FCC 95-51 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 ) In re ) ) Amendment of Part 74 of the ) MM Docket No. 93-24 Commission's Rules With Regard ) to the Instructional Television ) Fixed Service ) REPORT AND ORDER Adopted: February 7, 1995 Released: February 7, 1995 By the Commission: Table of Contents I. INTRODUCTION 1 II. THE WINDOW FILING SYSTEM 2 A. General Issues 2 B. Implementation 9 1. Public Notice 9 2. Geographic Scope 11 3. Duration of Window 13 4. Frequency 14 5. Amendments 16 C. Exceptions to the Filing Window 18 1. NTIA-Funded Proposals 18 2. Major Changes 19 3. Other Proposals 21 III. PROPOSALS TO IMPROVE THE APPLICATIONS PROCESS 24 A. Financial Qualifications 25 B. Applications Caps 31 C. Assignment of Unbuilt Facilities 35 D. Excess Capacity Lease Terms 36 E. Application of the Four-Channel Rule 39 F. Protected Service Areas 45 G. Receive Site Interference Protection 54 H. Major Modifications61 I. Reasonable Assurance of Receive Sites 66 J. Accreditation of Applicants 72 K. Other Proposals 77 1. Offset 77 2. Expedited Consideration of Applications 78 3. FAA Authorization 79 4. Interference Studies 80 5. Construction of Facilities 82 IV. CONCLUSION 83 V. ADMINISTRATIVE MATTERS 84 1. By this Report and Order, the Commission adopts rules that will increase the efficiency of our processing of applications for new Instructional Television Fixed Service (ITFS) stations, major amendments to such applications, and major changes to existing stations. We started this proceeding by seeking comment on a new filing system for such applications. In response to the comments received, we requested further comment on several additional proposals intended to increase the efficiency, and curtail potential abuse, of our application processes. We decline to adopt some of the proposals advanced by the commenters to deter speculative filings. However, we believe that, because an ITFS window filing procedure enhanced by an electronic filing and processing system as proposed in our outstanding MDS rulemaking proceeding and by the other modifications adopted herein, will result in a more efficient and effective application processing system, such improvement in expediting new and improved ITFS service and prompting the development of wireless cable service should adequately serve to deter speculative filings in the future. THE WINDOW FILING SYSTEM General Issues 2. Our goal in this proceeding has been to enhance the efficiency of our processing of ITFS applications. During the past decade, applicants for new ITFS stations or major changes in existing stations have been subject to an A/B cut-off procedure. We questioned in the Notice of Proposed Rulemaking in this proceeding whether this procedure is appropriate for the rapidly evolving ITFS service. We stated in the Notice that the telecommunications environment has changed substantially since 1985, when the Commission instituted the A/B cut-off procedure. We further observed that the overwhelming majority of tendered applications now include excess capacity lease agreements with wireless cable operators. The Notice observed that these changes have fostered a substantial increase in the rate of applications filed for new ITFS stations or major changes in existing stations, creating a significant backlog of applications. We therefore proposed a window filing procedure to allow us to better control the flow of applications and improve processing efficiency. 3. Pursuant to our proposal, we would accept applications for new facilities and applications for major changes in existing facilities only during limited periods (or "windows"). We would place applications filed in the window that were not mutually exclusive with any other application, and that were found to be acceptable for filing, on a proposed grant list. We would then provide the immediately following 30 days for the submission of petitions to deny. Uncontested applications would then be granted, if in the public interest. With regard to mutually exclusive applications, we would similarly give 30- day Public Notice for the submission of petitions to deny. Thereafter, we would evaluate those applications under the existing comparative selection process. Any applications currently tendered but not yet placed on an "A" cut-off list would be treated as having been filed and cut off as of the close of the first filing window. 4. Most commenters generally supported the adoption of a window filing system. However, several also argued that other processing reforms are needed to address speculative filings and certain other potential abuses arising from the dramatic regulatory changes that have occurred in the ITFS service in the past several years. 5. First, as noted above, in 1983 the Commission authorized ITFS licensees to lease their excess channel capacity to wireless cable operators. The Commission envisioned a revitalized ITFS service through the activation of underutilized ITFS channels resulting from the revenues which would be derived from the leasing of excess capacity by wireless cable operators. Since this initial action several years ago, the telecommunications environment has changed substantially, as the number and types of video program providers has increased. Thus, we have amended our regulations and policies significantly in order to further stimulate the growth of ITFS and wireless cable services in that new environment. Specifically, we have modified the minimum programming requirements for new ITFS operators, authorized 15-mile interference protection for ITFS licensees which lease excess capacity for wireless cable operations, authorized the use of channel mapping and channel loading technologies by ITFS licensees and wireless cable lessees, and modified our "ready recapture" requirement with regard to excess channel capacity leasing by eliminating unduly restrictive time-of-day and day-of-week regulations. The response to these changes by both educational and wireless cable entities has been enthusiastic, creating the environment necessary for building and maintaining robust ITFS and wireless cable services. By February 25, 1993, when we imposed a freeze on applications for new ITFS stations, more than 800 applications were under review by the staff. Not only did many of these applications require complex technical analysis, but more than 90% of these applications contained excess capacity leases and/or were mutually exclusive. 6. Because the viability of competing wireless cable operators is dependent upon the accumulation of a significant number of channels in a market (critical mass), we were informed that many wireless cable operators were engaging in abusive filing practices intended to impede the inauguration of new or improved ITFS and wireless cable service. For example, some commenters alleged that many wireless cable-supported ITFS applicants submit a large number of applications simply to enable bargaining with other wireless cable entities seeking to construct a viable wireless cable system. Thus, these commenters proposed a cap of applications associated with the same wireless cable entity. Other commenters advocated requiring applicants or their proposed wireless cable lessees to submit with their applications proof of their financial ability to construct. They claimed that such a requirement would deter a significant number of alleged ITFS speculators. Accordingly, we released a Further Notice of Proposed Rulemaking in which we addressed their suggestions, as well as other proposals to further enhance processing efficiency. 7. In the Further Notice, we tentatively concluded that a window filing system would serve the public interest. Currently, for instance, simply to allow the release of an "A" cut-off list, each application must undergo a substantive engineering analysis upon filing. No applications are granted or denied in this stage of processing. Subsequently, after the "B" cut- off period, each application undergoes a second technical analysis in order to determine whether it is grantable. Because each of these analyses requires significant resources, eliminating the duplicative step would substantially improve processing efficiency. In addition, the Further Notice found that a window filing procedure would allow us to better control the flow of applications. We also noted that it would prevent speculators from filing against applicants that had appeared on an "A" cut-off list. 8. Based on the record before us, we conclude that adoption of the window filing proposal would allow the Commission to accept, consider, and dispose of ITFS applications in the most efficient and timely manner possible. As a result, we believe that the public interest would be served by our adopting a filing window procedure, as enhanced by the aforenoted proposed electronic filing and processing system and by the other policy and rule modifications adopted herein. Specifically, to diminish the incentive of frequency speculators to submit applications for permits that they intend to later assign for profit, we will limit the allowable consideration for the sale of unbuilt ITFS facilities to out-of-pocket expenses. Also, we refine our rules on granting protected service areas requested for wireless cable lessees by providing such protection solely against subsequently proposed operations. We believe that such a policy will eliminate the practice by some ITFS applicants and licensees of requesting interference protection solely to create mutual exclusivity with otherwise grantable, previously filed ITFS applications. We also adopt other technical proposals that will further streamline our ITFS window application filing system. These improvements, we believe, should expedite the inauguration of new and improved ITFS service and prompt the continued development of the wireless cable service. Implementation of the Window Filing System 9. Public Notice. At the commencement of this proceeding, the initial Notice asked commenters to address how far in advance a window should be announced. Most commenters directly addressing this issue suggest a 60-day period, noting that this is the same time period within which parties now have to respond to the release of an "A" cut-off list. In contrast, Hardin and Associates, Inc. (Hardin) suggests the issuance of Public Notices 150-180 days before the first filing window, alleging that nonleasing educators will need more than 60 days to prepare their applications. It also predicts that the likely substantial number of applications submitted in the first window will deter nonleasing educators from filing. 