. The attribution rules established for narrowband PCS count the gross revenues of all investors in, and affiliates of, an applicant on a cumulative, fullydiluted basis for purposes of determining whether the $40 million gross revenue threshold for small  Xx-businesses has been exceeded.zx {O-ԍ Competitive Bidding Third MO&O/Further Notice, 10 FCC Rcd at 196,  47.z In addition, an applicant will not qualify as a small business if any one attributable investor in, or affiliate of, the entity has $40 million or more in  XJ-personal net worth.wJZ {OU -ԍ Id. at 196,  46; see also 47 C.F.R.  24.320(b)(2)(iv)(a).w There are two exceptions, however. First, applicants that meet the definition of a small business may form consortia of small businesses that, on an aggregate  X -basis, exceed the gross revenue cap.K  yO-ԍ 47 C.F.R.  24.320(b)(2)(iii).K Second, if the applicant forms a "control group," the gross revenues, personal net worth, and affiliations of any investor in the applicant are not considered so long as the investor holds 25 percent or less of the applicant's passive equity, is not a member of the applicant's control group, and the control group holds at least 25 percent  X -of the applicant's equity.h | {O-ԍ Id.; see also 47 C.F.R.  24.320(b)(2)(iv)(a). h  X-xD69. We also established in the Competitive Bidding Third MO&O/Further Notice a relaxed attribution standard for women and minorityowned businesses. Under this standard, the gross revenues or net worth of any single investor in a minority or womanowned small business applicant that is not a member of the applicant's control group is not attributable unless it holds more than 49.9 percent of the passive equity of the applicant. The control group must (1) own at least 50.1 percent of the applicant's equity, (2) retain control and hold at least 50.1 percent of the voting stock, and (3) consist entirely of minorities and/or women  X-or entities 100 percent owned and controlled by minorities and/or women.z {O-ԍ Competitive Bidding Third MO&O/Further Notice, 10 FCC Rcd at 198,  49.z The gross revenues and net worth of each member of the control group and each member's affiliates are counted toward the gross revenue threshold or the individual $40 million individual net worth  X-limitation, regardless of the size of the member's total interest in the applicant.3 {O!-ԍ Id.3 These provisions were intended to address the special problems of women and minorities in obtaining financing due, in part, to discriminatory lending practices by private financial institutions. x  X;-xE70. Discussion. We propose replacing the "control group" structure established for";$2 ,-(-(ZZ"  X-narrowband PCS in the Competitive Bidding Third Memorandum Opinion and Order with  X-simpler structural and control requirements. Consistent with our proposal adopted in the Part  X-One NPRM, we propose that in order to determine whether an applicant qualifies as a small business in the narrowband PCS auction, we will consider the gross revenues of the small  X-business applicant, its affiliates, and certain investors in the applicant. {O#- xԍ See Part One NPRM, FCC 9760 at  1929. See also Paging Second Report and Order, FCC 9759 at  178181. Specifically, for purposes of determining small business status, we will attribute the gross revenues of all controlling principals in the small business applicant as well as the gross revenues of affiliates of the applicant. We also choose not to impose specific equity requirements on the controlling principals that meet our small business definition.  X -xF71. We will still require, however, that in order for an applicant to qualify as a small business, qualifying small business principals must maintain "control" of the applicant. The  X -term "control" would include both de facto and de jure control of the applicant. For this purpose, we would borrow from certain SBA rules that are used to determine when a firm  X -should be deemed an affiliate of a small business.K " {O-ԍ See 13 C.F.R.  121.401.K Typically, de jure control is evidenced  X -by ownership of 50.1 percent of an entity's voting stock.  De facto control is determined on a casebycase basis. An entity must demonstrate at least the following indicia of control to  X-establish that it retains de facto control of the applicant: (1) the entity constitutes or appoints more than 50 percent of the board of directors or partnership management committee; (2) the entity has authority to appoint, promote, demote and fire senior executives that control the daytoday activities of the licensees; and (3) the entity plays an integral role in all major  X+-management decisions.+ {O-ԍ See Competitive Bidding Fifth Memorandum Opinion and Order, 10 FCC Rcd at 447,  80. While we are not imposing specific equity requirements on the small business principals, the absence of significant equity could raise questions about whether  X-the applicant qualifies as a bona fide small business. The existence of special small business provisions requires us to adopt the provisions set forth herein in order to prevent their improper use. Accordingly, we seek comment on whether we should count the gross revenues and assets only of controlling principals in the applicant to determine small business eligibility. We also seek comment on whether there is a more appropriate attribution standard for determining size.  X^-xG72. We also propose to eliminate the $40 million individual net worth limitation currently applicable in our narrowband PCS rules. We eliminated the personal net worth  X0-limits for broadband PCS.D0F {O'%-ԍ Id. at 421,  30.D In that context, we determined that the obstacles faced by minorities and minoritycontrolled businesses in raising capital are not necessarily confined to minorities with limited personal net worth. Rather than eliminating the personal net worth"%,-(-(ZZZ" limits for minorities only, however, we eliminated the requirement for all applicants because  X-such limits are difficult to apply and enforce.3 {Ob-ԍ Id.3 We seek comment on whether the individual net worth limitation should be eliminated for narrowband PCS. x` `  X-x 3. Bidding Credits x  Xv-xH73. Background. Bidding credits allow eligible designated entities to receive a  X_-payment discount for their winning bid in an auction. In the Competitive Bidding Third  XJ-Report and Order, we determined that women and minorities would receive a 25 percent bidding credit for three nationwide channels, two regional channels, three MTA channels, and  X -one BTA channel.w Z {O) -ԍ Competitive Bidding Third Report and Order, 9 FCC Rcd at 2970,  72.w After considering the outcome of the nationwide narrowband auction in which no designated entities won licenses, we increased the bidding credit on the designated  X -regional licenses from 25 percent to 40 percent.z  {O-ԍ  Competitive Bidding Third MO&O/Further Notice, 10 FCC Rcd at 201,  58.z In addition, we proposed in the  X -Competitive Bidding Third MO&O/Further Notice to provide bidding credits in the proposed  X -entrepreneurs' blocks that would give small businesses a 10 percent bidding credit, women and minorityowned businesses a 15 percent credit, and small businesses owned by women  X-and minorities an aggregate credit of 25 percent.J~ {O-ԍ  Id. at 216,  87.J  Xh-xI74. Discussion. Taking into account the recent Adarand decision and our decision to redesignate the remaining narrowband channel blocks into larger license areas, we propose to  X<-eliminate the bidding credit scheme adopted in the Competitive Bidding Third Report and  X'-Order and subsequently modified in the Competitive Bidding Third MO&O/Further Notice. We propose instead to extend a bidding credit to all small businesses on a "tiered" basis,  X-consistent with our proposals in the Part One NPRM.Y {O-ԍ See Part One NPRM, FCC 9760 at  40. Y Therefore, we propose that small  X-businesses with gross revenues of not more than $15 million for the preceding three years be entitled to a 15 percent credit and small businesses with gross revenues of not more than $40 million for the preceding three years be entitled to a 10 percent bidding credit. Bidding credits for small businesses will not be cumulative. Thus, a $15 million small business will be eligible for only a 15 percent credit, not a 25 percent credit.  X\-xJ75. We recognize that this proposal would enhance the competitiveness of small businesses, which will receive a bidding credit that they did not receive previously. We tentatively conclude, however, that extending the bidding credit to small businesses will achieve the objectives of Congress by providing small businesses, including womenowned"&,-(-(ZZ" and minorityowned small businesses, with a meaningful opportunity to obtain licenses in the narrowband PCS auction. We tentatively conclude that the redesignation of channel blocks into larger geographic license areas would increase the value of the licenses by allowing larger firms to bid on licenses that will enable widearea service. As a result, we believe that small businesses would require additional bidding enhancements in order to participate in the auction.  X_-xK76. We further recognize that this bidding credit would be less than the bidding credit  XH-previously made available to minority and womenowned businesses in the Competitive  X3-Bidding Third Report and Order and the Competitive Bidding Third MO&O/Further Notice  X -(i.e., 25 percent for selected nationwide and 40 percent for selected regional licenses).  X -However, we believe that a lower bidding credit, combined with the installment payments (see  X -discussion infra at  7982) will provide sufficient opportunities for small businesses to compete for some of the licenses. Furthermore, tiered bidding credits are narrowly tailored to the varying abilities of businesses to access capital. Thus, we believe that tiering will account for the fact that smaller businesses, which often include businesses owned by minorities and women, have more difficulty accessing capital and thus need a more substantial bidding credit.  XU-x 4. Payment Matters  X'-xL77. Background. The current narrowband PCS rules provide installment payments for small businesses and businesses owned by members of minority groups and/or women bidding  X-for any of the BTA, MTA, or regional narrowband PCS licenses. {Or- xԍ Competitive Bidding Third Report and Order, 9 FCC Rcd at 2978,  86; Order on Reconsideration, 9 FCC Rcd 5306 at  8. The terms and conditions of the installment payments follow those set forth in our general Part 1 rules, entitling eligible licensees to pay their winning bid amount in installments over the term of the license, with interest charges to be fixed at the time of licensing at a rate equal to the rate for tenyear U.S. Treasury obligations. Qualified licensees would make interestonly payments during the first  X-two years of the license term." {OY-ԍ  Competitive Bidding Fifth Report and Order, 9 FCC Rcd at 5593,  13839. x  XX-xM78. In light of the Adarand decision, for other services we have adopted a "tiered" approach to implementing installment payment plans, which is based solely on the financial  X,-status of licensees. Most recently, in the Paging Second Report and Order, we adopted  X-bidding credits and an installment payment plan for entities qualifying as small businesses. {O|$-#]\  PCIP#э See Paging Second Report and Order FCC 9759 at  165187.#]\  PCIP#ѿ  X-In the Broadband PCS Report and Order, we adopted a tiered installment plan for the D, E,"'F,-(-(ZZ<"  X-and F block broadband PCS licenses, but limited the interest payment period to two years.\ yOy- xiԍ Amendment of Parts 20 and 24 of the Commission's Rules Broadband PCS Competitive Bidding and the  {OA- xCommercial Mobile Radio Service Spectrum Cap, Report and Order, WT Docket No. 9659, GN Docket No. 90314,  {O -FCC 96278, 11 FCC Rcd 7824,  4148 (1996) (Broadband PCS Report and Order).  X-In the earlier 900 MHz Second Order on Reconsideration/Seventh Report and Order, we  X-adopted a tiered installment payment plan for 900 MHz SMR licensees.v {Oq-ԍ 900 MHz Second Order on Reconsideration, 11 FCC Rcd at 2706,  169.v  X-xN79. Discussion. We tentatively conclude that quarterly installment payments are appropriate for small businesses acquiring licenses for narrowband PCS. Installment payments will provide financial assistance to all small businesses. By allowing payment in installments, the government is in effect extending credit to licensees, thus reducing the amount of private financing needed prior to the auction. Such government financing will promote participation by small businesses that, because of their size and lack of access to capital, need such incentives to participate in new spectrum opportunities such as narrowband PCS.  X -xO80. The installment payment plan we propose today is consistent with the plans set  X -out in the proposed schedule in the Part One NPRM.T ~ {O-ԍ Part One NPRM, FCC 9760 at  36.T Small businesses with gross revenues that do not exceed $40 million for the preceding three years would be permitted to pay interest only for the first two years of the license term at the Treasury note rate plus 2.5 percent. Very small businesses with gross revenues that do not exceed $15 million for the preceding three years would be able to make interestonly payments for two years at the Treasury note rate with an additional 1.5 percent. The rate for U.S. Treasury obligations will be determined by taking the coupon rate of interest on the tenyear U.S. Treasury notes most recently auctioned by the Treasury Department before licenses are conditionally granted. In  X -both cases (i.e., small businesses with gross revenues that do not exceed $40 million and do not exceed $15 million), payment of principal and interest will be amortized over the remaining eight years of the license term and be payable in equal, quarterly payments. Timely payment of all quarterly installments would be a condition of the license grant, and failure to make such timely payment could ultimately be grounds for revocation of the license. We seek comment on this proposal. We also seek comment on alternative installment  X-payment plans.j {OC"-ԍ See generally, Market Entry Notice of Inquiry, supra, n.5.j  XT-xP81. Consistent with our recent proposal in the Part One NPRM, we seek comment on  X?-whether we should adopt a late payment fee on any installment payment that is overdue.X? {O&-ԍ See Part One NPRM, FCC 9760 at  70.X "?