[Federal Register Volume 65, Number 114 (Tuesday, June 13, 2000)]
[Rules and Regulations]
[Pages 37055-37057]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-14872]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 22
[WT Docket No. 96-148; GN Docket No. 96-113; FCC 00-141]
Geographic Partitioning and Spectrum Disaggregation by Commercial
Mobile Radio Services Licensees
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: This document modifies the Commission's rules governing
Cellular Radiotelephone Service (cellular service) to permit spectrum
disaggregation by cellular licensees. In addition, the Commission
maintains its existing geographic partitioning rules for initial
cellular licensees, and extends partitioning rules to unserved area
licensees. This document also resolves several related issues relevant
to cellular partitioning and disaggregation.
DATES: Effective July 13, 2000.
FOR FURTHER INFORMATION CONTACT: Jeffrey Steinberg, Wireless
Telecommunications Bureau, Commercial Wireless Division, at (202) 418-
0896.
SUPPLEMENTARY INFORMATION: Synopsis of the Second Report and Order.
``Partitioning'' is the assignment of geographic portions of a radio
license along geopolitical or other boundaries. ``Disaggregation'' is
the assignment of discrete portions or ``blocks'' of spectrum licensed
to a geographic licensee or other qualifying entity. The Commission has
previously examined partitioning and disaggregation for many Commercial
Mobile Radio Services (CMRS) on a service-by-service basis, and has
adopted geographic partitioning and spectrum disaggregation rules for
several services. In the Further Notice of Proposed Rulemaking in this
proceeding, 62 FR 696 (January 6, 1997), the Commission tentatively
concluded that it is now appropriate to consider permitting full
partitioning and disaggregation in the cellular service.
2. The Commission concludes that modifying its cellular rules to
allow disaggregation will promote competition and further regulatory
symmetry between cellular and other CMRS licensees. Extending flexible
disaggregation rules to cellular will increase carriers' flexibility to
tailor their service offerings to meet market demands, thus increasing
competition and enhancing the efficient use of spectrum. The Commission
further finds that there are no technical or other constraints unique
to the cellular service that would make disaggregation either
impractical or administratively burdensome. The Commission therefore
modifies its rules to permit cellular licensees to disaggregate
portions of their spectrum to other eligible entities. In addition, the
Commission declines to adopt minimum standards regarding the amount of
spectrum that cellular licensees may disaggregate.
3. With regard to partitioning, the Commission decides to retain
its existing partitioning rules for initial cellular licensees, and to
provide for partitioning by unserved area licensees. The Commission
recognizes that the current cellular partitioning rules are different
from the rules for geographically licensed services because the rules
restrict cellular partitioning outside the licensee's Cellular
Geographic Service Area (CGSA) after the initial five-year buildout
period. However, this restriction ensures that the cellular
partitioning rules do not conflict with the unserved area rules, and
the Commission finds that the rules are sufficiently flexible so as not
to place cellular licensees at a competitive disadvantage compared to
other CMRS. The Commission also believes that cellular unserved area
licensees should have the ability to partition their service areas. As
in the case of initial cellular licensees, the Commission will allow
cellular unserved area licensees to partition within their designated
licensing areas during the initial buildout period of the license.
After the expiration of the 12-month buildout period, an unserved area
licensee may not partition outside of the licensing area established as
a result of the buildout process.
4. The Commission retains its existing cellular construction rules
as they apply to partitioning. These rules provide sufficient
flexibility for cellular licensees to build out their markets and to
respond to demands for service. Thus, where a cellular licensee
partitions its license prior to the expiration of the relevant buildout
period, each partitionee will be responsible for completing the
buildout in its partitioned area within the remainder of the original
buildout period. Any area that remains unbuilt at the conclusion of the
buildout period will revert to the Commission and be available for
unserved area licensing. With respect to disaggregation, the parties
will be required to certify in their disaggregation application which
party will be responsible for building out the licensed area.