10. We decline to adopt Hardin's proposal. Rather, we agree with the majority of commenters that a 60-day period will provide potential applicants adequate notice. As most commenters observe, this is the same period within which parties currently have to file an application in response to an "A" cut-off list. Thus, educational institutions will experience no change from the existing system in this regard. Notably, there is no indication in the record that this has been an insufficient period of time in the past. Similarly, there is no indication that nonleasing educators need additional time within which to prepare for the initial filing window. Nonleasing educators that have been relying upon funding from the National Telecommunications and Information Administration (NTIA) have not been subject to the ITFS application filing freeze imposed in the Notice and they have not been prevented from preparing and submitting any applications they have chosen to file. Further, we anticipate opening filing windows frequently, providing nonleasing educators, as well as all others, many opportunities to submit their applications. 11. Geographic Scope. Addressing whether the window should be regional or national, one commenter claims that a regional window would expedite processing and give greater certainty to wireless cable operators assembling channels. Another asserts that a national window would encourage the filing of more applications than the Commission could efficiently process, because parties would tender applications solely to avoid losing potential access to most major markets. Some commenters claim that a market-based window would likely concentrate initially on larger markets, thereby disserving educators located in less populated areas. 12. Potential inefficiencies caused by the submission of a large number of applications during a national window are significantly diminished by our likely adoption of an electronic filing system for ITFS applications, which we expect would substantially accelerate processing. While a regional window system might aid some wireless cable operators' long-term planning, we believe that such a window would unfairly require educators not located within the relevant area to delay their educational plans. Moreover, the rules herein adopted will enhance processing efficiency, as discussed below, thereby reducing any potential negative effect of the submission of a greater number of applications. Finally, a national window will allow all interested parties to commence or continue their ITFS and MDS plans as soon as possible. This will provide the certainty of an imminent filing opportunity to all wireless cable entities, not just those within a restricted geographic area. Therefore, we conclude that educators, as well as wireless cable lessees, will be better served by a national window, which we accordingly adopt. 13. Duration of Window. The Notice also sought comment on how long we should generally keep filing windows open. WCA states that five business days, when combined with the 60-day Public Notice period, should provide ample opportunity for all potential applicants to file. Based on the record before us, we agree. Further, this period is short enough to allow the staff to begin processing an application almost immediately after its receipt, especially if the proposed electronic filing and processing system for ITFS applications is adopted. We note that the low power television service also generally keeps its filing windows open for five business days. Moreover, if this period of time should prove to be insufficient, we retain the flexibility to keep future ITFS windows open for a longer period. 14. Frequency. We next address how often to open a filing window. Some commenters support a fixed schedule, arguing that this would allow educators to plan their proposals in advance of the Public Notice. They also advocate the nondiscretionary opening of a window at least once each quarter, asserting that frequent filing periods are necessary to avoid unduly delaying the licensing of ITFS facilities that are essential to the growth of the wireless cable industry. 15. We believe that we should take a more cautious approach as we structure the window filing system. Because we have never before utilized this kind of filing system for ITFS applications, we cannot yet know what will prove to be the most efficient timetable for the acceptance and disposition of applications. Further, because the rate of the submission of applications could vary significantly in the future, a fixed requirement could quickly and unpredictably become counterproductive or impracticable to meet. As previously indicated, however, we intend to open filing windows as frequently as is consistent with our goals of efficient and expeditious processing. 16. Amendments. Some commenters propose that, after a filing window closes, the Commission should prohibit amendments that demonstrate eligibility, improve comparative standing, or seek rule waivers. Currently, they claim, many applicants impose an unnecessary burden on the Commission by filing such amendments, such as requests for waiver of the four-channel-per-market rule, Section 74.902(d) of the Commission's Rules, 47 C.F.R.  74.902(d). 17. We agree that amendments that pertain either to improving comparative standing or to establishing eligibility, as set forth in Sections 74.913(b) and 74.932(a) of the Commission's Rules, respectively, 47 C.F.R.  74.913(b) and 74.932(a), should not be filed outside the window period. Similarly, we shall prohibit the filing of amendments to a facility's proposed technical operations, including amendments to add any receive sites, outside the window. Such engineering amendments often require a time-consuming re- analysis by the staff of the amendment's effects on other applications and thus delay the processing of all pending applications. However, with the above two exceptions, such delay is not inherent in non-engineering amendments, including requests for waiver of the four- channel rule, and we will consequently permit their filing. Exceptions to the Filing Window 18. NTIA-Funded Proposals. In the Further Notice, we advanced a proposal designed to assure fairness to applicants relying on NTIA funding. We noted that NTIA rules require a party seeking a grant to have already filed its application with the Commission, and that those requests are subject to an annual January deadline. Accordingly, in order not to obstruct these grants, we proposed allowing applications that rely upon NTIA funding to be filed each December. We proposed to consider such applications, if filed outside a window period, as having been filed during the next window. We now adopt that proposal, with a slight modification, because NTIA funding deadlines may vary from year to year. Accordingly, during the 30 days preceding the annual deadline, rather than every December, we shall allow the tendering of applications that rely upon NTIA funding, and they shall be considered as having been filed during the current or immediately subsequent window, whichever is appropriate. 19. Major Changes. Several commenters also propose various exceptions to the window filing system. The Educational Parties propose that applications for major changes be exempt from the window filing requirement. They claim that such changes are needed to resolve coverage problems discovered only after the facilities begin operation. Further, they argue that such applications constitute only a small proportion of ITFS applications submitted to the Commission. In the alternative, some commenters propose the opening of additional windows solely for such applications. 20. We decline generally to exempt the filing of major change applications from the window filing process, and, as discussed at paragraph 17, above, we similarly decline to exempt amendments with similar effects. By definition, such changes can substantially impact both existing and proposed facilities. Accordingly, for the purpose of the window filing procedure, they should be treated the same as applications for new facilities. However, consistent with existing practice, we shall continue to make a narrow exception for amendments to pending applications that would resolve mutually exclusive applications without creating any additional interference. We will accept such amendments at any time, and we shall provide a 30-day period for the submission of petitions to deny those amendments. We believe that this will most efficiently bring new or improved service to the public. Further, to encourage market settlements, we shall now allow licensees of existing facilities to submit at any time applications for major changes, as long as the changes are essential components of a settlement involving mutually exclusive applications. 21. Other Proposals. The Educational Parties propose that educators have an additional 60 days after the close of the filing window to file mutually exclusive applications against any MDS application for an ITFS channel. These parties argue that the "A" cut-off list currently provides such a period, to ensure the continued availability of ITFS channels to educators. We decline to adopt the proposal. A wireless cable entity will continue to be ineligible to file for an ITFS channel unless a specified number of vacant channels would remain available for ITFS use after the proposed authorization. Further, as now, we generally will not consider an MDS application that is mutually exclusive with an ITFS application. These rules protect the rights of educators to acquire ITFS licenses, and they ensure their continued availability as against MDS applicants. Also, all educators have the same opportunity as wireless cable entities to prepare and apply for a particular ITFS frequency during a particular filing window. If no educator has expressed an interest in a certain channel, we see no reason to delay the efficient use of that frequency by another entity, especially when other ITFS frequencies are available to accommodate the needs of local educators. We believe that this will allow for the most efficient use of the spectrum. 22. National ITFS Association (NIA) proposes that when an application is filed by a nonlocal applicant with an excess capacity lease, the window should remain open for another 60 days to allow for the filing of competing applications by local nonleasing educators. According to NIA, this would protect plans that otherwise would be made obsolete by another party's filing during a window that would occur before the educator could prepare and file its own application. More expansively, California State University, Northridge (CSU Northridge) advocates a blanket exemption from the window for all educators not associated with a wireless cable lessee, alleging that such an exemption would allow such educators to rapidly meet their communities' changing needs. It predicts that few applications would fall within this category, thus making inconsequential any resultant burden on the Commission's processing. To prevent abuse of this exemption, the commenter would prohibit the applicant from leasing its excess capacity for three years after grant of the license. 