(4 ,-(-(ZZ" Payments would be applied in the following order: late charges, interest charges, principal payments. Thus, a licensee who makes payment after the due date but does make payment sufficient to pay the late fee, interest, and principal (only if principal is due), will be deemed to have failed to make full payment and will be subject to license cancellation pursuant to the Commission's rules. We tentatively conclude that such a late payment provision is necessary to ensure that licensees have an adequate financial incentive to make installment payments on time. We note that licensees would continue to have 90 days before a payment is deemed delinquent but a late payment fee would be assessed during this period. We also note that in  XH-the Part One NPRM we proposed that where a winning bidder misses the second down payment deadline and fails to remit the required payment (plus the applicable late fee) by the end of the late payment period, it would be declared in default and subject to applicable  X -default payments.?  {O~ -ԍ Id. at  61.? We seek comment on the applicability of this proposal within the context of narrowband PCS.  X -xQ82. Under Section 1.2110(e)(4)(ii) of the Commission's rules, interest that accrues  X -during a grace period will be amortized over the remaining term of the license.J Z yO-ԍ 47 C.F.R.  1.2110(e)(4)(ii).J Amortizing interest in this way has the effect of changing the amount of all future payments and requiring the Commission, or its designee, to generate a new payment schedule for the license. Changing the amount of the installment payment has, in turn, created uncertainty about the interest schedule, and increased the administrative burden by requiring formulation of a new amortization schedule. In order to avoid potential problems associated with changing the  X-amount of installment payments and consistent with our proposal in the Part One NPRM, we propose to require all current licensees who avail themselves of the grace period to pay all fees, all interest accrued during the grace period, and the appropriate scheduled payment with  X-the first payment made following the conclusion of the grace period._ {Ow-ԍ See Part One NPRM, FCC 9760 at  7174._ We seek comment on this proposal.  X-x 5. Unjust Enrichment, Holding Period and Transfer Restrictions  Xi-xR83. Background. Under our current rules for narrowband PCS, licensees that receive bidding credits and installment payments, and choose to transfer their licenses to entities not eligible for these benefits, are subject to certain restrictions. Entities seeking to transfer a license acquired through a bidding credit are required to repay the amount of the bidding  X -credit on a graduated basis until six years after the license grant.y | {O:%-ԍ Competitive Bidding Third Report and Order, 9 FCC Rcd at 297576, 80.y Similarly, if a small business making installment payments seeks to transfer a license to a nonsmall business entity during the term of the license, it must pay the remaining principal balance as a"),-(-(ZZ;" condition of the license transfer. The ineligible transferee would not have the benefit of  X-installment payments.?\ {Ob- x-ԍ Competitive Bidding Third Report and Order, 9 FCC Rcd at 2979,  89. This approach also was adopted  {O,- xfor the 900 MHz SMR service. See 900 MHz Second Order on Reconsideration, 11 FCC Rcd at 27078,  17374. ?  X-xS84. We later sought comment on revising these provisions in the Competitive Bidding  X-Third MO&O/Further Notice. With regard to bidding credits, we proposed that if, within the original 10 year term, a licensee applies to assign or transfer control of a license to an entity that is not eligible for as high a level of bidding credit, then the assignor would be required to pay to the U.S. Treasury the difference between the bidding credit obtained by the assignor and the bidding credit for which the acquiring party would qualify as a condition of transfer. Similarly, a sale to an entity that would not qualify for bidding credits would entail full  X -repayment of the original bidding credit as a condition of transfer.  {O-ԍ Competitive Bidding Third MO&O/Further Notice., 10 FCC Rcd at 217,  91. With regard to installment payments, we proposed to retain the unjust enrichment provisions adopted in the  X -Competitive Bidding Third Report and Order and clarified these provisions, noting that if an entity seeks to assign or transfer control of a license to an entity that does not qualify for as favorable an installment payment plan, the installment payment plan for which the acquiring entity qualifies would become effective immediately upon transfer. Thus, a higher interest  X-rate and earlier payment of principal may begin to be applied.J~ {O-ԍ Id. at 220,  98.J  Xh-xT85. In the Competitive Bidding Third MO&O/Further Notice, we also proposed that entrepreneurs' block licensees be prohibited from voluntarily assigning or transferring control  X<-of their licenses for a period of three years from the date of grant.G< {O-ԍ Id. at 21415,  85.G We asked commenters whether, for the next two to seven years of the license term, we should permit the licensee to assign or transfer control of its authorization only to an entity that satisfies the entrepreneurs' blocks entry criteria. During this limited transfer period, licensees would continue to be bound by the financial eligibility requirements, and a transferee or assignee who receives an entrepreneurs' block license during this period would remain subject to the transfer restrictions  X-for the balance of the holding period.3 {O"-ԍ Id.3 We recognized that in order to provide significant opportunities for entrepreneurs and small businesses, applicants require flexibility. We were concerned, however, that such flexibility would undermine the more fundamental objective to  Xm-ensure that designated entities retain de facto and de jure control of their companies. Thus,  XX-we proposed a holding and limited transfer period to address this concern.3X4  {O='-ԍ Id.3"X* ,-(-(ZZ"Ԍ4 <DL!T$&)\+- 0d24X` hp x (#%'0*,.8135@8:-ԍ See Partitioning and Disaggregation Report and Order, FCC 96474 at  3136. When a licensee paying its winning bid through installment payments partitions to a party that would qualify for installment payments, the partitionee will be permitted to make installment  X-payments of its pro rata portion of the remaining government obligation. The payments will be based on the ratio of the population of the partitioned area to the population of the entire license area calculated on the latest available census data. Partitionees that do not qualify for  X=-installment payments will be required to pay their entire pro rata share with 30 days of the Public Notice conditionally granting the partitioning transaction. We request comment on our proposals.  X-x]94. We also propose that in cases where a licensee that has qualified as a small business has received a bidding credit partitions a portion of its licenses to an entity that would not meet the eligibility standards for a bidding credit, we will require that the licensee reimburse the government for the amount of the bidding credit calculated on a proportional basis based on the ratio of the population. If a small business licensee that received a bidding credit partitions to an entity that would qualify for a lower bidding credit, we will require that"p$-Z,-(-(ZZF#" the licensee reimburse the government for the difference between the amount of the bidding credit obtained by the licensee and the bidding credit for which the partitionee is eligible calculated on a proportional basis based upon the ratio of population of the partitioned area. We request comment on our proposal.  X-x^95. We also seek comment on the type of unjust enrichment requirements that should be placed as a condition for approval of an application for a partial transfer of a license owned by a qualified small business to a nonsmall business entity. We tentatively conclude that these unjust enrichment provisions would include accelerated payment of bidding credits, unpaid principal, and accrued unpaid interest, and would be applied on a proportional basis. We seek comment on how such unjust enrichment amounts should be calculated, especially in light of the difficulty of devising a methodology or formula that will differentiate the relative market value of the opportunities to provide service to various partitioned areas within a geographic or market area. We seek comment on whether we should consider the price paid by the partitionee in determining the percentage of the outstanding principle balance to be repaid.  Xy- x7. Disaggregation  XK-x_96. We seek comment on the feasibility of spectrum disaggregation for narrowband PCS. Commenters should provide technical justifications and other relevant support in responding to this issue. Commenters should address whether minimum disaggregation standards are necessary for narrowband PCS services. Commenters should also address whether we should permit nationwide licensees to disaggregate spectrum.  X-x`97. We also seek comment on what the respective obligations of the participants in a disaggregation transfer should be, and whether each party should be required to guarantee a proportionate amount of the disaggregator's original auctionsrelated obligation in the event of default or bankruptcy by any of the parties to the disaggregation transfer. We seek comment on whether the disaggregator (the original licensee) should have an continuing obligation with respect to the entire initial license. Alternatively, should the parties have available a choice of options, ranging from an accelerated payment based on purchase price to a guarantee for a larger payment by one party in the event another party defaults? Parties are invited to comment on whether the disaggregating parties should be able to determine which party has a continuing obligation with respect to the original license area.  X -xa98. We propose to allow all small business licensees to disaggregate to similarly qualifying parties as well as parties not eligible for small business provisions. We tentatively conclude that if we permit a qualified small business licensee to disaggregate to a nonsmall business entity, the disaggregating licensee should be required to repay any benefits it received from the small business special provisions on a proportional basis. This would include accelerated payment of bidding credits, unpaid principal, and accrued unpaid interest. We seek comment on how such repayment amounts should be calculated. We also seek comment on whether we should consider the price paid by the disaggregatee in determining"#'.,-(-(ZZ%" the percentage of the outstanding principal balance to be repaid.  X-xb99. We tentatively conclude that if we permit a small business licensee to disaggregate to another qualified small business that would not qualify for the same level of bidding credit as the disaggregating licensee, the disaggregating licensee should be required to repay a portion of the benefit it received. We seek comment on how that amount should be calculated. Finally, we seek comment on what provisions, if any, we should adopt to address the situation of a small business licensee's disaggregation followed by default in payment of a winning bid at auction.  X - E. Ownership Disclosure Requirements  X -xc100. Background. The rules for narrowband PCS currently require applicants to disclose on their shortform applications (FCC Form 175) and longform applications (FCC Form 600) certain ownership information. Section 24.413(a) of our rules provides that parties filing the shortform application to participate in the narrowband PCS auction and auction  X-winners filing the longform application shall include in an exhibit, inter alia, (1) a list of its  X{-subsidiaries, if any,>X{} yO- xxԍ "Subsidiary" means any business five percent or more whose stock, warrants, options or debt securities are  xowned by the applicant or an officer, director, stockholder or key management personnel of the applicant. 47 C.F.R.  24.413(a)(1). > (2) a list of its affiliates, if any,PX{} yO- xԍ "Affiliate" means any business which holds a five percent or more interest in the applicant, or any business  xin which a five percent or more interest is held by another company which holds a five percent interest in the applicant. 47 C.F.R.  24.413(a)(2). P and (3) in the case of partnerships, the name and address of each partner, each partners citizenship and the share or interest  XM-participation in the partnership, and a signed and dated copy of the partnership agreement.CM} yO-ԍ 47 C.F.R.  24.413(a).C  X-xd101. The broadband PCS rules similarly contained ownership disclosure requirements  X-for both the shortform and longform applications.^} {OQ-ԍ See 47 C.F.R.  24.813(a)(1), (2), (4).^ We waived the five percent ownership  X-disclosure requirements, however, for the broadband PCS A, B, and C block auctions.* } {O - xԍ See Implementation of Section 309(j) of the Communications Act Competitive Bidding, Order, PP Docket  x;No. 93253, DA No. 941198 (rel. Oct. 25, 1994) (waiving certain ownership disclosure and partnership agreement  xdisclosure requirements of 47 C.F.R.  24.813(a) for shortform applications to be filed for A and B block licenses)  {O&#- x(Waiver Order I); Implementation of Section 309(j) of the Communications Act Competitive Bidding, Order,  xPP Docket No. 93253, DA No. 95507 (rel. Mar. 22, 1995) (waiving certain ownership disclosure for longform  {O$- xapplications to be filed for A and B block licenses) (Waiver Order II); Implementation of Section 309(j) of the  {O%- xJCommunications Act Competitive Bidding, Order, PP Docket No. 93253, DA No. 951130 (rel. May 19, 1995)  x(waiving certain ownership disclosure and partnership agreement disclosure requirements of 47 C.F.R.  24.813(a)  {O'-for shortform applications to be filed for C block licenses) (Waiver Order III). In"/,-(-(ZZ" that context, we reasoned that requiring applicants to list all businesses in which each attributable stockholder owns at least 5 percent would necessitate reporting of interests in firms with no relation to the services for which licenses are being auctioned, and for many companies, particularly investment firms with diverse holdings, might be extremely burdensome. We therefore waived Sections 24.813(a)(1) and 24.813(a)(2) of the rules. Disclosure of direct, attributable ownership interests in other CMRS licensees or applicants, however, is still required under Section 20.6 of the Commissions rules. Similarly, we waived the requirement that partnerships submit a signed and dated copy of partnership agreements  XH-with the shortform application.s\H} {O - xkԍ See Waiver Order III, at  6 (waiving partnership agreement disclosure requirement for shortform  {O - xapplications for C block licenses); Waiver Order I, at  5 (waiving partnership agreement disclosure requirement for shortform applications for A and B block licenses).s In waiving this requirement, we noted that partnership agreements often discuss strategic business objectives and financial and business obligations, including bidding strategies, which might be highly sensitive.  