NEWSReport No. DC 95-150 ACTION IN DOCKET CASE December 15, 1995 FCC ADOPTS GEOGRAPHIC LICENSING AND COMPETITIVE BIDDING RULES FOR THE UPPER 200 CHANNELS OF 800 MHz SPECIALIZED MOBILE RADIO SPECTRUM AND PROPOSES GEOGRAPHIC LICENSING AND COMPETITIVE BIDDING RULES FOR REMAINING 800 MHz SMR SPECTRUM (PR DOCKET NO. 93-144, GN DOCKET NO. 93-252, PP DOCKET NO. 93-253) The Commission has adopted final service and competitive bidding rules for the 10 MHz block of contiguous 800 MHz Specialized Mobile Radio (SMR) spectrum. The attached diagram illustrates the new bandplan for this portion of the 800 MHz SMR allocation. SMR is a flexible wireless service that may be used for dispatch, mobile telephone and data services. In recent years, SMRs have increased system capacity by aggregating channels across broad geographic areas and implementing spectrum-efficient technologies. As a result, the SMR service has come to be viewed as a viable competitor to cellular and personal communications services. The rules adopted by the Commission today will streamline our regulatory scheme and expedite service to the public. The Commission's decision also furthers the congressionally mandated goal of regulatory symmetry between 800 MHz SMR licensees and other competing commercial mobile radio service providers. In addition, the Commission adopted proposals for service and competitive bidding rules for the remaining 800 MHz SMR spectrum, including the General Category channels (Channel Nos. 1-150, corresponding to frequencies 806-809.750/851-854.750 MHz). The Commission's final and proposed rules for the 800 MHz SMR service will expedite service and allow 800 MHz SMR operators to respond quickly to changing consumer demands. By this action, the Commission proposes and adopts several measures specifically aimed at expanding and enhancing the role of small businesses in the 800 MHz SMR service. A summary of the principal decisions and proposals made in this First Report and Order, Eighth Report and Order, and Second Further Notice of Proposed Rule Making are attached hereto as Attachment 2. - more - - 2 - Action by the Commission December 15, 1995, by First Report and Order, Eighth Report and Order, and Second Further Notice of Proposed Rule Making (FCC 95-501). Chairman Hundt, Commissioners Quello, Barrett, Ness, and Chong. Commissioner Barrett issuing a separate statement. News Media contact: Stacey Reuben Mesa at (202) 418-0654. Wireless Telecommunications Bureau contact: D'wana Speight at (202) 418-0620 and Rosalind Allen (202) 418-0600. ATTACHMENT 2 A. First Report and Order: Service Rules for the Upper 10 MHz Block  Designates the upper 10 MHz block of 800 MHz SMR spectrum for wide-area licensing in three spectrum blocks, consisting of a 120-channel block, a 60- channel block, and a 20-channel block, in each EA (as shown in Attachment 1).  Establishes EA licenses that provide licensees with: (1) the right to construct at any available site within the EA, and to add, remove, or relocate site locations within the EA during the license term, on a "self-coordinated" basis; (2) the right to use any available spectrum within the EA licensee's designated spectrum block on a self-coordinated basis, including full discretion over channelization of available spectrum within the block (on condition that emission mask requirements are met, and co-channel interference protection is afforded to incumbent licensees and co- channel EA licensees in neighboring EAs); (3) the right to use any spectrum within the EA block that is recovered by the Commission from an incumbent SMR licensee in the event of termination of the incumbent's license; and (4) the presumption that assignments from incumbents operating in the EA spectrum block to the EA licensee generally are in the public interest.  Adopts a ten-year license term and a five-year construction period for EA licenses from the date the EA license is granted, with EA licensees required to demonstrate (1) coverage of one-third of the population within their EA and use of 50 percent of the channels included in its spectrum block within three years after initial grant of the EA license, and (2) coverage of two-thirds of the EA population by the end of the five-year period. The EA license will be subject to automatic cancellation for failure to meet these interim coverage and channel use requirements.  Discontinues acceptance of applications for extended implementation for the 800 MHz SMR service under Section 90.629 of the Commission's rules; and requires that 800 MHz SMR licensees with extended implementation periods demonstrate that such additional time to construct continues to further the public interest.  Grants operational flexibility to incumbent SMR licensees to add, remove, or relocate site locations within their current 22 dBu contours, on a "self- coordinated" basis if the incumbent is not relocated.  Grants EA licensees the right to relocate incumbents within their spectrum blocks. Requires that within ninety days from the date of license grant, EA licensees provide written notification to all incumbents they intend to relocate.  Creates a two-phase mandatory relocation mechanism under which there is a fixed one-year period for voluntary negotiations between EA licensees and incumbents and a two-year period for mandatory negotiations. Under this mechanism, if an EA licensee and an incumbent licensee fail to reach an agreement by the conclusion of the mandatory negotiation period, then the EA licensee may request involuntary relocation of the incumbent's system provided that it: (1) guarantees payment of all costs of relocating the incumbent to comparable facilities; (2) completes all activities necessary for placing the new facilities into operation, including engineering and frequency coordination, if necessary; and (3) builds and tests the incumbent's new system.  