23. We do not believe that either NIA or CSU Northridge's proposal would serve the public interest. Both would cause significant disruption to the window filing system. Further, we see no reason to distinguish between educators with and without excess capacity leases for these purposes. The public interest served by educational programming is not diminished by a licensee's affiliation with a wireless cable operator, which over the past several years has often been the only way to finance its ITFS facility. Moreover, in order for the proposals to have their intended effect, we would have to prohibit educational licensees without excess capacity leases from later leasing their excess capacity. Such a prohibition could harm educators by adversely impeding the development or continuation of ITFS service. We therefore decline to adopt these proposals. PROPOSALS TO IMPROVE THE APPLICATION PROCESS 24. As argued by the commenters and noted in the Further Notice, the goals of the proposed window filing procedure could be maximized if we at the same time enacted additional rules that would increase its efficiency. Therefore, we set forth several proposals, many initially advanced by the commenters, that were intended to improve service to the public or otherwise enhance processing efficiency. Our analysis of each of the proposals will be affected by two factors. First, as noted above, we plan to implement an electronic filing and processing system for ITFS applications, thereby greatly accelerating their disposition. Adoption of this system would diminish the negative impact that a large number of applications has had on our processing in the past. Second, implementation of the proposals adopted herein and strict enforcement of our existing rules will, we believe, eliminate many of the inefficiencies and alleged abuses of the existing processing system. Financial Qualifications 25. Proposal. In response to the Notice, two commenters proposed to require applicants or their prospective wireless cable lessees to submit with their applications proof of their financial ability to construct. In the Further Notice, we postulated that such a requirement might deter a significant number of ITFS speculators. We also asked whether we should require separate financial documentation for each station applied for, and whether we should require the wireless cable lessee to submit the documentation when it is paying for construction of the facilities. In addition, we asked whether such documentation would likely become the basis of frivolous petitions to deny. 26. Comments. Hispanic Information and Telecommunications Network, Inc. (HITN) and ACS dispute the assertion that speculation is a problem, arguing that the majority of channels in the most desirable markets have now been licensed. Thus, they aver that no change in the application process is necessary. While other commenters regard speculation as a continuing problem, most nevertheless oppose a change. They argue that compiling the necessary documentation could impose a significant burden on educational institutions, especially those not leasing their excess capacity. Further, they assert, any enhanced processing efficiency would be countered by the diversion of the staff resources needed to analyze each financial submission. In addition, according to these commenters, the requirement could easily become a basis for frivolous petitions, further delaying the grant of applications. In their opposition, then, HITN, ACS, and RuralVision are in accord with the Educational Parties, who had earlier supported the proposal, but who now oppose it. 27. Supporters of changing the existing certification requirement generally address the financial qualifications of the excess capacity lessee, rather than of the educator. Various options supported by these commenters include: requiring the wireless cable lessee to certify its qualifications as part of the ITFS application; requiring certification from the lessee, but also requiring the educator applicant to possess detailed supporting financial documents; and requiring educators and lessees to demonstrate, not merely certify, their financial qualifications in the application. With regard to the last variant, Central Texas alleges that, because the submissions would include audited financial statements, the staff would not expend significant resources in its analysis. 28. Also, proponents of changing the existing certification requirement generally would require the wireless cable operator, in demonstrating its financial qualifications, to incorporate all of its obligations to construct and operate any other ITFS facilities. To discourage abuse of any new informational requirement, they propose, the Commission should perform random spot checks on applicants and their lessees. 29. Discussion. ITFS applicants must have reasonable assurance that sufficient net liquid assets are on hand or available from committed sources to construct and operate the station for three months without additional funds. The applicant certifies that it has such access, and the Commission relies upon that certification. The record does not indicate that our reliance in this regard has been ill-placed. Further, we believe that the submission of detailed financial information would in practice neither increase processing efficiency nor deter abuse. Collecting the data would impose significant costs on the wireless cable lessee, regardless of whether the supporting documents were kept on hand by the educator or submitted to the Commission. We believe that a sound analysis of all of the incoming detailed financial submissions would consume a great deal of the staff's time, severely slowing the rate of processing. Conversely, any reliance on the documents without our own rigorous independent analysis would enable us to detect only a small proportion of potential abuse. Moreover, the record contains no information diminishing our concern that the financial information submitted would become fodder for frivolous petitions to deny. 30. A financially unqualified educator would generally not be able to complete construction within the prescribed period. Because that educator would then need an extension of time within which to construct, it would have to submit an appropriate application to the Commission, explaining the reasons for its delay in construction. Thus, we already have a process in place by which we can monitor and assess ITFS licensees' progress in constructing their authorized facilities and forestall any dilatory conduct on their part. Should it become necessary in the future, we can revise this process accordingly. Application Caps 31. Proposals. We now address two proposals, raised in response to the Notice by the Educational Parties, to limit the number of certain types of applications that can be filed during a filing window. The first would impose a cap of 25 applications associated with the same wireless cable entity, including any entity with direct or indirect common ownership or control. The second proposal would limit an individual nonlocal ITFS entity to filing no more than three to five applications during a window. To support this restriction, the Educational Parties argued that nonlocal applicants often work with wireless cable entities as frequency speculators. 32. Comments. The overwhelming majority of interested commenters oppose the adoption of either type of cap. Many stated that such restrictions would significantly restrain ongoing efforts to create viable wireless cable and ITFS systems. First, with regard to the wireless cable cap, one commenter alleges that a limitation would prevent wireless cable companies from utilizing the economies of scale that currently benefit their wired cable competitors. Also, RuralVision contends that a school district's need for educational programming is no less compelling when its excess capacity lessee has similar leasing agreements with different parties. Only one commenter supports an outright cap based on the identity of the wireless cable lessee, arguing that it would speed processing and prevent wireless cable entities from overextending themselves. A few commenters would support such a cap only if it excluded the operators allegedly most likely to construct, i.e., those that already have access (by license or by lease) to a specified minimum number of MDS and/or ITFS channels in the area. 33. The proposed cap on nonlocal ITFS entities is similarly unsupported by many of the commenters addressing the issue. ACS asserts that it is unnecessary, as the window filing system will eliminate most of the problems associated with speculation. Also, North American Catholic contends that nonlocal educational entities, due to their economies of scale, are critical to bringing distance learning to many schools that otherwise might not be able to afford it. It adds that nonlocal entities serve important area needs, noting that they must submit letters of intended use from local accredited schools to establish their basic eligibility for the license. Supporters dispute that claim, with one arguing that nonlocal entities lack community ties, are less familiar with local programming needs despite the local programming committee's input, and tend to associate with frequency speculators. Further, according to the Educational Parties, the Commission already treats local and nonlocal applicants dissimilarly through the ITFS license eligibility criteria, thus setting a precedent for disparate treatment in this area. 34. Discussion. Adoption of either of the proposed restrictions would certainly eliminate any processing burden and limit multiple filings associated with potential frequency speculators. However, these benefits would come at immense cost. To suddenly impose limits on the number of applications that particular parties may be affiliated with would slow both ITFS and wireless cable development. Further, it would artificially constrain MDS operators' business decisions as to the number of ITFS channels needed to establish economically viable wireless cable operations. These costs would not be sufficiently offset by exempting applications associated with wireless cable entities that already have a significant market presence, as this would unfairly penalize an educator for exercising its discretion as a licensee to lease excess capacity to a particular party. Moreover, suggestions by some commenters that nonlocal entities are not adequately serving local educational needs are unsupported. Finally, we can deter the speculation complained of by the less restrictive process of analyzing construction extension applications, as noted above at paragraph 30. Accordingly, based on the record before us, we decline to adopt either of the proposed application caps. Assignment of Unbuilt Facilities 35. In the Further Notice, we proposed to formalize our current practice of limiting the allowable consideration for the assignment of authorizations for unbuilt ITFS facilities to