X -xe102. Discussion. We propose to modify the ownership disclosure requirements for narrowband PCS as we modified those requirements for broadband PCS through waiver. Consistent with our proposal for a uniform ownership disclosure requirement in our general competitive bidding rules, we tentatively conclude that relaxing the disclosure requirements in this regard serves the public interest by reducing the administrative burdens associated with  Xy-the auction process._y} {O-ԍ See Part One NPRM, FCC 9760 at  5152._ We seek comment on this proposal. Furthermore, we seek comment on whether a separate schedule to the FCC Form 175 should be designed, which would formalize the ownership disclosure requirements for the shortform application that are presently reported in separate exhibits to the FCC Form 175.  X- F. Construction Prior to Grant of Licenses for Narrowband and Broadband PCS  X-xf103. Background. In the Third Report and Order in GN Docket No. 93252, we determined that all commercial mobile radio service applicants should be subject to the same  X-rules governing the construction of facilities prior to grant of pending applications. ~} {O- xԍ CMRS Third Report and Order, 9 FCC Rcd at 8153. There, we extended the pregrant construction rule  {O-applicable to Part 22 licensees to all CMRS providers. See 47 C.F.R.  22.143.  We later clarified that such rules would extend to successful broadband PCS bidders that had filed  X~-a longform application.~} {O #- xJԍ See Public Notice, "Personal Communications Service Information, Broadband," Report No. CW9502 (rel. Apr. 12, 1995). Thus, 35 days after the date of the Public Notice announcing the Form 600 applications accepted for filing, PCS applicants listed therein may, at their own risk, commence construction of facilities, provided that 1) no petitions to deny the application have been filed; 2) the application does not contain a request for a rule waiver; 3) the"904 ,-(-(ZZ" applicant complies fully with the antenna structure provisions of 47 C.F.R.  24.416, 24.816, including FAA notification and Commission filing requirements; 4) the application indicates that the facilities for which construction is commenced would not have a significant  X-environmental effect (see 47 C.F.R.  24.413(f), 24.813(f)); and 5) international coordination  X-of the facility for which construction is commenced is not required.3} {O-ԍ Id.3  Xx-xg104. Discussion. We propose to modify our prelicensing construction requirements  Xa-for both broadband and narrowband PCS in order to expedite service to the public.UaZ} {Ol -ԍ Part One NPRM, FCC 9760 at  104.U Specifically, we propose that longform applicants may begin construction of facilities at their own risk regardless of whether petitions to deny have been filed. In adopting pregrant construction rules for CMRS applicants in general, we favored a more liberal approach, urged by the industry's comments that granting applicants authority to engage in pregrant  X -construction could advance the date on which the public receives service.m } {O-ԍ CMRS Third Report and Order, 9 FCC Rcd at 815253,  376. m We continue to believe that liberal pregrant construction rules could speed the deployment of services to the public. We also believe that applicants that begin construction pursuant to these provisions before receiving a final license grant do so at their own risk and, thus, they assume the risk that their licenses may not be granted as a result of pending petitions to deny. We propose to retain the remaining restrictions, however, in light of the specific public interest considerations they promote. We seek comment on these tentative conclusions and proposals.   X6-} VI. CONCLUSION ĐTP  X-xh105. We believe that the rules and proposals set forth for narrowband PCS in this  X-Report and Order and Further Notice of Proposed Rulemaking will promote the public policy goals set forth by Congress. We conclude that we will auction three nationwide licenses, three regional licenses and three MTA licenses in each geographic area. In addition, eight response channels, four designated as regional licenses and four designated as MTA licenses,  X-will be offered by auction.  x  Xi-. VII. PROCEDURAL MATTERS ĐTP  X;-A. Regulatory Flexibility Act  X -xi106. The Final Regulatory Flexibility Analysis, pursuant to the Regulatory Flexibility Act, 5 U.S.C. Section 604, is contained in Appendix E. The Initial Regulatory Flexibility Analysis, pursuant to the Regulatory Flexibility Act, 5 U.S.C. Section 603, is contained in  X -Appendix D. Written public comments are requested on the Initial Regulatory Flexibility" 1F,-(-(ZZ" Analysis These comments must be filed in accordance with the same filing deadlines as  X-comments on the rest of the Further Notice of Proposed Rulemaking, but they must have a separate and distinct heading designating them as responses to the Initial Regulatory  X-Flexibility Analysis. The Secretary shall send a copy of this Report and Order and Further  X-Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration in accordance with the  X|-Regulatory Flexibility Act.  See 47 U.S.C.  603(a).  XP- B. Ex Parte Rules NonRestricted Proceeding  X" -xj107. This is a nonrestricted notice and comment rule making proceeding. Ex parte presentations are permitted except during the Sunshine Agenda period, provided they are  X -disclosed as provided in the Commission's rules. See generally 47 C.F.R.  1.1202, 1.1203, and 1.1206(a).  X - C. Initial Paperwork Reduction Act of 1995 Analysis  X-xk108. This Further Notice contains either a proposed or modified information collection. As part of its continuing effort to reduce paperwork burdens, we invite the general public and the Office of Management and Budget ("OMB") to take this opportunity to  XB-comment on the information collections contained in this Report and Order and Further  X--Notice, as required by the Paperwork Reduction Act of 1995, Pub. L. No. 10413. Public and  X-agency comments are due at the same time as other comments on this Further Notice; OMB  X-comments are due 60 days from the date of publication of this Further Notice in the Federal Register. Comments should address: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden  X-estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology.  X6- D. Comment Dates  X-xl109. Pursuant to applicable procedures set forth in Sections 1.415 and 1.419 of the Commission's rules, 47 C.F.R.  1.415 and 1.419, interested parties may file comments on or before June 18, 1997, and reply comments on or before July 7, 1997. To file formally in this proceeding, you must file an original and four copies of all comments, reply comments, and supporting comments. If you want each Commissioner to receive a personal copy of your comments, you must file an original plus nine copies. You should send comments and reply comments to the Office of the Secretary, Federal Communications Commission, Washington, D.C. 20554. Comments and reply comments will be available for public inspection during regular business hours in the FCC Reference Center of the Federal Communications Commission, Room 239, 1919 M Street, N.W., Washington, D.C. 20554."9'2,-(-(ZZ%"Ԍ X- x` `  X-E. Ordering Clauses xm110. Accordingly, IT IS ORDERED that Part 24 of the Commission's Rules IS AMENDED as specified in Appendix A, effective 60 days after publication in the Federal Register. xn111. IT IS FURTHER ORDERED that the Petitions for Reconsideration of the  XH-Second Memorandum Opinion and Order in GN Docket 90314 and ET Docket 92100 filed by AirTouch Paging, PCIA, and the Puerto Rico Telephone Company, and the responses to the Petitions for Reconsideration filed by PageMart, Inc., Pegasus Communications, Inc., the Puerto Rico Telephone Company, and Radiofone Nationwide Paging Services, Inc. ARE DISMISSED.  X -x o112. Authority for issuance of this Report and Order and Further Notice of Proposed  X -Rulemaking is contained in Section 4(i), 303(r) and 309(j) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 303(r) and 309(j).  X- F. Contacts for Information  XQ- xp113. For further information concerning this proceeding, contact Mark Bollinger or Alice Elder at (202) 4180660 (Wireless Telecommunications Bureau, Auctions Division) or David Furth or Rhonda Lien at (202) 4180620 (Wireless Telecommunications Bureau, Commercial Wireless Division).  x` `  hh@FEDERAL COMMUNICATIONS COMMISSION x` `  hh@William F. Caton x` `  hh@Acting Secretary  X=-T T"&3,-(-(ZZ "  X-T3 APPENDIX A FINAL RULES T  X-TP Part 24 of Chapter I of Title 47 of the Code of Federal Regulations is amended as follows:  X-  Part 24 PERSONAL COMMUNICATIONS SERVICES ă 1. The authority citation for Part 24 continues to read as follows:  XH- AUTHORITY: Secs. 4, 301, 302, 303, 309, and 332, 48 Stat. 1066, 1082, as amended; 47 U.S.C.  154, 301, 302, 303, 309 and 332, unless otherwise noted. l<* * * * * 2. Section 24.132 is revised to read as follows:  X -  24.132 Power and antenna height limits. 9) * * * * *TPParagraphs (d) and (e) are revised as follows: (d) MTA and regional base stations located between 200 kilometers (124 miles) and 80 kilometers (50 miles) from their licensed service area border are limited to the power levels in the following table: "4,-(-(ZZ7"Ԍ X-x Antenna HAAT in metershh@ x(feet) (see  24.53 for HAAT Effective radiated power  X-xHAAT calculation method)hh (e.r.p.) (watts) 183 (600) and below 3500 183 (600) to 208 (682) 3500 to 2584 208 (682) to 236 (775) 2584 to 1883 236 (775) to 268 (880) 1883 to 1372 268 (880) to 305 (1000) 1372 to 1000 305 (1000) to 346 (1137) 1000 to 729 346 (1137) to 394 (1292) 729 to 531 394 (1292) to 447 (1468) 531 to 387 447 (1468) to 508 (1668) 387 to 282 508 (1668) to 578 (1895) 282 to 206 578 (1895) to 656 (2154) 206 to 150 656 (2154) to 746 (2447) 150 to 109 746 (2447) to 848 (2781) 109 to 80 848 (2781) to 963 (3160) 80 to 58 963 (3160) to 1094 (3590) 58 to 42 1094 (3590) to 1244 (4080) 42 to 31 1244 (4080) to 1413 (4636) 31 to 22 Above 1413 (4636) 16 For heights between the values listed above, linear interpolation shall be used to determine maximum e.r.p. (e) MTA, BTA and regional base stations located less than 80 kilometers (50 miles) from the licensed service area border must limit their effective radiated power in accordance with the following formula: PW = 0.0175 x dkm**6.6666 x hm**-3.1997 PW is effective radiated power in watts. dkm is distance in kilometers. hm is antenna HAAT in meters; see  24.53 for HAAT calculation method. l<* * * * *  X!- 3. Section 24.320(e) is revised to read as follows:  X#- 24.320 Definitions.  (a) * * * * * (b) * * * * * (c) * * * * *"#'5,-(-(ZZ%"Ԍ(d) * * * * *  X-(e) Members of Minority Groups. Members of minority groups include Blacks, Hispanics, American Indians, Alaskan Natives, Asians and Pacific Islanders. * * * * *"6,-(-(ZZe"  X-n  APPENDIX B PROPOSED RULES  X-  X-  Part 24 PERSONAL COMMUNICATIONS SERVICES ă Part 24 of Chapter I of Title 47 of the Code of Federal Regulations is amended as follows:  X- Subpart C Technical Standards  X_-  XH- 1. Add a new section 24.54, as follows:  X - 24.54 Construction Prior to License Grant. xApplicants may construct facilities prior to grant of their licenses, subject to the provisions of this section, but must not operate such facilities until the Commission grants a final license. If the conditions stated in this section are not met, applicants must not begin to construct facilities.  Xy-(a) When applicants may begin construction. An applicant may begin construction of a facility thirtyfive (35) days after the date of the Public Notice listing the long form (FCC Form 600) application for that facility as acceptable for filing.  X-(b) Notification to stop. If the Commission for any reason determines that construction should not be started or should be stopped while an application is pending, and so notifies the applicant, orally (followed by written confirmation) or in writing, the applicant must not begin construction or, if construction has begun, must stop construction immediately.  X-(c) Assumption of risk. Applicants that begin construction pursuant to this section before receiving a final license grant do so at their own risk and have no recourse against the United States for any losses resulting from: x(1) Applications that are not granted; x(2) Errors or delays in issuing Public Notices; x(3) Having to alter, relocate, or dismantle the facility; or x(4) Incurring whatever costs may be necessary to bring the facility into compliance with applicable laws, or Commission rules and orders.  X -(d) Conditions. Except as indicated, all pregrant construction is subject to the following conditions: x(1) The application is not mutually exclusive with any other application. Applicants whose FCC Form 600 applications have been accepted for filing will have satisfied this condition; x(2) The application does not include a request for a waiver of one or more Commission rules;"+'7,-(-(ZZ%"Ԍx(3) The applicant complies fully with the antenna structure provisions of 47 C.F.R.  24.416, 24.816, and for any construction or alteration that would exceed the requirements of  17.7 of this chapter, the applicant has notified the appropriate Regional Office of the Federal Aviation Administration (FAA Form 74601), filed a request for antenna height clearance and obstruction marking and lighting specifications (FCC Form 854) with the Commission; x(4) The applicant has indicated in the application that the proposed facility would not  Xv-have a significant environmental effect, in accordance with  1.301 et seq.; and, x(5) Under applicable international agreements and rules in this part, individual coordination of the proposed channel assignment(s) with a foreign administration is not required.  