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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** APPENDIX B SUPPLEMENTAL FINAL REGULATORY FLEXIBILITY ANALYSIS Report and Order As required by the Regulatory Flexibility Act (RFA), a Final Regulatory Flexibility Analysis (FRFA) was incorporated in Appendix B of the Report and Order (R&O) in this proceeding. The Commission's Supplemental Final Regulatory Flexibility Analysis (Supplemental FRFA) in this Report and Order on Reconsideration (Reconsideration) reflects revised or additional information to that contained in the FRFA. This Supplemental FRFA is thus limited to matters raised in response to the R&O and that are granted on reconsideration in the Reconsideration. The Supplemental FRFA conforms to the RFA, as amended by the Contract With America Advancement Act of 1996. I. Need For and Objectives of Action: The actions taken in this Reconsideration are in response to petitions for reconsideration or clarification of the rules and policies adopted in the R&O, in which we amended Parts 21 and 74 of our rules to enhance the ability of Multipoint Distribution Service ("MDS") and Instructional Television Fixed Service ("ITFS") licensees to provide two-way communication services. The petitions have been granted in part and denied in part. The Reconsideration grants the petitions that sought to expand the R&O's streamlined application processing system for MDS two-way applications to all ITFS major modification applications. We also grant those petitions that request clarification of the term "documented complaint," which was used in the R&O in the discussion of interference complaints. We further grant those petitions for reconsideration that sought a waiver of our advance notification and professional installation rules in regard to very low power response stations and other changes to our advance notification requirement. Finally, we grant those petitions seeking certain minor modifications to our engineering rules adopted in the R&O and to certain other minor matters pertaining to ITFS. We believe these final rule amendments will facilitate further two-way transmission and other improvements to the MDS and ITFS services. II. Significant Issues Raised by the Public in Response to the Initial Analysis: No comments were received specifically in response to the FRFA contained in the R&O. However, some commenters did raise arguments concerning the effect that certain of our proposals may have on small entities. As to whether we should apply the streamlined application processing system, which does not treat applications as mutually exclusive, to ITFS major modification applications, Region IV argued that the existence of mutually exclusive ITFS major modification applications may invoke the auction process, which would be unfair to smaller, local educators. III. Description and Number of Small Entities Involved: The RFA generally defines "small entity" as having the same meaning as the terms "small business," "small organization," and "small business concern." In addition, the term "small business" has the same meaning as the term "small business concern" 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) satisfies any additional criteria established by the SBA. MDS: The Commission has defined "small entity" for the auction of MDS as an entity that, together with its affiliates, has average gross annual revenues that are not more than $40 million for the preceding three calendar years. This definition of a small entity in the context of MDS auctions has been approved by the SBA. The Commission completed its MDS auction in March 1996 for authorizations in 493 basic trading areas (BTAs). Of 67 winning bidders, 61 qualified as small entities. MDS is also heavily encumbered with licensees of stations authorized prior to the auction. The SBA has developed a definition of small entities for pay television services, which includes all such companies generating $11 million or less in annual receipts. This definition includes multipoint distribution systems, and thus applies to MDS licensees and wireless cable operators which did not participate in the MDS auction. Information available to us indicates that there are 832 of these licensees and operators that do not generate revenue in excess of $11 million annually. Therefore, for purposes of this FRFA, we find there are approximately 892 small MDS providers as defined by the SBA and the Commission's auction rules, and some of these providers may take advantage of our amended rules to provide two-way MDS. ITFS: There are presently 2032 ITFS licensees. All but 100 of these licenses are held by educational institutions (these 100 fall in the MDS category, above). Educational institutions may be included in the definition of a small entity. ITFS is a non-pay, non-commercial broadcast service that, depending on SBA categorization, has, as small entities, entities generating either $10.5 million or less, or $11.0 million or less, in annual receipts. However, we do not collect, nor are we aware of other collections of, annual revenue data for ITFS licensees. Thus, we find that up to 1932 of these educational institutions are small entities that may take advantage of our amended rules to provide two-way ITFS. IV. Summary of Projected Reporting, Recordkeeping and Other Compliance Requirements: The R&O adopts the following proposals that include reporting, recordkeeping, and compliance requirements: We required that response stations can only be initially activated, or reactivated if relocated, by a signal from a booster or primary station, and that hub licensees have a means to remotely deactivate any subscriber's response station transmitter within their RSA. These provisions are intended to give an added measure of control to system licensees useful for conducting interference tests and other system evaluations, and will result in a positive "interlock" feature that prevents inadvertent activation of a newly installed response transmitter when the response antenna is not properly installed so as to receive signals from the associated main or booster transmitters. We relaxed our notification and professional installation requirements as they pertain to low power response stations. Specifically, neither notice nor professional installation is required for stations operating below 6 dbW EIRP and is only required in other stations operating up to 18 dbW EIRP in certain circumstances. Due to the low power at which these stations operate there is a lessened risk of the kind of harmful RF exposure or of the potential for interference that necessitate the notification and professional installation requirements for stations operating at higher power. We extended our streamlined application processing system adopted in the R&O to major modification applications by ITFS licensees. We will accept applications for ITFS major modifications via a rolling, one- day filing window. Each applicant will have to provide interference protection to all facilities existing or proposed prior to the filing of its application, but its application will take precedence over all subsequently filed applications. Applicants will be required to file their applications with all of their interference analyses, in both hard copy and on disk. Applicants for two-way facilities will be required to certify that they have met all requirements regarding interference protection to existing and prior proposed facilities. The applicant will also be required to certify that it has served all potentially affected parties with copies of its application and with its engineering analysis supporting its interference compliance claim. We adopted a more complete definition of the "documented complaint" that will be the basis for the resolution of complaints of unauthorized interference. V. Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered: The following steps were taken in the R&O to minimize the significant economic impact on small entities: Extending the streamlined application procession system to ITFS major modifications will provide greater flexibility and reduce the filing burdens on ITFS licensees. Defining the requirements of a "documented complaint" provides ITFS and other small entities with greater certainty in complaining against unauthorized interference and serves to more completely protect them from such interference. Relaxing the notification and professional installation requirements in certain circumstances reduces the burden on smaller entities, encourages retail distribution of response stations and still provides protection from harmful interference or harmful exposure to RF emissions. The following significant alternatives were considered in the R&O: We declined to adopt Catholic Television Network's (CTN) and BellSouth's suggestions for an interference dispute resolution procedure. We found that the proposed procedures would delay dispute resolution and cause longer potential service interruptions. We did not adopt National ITFS Foundations proposal that we abandon streamlined processing. To do so, would have resulted in using a slow, burdensome processing system that would have jeopardized the future of the industry and the interests of ITFS licensees. VI. Report to Congress: The Commission will send a copy of the Reconsideration, including this Supplemental FRFA, in a report to be sent to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996. See 5 U.S.C.  801(a)(1)(A). In addition, the Commission will send a copy of the Reconsideration, including the Supplemental FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the Report and Order and FRFA (or summaries thereof) will also be published in the Federal Register. See 5 U.S.C.  604(b).