out-of-pocket expenses, as we do with broadcast construction permits. Our stated goal was to diminish the incentive of frequency speculators to submit applications for authorizations that they intend to later assign for profit. Every commenter addressing this issue supports the proposal, agreeing that it would help deter abuse. We agree that this limitation, applicable to broadcast construction permits, will have similar deterrent effects on frequency speculation in the ITFS service, and we shall therefore adopt it. Therefore, licensees assigning construction permits for unbuilt ITFS facilities will have to submit documentation of their reasonable and prudent out-of-pocket expenses with their assignment applications. American Telecasting suggests that we extend the rule to cover wireless cable lessees, claiming that the rule as proposed does not preclude speculation in excess capacity leases. We decline to do so. As wireless cable entities accumulate channels or channel access in various markets, they approach the critical mass necessary to operate competitive MDS systems. Therefore, acquisition of a small number of additional channels may be integral to the inauguration of a wholly new video service to an area's population, and restricting the alienability of ITFS leases might delay the orderly completion of viable MDS systems. Excess Capacity Lease Terms 36. Proposal and Comments. Our existing policy does not authorize an educator to execute a lease agreement the term of which extends beyond the end of the educator's license term. Consequently, depending on how many years remain in the term, there may be situations in which our policy would prohibit a lease agreement to extend beyond one or two years. At most, MDS operators can have contractual access to ITFS channels for no more than ten years, the length of a full license period. ACS, supported by WCA and CAI Wireless Systems, Inc. (CAI), proposes that we modify our policy to allow parties to negotiate lease agreements whose terms extend beyond the end of the license term. The proposal is unopposed. 37. The proponents of this proposal argue that a wireless cable operator can have no assurance that it will be able to retain beyond the ITFS license term its leasehold rights for its use of the ITFS channels. Pursuant to existing Commission policy, an educator wishing to afford the MDS operator a reasonable lease term is prohibited from agreeing to extend the lease agreement beyond the current ITFS licensee's term. According to the commenters, this significant uncertainty deters potential financiers from investing in new MDS systems. CAI adds that it also negatively affects negotiations over possible future business arrangements with telephone companies, such as those involving video distribution agreements. 38. Discussion. We are mindful that the wireless cable industry requires substantial equity investment in order to become a viable competitor in the video marketplace. We also realize that a potential financier is likely to exercise caution before investing in an MDS system, where there is uncertain long-term availability of the ITFS channels that provide the basic capacity for that system. The record demonstrates that adoption of the unopposed proposal to extend the allowable lease term would have substantial benefits. Authorizing lease agreements that extend beyond the end of the license term would reduce the anxiety of potential investors that the MDS entity would shortly lose four channels, crippling the entire system: a ten-year lease appears far more reliable and stable than a two-year lease. The increased confidence of investors will significantly accelerate the development of the wireless cable industry and provide competition to wired cable. Hence, we are revising our policy to permit an educator, if it chooses, to execute a 10-year lease agreement without regard to the duration of the educator's current license term. In previous cases, the Commission granted ITFS licenses subject to the revision of lease provisions that extended beyond the 10-year license term because such provisions were viewed as inconsistent with the terms of the license. Upon reexamination of this issue, however, we conclude that the policy adopted here better serves the public interest. The existence of a lease in no way affects the duration of that license or the licensee's future use of the frequency, but it nevertheless allows the benefits discussed above. Thus, we will require only that ITFS lease agreements that extend beyond the end of the license term note that such an extension is contingent on the renewal of the educator's license. As a result, our policy in this regard becomes similar to that governing television broadcast licensees and their network affiliation agreements. Application of the Four-Channel Rule 39. Proposal. We seek to provide as many educators as possible with the opportunity to operate ITFS systems that meet their educational needs. Consequently, the four-channel limitation rule, Section 74.902(d) of the Commission's Rules, 47 C.F.R.  74.902(d), generally limits an ITFS licensee to four channels for use in a single area of operation. However, because we have never formally defined what constitutes an "area of operation," educational institutions at times have been uncertain as to what channels they could apply for, and unsure as to when a four-channel rule waiver showing was required. The Further Notice proposed to adopt the staff's informal policy of considering a single area of operation for this purpose to extend no farther than 20 miles from the transmitter site. We posited that such a clear benchmark would be easy for applicants to comply with and, due to its ease of application, would also increase the speed of processing. Alternatively, we queried whether we should instead define an area of operation in terms of interference, such that two sites would be considered to be in different areas of operation, as long as a licensee could operate at maximum authorized power on the same channel at each site without co-channel interference. 40. Comments. A number of parties addressing the issue oppose a standard based on mileage. ACS argues that the use of 20 miles as a benchmark would be arbitrary and inconsistent with the Commission's statement, in a discussion of an unrelated rule elsewhere in the Further Notice, that an educator is unlikely to serve a site that is more than 35 miles from the transmitter. In this regard, some commenters contend that many ITFS stations serve sites more than 20 miles from the transmitter. Under a mileage-based definition, HITN argues that two cochannel stations more than 20 miles apart would be considered to be in different areas of operation, even if they would in fact interfere with each other. Thus, HITN and RuralVision advocate the proposed interference-based definition. One commenter advocates combining the two proposals. Specifically, Central Texas supports the 20-mile definition, but adds that, if an applicant could show that two sites less than 20 miles apart could nevertheless operate without co-channel interference, it should be allowed to operate up to four channels at each site without violating the rule. The commenter classifies this as a flexible approach that takes area terrain into account. It also helps large rural areas served by only a few schools that are qualified to become ITFS licensees, according to Central Texas. 41. A few commenters, broaching a definition not advanced in the Further Notice, propose to link the definition of an "area of operation" to the facility's protected service area, thereby making the rules governing ITFS and MDS more consistent. To foster the expansion of ITFS service, North American Catholic recommends waiving the rule for any applicant proposing more than four channels within the 15-mile protected service area, as long as there are no competing applications for those channels. The Educational Parties also advocate a definition not discussed in the Further Notice, based on whether the second facility is necessary to serve receive sites that cannot reasonably be served by the first. Specifically, if all of a second facility's proposed receive sites can be served by both facilities, the stations would be duplicative and considered to be in the same area of operation. Thus, they add, some service overlap would be acceptable if it were the only way to reach some receive sites. 42. Discussion. Having examined the record before us, we find that the mileage proposal that is currently in use by the staff should be the basis of the rule. Our experience has demonstrated that this standard is efficient and easily understood and implemented. Determining a station's area of operation by use of the interference approach would require a considerable amount of technical analysis by the staff. As a consequence, adoption of this proposal could inordinately slow processing and delay service to the public. We also see no reason to link the four-channel rule to the conceptually unrelated protected service area. The protected service area is based on the service area of a commercial wireless cable entity; the four-channel rule's area of operation is based on the educational needs of the ITFS licensee. Further, neither the record nor our experience suggests that an educator's area of operation is in fact limited to the smaller 15-mile area covered by the protected service area and should accordingly be diminished from the currently applied standard. Indeed, as noted above, several educators have commented that, not infrequently, ITFS facilities serve receive sites more than 20 miles away. 43. We also reject the Educational Parties' proposal that we base our definition on whether the second facility is necessary to serve receive sites that cannot reasonably be served by the first. This proposal would be susceptible to significant abuse, because it would allow applicants to design a series of closely spaced systems, each with one or a few receive sites that could not be served by the prior system. These systems would then be considered to be in separate areas of operation, despite the substantial overlap in service area that could result. We do not believe that this result would be consistent with our intent to preserve as much channel capacity for as many educational applicants as possible. 