X -l<* * * * *pp  X -  X -Subpart D Narrowband PCShh 2. Section 24.103(d) is revised to read as follows:  X{-  24.103 Construction requirements . (a) * * * * * (b) * * * * * (c) * * * * * (d) As an alternative to the coverage requirements in paragraphs (a), (b) and (c), the narrowband PCS licensee may demonstrate that, no later than five years after the initial grant of its narrowband PCS authorization, it provides substantial service to the narrowband PCS license area. "Substantial service" means service that is sound, favorable, and substantially above a level of mediocre service that would barely warrant renewal. l<* * * * * 3. Section 24.129 is revised to read as follows:  X- Sec. 24.129 Frequencies . xThe following frequencies are available for narrowband PCS. All licenses on channels indicated with an (**) will be eligible for bidding credits as set forth in Section 24.309(b) of this Part if competitive bidding is used to award such licenses. x(a) * * * * * x(b) * * * * *"%'8,-(-(ZZ%"Ԍx(c) Seven frequencies are available for assignment on a nationwide, regional, and MTA basis as follows: x(1) Two 50 kHz channels paired with 50 kHz channels are available for assignment on a nationwide basis:  Xv-Channel 18:` ` 940.35940.40 and 901.35901.40 MHz; and,  X_-Channel 19:` ` 940.40940.45 and 901.40901.45 MHz.** x(2) One 50 kHz channels paired with 12.5 kHz channels is available for assignment on an MTA basis as follows:  X -xChannel 20: 930.75930.80 and 901.8375901.8500 MHz.** x(3) Two 50 kHz channels paired with 12.5 kHz channels are available for assignment on a regional basis as follows:  Xy-xChannel 21: 930.80930.85 and 901.8500901.8625 MHz; and,  Xb-xChannel 22:  930.85930.90 and 901.8625901.8750 MHz.** x(4) Two 50 kHz unpaired channels are available for assignment on an MTA basis as follows:  X-xChannel 23: 940.90940.95 MHz; and,  X-xChannel 24: 940.95941.00 MHz.** x(d) Two 50 kHz channels paired with 12.5 kHz channels are available for assignment on a nationwide and regional basis: x(1) One 50 kHz channel paired with a 12.5 kHz channel is available for assignment on a regional basis as follows:  X -xChannel 25: 930.90930.95 and 901.8750901.8875 MHz;** and, x x(2) One 50 kHz channel paired with a 12.5 kHz channel is available for assignment on a nationwide basis as follows:  X!-xChannel 26: 930.95931.00 and 901.8875901.9000 MHz.** T TPl<* * * * * "h$9,-(-(ZZ(#"Ԍ4. Section 24.130 is revised to read as follows:  X-  24.130 Paging response channels. (a) The channels listed in paragraphs (b) and (c) of this section are available to all potential bidders. All qualified potential bidders are eligible to bid for any response channel in any MTA or regional license. Until two years after the date of initial license grant, winning bidders are limited to a maximum of two response channels within the same geographic area. Licenses for paging response channels are not counted toward the multiple ownership restrictions of Section 24.101.  X - (b) The following four 12.5 kHz unpaired channels are available for assignment on a MTA basis: A: 901.9000901.9125 MHz; B: 901.9125901.9250 MHz; C: 901.9250901.9375 MHz; and D: 901.9375901.9500 MHz. (c) The following four 12.5 kHz unpaired channels are available for assignment on a regional basis: E: 901.9500901.9625 MHz; F: 901.9625901.9750 MHz; G: 901.9750901.9875 MHz; and H: 901.9875902.0000 MHz. l<* * * * * Subpart F Competitive Bidding Procedures for Narrowband PCS   X7- 5. Section 24.309 is revised to read as follows:  X -  24.309 Designated entity provisions (a) Designated entities entitled to preferences in the narrowband PCS service are small businesses and very small businesses as defined in  24.320(b). (b) Designated entities that are winning bidders for narrowband PCS licenses will be eligible for certain special provisions as follows:  X#-(1) Installment payments. Each winning bidder that qualifies as a small business, a very small business or a consortium of small businesses, as defined in  24.320, and is a winning bidder for licenses may pay the remaining 90 percent of the net auction price for the license in quarterly installment payments made each year pursuant to  1.2110(e) of this Chapter. Payments shall include both principal"%':,-(-(ZZ%" and interest amortized over the term of the license. A license issued to an eligible small business that elects installment payments will be conditioned on the full and timely performance of the license holder's quarterly payments. The additional following terms apply: (i) An eligible licensee qualifying as a very small business under Section 24.320(b)(2) may make interestonly payments for two years. Interest will accrue at the Treasury note rate plus an additional 1.5 percent. Payments of interest and principal shall be amortized over the remaining eight years of the license term. (ii) An eligible licensee qualifying as a small business under Section 24.320(b)(1) may make interestonly payments for two years. Interest will accrue at the Treasury note rate plus an additional 2.5 percent. Payments of interest and principal shall be amortized over the remaining eight years of the license term. x  X -(2) Bidding Credits. A winning bidder that qualifies as a small business or a consortium of small businesses, as defined in  24.320(b)(2), may use a bidding credit of 10 percent to lower the cost of its winning bid. A winning bidder that qualifies as a very small business or a consortium of very small businesses, as defined in  24.320(b)(1) may use a bidding credit of 15 percent to lower the cost of its winning bid.  XM-(c) Short-Form Application Certification; Long-Form Application Disclosure. (1) All applicants for licenses under the designated entity provisions set forth in this section shall certify on their short-form applications (FCC Form 175) that they are eligible for those preferences pursuant to this section. (2) In addition to the requirements in subpart I, all designated entity applicants that are winning bidders shall, in an exhibit to their long-form applications-- (i) Disclose separately and in the aggregate the gross revenues, computed in accordance with  24.320, for each of the following: the applicant; the applicant's affiliates; the applicant's attributable investors, affiliates of its attributable investors, and, if a consortium of small businesses, the members of the joint venture; (ii) List and summarize all agreements or other instruments (with appropriate references to specific provisions in the text of such agreements and instruments) that support the applicant's  X;-eligibility as a small business, including the establishment of de facto and de jure control; such agreements and instruments include articles of incorporation and bylaws, shareholder agreements, voting or other trust agreements, franchise agreements, and any other relevant agreements (including letters of intent), oral or written; and (iii) List and summarize any investor protection agreements, including rights of first refusal, supermajority clauses, options, veto rights, and rights to hire and fire employees and to appoint members to boards of directors or management committees.  X#-(d) Audits. (1) Applicants and licensees claiming eligibility under this section shall be subject to random audits by the Commission. (2) Consent to such audits is part of the certification included in the short- form application (FCC Form 175). Such consent shall include consent to the audit of the applicant's or"+';,-(-(ZZ%" licensee's books, documents and other material (including accounting procedures and practices) regardless of form or type, sufficient to confirm that such applicant's or licensee's representations are, and remain, accurate. Such consent shall include inspection at all reasonable times of the facilities, or parts thereof, engaged in providing and transacting business, or keeping records regarding licensed narrowband PCS service and shall also include consent to the interview of principals, employees, customers and suppliers of the applicant or licensee.  XH-(e) Definitions. The terms affiliate, consortium of small businesses, gross revenues, small business and very small business used in this section are defined in  24.320. (f) * * * * *  l<* * * * * 6. A new Section 24.310 is added, to read as follows:  X{-  24.310 Eligibility for Licenses under Designated Entity Provisions  XM-(a) General Rule. Authorizations will be granted upon proper application if: (1) The applicant is qualified under the applicable laws and the regulations, policies and decisions issued under those laws; (2) There are frequencies available to provide satisfactory service; and (3) The public interest, convenience or necessity would be served by a grant. x  X-(b) Records Maintenance. All applicants, including those that are winning bidders, shall maintain at their principal place of business an updated file of ownership, revenue and asset information, including any documents necessary to establish eligibility under this section or  X-under the definition of small business. Licensees (and their successors in interest) shall maintain such files for the term of the license. Applicants that do not obtain the license(s) for which they applied shall maintain such files until the grant of such license(s) is final, or one year from the date of the filing of their short-form application (Form 175), whichever is earlier.  X-(c) Audits. (1) Applicants and licensees claiming eligibility under this section or shall be subject to audits by the Commission, using in- house and contract resources. Selection for audit may be random, on information, or on the basis of other factors. (2) Consent to such audits is part of the certification included in the short- form application (FCC Form 175). Such consent shall include consent to the audit of the applicant's or licensee's books, documents and other material (including accounting procedures and practices) regardless of form or type, sufficient to confirm that such applicant's or licensee's representations are, and remain, accurate. Such consent shall include inspection at all reasonable times of the facilities, or parts thereof, engaged in providing and transacting"-'<,-(-(ZZ%" business, or keeping records regarding licensed narrowband PCS service and shall also include consent to the interview of principals, employees, customers and suppliers of the applicant or licensee.  X- (d) Definitions. The terms affiliate, consortium of small businesses, gross revenues, publicly traded corporation with widely dispersed voting power, small business, very small business  Xx-and total assets used in this section are defined in  24.320. l<* * * * * 7. A new Section 24.311 is added, to read as follows:  X -  24.311 Geographic Partitioning and Spectrum Disaggregation; Unjust Enrichment; Construction Requirements  X -  X -(a) Eligibility (1) Parties seeking approval for partitioning and disaggregation shall request an authorization for partial assignment of license pursuant to  24.439.  XQ-(b) Technical Standards  X%-(1) Partitioning. In the case of partitioning, requests for authorization for partial assignment of a license must include, as attachments, a description of the partitioned service area and a calculation of the population of the partitioned service area and the licensed geographic service area. The partitioned service area shall be defined by coordinate points at every 3 seconds along the partitioned service area unless an FCC recognized service area is utilized (i.e., Major Trading Area, Basic Trading Area, Metropolitan Service Area, rural Service Area or Economic Area) or county lines are followed. The geographic coordinates must be specified in degrees, minutes, and second to the nearest second of latitude and longitude and must be based upon the 1927 North American Datum (NAD27). Applicants may supply geographical coordinates based on the 1983 North American Datum (NAD83) in addition to those required (NAD27). In the case where an FCC recognized service area or county lines are utilized, applicants need only list the specific area(s) (through use of FCC designations or county names) that constitute the partitioned area.  X-(2) Disaggregation. Spectrum maybe disaggregated in any amount.  X!-(3) Combined Partitioning and Disaggregation.  The Commission will consider requests for partial assignments of licenses that propose combinations of partitioning and disaggregation.  Xv$-(c) Unjust Enrichment  Xa%-(1) General.  Designated entities using installment plans and/or bidding credits to obtain narrowband license(s) and partition the license(s) or disaggregate their spectrum to entities not meeting the eligibility standards for installment payments, will be subject to the following"5'=,-(-(ZZ%" unjust enrichment provisions:  X-(2)  Apportioning Unjust Enrichment Payments. Unjust enrichment payments for partitioned license areas shall be calculated based upon the ratio of the population of the partitioned license area to the overall population of the license area and by utilizing the most recent census data. Unjust enrichment payments for disaggregated spectrum shall be calculated based upon the ratio of the amount of spectrum disaggregated to the amount held by the licensee.  XJ-(d) Installment Payments.  X5-(1) Apportioning the Balance on Installment Payment Plans.  When a winning bidder elects to pay for its license through an installment payment plan pursuant to  1.2110(e) or 24.309(1), and partitions its licensed area or disaggregates spectrum to another party, the outstanding balance owed by the licensee on its installment payment plan (including accrued and unpaid interest) shall be apportioned between the licensee and partitionee or disaggregatee. Both parties will be responsible for paying their proportionate share of the outstanding balance to the U.S. Treasury. In the case of partitioning, the balance shall be apportioned based upon the ratio of the population of the partitioned area to the population of the original license area calculated on the latest available census data. In the case of disaggregation, the balance shall be apportioned based on the ration of the amount of spectrum disaggregated to the amount of spectrum allocated to the license area.  