5. The Commission adopts its proposal to permit combined
partitioning and disaggregation for cellular. The Commission also
determines that the license terms for partitioned and disaggregated
cellular licenses will be limited to the remaining term of the
underlying licenses, and that partitionees and disaggregatees may
obtain renewal expectancy on the same basis as initial cellular
licensees and other CMRS licensees. Finally, the Commission declines to
change its current procedures for reviewing and licensing cellular
partitioning transactions, and adopts these procedures for reviewing
and licensing disaggregation transactions.
Final Regulatory Flexibility Analysis
6. As required by section 603 of the Regulatory Flexibility Act
(RFA), 5 U.S.C. 603, an Initial Regulatory Flexibility Analysis (IRFA)
was incorporated in the Further Notice of Proposed Rulemaking (Further
Notice) in WT Docket No. 96-148.\1\ The Commission sought written
public comment on the proposals in the Further Notice, including the
IRFA. The Commission's Final Regulatory Flexibility Analysis (FRFA) in
this Second Report and Order conforms to the RFA, as amended by the
Contract With America Advancement Act of 1996.\2\
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\1\ Geographic Partitioning and Spectrum Disaggregation by
Commericial Mobile Radio Services Licensees, WT Docket No. 96-148,
FCC 96-287, Notice of Proposed Rulemaking, 11 FCC Rcd. 10187 (1996).
\2\ Public Law 104-121, 110 Stat. 847 (1996) (CWAA, Subtitle II
of the Small Business Regulatory Enforcement Fairness Act of 1996
(SBREFA) codified at 5 U.S.C. 601, et seq.)
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A. Need for and Purpose of This Action
7. In this document, we modify our rules for the Cellular
Radiotelephone Service (cellular) to permit partitioning and
disaggregation for all licensees in these services. The rules adopted
herein also implement Congress' goal of giving small businesses the
opportunity to participate in the provision of spectrum-based services
in accordance with 47 U.S.C. 309(j)(4)(D) and reduce entry barriers for
small businesses in accordance with 47 U.S.C. 257. With flexible
partitioning and disaggregation, additional entities, including small
businesses, may participate in the
[[Page 37056]]
provision of cellular service without needing to acquire wholesale an
existing license (with all of the bundle of rights currently associated
with the existing license). Acquiring ``less'' than the current license
will presumably be a flexible and less expensive alternative for
entities desiring to provide these services.
B. Description and Number of Small Entities Involved
8. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that will be
affected by our rules.\3\ The RFA generally defines the term ``small
entity'' as having the same meaning as the terms ``small business,''
``small organization,'' and ``small governmental jurisdiction.'' \4\ A
small organization is generally ``any not-for-profit enterprise which
is independently owned and operated and is not dominant in its field.''
\5\ Nationwide, there are 275,801 small organizations.\6\ In addition,
the term ``small business'' has the same meaning as the term ``small
business concern'' under section 3 of the Small Business Act.\7\ Under
the Small Business Act, a ``small business concern'' is one which: (1)
Is independently owned and operated; (2) is not dominant in its field
of operation; and (3) meets any additional criteria established by the
Small Business Administration (SBA).\8\
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\3\ 5 U.S.C. 603(b)(3), 604(a)(3).
\4\ 5 U.S.C. 601(6).
\5\ 5 U.S.C. 601(4).
\6\ 1992 Economic Census, U.S. Bureau of the Census, Table 6
(special tabulation of data under contract to Office of Advocacy of
the U.S. Small Business Administration).
\7\ 5 U.S.C. 601(3) (incorporating by reference the definition
of ``small business concern'' in 15 U.S.C. 632).
\8\ 15 U.S.C. 632.
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9. The rules adopted in this document will affect all small
businesses which avail themselves of these rule changes, including
small businesses currently holding cellular licenses who choose to
partition and/or disaggregate, and small businesses that may acquire
licenses through partitioning and/or disaggregation. We have not
developed a definition of small entities applicable to cellular
licensees.
Therefore, the applicable definition of small entity is the
definition under the SBA rules applicable to radiotelephone companies.