44. In adopting the 20-mile criterion, we recognize that any mileage standard will be imprecise, because there will always be educators that serve sites beyond the designated distance. However, the bright-line test we are adopting today has the important advantage of being easy for applicants to comprehend and apply. Further, the Commission staff can process applications far more efficiently using this standard. Moreover, Commission staff, educators, and wireless cable entities are extremely familiar with this standard, having utilized it for a number of years. Thus, it will foster much more rapid processing of applications and inauguration of service to the public. Our long experience with the 20-mile standard suggests that it is a practical and effective tool. We also note that many of the concerns expressed by the commenters can continue to be addressed on a case-by-case basis. Specifically, if an applicant can present good cause to waive the four-channel rule, we will consider the public interest benefits of doing so. Protected Service Areas 45. Proposal. The Further Notice also solicited comment on a proposed change in the application of protected service areas for wireless cable lessees. Currently, we provide a 15-mile interference protection for a service area regardless of receive site locations, but solely at the request of the ITFS applicant or licensee. Generally, this benefits the wireless cable lessee, because it ensures interference protection within an area where receive sites are not specified, or extends protection over an area where receive sites are not currently located. By so doing, these areas provide a measure of protection to lessees, thereby encouraging new or improved wireless cable service. 46. The Further Notice observed that an applicant for new facilities often requests and receives interference protection that restricts an existing licensee lacking such protection from pursuing certain modifications to its facilities. At the same time, an existing facility that has not requested such protection, upon learning that an application for a nearby operation has been filed, often requests interference protection and possibly obstructs the new applicant. The Further Notice expressed the view that these practices may be an abuse of our processing system that diminishes competition, significantly impacts our processing, and delays the inauguration of new or improved service to the public. Moreover, we stated, such practices unfairly disrupt existing operations and already-proposed facilities. We therefore proposed to apply interference protection only prospectively, making it effective solely with regard to applications filed after the protection request. We asked commenters whether our proposal would sufficiently diminish the disruption and delay resulting from the current system. We also asked commenters to address a specific application of the proposed rule: If two applications are (1) submitted during the same filing window, (2) otherwise grantable, and (3) mutually exclusive only because both applicants request a protected service area, we proposed to consider them as mutually exclusive. 47. Comments. Only two parties oppose the proposal to apply the 15-mile protected service area prospectively only: the Educational Parties, who claim that there has been no abuse of the protected service area, and United States Interactive and Microwave Television Association, who claims it would not deter frequency speculators. Most commenters addressing the proposal express support. HITN advocates the proposal, but would exempt existing facilities. According to HITN, wireless cable lessees must be able to apply the protected service area regressively, in order to address what it claims is the most frequent abuse of the protected service area. Specifically, according to the commenter, another wireless cable operator often finds a number of educators to apply for licenses in several small markets that encircle a larger market, thereby shrinking the larger market's service area by their protected service areas. HITN claims that this hinders the future, orderly development of wireless cable systems in large markets, and that its proposed exception is needed to prevent further abuse. 48. Four commenters address whether we should consider as mutually exclusive two applications that are submitted during the same filing window, otherwise grantable, and mutually exclusive only because both applicants request a protected service area. United States Interactive and Microwave Television Association opposes the proposal, again claiming that it would not deter speculators. RuralVision and WCA, however, profess support. The former commenter also proposes an exception under a particular set of circumstances. Specifically, RuralVision proposes that this aspect of the rule be waived if the applicant can demonstrate that (1) less than five percent of another applicant or licensee's protected service area would receive interference, and (2) the nature of that area is such that no subscribers or potential subscribers would be affected by the interference (within a lake, for example). Under such circumstances, it states, the applications should not be considered mutually exclusive. Opposing RuralVision's proposed exception, WCA responds that the Commission has already rejected automatic waiver of MDS interference protection standards where the interference is minimal. 49. Finally, two commenters propose that the Commission in the future grant the protected service area automatically, unless specifically declined by the applicant. One of these commenters also requests the Commission to grant 15-mile protected service areas to all current licensees and applicants, to the extent that they have such reach after consideration of all previously filed applications. 50. Discussion. For the reasons stated in the Further Notice, we conclude that the public interest will be served by adoption of the proposal to apply protected service area protection only prospectively. Thus, an applicant for new facilities will no longer be able to receive interference protection that restricts an existing licensee without such protection from seeking certain modifications to its facilities. Similarly, an existing facility without such protection will not be able to request interference protection that obstructs the new applicant. Adoption of the proposal will diminish disruption to existing and proposed facilities. We reject, however, HITN's proposed exception concerning existing facilities. For more than three years, ITFS licensees have been afforded the unrestricted opportunity during their initial construction periods and thereafter to request protection for their facilities, if they so chose. The record does not reflect any obstacle to any wireless cable operator's having requested, through the ITFS applicant or licensee, a protected service area. Moreover, adoption of HITN's proposal is not necessary to eliminate the abuse complained of. With the adoption of a window filing process, the problem we identified in the Notices, of existing licensees filing minor change applications creating mutually exclusive situations with pending applications, will be eliminated. The window filing process will prevent the identification of pending applications that could be obstructed by the licensee's filing of such minor change application, and further ensure that the submission of a protected service area request is principally motivated by the licensee's desire to enhance or expand its own system. 51. Only one commenter expressed opposition to the proposed specific application of the rule involving mutual exclusivity. With regard to the proposed exception advanced by RuralVision, we shall adopt it in part. We agree that there is no public interest benefit in protecting an uninhabitable area. To do so would needlessly restrict neighboring facilities, unduly depriving the area of both ITFS and wireless cable programming. Thus, if an applicant shows that interference will occur solely over water, we shall not consider the applications to be mutually exclusive. However, in order to avoid future conflicting interpretations and confusion, we will not extend the exception to cover any area in which no subscribers or potential subscribers would be affected by the interference. 52. We decline to adopt RuralVision's proposal that two applications not be considered mutually exclusive if less than five percent of one applicant or licensee's protected service area will receive interference from the other's facilities. We find no support in the record for diminishing the protection we have afforded excess capacity lessees as an incentive for them to construct viable ITFS and wireless cable facilities. Moreover, we find only minimal countervailing public interest benefits in the proposal. While some additional facilities might be constructed, many viewers could be deprived of the quality reception that the Commission has always held as a standard. Indeed, the emerging wireless cable industry is less likely to successfully compete with cable if subscribers cannot enjoy the highest quality reception reasonably possible. 53. Finally, we decline to adopt the proposals automatically to grant protected service areas to all current licensees, all current applicants, and all future applicants. As noted above, applicants and licensees have had no obstacle to requesting a protected service area on their own. We also shall not automatically grant protected service areas in the future, as such protection may in fact not be desired or utilized by the applicant. We are also changing our application form and expressly asking whether the applicant seeks this protection. This will further expedite processing. Receive Site Interference Protection 54. Proposal. The Commission's rules currently provide interference protection to an educator's receive sites, regardless of their distance from the transmitter. The Further Notice cited instances in which interference protection was requested for receive sites apparently beyond an educational institution's reasonable coverage area. We stated in the Further Notice that such requests could be an abuse of our processes, designed to artificially increase the service area of the wireless cable lessee. We also opined that eliminating this practice would significantly increase the efficiency of our processing of applications, thereby hastening service to the public. 55. We tentatively concluded that an educational institution is generally unlikely to reasonably serve a receive site located more than 35 miles from the transmitter. Thus, absent a showing of unique circumstances, we proposed to protect only those receive sites 35 miles or less from the transmitter. Further, we proposed that an applicant not be able to claim basic eligibility for a license by use of any receive site more than 35 miles from the transmitter. 56. Comments. The commenters are nearly evenly divided on whether to adopt the 35-mile standard for receive site interference protection. Opponents argue that the mileage standard is arbitrary, not reflecting that educators may legitimately serve sites beyond 35 miles from the transmitter, especially in rural areas. ACS, WCA, and HITN propose that all receive sites within the protected service area should automatically be protected. HITN would deny protection to any receive site outside the protected service area, asserting that this clear demarcation would deter abuse. Several other commenters, however, argue that any receive site that can in fact be adequately served should be eligible for receive site interference protection, regardless of location. 