X#-(2) Parties Not Qualified For Installment Payment Plans. (i) When a winning bidder elects to pay for its license through an installment payment plan, and partitions its license or disaggregates spectrum to another party that would not qualify for an installment payment plan or elects not to pay for its share of the license through installment payments, the outstanding balance owed by the licensee (including accrued and unpaid interest) shall be apportioned according to 24.311(d)(1). (ii) The partitionee or disaggregatee shall, as a condition of the approval of the partial  Xm-assignment application, pay its entire pro rata amount within 30 days of Public Notice conditionally granting the partial assignment application. Failure to meet this condition will  XA-result in a rescission of the grant of the partial assignment application; or  X- (iii) The licensee shall be permitted to continue to pay its pro rata share of the outstanding balance and shall receive new financing documents (promissory note, security agreement) with a revised payment obligation, based on the remaining amount of time on the original installment payment schedule. These financing documents will replace the licensee's existing financing documents which shall be marked "superseded" and returned to the licensee upon receipt of the new financing documents. The original interest rate, established pursuant to  1.2110(e)(3)(i) at the time of the grant of the initial license in the market, shall continue to be applied to the licensee's portion of the remaining government obligation. (iv) A default on the licensee's payment obligation will only affect the licensee's portion of the market."1'>,-(-(ZZ%"Ԍ X-ԙ(3) Parties Qualified For Installment Payment Plans. (i) Where both parties to a partitioning or disaggregation agreement qualify for installment payments, the partitionee or disaggregatee will be permitted to make installment payments on its portion of the remaining government obligation. (ii) Each party will be required, as a condition to approval of the partial assignment application, to execute separate financing documents (promissory note, security  Xx-agreement) agreeing to pay their pro rata portion of the balance due (including accrued and unpaid interest) based upon the installment payment terms for which they qualify under the rules. The financing documents must be returned to the U.S. Treasury within thirty (30) days of the Public Notice conditionally granting the partial assignment application. Failure by either party to meet this condition will result in the automatic cancellation of the grant of the partial assignment application. The interest rate, established pursuant to  1.2110(e)(3)(i) at the time of the grant of the initial license in the market, shall continue to be applied to both parties' portion of the balance due. Each party will receive a license for their portion of the partitioned market. (iii) A default on an obligation will only affect that portion of the market area held by the defaulting party. (iv) Partitionees or disaggregatees that qualify for installment payment plans may elect to  Xf-pay some of their pro rata portion of the balance due in a lump sum payment to the U.S. Treasury and to pay the remainder in installments as set forth in 24.309(1).  X#-  (e) Construction Requirements.  X-(1) Requirements for Partitioning. Parties seeking authority to partition must meet one of the following construction requirements: (i) The partitionee may certify that it will satisfy the applicable construction  X-requirements set forth in  24.103 for the partitioned license area; or (ii) The original licensee may certify that it has or will meet its construction requirements, as set forth in 24.103, for the entire license area. In that case, the partitionee must only satisfy the requirements for "substantial service," as set forth in  24.103, for the partitioned license area by the end of the original ten-year license term of the licensee. (iii) Applications requesting partial assignments of license for partitioning must include a certification by each party as to which of the above construction options they select. (iv) Partitionees must submit supporting documents showing compliance with the respective construction requirements within the appropriate construction benchmarks set forth in  24.103. (v) Failure by any partitionee to meet its respective construction requirements will result in the automatic cancellation of the partitioned license without further Commission action.  X]%-(2) Requirements for Disaggregation. Parties seeking authority to disaggregate must submit with their partial assignment application a certification signed by both parties stating which of the parties will be responsible for meeting the construction requirements for narrowband PCS"1'?,-(-(ZZ%" as set forth in  24.103. Parties may agree to share responsibility for meeting the construction requirements. Parties that accept responsibility for meeting the construction requirements and later fail to do so will be subject to license forfeiture without further Commission action. l<* * * * *  X_- 8. Section 24.320 is revised, to read as follows:  X1- 24.320 Definitions.   X -(a) Scope. The definitions in this section apply to  24.309-24.315 of this subpart, unless otherwise specified in those sections.  X -(b) Small Business; Consortium of Small Businesses.  X -(1) A small business is an entity that together with its affiliates, persons or entities that hold attributable interests in such entity, and their affiliates, has average gross revenues that are not more than $40 million for the preceding three years; or  Xh- (2) A very small business is an entity that, together with its affiliates, persons or entities that  XS-hold attributable interests in such entity, and their affiliates, has average gross revenues that are not more than $15 million for the preceding three years.  X'- (3) Attribution and Aggregation of Gross Revenues . (i) For purposes of determining whether an entity meets either the $15 million or $40 million average annual gross revenues size standard set forth in paragraphs (b)(1)and (b)(2) of this section, the gross revenues of the entity, its affiliates, persons or entities holding interests in the entity and their affiliates shall be considered on a cumulative basis and aggregated. (ii) Where an applicant (or licensee) is a consortium of small businesses, the gross revenues of each small business shall not be aggregated.  X-(4) A small business consortium is a conglomerate organization formed as a joint venture between mutually-independent business firms, each of which individually satisfies either definition of a small business in paragraph (b)(1) of this section. In a consortium of small businesses, each individual member must establish its eligibility as a small business, as defined in this section.  X-(5) A very small business consortium is a conglomerate organization formed as a joint venture between mutually-independent business firms, each of which individually satisfies either definition of a very small business in paragraph (b)(2) of this section. In a consortium of small businesses, each individual member must establish its eligibility as a small business, as defined in this section.  X#-(c) Business Owned by Members of Minority Groups and/or Women. A business owned by members of minority groups and/or women is an entity owned by members of minority groups and/or women in which minorities and/or women who are U.S. citizens control the applicant, have at least 50.1 percent equity ownership and, in the case of a corporate applicant, a 50.1 percent voting interest. For applicants that are partnerships, every general"5'@,-(-(ZZ%" partner either must be a minority and/or woman (or minorities and/or women) who are U.S. citizens and who individually or together own at least 50.1 percent of the partnership equity, or an entity that is 100 percent owned and controlled by minorities and/or women who are U.S. citizens. The interests of minorities and women are to be calculated on a fullydiluted basis; agreements such as stock options and convertible debentures shall be considered to have a present effect on the power to control an entity and shall be treated as if the rights thereunder already have been fully exercised. However, upon a demonstration that options or conversion rights held by noncontrolling principals will not deprive the minority and female principals of a substantial financial stake in the venture or impair their rights to control the designated entity, a designated entity may seek a waiver of the requirement that the equity of the minority and female principals must be calculated on a fullydiluted basis.  X - (d) Gross Revenues. Gross revenues shall mean all income received by an entity, whether  X -earned or passive, before any deductions are made for costs of doing business (e.g., cost of goods sold), as evidenced by audited quarterly financial statements for the relevant period. (e) * * * * *  Xf-(f) Affiliate.  XQ-(1) Basis for Affiliation. An individual or entity is an affiliate of an applicant or of a person holding an attributable interest in an applicant (both referred to herein as "the applicant") if such individual or entity: (i) Directly or indirectly controls or has the power to control the applicant, or (ii) Is directly or indirectly controlled by the applicant, or (iii) Is directly or indirectly controlled by a third party or parties that also controls or has the power to control the applicant, or (iv) Has an "identity of interest" with the applicant.  X-(2) Nature of control in determining affiliation. (i) Every business concern is considered to have one or more parties who directly or indirectly control or have the power to control it. Control may be affirmative or negative and it is immaterial whether it is exercised so long as the power to control exists.  XA- Example for paragraph (g)(2)(i). An applicant owning 50 percent of the voting stock of another concern would have negative power to control such concern since such party can block any action of the other stockholders. Also, the bylaws of a corporation may permit a stockholder with less than 50 percent of the voting to block any actions taken by the other stockholders in the other entity. Affiliation exists when the applicant has the power to control a concern while at the same time another person, or persons, are in control of the concern at the will of the party or parties with the power of control. (ii) Control can arise through stock ownership; occupancy of director, officer or key employee positions; contractual or other business relations; or combinations of these and other factors. A key employee is an employee who, because of his/her position in the concern, has a critical influence in or substantive control over the operations or management of the concern. (iii) Control can arise through management positions where a concern's voting stock is so"/'A,-(-(ZZ%" widely distributed that no effective control can be established.  X- Example for paragraph (g)(2)(iii). In a corporation where the officers and directors own various size blocks of stock totaling 40 percent of the corporation's voting stock, but no officer or director has a block sufficient to give him or her control or the power to control and the remaining 60 percent is widely distributed with no individual stockholder having a stock interest greater than 10 percent, management has the power to control. If persons with such management control of the other entity are persons with attributable interests in the applicant, the other entity will be deemed an affiliate of the applicant.  XJ-(3) Identity of interest between and among persons. Affiliation can arise between or among two or more persons with an identity of interest, such as members of the same family or persons with common investments. In determining if the applicant controls or is controlled by a concern, persons with an identity of interest will be treated as though they were one person. Example 1. Two shareholders in Corporation Y each have attributable interests in the same narrowband PCS application. While neither shareholder has enough shares to individually control Corporation Y, together they have the power to control Corporation Y. The two shareholders with these common investments (or identity of interest) are treated as though they are one person and Corporation Y would be deemed an affiliate of the applicant. Example 2. One shareholder in Corporation Y, shareholder A, has an attributable interest in a narrowband PCS application. Another shareholder in Corporation Y, shareholder B, has a nonattributable interest in the same narrowband PCS application. While neither shareholder has enough shares to individually control Corporation Y, together they have the power to control Corporation Y. Through the common investment of shareholders A and B in the narrowband PCS application, Corporation Y would still be deemed an affiliate of the applicant.  X- (i) Spousal Affiliation. Both spouses are deemed to own or control or have the power to control interests owned or controlled by either of them, unless they are subject to a legal separation recognized by a court of competent jurisdiction in the United States.  X- (ii) Kinship Affiliation. Immediate family members will be presumed to own or control or have the power to control interests owned or controlled by other immediate family members. In this context "immediate family member" means father, mother, husband, wife, son, daughter, brother, sister, father- or mother-in-law, son- or daughter-in-law, brother- or sister-in-law, step-father, or -mother, step-brother, or -sister, step-son, or -daughter, half brother or sister. This presumption may be rebutted by showing that (A) The family members are estranged, (B) The family ties are remote, or (C) The family members are not closely involved with each other in business matters.  X - Example for paragraph (g)(3)(ii). A owns a controlling interest in Corporation X. A's sister-in-law, B, has an attributable interest in an narrowband PCS application. Because A and B have a presumptive kinship affiliation, A's interest in Corporation X is attributable to B, and thus to the applicant, unless B rebuts the presumption with the necessary showing.  