Reallocates the General Category channels, consisting of 150 contiguous 25 KHz channels, to the 800 MHz SMR service.  Partially lifts freeze on acceptance of new applications for the SMR Category and General Category channels to permit potential EA applicants to relocate incumbents out of the upper 10 MHz block of 800 MHz SMR spectrum, provided that: (1) the potential EA applicant and relocating incumbent are unaffiliated; (2) the incumbent relocates without changing its original 22 dBu service contour; (3) both the incumbent and the potential EA applicant certify that they are unaffiliated and that the application is for the sole purpose of relocating an incumbent to other channels in the 800 MHz band (for SMR licensees, this would mean the lower 80 or General Category channels, but for non-SMRs this would mean channels available in their respective service categories); and (4) the application is accepted for filing prior to release of the Public Notice announcing the auction for the upper 10 MHz block and establishing a date for filing of FCC Form 175 ("short-form") applications. B. Eighth Report and Order: Competitive Bidding Rules for the Upper 10 MHz Block  Provides for award of 525 EA licenses in the upper 10 MHz block by a single simultaneous multiple round auction. Both incumbents and new entrants are eligible to bid for all EA licenses, subject only to the CMRS spectrum aggregation limit provided in Section 20.6 of the Commission's rules.  Adopts a "tiered" approach to installment payments for small businesses in the upper 10 MHz block.  Allows partitioning for rural telephone companies. C. Second Further Notice of Proposed Rule Making: Additional Service Rules for the Upper 200 Channels and Service and Competitive Bidding Rules for the Lower 80 and General Category Channels 1. Disaggregation of Spectrum Blocks in the Upper 200 Channels  Tentatively concludes that EA licensees should be permitted to disaggregate their spectrum blocks. We define disaggregation as assigning discrete portions of the spectrum licensed to a geographic licensee. The assignee would receive a separate EA license to operate on the disaggregated channels throughout the EA. 2. Partitioning in the Upper 200 Channels  Tentative concludes that the partitioning option should be extended to SMR licensees generally rather than limited to rural telephone companies. We define partitioning as assigning geographic portions of the EA license on geo- political boundaries. The assignee would receive a separate EA license to operate on the channels throughout the partitioned area. 3. Mandatory Relocation from the Upper 200 channels  Proposes that incumbents who are notified by several EA licensees of an intention to relocate may require that negotiations to relocate the incumbent include all EA licensees who have notified the incumbent.  Tentatively concludes that, for purposes of the mandatory negotiation period, an offer by an EA licensee to replace an incumbent's system with comparable facilities constitutes a good faith offer. Similarly, tentatively concludes that an incumbent that accepts such an offer presumably would be acting in good faith.  Proposes that "comparable facilities" be defined as a relocated incumbent (1) receiving the same number of channels with the same bandwidth; (2) having its entire system relocated, not just those channels desired by a particular EA licensee; and, (3) once relocated, having a 40 dBu service contour that encompasses all of the territory covered by the 40 dBu contour of its original system. 4. Licensing of Other 800 MHz SMR Channels  Tentatively concludes that these 800 MHz SMR channels should be licensed on a geographic basis with EA service areas. Proposes to license the lower 80 channels in five-channel blocks. Proposes to license the General Category channels in channel blocks per geographic licensing area.  Proposes not to limit the number of lower 80 and General Category frequencies that a single applicant can request at one time. Aggregation would be limited only by the 45 MHz CMRS spectrum aggregation limit provided in Section 20.6 of the Commission's rules.  Tentatively concludes that there should be no mandatory relocation plan for these frequencies and that incumbents should be allowed to continue to operate under their existing site-specific authorizations, with geographic area licensees required to provide co-channel interference protection to all constructed and operating systems within their license area. Proposes to provide incumbent licensees operational flexibility within their currently authorized 22 dBu interference contour. 5. Competitive Bidding Rules for Other 800 MHz SMR Channels  Proposes to award geographic area licenses for the lower 80 channels through a simultaneous multiple round auction with 16 five-channel blocks in each EA and regional EA groupings for competitive bidding purposes. Proposes to employ market-by-market stopping rules for these licenses.  Proposes to award EA licenses for the General Category channels through a simultaneous multiple round auction for a 120-channel block, a 20-channel block, and a 10-channel block in each EA. We propose to employ simultaneous stopping rules for these licenses.  Proposes to adopt a "tiered" approach to bidding credits whereby small businesses with gross revenues of not more than $3 million are eligible for a 15 percent bidding credit on geographic area licenses, and those with gross revenues of more than $3 million but not more than $15 million are eligible for a 10 percent bidding credit.  Proposes to adopt a "tiered" approach for installment payments and reduced down payments for small businesses.  Proposes to adopt size restrictions for entities applying for geographic area licenses for remaining SMR channels (including the General Category) by designating them as an "entrepreneurs' block," with eligibility limitations based on gross revenues and total assets.