57. In contrast, the 35-mile standard was supported by several commenters, many of whom would also incorporate the interference test. They propose automatic interference protection for receive sites within the 35-mile limit, and a rebuttable presumption that farther receive sites cannot adequately be served. An applicant demonstrating otherwise would receive interference protection for the particular site in question. Central Texas advocates that the Commission not authorize new receive sites for applicants unless they have already placed their facilities into operation. It alleges that such a restriction would deter parties from abusively applying for receive sites solely to prevent legitimate operators from expanding. 58. Our second proposal, regarding basic eligibility through receive sites located more than 35 miles from the transmitter, was directly addressed by only two commenters. Vermont Wireless expresses its support for the proposal as put forth in the Further Notice. RuralVision, however, advocates not allowing an applicant to use such a receive site to establish its basic eligibility unless it has demonstrated that it can adequately serve that site. The commenter also supports a similar requirement for receive sites that are used for tie- breaking purposes. 59. Discussion. With regard to the 35-mile proposal, we acknowledge the concerns of some commenters that educators may at times serve receive sites beyond the proposed boundary. We also acknowledge RuralVision's statement that schools in rural areas are frequently more than 35 miles apart. It is true that an educator might indeed be able to serve two sites more than 35 miles apart. In fact, however, under the proposed rule, a licensee could protect two receive sites that were as far as 70 miles apart, depending on the location of the transmitter. Thus, we find that the 35-mile standard is not unduly restrictive, and we adopt the proposal as it regards both interference protection and basic eligibility for receive sites not more than 35 miles from the transmitter. However, we will waive the rule for a particular site if an applicant can demonstrate that it is located within the educator's reasonable coverage area. 60. We next address an issue raised by one of the commenters in relation to the four-channel rule: how to justify defining a service area as 35 miles in one context, and 20 miles in another. Significantly, the two rules have differing purposes. The four-channel rule addresses the facility's general service area, i.e., the area within which an educator can reasonably expect the substantial majority of its receive sites to be located. In contrast, our receive site interference rules concern a different and much smaller set: only the farthest sites that an educator generally and reasonably can expect to be protected. By definition, they involve more distant sites, and therefore a larger area that subsumes the general service area. Accordingly, the mileage standard is greater for the receive site interference protection rule than for the four-channel rule. As the purposes of the two rules are unrelated, the standards used to define an area of operation are also unrelated. Turning to more specific applications of the rule, we decline to adopt Central Texas' proposal not to authorize any new receive site unless the applicant has already placed its facilities into operation. This would place a significant obstacle to an educator and a newly formed wireless cable operator with which it may be associated, as they might lack the funds to fully implement a competitive MDS system. Major Modifications 61. Proposal. We turn now to our proposal to reclassify certain types of modifications to existing ITFS facilities. As stated in the Further Notice, we have classified these as either major or minor, attaching different procedural rules to each. In the Further Notice, we expressed our belief that our consideration of certain changes as minor does not realistically take into account the impact that they would have on the facilities in question, nearby facilities, or proposed facilities. 62. Consequently, we proposed to reclassify as a major change any application involving: (1) any polarization change; (2) the addition of any receive site that would experience interference from any licensee or applicant on file prior to the submission of the application; (3) an increase in the EIRP in any direction by more than 1.5 dB; (4) an increase of 25 feet or more in the transmitting antenna height; or (5) any change that would cause interference to any previously proposed application or existing facility. We additionally proposed to formalize our policy of considering proposals to relocate a facility's transmitter site by ten miles or more as a major change. We asked whether, by limiting the opportunity to file the above types of applications to open window filing periods, adoption of the proposal would diminish an educator's flexibility to respond to changing needs and circumstances. We also stated our belief that the change in definitions would make our classification of changes more consistent, enhancing the efficiency of the window filing system. Finally, we proposed to exempt from the new rule any change that would resolve mutually exclusive applications without creating new frequency conflicts. 63. Comments. Most of the commenters that addressed this issue generally supported the proposal. HITN and the Educational Parties, however, did not support the proposal, stating that the changes would slow the licensing process because currently- permitted modifications would have to be filed during a window. The Educational Parties oppose making polarization changes that eliminate interference as a major change. Many of the commenters who supported the reclassifying of amendments suggested that we adopt the rules contained in Sections 21.41 and 21.42 of the Commission's MDS rules, 47 C.F.R.  21.41, 21.42. The supporting comments assert that the adoption of the MDS modification rules would be desirable, due to the technical and regulatory relationship that exists between the two services. 64. Discussion. Our experience, as supported by many of the comments, warrants the need to modify the current classification system to increase processing efficiency. We do not believe that the reclassification of certain amendments as major will diminish processing efficiency, as claimed by HITN and the Educational Parties. These amendments are being reclassified precisely because their submission outside a window would likely impede processing, due to their potential effect on the facilities in question, nearby facilities, or proposed facilities. Also, adoption of the MDS classification system would not be appropriate. Its definition of a major change is significantly broader than that previously used or now adopted for ITFS. However, the MDS rolling one-day filing window is structured to accommodate such an expansive definition, and it does not significantly restrict the submission of applications to change existing facilities. The ITFS window filing system, on the other hand, is not compatible with such an expansive classification that would needlessly restrict the filing of many ITFS technical modifications. Thus, we shall classify as major any application involving: (1) any polarization change; (2) an increase in the EIRP in any direction by more than 1.5 dB; (3) an increase of 25 feet or more in the transmitting antenna height; and (4) relocation of a facility's transmitter site by ten miles or more. We shall, however, accept such applications at any time, if their grant would resolve mutually exclusive applications without creating new conflicts. Adoption of the proposal will significantly expedite the processing of ITFS applications. 65. We do not incorporate into the new rule two types of changes that we had earlier listed: (1) the addition of any receive site that would experience interference from any licensee or applicant on file prior to the submission of the application; and (2) any change that would cause interference to any previously proposed application or existing facility. By eliminating the cut-off system, the window filing system will prevent parties from requesting changes that are mutually exclusive with a tendered but not yet cut-off application. Reasonable Assurance of Receive Sites 66. Proposal. The Further Notice requested comment on how best to ensure the accuracy of each applicant's list of receive sites. We seek to deter applicants from listing receive sites that have in fact not agreed to participate in the proposed ITFS system. We therefore proposed requiring a letter of assurance from the applicant, listing each receive site's contact person, title, and telephone number. We also asked if we should decline to consider any proposed receive site that lacked such adequate assurance. 67. Comments. ACS supports the proposal, stating that the applicant's letter should also contain other information. For example, if an applicant is relying on the accreditation of its receive sites for its basic eligibility, the letter should supply supporting accreditation information. According to ACS, the letter could also contain enrollment information for potential tie-breaking purposes. RuralVision proposes that a school district submit one letter for all the schools within its jurisdiction, listing each school individually. However, RuralVision claims that schools may be more hesitant to sign a letter that they fear will lock them into a commitment, thereby causing them to miss the opportunity to receive ITFS programming. Thus, it proposes that a school be allowed to assert simply its interest in, not necessarily its commitment to, participating in the ITFS system. In this regard, it alleges that the Commission's Rules would continue to protect the receive site's right to change its mind as to its participation, regardless of the letter's wording. North American Catholic advocates the same standard, but applied only to businesses, libraries, and other institutions not relevant to eligibility or tie-breaking. WCA opposes altogether the modified standard proposed by RuralVision, focusing instead on receive site interference protection. According to the commenter, the public interest would be disserved if the Commission precluded an applicant's potential service solely to protect a receive site that might not even use ITFS programming. 