Xr$-(4) Affiliation through stock ownership. (i) An applicant is presumed to control or have the power to control a concern if he or she owns or controls or has the power to control 50 percent or more of its voting stock. (ii) An applicant is presumed to control or have the power to control a concern even though"/'B,-(-(ZZ%" he or she owns, controls or has the power to control less than 50 percent of the concern's voting stock, if the block of stock he or she owns, controls or has the power to control is large as compared with any other outstanding block of stock. (iii) If two or more persons each owns, controls or has the power to control less than 50 percent of the voting stock of a concern, such minority holdings are equal or approximately equal in size, and the aggregate of these minority holdings is large as compared with any other stock holding, the presumption arises that each one of these persons individually controls or has the power to control the concern; however, such presumption may be rebutted by a showing that such control or power to control, in fact, does not exist.  X1-(5) Affiliation arising under stock options, convertible debentures, and agreements to merge. Stock options, convertible debentures, and agreements to merge (including agreements in principle) are generally considered to have a present effect on the power to control the concern. Therefore, in making a size determination, such options, debentures, and agreements will generally be treated as though the rights held thereunder had been exercised. However, neither an affiliate nor an applicant can use such options and debentures to appear to terminate its control over another concern before it actually does so.  X- Example 1 for paragraph (g)(5). If company B holds an option to purchase a controlling interest in company A, who holds an attributable interest in an narrowband PCS application, the situation is treated as though company B had exercised its rights and had become owner of a controlling interest in company A. The gross revenues of company B must be taken into account in determining the size of the applicant.  X!- Example 2 for paragraph (g)(5). If a large company, BigCo, holds 70% (70 of 100 outstanding shares) of the voting stock of company A, who holds an attributable interest in a narrowband PCS application, and gives a third party, SmallCo, an option to purchase 50 of the 70 shares owned by BigCo, BigCo will be deemed to be an affiliate of company A, and thus the applicant, until SmallCo actually exercises its options to purchase such shares. In order to prevent BigCo from circumventing the intent of the rule which requires such options to be considered on a fully diluted basis, the option is not considered to have present effect in this case.  Xk- Example 3 for paragraph (g)(5). If company A has entered into an agreement to merge with company B in the future, the situation is treated as though the merger has taken place.  X?- (6) Affiliation under voting trusts. (i) Stock interests held in trust shall be deemed controlled by any person who holds or shares the power to vote such stock, to any person who has the sole power to sell such stock, and to any person who has the right to revoke the trust at will or to replace the trustee at will. (ii) If a trustee has a familial, personal or extra-trust business relationship to the grantor or the beneficiary, the stock interests held in trust will be deemed controlled by the grantor or beneficiary, as appropriate. (iii) If the primary purpose of a voting trust, or similar agreement, is to separate voting power from beneficial ownership of voting stock for the purpose of shifting control of or the power to control a concern in order that such concern or another concern may meet the Commission's size standards, such voting trust shall not be considered valid for this purpose regardless of whether it is or is not recognized within the appropriate jurisdiction.  X-'- (7) Affiliation through common management. Affiliation generally arises where officers,"-'C,-(-(ZZ%" directors, or key employees serve as the majority or otherwise as the controlling element of the board of directors and/or the management of another entity.  X-(8) Affiliation through common facilities. Affiliation generally arises where one concern shares office space and/or employees and/or other facilities with another concern, particularly where such concerns are in the same or related industry or field of operations, or where such concerns were formerly affiliated, and through these sharing arrangements one concern has control, or potential control, of the other concern.  Xa-(9) Affiliation through contractual relationships. Affiliation generally arises where one concern is dependent upon another concern for contracts and business to such a degree that one concern has control, or potential control, of the other concern.  X -(10) Affiliation under joint venture arrangements. (i) A joint venture for size determination purposes is an association of concerns and/or individuals, with interests in any degree or proportion, formed by contract, express or implied, to engage in and carry out a single, specific business venture for joint profit for which purpose they combine their efforts, property, money, skill and knowledge, but not on a continuing or permanent basis for conducting business generally. The determination whether an entity is a joint venture is based upon the facts of the business operation, regardless of how the business operation may be designated by the parties involved. An agreement to share profits/losses proportionate to each party's contribution to the business operation is a significant factor in determining whether the business operation is a joint venture. (ii) The parties to a joint venture are considered to be affiliated with each other.  X-(g) Publicly Traded Corporation with Widely Dispersed Voting Power. A publicly  X- traded corporation with widely dispersed voting power is a business entity organized under the laws of the United States: (1) Whose shares, debt, or other ownership interests are traded on an organized securities exchange within the United States; (2) In which no person (i) Owns more than 15 percent of the equity; or (ii) Possesses, directly or indirectly, through the ownership of voting securities, by contract or otherwise, the power to control the election of more than 15 percent of the members of the board of directors or other governing body of such publicly traded corporation; and (3) Over which no person other than the management and members of the board of directors  X-or other governing body of such publicly traded corporation, in their capacities as such, has  X-de facto control.  X -(4) The term person shall be defined as in section 13(d) of the Securities and Exchange Act of 1934, as amended (15 U.S.C. 78(m)), and shall also include investors that are commonly  X"-controlled under the indicia of control set forth in the definition of affiliate in paragraph (h) of this section.  Xa%- (h) Attributable Interests. Partnership and other ownership interests and any stock interest amounting to 5 percent or more of the equity, or outstanding stock, or outstanding voting stock of a licensee or applicant will be attributable."5'D,-(-(ZZ%"  X-T ) APPENDIX C  T  X<TPComments and Replies Filed in Response to Competitive Bidding Third MO&O/Further  W<Notice  X-Comments (September 16, 1994)  Xw- AirTouch Paging (AirTouch) American Paging, Inc. (American Paging) Association of Independent Designated Entities (AIDE) Blooston, Mordkofsky, Jackson & Dickens (BMJ&D) Essence Communications, Inc. (Essence) Lieto, David J. (Lieto) Mobile Telecommunications Technologies Corp. (Mtel) Paging Network, Inc. (PageNet) PageMart, Inc. (PageMart) Puerto Rico Telephone Company (PRTC) Personal Communications Industry Association (PCIA) San Juan Pacific Management (SJPM) Small Business Administration (SBA) Women of Wireless (WOW)  X- Reply Comments (October 3, 1994) Blooston, Mordkofsky, Jackson & Dickens (BMJ&D) Essence Communications, Inc. (Essence) Minority Media and Telecommunications Council (MMTC) Paging Network, Inc. (PageNet)  X- Comments Filed in Response to Public Notice Seeking Additional Comment on Commission's Narrowband PCS Entrepreneurs' Blocks Proposals  Xf-  XO- Comments (January 13, 1995) AirTouch Paging (AirTouch) American Paging, Inc. (American Paging) Eatelcorp, Inc. (Eatel) Mobile Telecommunication Technologies Corp. (Mtel) Pagemart, Inc. PCS Development Corporation (PCSD) Personal Communications Industry Assoc. (PCIA) USIMTA/USIPCA  Xi$- Reply Comments (January 23, 1995 ) Mobile Telecommunication Technologies Corp. (Mtel) Pagemart, Inc. (Pagemart) PCS Development Corporation (PCSD)"$'E,-(-(ZZ%"  X-) APPENDIX D T  X-s INITIAL REGULATORY FLEXIBILITY ANALYSIS  W<J  Further Notice of Proposed Rulemaking Đ X-TPx   X-xAs required by the Regulatory Flexibility Act, see 3 U.S.C.  603, the Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the expected impact on small  Xa-entities of the policies and rules proposed and adopted in the Further Notice section of this  XL-Report and Order and Further Notice of Proposed Rulemaking (FNPRM). Written public comments are requested on the IRFA and must be filed by the deadlines for comments on the  X -Report and Order and Further Notice of Proposed Rulemaking, provided above in paragraph 109.  X < A. Reason for Action:   X -xThis FNPRM was initiated to secure comment on proposals for revising rules for narrowband PCS. Such changes to the rules for the narrowband PCS service would promote efficient licensing and enhance the service's competitive potential in the Commercial Mobile Radio Service marketplace. The adopted and proposed rules are based on the competitive bidding authority of Section 309(j) of the Communications Act of 1934, as amended, 47 U.S.C.  309(j), which authorized the Commission to use auctions to select among mutually exclusive initial applications in certain services, including narrowband Personal Communications Services (PCS).  X< B. Objectives of this Action:  xThe Omnibus Budget Reconciliation Act of 1993 (Budget Act), Pub. L. No. 10366, Title VI,  6002, and the subsequent Commission actions to implement it are intended to establish a system of competitive bidding for choosing among certain applications for initial licenses, and to carry out statutory mandates that certain designated entities, including small businesses, are afforded an opportunity to participate in the competitive bidding process and in the provision of narrowband PCS services.  X< C. Legal Basis:  xThe proposed action is authorized under the Budget Act and 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) and 309(j).  X#< D. Reporting, Recordkeeping, and Other Compliance Requirements:  X_%-xThe proposals under consideration in this FNPRM include the possibility of new reporting and recordkeeping requirements for a number of small business entities, as follows. We request comment on these proposals."3'F,-(-(ZZ&"Ԍ X-ԙx1. Service Area Reallocation. The Commission proposes revising its current channelization plan to ensure that it provides sufficient opportunities for all interested parties, including small businesses, to establish a viable narrowband PCS system. The Commission is concerned that such opportunities may not be meaningful if a single Basic Trading Area  X-(BTA)} yO- xԍ Rand McNally is the copyright owner of the MTA/BTA listings, which list the BTAs contained in each MTA  xand the counties within each BTA, as embodied in Rand McNally's Trading Areas System MTA/BTA Diskette, and  xgeographically represented in the Rand McNally 1992 Commercial Atlas and Marketing Guide (the "MTA map"),  x123rd Edition at pp. 3839. The conditional use of Rand McNally's copyrighted material by interested persons is  x;authorized under a blanket license agreement dated February 10, 1994, which covers certain services, including PCS.  xRand McNally organizes the 50 states and the District of Columbia in 47 MTAs and 487 BTAs. For PCS licensing  xJpurposes, we adopted service areas that separated Alaska from the Seattle MTA and added five insular areas: Puerto  xRico, U.S. Virgin Islands, Guam, Northern Mariana Islands and American Samoa. In 1994, the number of BTAs  {O] - xiwas changed to 493 because Puerto Rico was reconfigured into 2 BTAlike service areas. See Amendment of the  {O' - x<Commission's Rules to Establish New Narrowband PCS, Second Memorandum Opinion and Order, GEN Docket  {O -90314, 9 FCC Rcd 4519, 4523,  18 (1994) (PCS Second MO&O).  is not a sufficiently large service area for implementation of narrowband PCS. The  X-Commission has previously stated that the larger Major Trading Area licenses (MTAs)E. } {Ol-ԍ  See n.1, supra.E will provide for more reasonable and homogeneous license areas for the provision of PCS. In addition, the Commission reiterates that local participation in narrowband PCS could occur through franchising or partitioning arrangements with nationwide and regional PCS licensees, thus affording more opportunities to serve smaller areas. As a result, the Commission tentatively concludes that it will redesignate certain narrowband PCS frequencies for larger service areas and will thus provide additional opportunities for designated entities, including small businesses. The Commission proposes that the remaining narrowband PCS channel blocks will be redesignated as follows: (1) MTA licenses on channel blocks 18 and 19, and BTA licenses on channel block 26, will be redesignated as nationwide licenses; (2) MTA licenses on channel blocks 21 and 22, and BTA licenses on channel block 25, will be redesignated as regional licenses; and (3) the four BTA response channels (E, F, G and H) will be redesignated as regional channels. The Commission does not anticipate any additional reporting or recordkeeping requirements from this proposal.  X4-x2. Response Channel Redesignation. The Commission tentatively concludes that the paging response channels should be reallocated for use in larger service areas. The Commission agrees with commenters who argue that reallocating some of the response channels for use in larger service areas will facilitate the upgrade of existing paging networks, and enhance narrowband PCS systems. The Commission therefore proposes to redesignate the four 12.5 kHz unpaired response channels currently licensed as BTA channel blocks as  X-regional channel blocks,Xx } yO%- xԍ The five regions for licensing of narrowband PCS consist of the following MTAs: Region 1 (Northeast):  xBostonProvidence, BuffaloRochester, New York, Philadelphia, and Pittsburgh; Region 2 (South): Atlanta, Charlotte xiGreensboroGreenvilleRaleigh, Jacksonville, Knoxville, LouisvilleLexingtonEvansville, Nashville, MiamiFort"&,-(-(&"  xJLauderdale, RichmondNorfolk, TampaSt. PetersburgOrlando, WashingtonBaltimore, Puerto Rico and the United  x-States Virgin Islands; Region 3 (Midwest): Chicago, CincinnatiDayton, Cleveland, Columbus, Des MoinesQuad  xCities, Detroit, Indianapolis, Milwaukee, MinneapolisSt. Paul, and Omaha; Region 4 (Central): Birmingham, Dallas xFort Worth, Denver, El PasoAlbuquerque, Houston, Kansas City, Little Rock, MemphisJackson, New OrleansBaton  xRouge, Oklahoma City, San Antonio, St. Louis, Tulsa, and Wichita; Region 5 (West): Honolulu, Los AngelesSan  xiDiego, Phoenix, Portland, Salt Lake City, San FranciscoOaklandSan Jose, Seattle, SpokaneBillings and Alaska; and American Samoa, Guam, and the Northern Mariana Islands. and retain the four MTA paging response channels. Additionally,"G,-(-(ZZ" the Commission does not redesignate response channels to an entrepreneurs' block. Instead,  X-as discussed in the Further Notice of Proposed Rulemaking accompanying this Report and  X-Order, the Commission proposes to open eligibility for these channels to all applicants, not just incumbent paging licensees. The Commission does not anticipate any additional reporting or recordkeeping requirements from this proposal.  