This definition provides that a small entity is a radiotelephone
company employing fewer than 1,500 persons.\9\ The size data provided
by the SBA does not enable us to make a meaningful estimate of the
number of cellular providers which are small entities because it
combines all radiotelephone companies with 500 or more employees.\10\
10. The 1992 Census of Transportation, Communications, and
Utilities, conducted by the Bureau of the Census, is the most recent
information available. This document shows that only twelve
radiotelephone firms out of a total of 1,178 such firms that operated
during 1992 had 1,000 or more employees.\11\ Therefore, even if all
twelve of these large firms were cellular telephone companies, nearly
all of the cellular carriers were small businesses under the SBA's
definition. We assume, for purposes of this FRFA, that all of the
current cellular licensees are small entities, as that term is defined
by the SBA. In addition, we note that there are 1,758 cellular
licenses; however, a cellular licensee may own several licenses. The
most reliable source of information regarding the number of cellular
service providers nationwide appears to be data that we publish
annually in our Telecommunications Industry Revenue report, regarding
the Telecommunications Relay Service (TRS). The report places cellular
licensees and Personal Communications Services (PCS) licensees in one
group. According to the data released in November 1997, there are 804
companies reporting that they engage in cellular or PCS service.\12\ It
seems certain that some of these carriers are not independently owned
and operated, or have more than 1,500 employees; however, we are unable
at this time to estimate with greater precision the number of cellular
service carriers qualifying as small business concerns under the SBA's
definition. For purposes of this FRFA, we estimate that there are fewer
than 804 small cellular service carriers.
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\9\ 13 CFR 121.201, Standard Industrial Classification (SIC)
Code 4812.
\10\ U.S. Small Business Administration 1992 Economic Census
Employment Report, Bureau of the Census, U.S. Department of
Commerce, SIC Code 4812 (radiotelephone communications industry data
adopted by the SBA Office of Advocacy).
\11\ Bureau of the Census, U.S. Department of Commerce, 1992
Census of Transportation, Communications, and Utilities, UC92-S-1,
Subject Series, Establishment and Firm Size, Table 5, Employment
Size of Firms: 1992, SIC Code 4812 (issued May 1995).
\12\ FCC, Telecommunications Industry Revenue: TRS Fund
Worksheet Data, Figure 2 (Number of Carriers Paying Into the TRS
Fund by Type of Carrier) (Nov. 1997).
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C. Summary of Projected Reporting, Recordkeeping and Other Compliance
Requirements
11. The rules adopted in this document will impose reporting and
recordkeeping requirements on small businesses seeking licenses through
partitioning and disaggregation. The information requirements will be
used to determine whether the licensee is a qualifying entity to obtain
a partitioned license or disaggregated spectrum. Any applicant
requesting such a license, will provide this information in a one-time
filing. The applicant will submit this information on a FCC Form 490
Application for Assignment of Authorization or Consent to Transfer of
Control of License. The applicant will also submit an FCC Form 430
Licensee Qualification Report if one is not already on file with us,
and an FCC Form 600 Application for Mobile Radio Service Authorization.
These forms are currently in use and have already received Office of
Management and Budget clearance. We estimate that the average burden on
the applicant is three hours for the information necessary to complete
these forms. We further estimate that seventy-five percent of the
respondents (which may include small businesses) will contract out the
burden of responding. Finally, we estimate that it will take
approximately thirty minutes to coordinate information with those
contractors. The remaining twenty-five percent of respondents (which
may include small businesses) are estimated to employ in-house staff to
provide the information.
D. Steps Taken To Minimize Burdens on Small Entities
12. The rules adopted in this document are designed to implement
Congress' goal of giving small businesses, as well as other entities,
the opportunity to participate in the provision of spectrum-based
services and are consistent with the Communications Act's mandate to
identify and eliminate market entry barriers for entrepreneurs and
small businesses in the provision and ownership of telecommunications
services.
13. Allowing non-restricted partitioning of licenses will
facilitate market entry by parties who may lack the financial resources
for participation in auctions, including small businesses. Some small
businesses may have been unable to obtain cellular licenses through
sale due to high asking prices. By eliminating this restriction and
allowing flexible partitioning, small businesses will be able to obtain
partitioned licenses for smaller service areas at presumably reduced
costs, thereby providing a method for small businesses to enter the
cellular marketplace.