68. Most interested commenters support a stricter requirement than we proposed. They argue that for adequate deterrence, we should require a verification letter from an authorized official of each receive site listed in an application. Most of these commenters generally envision each letter to contain the information described in the Further Notice: the receive sites' contact people, titles, and telephone numbers. WCA, for example, avers that the letter should confirm that formal educational programming will be viewed at the receive site by students enrolled in for-credit courses offered by a specifically identified accredited institution. For each such institution, WCA adds, the application should provide the accrediting body and date of accreditation. 69. Only two commenters oppose the proposal in any form. HITN claims that the requirement would be superfluous, because nonlocal applicants already have to submit commitment letters on accredited school letterhead, showing the school's commitment to be a receive site. The Educational Parties contend that compiling a single list would impose an undue paperwork burden on applicants. Instead, they argue, the Commission should declare that it considers the listing of receive sites as a representation that those sites have been contacted and have agreed to participate, or, in the alternative, are under the jurisdiction of an authority that can mandate their participation. Under this proposal, petitioners would bear the burden of demonstrating otherwise. The commenter states that many receive sites are work places or public locations (such as libraries or hospitals) whose participation consists only of installing ITFS equipment and letting people watch, instead of formally committing to incorporate ITFS into instructional or educational programs. 70. Discussion. To better ensure the accuracy of receive site lists submitted both by local and nonlocal applicants, we adopt a modified version of the proposal. Because the submission of commitment letters by nonlocal applicants does not encompass all the situations with which we are concerned, we reject HITN's assertion that the proposal is superfluous. Processing efficiency will be enhanced because the additional data would allow for rapid confirmation of a site's participation. However, requiring a separate letter of verification from each receive site would involve the submission of not one letter, but potentially dozens of separate letters. We believe, though, that we can expedite processing to the same degree through the application form itself, rather than by separate attachments. Therefore, on the application form, where we already ask for information about each of the applicant's receive sites, we shall simply add a column asking for a contact person's name, title, and telephone number. The contact person should be the person (or one of the people) responsible for implementation of the ITFS program at that receive site. 71. We also will not adopt the modified standard of assurance suggested by RuralVision. Our goal is to ensure the availability of the receive sites that are associated with the applications being processed. The public interest is not served by the processing of applications in which we have no reasonable assurance that the receive sites have indeed agreed to participate in the ITFS system. Accreditation of Applicants 72. Proposal. While applicants seeking to construct a new ITFS station must indicate their accreditation or that of the schools or other institutions that intend to utilize the proposed ITFS service, we noted in the Further Notice that the extent to which the specified receive sites are being utilized by students from accredited institutions is not called for. Accordingly, we proposed to require applicants to state whether and by whom each listed receive site is accredited. We also asked whether having only one proposed receive site out of many as accredited defeats the fundamental purpose of ITFS: to serve the educational needs of accredited institutions. Thus, we invited commenters to address whether we should require a majority of receive sites to be accredited in order for the application to be grantable, or if we should deny interference protection for any unaccredited receive site. 73. Comments. The proposed changes are generally opposed by the commenters. Many of them argue that receive sites are increasingly being used for distance learning without regard to whether they are accredited. According to these commenters, such distance learning gives more people, including students enrolled in accredited courses, greater access to the educational programming transmitted by the ITFS facilities. CSU Northridge, for example, claims that it utilizes hospitals, fire stations, and military bases as receive sites where students go for distance learning. Also, RuralVision argues that because some states have higher fees than others for private accreditation of schools, mandatory accreditation of receive sites would unfairly deprive many smaller private schools of the opportunity to receive educational programming. 74. According to HITN, the purpose of ITFS is not to serve the educational needs of accredited institutions, as we stated in the Further Notice, but simply to educate. Thus, as long as one of the applicant's receive sites is accredited, the commenter continues, the accreditation of any of the others is irrelevant. The Educational Parties propose that as long as the party offering the programming (not necessarily the licensee) is accredited, offers credit for some of its programming, and enrolls students that are able to take courses at listed receive sites, the accreditation of those receive sites is irrelevant. Even those commenters that do not oppose obtaining more detailed accreditation information urge the Commission not to use such information to affect the substantive rights an applicant or licensee might have. ACS, for example, alleges that the Commission can address its concerns regarding receive site legitimacy through the proposed letters of assurance, discussed above. Finally, WCA advocates the existing standard, i.e., that the only receive sites that should have interference protection are those where formal educational programming is viewed by students enrolled in for-credit courses offered by accredited institutions. 75. Discussion. The record does not demonstrate that serving one accredited receive site among other unaccredited receive sites is incompatible with serving the formal, for-credit educational needs of students enrolled at accredited institutions, and we therefore decline to adopt either proposal. To do otherwise would artificially restrict those enrolled students' accessibility to formal ITFS educational programming, while depriving others of worthwhile programming, such as in-service training and instruction in special skills and safety programs. As most commenters note, while the essential purpose of the ITFS service is to provide formal educational programming to students enrolled in accredited schools, colleges and universities, the Commission has long recognized the value of transmitting "other visual and aural educational, instructional and cultural material to selected receiving locations. . ." 47 C.F.R.  74.931(a)-(b). We find no evidence on the record that persuades us to now significantly alter the existing relationship between the provision of formal, for-credit educational ITFS programming and the offering of other educational, instructional, and cultural material. Indeed, we reaffirm our commitment to our longstanding objective, one that permits ITFS licensees to transmit educational and cultural programs for use in other than a classroom setting or to persons other than students enrolled at accredited institutions. However, we take this opportunity to modify and make clearer our requirements regarding the need for further specification with respect to the accreditation of the parties utilizing the proposed ITFS services. 76. To attain eligibility, an ITFS applicant must, among other things, be accredited in its own right and serve its own students or serve accredited institutional or governmental organizations. It has come to our attention that some applicants accredited in their own right propose service only to receive sites which will not be used by their own students. Such applicants do not satisfy the eligibility requirements. They must, therefore, as Item 3 of Section II in the FCC Form 330 now requires, indicate the name of the "school/institution" it will serve, the accreditation date and the accrediting agency or organization. However, we have found, in processing applications, that the name of the school or institution often does not match with any receive site specified in Section VI of the Form 330. For ease of processing, we shall require, for applicants accredited in their own right and serving their own students, to identify in Section II, Item 3(a), the receive sites in Section VI which fall under their jurisdiction. For other applicants, that is, those which are accredited and not serving their own students and those applicants which are unaccredited and establishing their eligibility by serving accredited institutions, we shall require that they specify in Section II, Item 3(b), the receive sites belonging to or being used by the accredited institution. This additional information will enable the staff and all interested parties to immediately determine the accreditation status of an applicant. Other Proposals 77. Offset. The Further Notice proposed requiring the use of offset when all affected transmitters are capable of handling frequency offset stability requirements. This proposal is supported by most of the commenters. However, we believe that voluntary agreements to utilize frequency offsets better serve the public interest. The use of frequency offsets represents a balancing of the need to prevent co-channel interference with our desire to allow an increase in the number of stations in a geographic area. As such, frequency offsets are not a substitute for the standard of interference protection, a desired-to-undesired signal ratio of 45dB, that our technical rules are designed to ensure. Indeed, the efficacy of frequency offsets, which is not universally acclaimed by the engineering society, is largely determined by the exigencies of the situation at hand, requiring affected applicants and licensees to engage in cooperative efforts to construct and adjust their respective technical operations to successfully avail themselves of this engineering technique, if possible. Under these circumstances, we are not persuaded to require the mandatory specification of frequency offsets. 