Xz-x3. Construction Requirements. The proposals in the FNPRM include the possibility of imposing reporting and recordkeeping requirements for new narrowband PCS licensees to establish compliance with the coverage requirements, if such requirements are adopted.  X7-  X -x4. Geographic Partitioning and Spectrum Disaggregation. The proposals in the  X -FNPRM include the possibility of imposing reporting and recordkeeping requirements for small businesses seeking licenses through the proposed partitioning and disaggregation rules. The information requirements would be used to determine whether the licensee is a qualifying entity to obtain partitioned or disaggregated spectrum. This information will be a onetime filing by any applicant requesting such a license. The information will be submitted on the FCC Forms 490 (or 430 and/or 600 filed as one package under cover of the Form 490) which are currently in use and have already received OMB clearance. The Commission estimates that the average burden on the applicant is three hours for the information necessary to complete these forms. The Commission estimates that 75 percent of the respondents, which may include small businesses, will contract out the burden of responding. The Commission estimates that it will take approximately 30 minutes to coordinate information with those contractors. The remaining 25 percent of respondents, which may include small businesses, are estimated to employ inhouse staff to provide the information. Applicants, including small businesses, filing the package under cover of FCC Form 490 electronically will incur a $2.30 per minute online charge. Online time would amount to no more than 30 minutes. The Commission estimates that 75 percent of the applicants may file electronically. The Commission estimates that applicants contracting out the information would use an attorney or engineer, with an average cost of $200 per hour, to prepare the information.  XV-x5. Construction Prior to Grant of Licenses for Narrowband and Broadband PCS. The  X?-proposals in the FNPRM include the possibility of changing existing Commission pre X*-licensing construction requirements for narrowband PCS. The proposal in the FNPRM would allow longform applicants to begin construction of facilities at their own risk, regardless of whether any petitions to deny have been filed. The Commission does not anticipate any additional reporting or recordkeeping requirements from this proposal."H,-(-(ZZ"Ԍ X-Ùx6. Small Business Definition. The FNPRM proposes a twotiered definition to define small businesses: (1) a small business is a business with average gross revenues for each of the preceding three years that do not exceed $40 million, and (2) a very small business is one which has less than an average of $15 million in gross revenues in each of the last three  X-years.  Qualifying entities will be eligible for bidding credits and installment plans. In order to qualify as small business under either tier, an entity must demonstrate that its gross revenues fall within the proposed thresholds. The information will be submitted on the FCC Form 600, which is currently in use and which has received OMB clearance. Such entities will also need to maintain supporting documentation at their principal place of business.  X3-  X -x7. Ownership Disclosure Requirements. The proposals in the FNPRM include the possibility of changing the ownership disclosure requirements for all applicants. The information requirements would be used to determine whether the licensee is a qualifying entity under the Commission's ownership rules. The proposals include relaxing the disclosure requirements, such as the required submittal of partnership agreements, which would reduce the administrative burdens associated with the auction process. The Commission also seeks comment on whether a separate schedule to FCC Form 175 should be designated, which would formalize the disclosure requirements to the current FCC Form 175. The proposal in  Xf-the FNPRM would decrease the amount of information that a narrowband PCS applicant would be required to file. This information will be a onetime filing by any applicant requesting such a license. The information will be submitted on the FCC Forms 600 and FCC Form 175, which are currently in use and have already received OMB clearance.  X< E. Federal Rules Which Overlap, Duplicate or Conflict With These Rules : None.  X< F. Description, Potential Impact, and Number of Small Entities Involved:   X-xThe FNPRM would establish certain narrowband PCS spectrum blocks for bidding by smaller entities as well as larger entities, and would provide installment payments and bidding credits to certain eligible entities bidding within those blocks. The Commission is required to estimate in its Final Regulatory Flexibility Analysis the number of small entities to which a rule will apply, provide a description of such entities, and assess the impact of the rule on such entities. To assist the Commission in this analysis, commenters are requested to provide information regarding how many total entities, existing and potential, would be affected by  X-the proposed rules in the FNPRM. In particular, the Commission seeks estimates of how many such entities will be considered small businesses.  X!-xGeographic Partitioning and Spectrum Disaggregation. The partitioning and disaggregation rule changes proposed in this proceeding will affect all small businesses which avail themselves of these rule changes, including small businesses currently holding narrowband PCS licenses who choose to partition and/or disaggregate and small businesses who may acquire licenses through partitioning and/or disaggregation. xThe Commission is required to estimate in its Final Regulatory Flexibility Analysis the"/'I,-(-(ZZ%" number of small entities to which a rule will apply, provide a description of such entities, and assess the impact of the rule on such entities. To assist the Commission in this analysis, commenters are requested to provide information regarding how many total entities, existing  X-and potential, would be affected by the proposed rules in the FNPRM. In particular, the Commission seeks estimates of how many such entities will be considered small businesses.  X-As explained in the Final Regulatory Flexibility Analysis for the Second Report and Order,  Xz-the Commission is utilizing the SBA definition applicable to radiotelephone companies, i.e.,  Xe-an entity employing less than 1,500 persons.oe} yO-ԍ 13 C.F.R.  121.201, Standard Industrial Classification Code 4812.o The Commission seeks comment on whether this definition is appropriate for narrowband PCS licensees in this context. Additionally, the Commission requests each commenter to identify whether it is a small business under this definition. If a commenter is a subsidiary of another entity, this information should be provided for both the subsidiary and the parent corporation or entity. xThe Commission estimates that the approximately 30 current regional narrowband PCS licensees and 11 nationwide narrowband PCS licensees could take the opportunity to partition and/or disaggregate a license or obtain an additional license through partitioning or  X-disaggregation.X} {O-ԍ See Visitors Auction Guide, Broadband Personal Communications Services, December 5, 1995 at Tab VIII. New entrants could obtain narrowband PCS licenses through the competitive bidding procedure, and take the opportunity to partition and/or disaggregate a license or obtain an additional license through partitioning or disaggregation. Additionally, entities that are neither incumbent licensees nor geographic area licensees could enter the market by obtaining a narrowband PCS license through partitioning or disaggregation. The Commission cannot estimate how many licensees or potential licensees could take the opportunity to partition and/or disaggregate a license or obtain a license through partitioning and/or disaggregation, because it has not yet determined the size or number of narrowband PCS licenses that will be granted in the future. Given the fact that nearly all radiotelephone companies have fewer than 1,000 employees, and that no reliable estimate of the number of future narrowband PCS licensees can be made, the Commission assumes for purposes of this IRFA that all of the licenses will be awarded to small businesses. It is possible that a significant number of the potential licensees who could take the opportunity to partition and/or disaggregate a license or who could obtain a license through partitioning and/or disaggregation will be small businesses.  W=< G. Any Significant Alternatives Minimizing the Impact on Small Entities Consistent with  X&<the Stated Objectives:  xIn the FNPRM the Commission seeks comment on whether coverage requirements should be imposed for all narrowband PCS licensees. Any significant alternatives presented in the comments will be considered. Coverage requirements for narrowband PCS licensees, if adopted, would probably not affect small businesses. ""J,-(-(ZZ!"ԌxWith respect to partitioning, the Commission tentatively concludes that unjust enrichment provisions should apply when a licensee has benefitted from the small business provisions in the auction rules and partitions a portion of the geographic license area to another entity that would not qualify for such benefits. The alternative to applying the unjust enrichment provisions would be to allow an entity who had benefitted from the special bidding provisions for small businesses to become unjustly enriched by partitioning a portion of their license area to parties that do not qualify for such benefits. The Commission also seeks comment on whether spectrum disaggregation would be feasible for narrowband PCS, and how much spectrum a narrowband PCS licensee should be permitted to disaggregate.  X -xThe FNPRM proposes certain provisions for smaller entities designed to ensure that such entities have the opportunity to participate in the competitive bidding process and in the provision of narrowband PCS services. Any significant alternatives presented in the comments will be considered.  X <x IRFA Comments:  We request written public comment on the foregoing Initial Regulatory Flexibility Analysis. Comments must have a separate and distinct heading designating them as responses to the IRFA and must be filed by the deadlines provided in  Xe-paragraph 109 of this Report and Order/Further Notice of Proposed Rulemaking. "PK,-(-(ZZ"  X-* APPENDIX E ă X01Í ÍX01Í Í  X-  FINAL REGULATORY FLEXIBILITY ANALYSIS ă  X< Report and Order ă  X-x   X-xAs required by the Regulatory Flexibility Act, see 5 U.S.C.  604, the Commission has prepared a Final Regulatory Flexibility Analysis (FRFA) of the expected impact on small  Xb-entities of the policies and rules proposed and adopted in the Report and Order section of  XM-this Report and Order and Further Notice of Proposed Rulemaking (R&O). An Initial  X8-Regulatory Flexibility Analysis (IRFA) was incorporated in the Notice of Proposed Rule  X# -Making and Tentative Decision in this proceeding, in GEN Docket No. 90314 and ET  X -Docket No. 92100, as well as the Third Memorandum Opinion and Order and Further Notice  X -of Proposed Rule Making in this proceeding. Additionally, Final Regulatory Flexibility  X -Analyses were incorporated in the First Report and Order, the Third Report and Order, the  X -Third Memorandum Opinion and Order and Further Notice of Proposed Rulemaking, and the  X -Second Memorandum Opinion and Order in this proceeding. Written comments to the proposals, including the Initial Regulatory Flexibility Analysis, were requested. As noted in these previous final analyses, this proceeding will establish a system of competitive bidding for choosing among certain applications for initial licenses, and will carry out statutory mandates that certain designated entities, including small entities, be afforded an opportunity to participate in the competitive bidding process and in the provision of spectrumbased services.  X-x   X< A. Need for and Objective of Rules  :  X-xThis R&O was initiated to adopt rules and secure comment on proposals for revising rules for narrowband Personal Communications Services (PCS). Such changes to the rules for the narrowband PCS service would promote efficient licensing and enhance the service's competitive potential in the Commercial Mobile Radio Service marketplace. The adopted rules are based on the competitive bidding authority of Section 309(j) of the Communications Act of 1934, as amended, 47 U.S.C.  309(j), which authorizes the Commission to use auctions to select among mutually exclusive initial applications in certain services, including narrowband PCS. The Omnibus Budget Reconciliation Act of 1993 (Budget Act), Pub. L. No. 10366, Title VI,  6002, and the subsequent Commission actions to implement it are intended to establish a system of competitive bidding for choosing among certain applications for initial licenses, and carry out statutory mandates that certain designated entities, including small businesses, are afforded an opportunity to participate in the competitive bidding process and in the provision of narrowband PCS services.  