14. Similarly, allowing immediate disaggregation of cellular
licenses will
[[Page 37057]]
facilitate the entry of new competitors to the provision of these
services, many of whom will be small businesses seeking to acquire a
smaller amount of spectrum at a reduced cost. Additionally, allowing
disaggregation of spectrum in any amount will also promote
participation by small businesses who may seek to acquire a smaller
amount of cellular spectrum tailored to meet the needs of their
proposed service.
E. Significant Alternatives Considered and Rejected
15. We considered and rejected several alternative proposals
concerning partitioning and disaggregation:
We considered and rejected the option of continuing to
disallow disaggregation of cellular spectrum. We concluded that
permitting disaggregation would promote competition and further
regulatory symmetry, and that there were no technical or other
constraints that would make cellular disaggregation either impractical
or administratively burdensome.
We declined to establish any minimum amount of spectrum
that can be disaggregated. We concluded that allowing flexibility in
disaggregation would promote more efficient use of spectrum and permit
deployment of a wider array of services.
We declined to allow additional flexibility in our
cellular partitioning rules. We concluded that our existing rules are
sufficiently flexible so as not to place cellular licensees at a
competitive disadvantage compared to other CMRS, and that additional
flexibility would be inconsistent with our cellular unserved area
rules.
We declined to apply a new license term to partitioned
license areas or disaggregated spectrum. We found that allowing parties
to ``re-start'' their license term would effectively allow a licensee
to extend its license term and could lead to circumvention of our
license term rules.
F. Report to Congress
16. We shall include a copy of this Final Regulatory Flexibility
Analysis, along with this Second Report and Order, in a report to be
sent 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.
G. Ordering Clauses
17. Accordingly, pursuant to the authority of sections 4(i), 257,
303(g), 303(r), and 332(a) of the Communications Act of 1934, as
amended, 47 U.S.C. 154(i), 257, 303(g), 303(r), and 332(a), part 22 of
the Commission's Rules, 47 CFR 22.1, et seq., Is Amended as set forth
in the rule changes.
18. The rules adopted herein will become effective July 13, 2000.
This action is taken pursuant to sections 4(i), 303(r), and 309(j) of
the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r),
309(j).
List of Subjects in 47 CFR Part 22
Radio.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
Rule Changes
For the reasons set forth in the preamble, the Federal
Communications Commission amends 47 CFR part 22 as follows:
PART 22--PUBLIC MOBILE SERVICES
1. The authority citation for part 22 continues to read:
Authority: 47 U.S.C. 154, 222, 303, 309 and 332.
2. Add Sec. 22.948 to read as follows:
Sec. 22.948 Partitioning and Disaggregation.
(a) Eligibility. (1) Generally. Parties seeking approval for
partitioning and disaggregation shall request an authorization for
partial assignment of a license pursuant to Sec. 1.948 of this chapter.
Cellular licensees may partition or disaggregate their spectrum to
other qualified entities.
(2) Partitioning. During the five year build-out period, as defined
in Sec. 22.947, cellular licensees may partition any portion of their
cellular market to other qualified entities. After the five year build-
out period, cellular licensees and unserved area licensees may
partition any portion of their Cellular Geographic Service Area (CGSA),
as defined by Sec. 22.911, to other qualified entities but may not
partition unserved portions of their cellular market.
(3) Disaggregation. After the five year build-out period, as
defined in Sec. 22.947, parties obtaining disaggregated spectrum may
only use such spectrum in that portion of the cellular market
encompassed by the original licensee's CGSA and may not use such
spectrum to provide service to unserved portions of the cellular
market.
(b) Disaggregation. Cellular licensees and unserved area licensees
may disaggregate spectrum in any amount.
(c) Combined partitioning and disaggregation. The Commission will
consider requests for partial assignment of cellular licenses that
propose combinations of partitioning and disaggregation.
(d) License Term. The license term for the partitioned license area
and for disaggregated spectrum shall be the remainder of the original
cellular licensee's or the unserved area licensee's license term
provided for in Sec. 22.144(a).
[FR Doc. 00-14872 Filed 6-12-00; 8:45 am]
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