78. Expedited Consideration of Applications. In the Further Notice, we asked for comments on the Educational Parties and WCA's proposal that we expedite consideration of certain ITFS applications in return for the applicant's agreeing to an accelerated construction schedule. The stated purpose was to rapidly authorize facilities that would most likely become part of an operating wireless cable system. Most commenters are supportive of the proposal, although they disagree on the details of its implementation. Opponents of expedited consideration argue that it would not in fact accelerate the construction of viable MDS systems, because processing the likely high number of requests would delay service to the public. We agree. Rapid authorization of ITFS facilities is essential to providing unique educational programming to greater numbers of people, and to accelerating the ability of MDS systems to compete with wired cable operators. The more rapid processing sought by the commenters will likely be achieved by implementation of the filing window, as enhanced by the proposed electronic filing and processing system and the other modifications adopted in this proceeding. Hence, we do not believe that adoption of the commenters' proposal is warranted. 79. FAA Authorization. As mentioned in the Further Notice, we do not grant or modify a license until the Federal Aviation Administration (FAA) has determined that the proposed transmitter site and receive sites will pose no hazard to air navigation. To prevent needless delay in processing, applications, we proposed to require applicants to inform the Commission of the FAA's determination. The record clearly supports our belief that enactment of this policy would speed processing at minimal cost to applicants. Therefore, to expedite processing, we require applicants to inform the Commission of the FAA's determination on a timely basis. 80. Interference Studies. The Further Notice noted that applicants frequently make technical claims that lack adequate supporting data. To address this problem, we proposed requiring the submission of terrain profiles and a quantitative analysis of any additional signal loss calculated by using the Longley-Rice propagation model, Version 1.2.2, in the point-to- point mode. Most of the commenters that addressed this issue generally supported the proposal. In addition, most advocate various exceptions to the rule, allowing the use of less rigorous models under a variety of circumstances. Two commenters oppose the required use of the Model altogether. 81. Based on the information before us, we shall not adopt the proposal. The record demonstrates that our concern will be met by the submission of any valid profile maps or sufficient data that takes terrain shielding into account and supports the validity of each claim, regardless of whether the study involves the Model. Also, for each instance where terrain shielding is relied upon to protect ITFS facilities, applicants will be required to submit the quantitative amount of signal attenuation, in dB, attributable to terrain shielding. Any study must use generally acceptable engineering practices, and applicants must state the specific model they have used in their analysis. 82. Construction of Facilities. Some commenters express concern that the Commission has extended construction periods for parties with no intention to construct. Hence, they request strict guidelines for granting such extensions. National Micro Vision proposes decreasing the period within which an ITFS licensee must construct its facilities from 18 months to 12 months. The commenter alleges that, if its proposal were adopted, frequency speculators would quickly lose their licenses and their channels would consequently become available during the next window. In both cases, however, our existing rules already address these matters. We have set forth the requirements an educator must meet in order to obtain an extension of time within which to construct: (1) construction is complete and testing of the facilities has begun; (2) substantial progress has been made; or (3) reasons clearly beyond the applicant's control, which applicant has taken all possible steps to resolve, have prevented construction. We have no specific evidence that these rules have not operated sufficiently to prevent abuses by frequency speculators. Therefore, we decline to modify the period of time to construct. CONCLUSION 83. Over the past decade, the Commission has actively endeavored to find new and innovative ways to encourage educational institutions to develop working ITFS systems. At the same time, we have sought to facilitate the rapid development of robust wireless cable systems that can vigorously compete in the rapidly expanding video marketplace. The substantial increase in the number of tendered ITFS applications over the past several years demonstrates that our policies regarding excess capacity leases have effectively served both goals. The window filing system and the other changes we have adopted today represent further steps that will encourage and allow both ITFS and MDS to reach their full potential. ADMINISTRATIVE MATTERS A. Regulatory Flexibility Analysis 84. The Commission's Final Regulatory Flexibility Analysis for this Report and Order is set forth in Appendix A. B. Ordering Clause 85. IT IS ORDERED that this Report and Order IS ADOPTED. 86. IT IS FURTHER ORDERED that, pursuant to authority contained in Sections 4(i) and 303 of the Communications Act of 1934, as amended, 47 C.F.R.  74 IS AMENDED as set forth in Appendix B. The change to the rules adopted in this Report and Order will become effective thirty (30) days from the date of publication in the Federal Register. 87. IT IS FURTHER ORDERED that MM Docket No. 93-24 IS TERMINATED. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Secretary APPENDIX B Rules Part 74 of Title 47 of the Code of Federal Regulations is amended to read as follows: PART 74 -- EXPERIMENTAL, AUXILIARY, AND SPECIAL BROADCAST DISTRIBUTION SERVICES 1. The Authority Citation for Part 74 continues to read as follows: AUTHORITY: Secs. 4, 303, 48 Stat. 1066, as amended, 1082, as amended; 47 U.S.C. 154, 303, unless otherwise noted. Interpret or apply secs. 301, 303, 307, 48 Stat. 1081, 1082, as amended, 1083, as amended; 47 U.S.C. 301, 303, 307. 2. Section 74.902 is amended by revising paragraph (d) to read as follows:  74.902 Frequency assignments * * * (d) A licensee is limited to the assignment of no more than four channels for use in a single area of operation, all of which should be selected from the same Group listed in paragraph (a) of this section. An area of operation is defined as the area 20 miles or less from the ITFS transmitter. * * * 3. Section 74.903 is amended by adding a new paragraph (a)(5), by adding a final sentence to paragraph (e), and by adding a new paragraph (f) to read as follows:  74.903 Interference (a) * * * (5) No receive site more than 35 miles from the transmitter shall be entitled to interference protection. * * * (e) * * * Such protection shall be applied solely with regard to applications filed subsequent to the request for a protected service area. (f) With respect to protected service area proposals, two applications will be regarded as mutually exclusive if they are: (1) submitted during the same filing window; (2) otherwise grantable; and (3) mutually exclusive only because either or both applicants request a protected service area. However, if an applicant in such a situation shows that the resulting interference would occur solely over water, the applications will not be considered to be mutually exclusive. 4. Section 74.910 is amended to read as follows:  74.910 Part 73 application requirements pertaining to ITFS stations. The following rules are applicable to ITFS stations. **** [The following text is deleted] 73.3564 (a), (b) Acceptance of applications. **** [The following text is added] 73.3597(c)(2) Procedures on transfer and assignment applications. 5. Section 74.911 is revised by amending paragraph (a)(1), and by revising paragraph (c) in its entirety, to read as follows:  74.911 Processing of ITFS station applications (a) * * * (1) In the first group are applications for new stations or major changes in the facilities of authorized stations. These applications are subject to the provisions of paragraph (c) of this section. A major change for an ITFS station will be any proposal to add new channels, change from one channel (or channel group) to another, change polarization, increase the EIRP in any direction by more than 1.5dB, increase the transmitting antenna height by 25 feet or more, or relocate a facility's transmitter site by 10 miles or more. However, the Commission may, within 15 days after the acceptance of an application, or 15 days after the acceptance of any other application for modification of facilities, advise the applicant that such application is considered to be one for a major change, and subject to the provisions of paragraph (c) of this section. * * * (c) New and major change applications for ITFS stations will be accepted only on dates specified by the Commission. Filing periods will be designated by the Commission in a Public Notice, to be released not fewer than 60 days before the commencement of the filing period. Qualified parties will have no fewer than 5 business days within which to submit their applications. After termination of the filing period, the Commission shall release a Public Notice with a list of applications filed in the window and provide no fewer than 30 days for the submission of petitions to deny. Uncontested applications that are not mutually exclusive with any other application or licensed facility, and are found to be acceptable, shall be granted. Mutually exclusive applications shall be evaluated pursuant to the comparative selection process set forth in  74.913 of this part, as herein amended. (1) The requirements of this section apply to a wireless cable entity requesting to be licensed on ITFS frequency pursuant to Section 74.990. The application of such a wireless cable entity shall be included in the Public Notice released after the termination of the filing period. 6. Section 74.913 is amended by replacing the first sentence of paragraph (d)(1), and adding a new paragraph (d)(5), to read as follows:  74.913 Selection procedure for mutually exclusive applications * * * (d) * * * (1) Enrollment will be considered as of the last date of the filing window during which the applications were filed, as provided by  74.911(c) of this part. * * * * * * (5) A receive site not receiving interference protection may not be utilized by an applicant for tie-breaking purposes. 7. Section 74.932 is amended by adding a new subsection (e), to read as follows:  74.932 Eligibility and licensing requirements * * * (e) No receive site more than 35 miles from the transmitter site shall be used to establish basic eligibility. 8. Section 74.991 is amended to revise the final two sentences of paragraph (a) to read as follows:  74.991 Wireless cable application procedures (a) * * * A wireless cable application for available instructional television fixed service channels will be subject to  21.914 of this chapter with respect to other wireless cable applicants, and to the ITFS window filing period with respect to instructional television fixed service applications. All lists of accepted applications for ITFS frequencies, regardless of the nature of the applicant, will be published as ITFS public notices.