X#< B. Issues Raised by the Public in Response to the Initial Analysis:  xNo party suggested modifications specifically to the Initial Regulatory Flexibility Analysis. The following issues will apply to small businesses. "<'L,-(-(ZZ%"Ԍ X-ԙx1. Power and Antenna Height Limits. The Commission clarifies that Section 24.132  X-of its rules applies to the regional service areas as well as Major Trading Area (MTA)6 yOb- x#X\  P6G;IP#э Rand McNally is the copyright owner of the MTA/BTA listings, which list the BTAs contained in each MTA  xand the counties within each BTA, as embodied in Rand McNally's Trading Areas System MTA/BTA Diskette, and  xgeographically represented in the Rand McNally 1992 Commercial Atlas and Marketing Guide (the "MTA map"),  x123rd Edition at pp. 3839. The conditional use of Rand McNally's copyrighted material by interested persons is  x;authorized under a blanket license agreement dated February 10, 1994, which covers certain services, including PCS.  xRand McNally organizes the 50 states and the District of Columbia in 47 MTAs and 487 BTAs. For PCS licensing  xJpurposes, we adopted service areas that separated Alaska from the Seattle MTA and added five insular areas: Puerto  xRico, U.S. Virgin Islands, Guam, Northern Mariana Islands and American Samoa. In 1994, the number of BTAs  {O - xiwas changed to 493 because Puerto Rico was reconfigured into 2 BTAlike service areas. See Amendment of the  {Ol - x<Commission's Rules to Establish New Narrowband PCS, Second Memorandum Opinion and Order, GEN Docket  {O6 -90314, 9 FCC Rcd 4519, 4523,  18 (1994) (PCS Second MO&O).  service areas. The Commission amends paragraphs (d) and (e) of Section 24.132 of its rules, 47 C.F.R.  24.132, to reflect that these rules apply to regional areas. Regional base stations, in addition to MTA base stations, must operate at reduced heights and power limits near service area borders in order to protect adjacent licensees from interference. In addition, the Commission clarifies that a narrowband PCS licensee holding a license for the same channel in an adjacent region or MTA is not required to reduce height and power to protect itself.  X1-x2. Auction Rules. Based upon the comments and record before it, the Commission determines that it will not establish an entrepreneurs' block for narrowband PCS similar to its provisions in broadband PCS. The Commission agrees with those commenters who argue that the results of the previouslyheld narrowband regional auction demonstrate that bidding credits and installment payments can facilitate participation by designated entities in the competitive process, as well as securing licenses for the provision of narrowband PCS. Additionally, the Commission has the experience of other auctions, such as 900 MHz SMR, which did not have  X-an entrepreneurs' block but, nonetheless, had many successful designated entity applicants.. 6 {Oo-#X\  P6G;IP#э  See Press Release, "Wireless Telecom Bureau Releases Progress Report" (rel. March 5, 1997). Also, the Commission considers narrowband PCS to be less capital intensive than broadband PCS, thereby making it more likely that small businesses, for example, can acquire the financing to win these licenses, particularly for MTAs. Thus, the Commission concludes there is no need to insulate designated entities from other bidders and that bidding credits coupled with installment payments should satisfy its obligations under Section 309(j) of the Communications Act as they have in so many other auctions.   X-x3. Definition of Minority Groups. In the Competitive Bidding Fifth Memorandum  X-Opinion and Order, the Commission noted that it would make the same definitional correction made in the broadband PCS context to the definition of minority groups used in the  X-narrowband PCS auction rules.4 6 {O&- x<#X\  P6G;IP#э Implementation of Section 309(j) of the Communications Act Competitive Bidding, Fifth Memorandum  {O&-Opinion and Order, PP Docket No. 93253, 10 FCC Rcd 403, 432,  52, n.123 (1994).4 Thus, in an effort to maintain consistency throughout its"M,-(-(ZZ" auction rules for various services, the Commission revises its definition of "members of minority groups" in its narrowband PCS auction rules to include "Blacks, Hispanics, American Indians, Alaskan Native, Asians, and Pacific Islanders."    X< C. Description and Number of Small Entities Involved :   Xw-xThe rules adopted in this Report and Order will apply to current narrowband PCS operators and new entrants into the narrowband PCS market. Under these rules, mutually exclusive applications for narrowband PCS licenses will be resolved through competitive bidding procedures. xThe Commission does not know how many narrowband PCS licenses will be granted or auctioned, as it has not yet determined the size or number of such licenses. Two auctions of narrowband PCS licenses have been conducted for a total of 41 licenses, out of which 11 were obtained by small businesses owned by members of minority groups and/or women. Small businesses were defined as those with averaged gross revenues for the prior three fiscal  X-years of $40 million or less.\6 {O - xJ#X\  P6G;IP#э  See Implementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket No. 93 x253, and Amendment of the Commission's Rules to Establish New Narrowband PCS, GEN Docket No. 90314,  {O-Competitive Bidding Third Memorandum Opinion and Order and Further Notice, 10 FCC Rcd 175, 208 (1994). For purposes of this Final Regulatory Flexibility Analysis, the  X|-Commission is utilizing the SBA definition applicable to radiotelephone companies, i.e., an  Xg-entity employing less than 1,500 persons.g6 yO-#X\  P6G;IP#э 13 C.F.R.  121.201, Standard Industrial Classification Code 4812. Not all of the narrowband PCS licenses have yet been awarded. There is therefore no basis to determine the number of licenses that will be awarded to small entities in future auctions. Given the fact that nearly all radiotelephone  X"-companies have fewer than 1,000 employees,}"|6 yOO- x#X\  P6G;IP#э The 1992 Census of Transportation, Communications, and Utilities, conducted by the Bureau of the Census,  xshows that only 12 radiotelephone firms out of a total of 1,178 such firms which operated during 1992 had 1,000  xxor more employees. U.S. Bureau of the Census, U.S. Department of Commerce, 1992 Census of Transportation,  xCommunications, and Utilities, UC92S1, Subject Series, Establishment and Firm Size, Table 5, Employment Size of Firms: 1992, SIC Code 4812 (issued May 1995).} and that no reliable estimate of the number of prospective narrowband PCS licensees can be made, the Commission assumes, for purposes of the evaluations and conclusions in this Final Regulatory Flexibility Analysis, that all the remaining narrowband PCS licenses will be awarded to small entities.  X< D. Summary of Projected Reporting, Recordkeeping and Other Compliance Requirements:  xNarrowband PCS licensees may be required to report information concerning the  Xk-location of their transmission sites under some circumstances,k, 6 {OH&-#X\  P6G;IP#э See, e.g., 47 C.F.R.  1.1301 et seq.ą although generally they will not be required to file applications on a sitebysite basis. Additionally, narrowband PCS"TN ,-(-(ZZ" license applicants will be subject to reporting and recordkeeping requirements to comply with the competitive bidding rules. Specifically, applicants will apply for narrowband PCS licenses by filing a shortform application (FCC Form 175), and will file a longform application (FCC Form 600) at the conclusion of the auction. Additionally, entities seeking treatment as small businesses will need to submit information pertaining to the gross revenues of the small business applicant and its affiliates and certain investors in the applicant. Such entities will also need to maintain supporting documentation at their principal place of business.   WH< E. Steps Taken to Minimize Burdens on Small Entities:   X -xSection 309(j)(3)(B) of the Communications Actm 6 yO -#X\  P6G;IP#э 47 U.S.C.  309(j)(3)(B).m provides that in establishing  X -eligibility criteria and bidding methodologies the Commission shall, inter alia, promote economic opportunity and competition and ensure that new and innovative technologies are readily accessible by avoiding excessive concentration of licenses and by disseminating licenses among a wide variety of applicants, including small businesses, rural telephone companies, and businesses owned by members of minority groups and women. Section 309(j)(4)(A) provides that in order to promote such objectives, the Commission shall consider alternative payment schedules and methods of calculation, including lump sums or guaranteed  Xd-installment payments, with or without royalty payments, or other schedules or methods.m dX6 yOm-#X\  P6G;IP#э 47 U.S.C.  309(j)(4)(A).m Therefore, the Commission finds that it is appropriate to establish special provisions in the narrowband PCS rules for competitive bidding by small businesses. The Commission believes that small businesses applying for narrowband PCS licenses should be entitled to some type of  X-bidding credits and should be permitted to pay their bids in installments. In awarding narrowband PCS licenses, the Commission is committed to meeting the statutory objectives of promoting economic opportunity and competition, of avoiding excessive concentration of licenses, and of ensuring access to new and innovative technologies by disseminating licenses among a wide variety of applicants, including small businesses, rural telephone companies, and businesses owned by members of minority groups and women. xIn determining small business status, the Commission will consider the gross revenues of the small business applicant, its affiliates, and certain investors in the applicant. The Commission will attribute the gross revenues of all controlling principals in the small business applicant as well as the gross revenues of affiliates of the applicant. The Commission will require that in order for an applicant to qualify as a small business, qualifying small business principals must maintain control of the applicant. "O ,-(-(ZZ"Ԍ W< F. Significant Alternatives Considered and Rejected:   X-x xThe Commission considered and rejected a proposal to give additional relief to narrowband PCS licensees affected by an interim sharing arrangement with respect to use of  X-narrowband PCS channels in border areas between the United States and Canada.s 6 {O-#X\  P6G;IP#э Report and Order at  14.s The Commission determined that such special relief is not necessary, as potential bidders to this spectrum had adequate notice of such interim arrangement and the interim arrangement also provides licensees with adequate spectrum protection. xThe Commission also considered and rejected a proposal to establish an entrepreneur's block for narrowband PCS similar to the Commission's provisions for such a block of  X -spectrum in broadband PCS.x  Z6 {O-#X\  P6G;IP#э  Report and Order,  1920.x The Commission agrees with those commenters who argue that the results of the previouslyconducted narrowband regional auction demonstrate that bidding credits and installment payments can facilitate participation by designated entities in the competitive process as well as securing licenses for the provision of narrowband PCS. Additionally, the Commission has the experience of other auctions, such as 900 MHz Specialized Mobile Radio, where no entrepreneurs' block existed but, nonetheless, many successful designated entity applicants existed. The Commission also considers narrowband PCS to be less capital intensive than broadband PCS, thereby making it more likely that small businesses, for example, can acquire the financing to win these licenses, particularly for MTAs. Thus, the Commission concludes there is no need to insulate designated entities from other bidders and that bidding credits coupled with installment payments should satisfy its obligations under Section 309(j) of the Communications Act as they have in so many other auctions. Moreover, narrowband PCS licensees are free to transfer and assign licenses immediately (unlike broadband PCS), providing further flexibility to acquire licenses post X-auction.t 6 {O^-#X\  P6G;IP#э See 47 C.F.R.  24.839(d).t xThe Commission also considered and rejected a proposal to maintain its definition of  X|-minority groups eligible for special provisions in the narrowband PCS auction.q |~6 {O -#X\  P6G;IP#э Report and Order,  22.q The Commission instead decided to modify its definition in order to bring it into conformity with the Commission's definition for broadband PCS, namely, "Blacks, Hispanics, American Indians, Alaskan Natives, Asians, and Pacific Islanders."  W < G. Report to Congress : xThe Commission shall send a copy of this Final Regulatory Flexibility Analysis, along"P ,-(-(ZZY"  X-with this Report and Order/Further Notice of Proposed Rulemaking, in a report to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C.  801(a)(1)(A). A copy of this Final Regulatory Flexibility Analysis will also be published in the Federal Register."Q ,-(-(ZZ"  X-  APPENDIX F NARROWBAND CHANNELIZATION PLANS ă   y!x  0*ddRx y$(#(#(#(# !"$yAxO SS(xddhRxO y$(#(# (#(# A"$yaxv 9"q!'xddRxv y$(#(#|(#(# a#$:&R ,-(-(ZZ%&"!R6 oF4=(g4O7V"i ARMShDq!#v-aR9"  X- ORIGINAL CHANNELIZATION PLAN:  X- h ddx !$$xSZZZZZZZ h  c  &H& "wc" 50/50 kHz  (paired)Lg" 50/12.5 kHz \(paired)Lg"C50 kHz 9R(unpaired)Lg"12.5 kHz (unpaired)Lg"Total LchannelsLg"Overall MTotal # of licensesc H  !$$xSZZZZZZZ A x5SZ------------ "c  q " >h > "wh" Lic.h" TBAh" Lic.h"TBAh"8<Lic.h"ZATBAh"Lic.h"TBA h"Lic. h"TBA h"JLic. h"77!TBAq q 5"X#Nationwideh" 5h"U h"P3h"h"?3h"g h"6h"c h",11 h" h"11 h"D!q q "WRegional (5) h" 2 h"U  h"P4 h" h"B h"g  h"6 h"c  h"^6  h"  h"30  h"D!q q "\NMTA (51) h"(  h"# 2 h" h"}3 h"B h"d2 h"6 h"14  h"  h"Y11  h"!  h";i!561q     >h > "[2BTA (493) "(  "U  " "}2 "B "g  "6 "14  "  "6  "!  "87!2958    Lic. = Already licensed. TBA = To be auctioned.  X'- PROPOSED CHANNELIZATION PLAN: [shading reflects proposed changes:] x  X- A x5SZ------------  a$$xSZZZZZZZ  c   &H& "w\" 50/50 kHz  (paired)Eg" 50/12.5 kHz \(paired)Eg"C50 kHz 9R(unpaired)Eg"12.5 kHz (unpaired)Eg"Total LchannelsEg"Overall MTotal # of licensesc H  a$$xSZZZZZZZ  x.SZ------------ $c   q $ >h > "wh" Lic.h" TBAh" Lic.h"TBAh"8<Lic.h"ZATBAh"Lic.h"TBA h"Lic. h"TBA h"JLic. h"77!TBA*q q @ @ @ P.* >hh > "X#Nationwideh" 5h"# 2h"P3h"}1h"?3h"g h"6h"c h",11 h"3 h"11 h"A!38q @ @ @ Pq @ @ @ P8"WRegional (5)h" 2h"U h"P4h"}3h"Bh"g h"6h"14 h"^6 h"7 h"30 h">!356q @ @ @ Pq @ @ P6"\NMTA (51)h"( h"U h"h"}1h"Bh"d2h"6h"14 h" h"7 h"! h";i!357,q @ @ P  B  R, >h > "[2BTA (493)"( "U """B"g "6"c " "None "! "5'!None  B  R  Lic. = Already licensed. TBA = To be auctioned. x