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Implementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket No. 93 {O-253, Notice of Proposed Rule Making, 8 FCC Rcd 7635, 7662,  165 (1993).f The Rural Radiotelephone Service, including BETRS, is a fixed service regulated under Subpart H  X -of Part 22 of our rules.U?  {OB-ԍ See 47 C.F.R.  22.60022.610.U Because the areas served by BETRS are sparsely populated, they typically are not sought by paging operators. Nonetheless, it is possible for paging and  Xy-BETRS applications to be mutually exclusive. In the Competitive Bidding Second Report and  Xd-Order we determined that, because of the public interest in extending basic telephone service to sparsely populated areas, competitive bidding should not be used to select between BETRS  X8-and Public Mobile applicants.@8| {Oe-ԍ See Competitive Bidding Second Report and Order, 9 FCC Rcd at 2356,  46.  X -x30. In light of the shared use of these channels by paging licensees and BETRS operators, we consider it important to ensure that any changes to our paging rules do not prevent BETRS from providing service to areas that otherwise would lack basic telephone service. However, because new wireless services, such as PCS, are expected to provide service to these remote areas, we seek comment on whether competitive bidding should be used to select among mutually exclusive paging and BETRS applications. We also seek comment on whether to allow geographic partitioning of licensing areas to make spectrum available to BETRS operators in sparsely populated regions. This would be similar to the partitioning system established for rural telephone companies in broadband PCS, which allows rural telephone companies to form bidding consortia or acquire a partitioned license from the";@0*((" broadband PCS licensee through private negotiation before or after the licensing of the  X-geographic area.;A^ {Ob-ԍ See Implementation of Section 309(j) of the Communications Act Competitive Bidding, Fifth Report  {O,-and Order, PP Docket No. 93253, 9 FCC Rcd 5532, 5598,  151 (1994) (Competitive Bidding Fifth Report and  {O-Order).; x` `  X-x31. Shared PCP Channels. We also seek comment on whether and when to use  X-geographic licensing for lower band PCP channels (i.e., those PCP frequencies in the 152/158 MHz, 462 MHz, 465 MHz bands), which currently are licensed on a shared basis. In the  Xx-PCP Exclusivity Order, we concluded that the record did not support converting these  Xc-channels to exclusive licensing.lBc {O -ԍ PCP Exclusivity Order, 8 FCC Rcd at 833132,  3638.l We tentatively conclude that if we were to convert to exclusive licensing of shared paging channels, a geographic licensing approach would be appropriate. On the other hand, in lieu of exclusive licensing, PCIA submitted a petition for rulemaking to restrict additional licensing on shared paging channels once a certain number of  X -contiguous transmitters affiliated with a particular channel (i.e., six transmitters for a local system and 70 transmitters for a regional system) have been constructed and are in  X -operation.CZ  {O -ԍ See Amendment of the Commission's Rules and Regulations Concerning Shared Use of 150 MHz and 460 MHz Paging Frequencies, Petition for Rule Making, filed by The Association for Private Carrier Paging Section of NABER, Jul. 11, 1994 at 10. We therefore incorporate the PCIA petition into this rulemaking proceeding and seek comment on the best way to license these channels.  X-x32. Specifically, we ask for comment on whether to (1) convert lower band shared PCP channels to exclusive use and implement geographic licensing, (2) issue only a certain number of licenses per shared channel and use competitive bidding to choose among mutually  XQ-exclusive applications once the limit is reached, or (3) retain the status quo. We request comment on the costs and benefits of continuing to license some channels on a shared basis versus licensing all channels on an exclusive basis, and how such licensing plans would affect the rights of incumbent licensees. We seek comment on whether a geographic plan is the most practical way in which to begin licensing these channels on an exclusive basis. PCIA also has petitioned the Commission to implement guidelines to prevent simultaneous transmission on a shared channel ("keyup overlap") by licensees who operate in the same  X-service area.:D {O"-ԍ Id. at 13.: We request comment on whether such guidelines should be adopted and, if so, what the guidelines should be. We note that the former Private Radio Bureau denied a  X-similar request previously filed by PCIA.E4  {Oi%-ԍ See Amendment of Section 90.173 of the Commission's Rules and Regulations Concerning Shared Use of Paging Frequencies, 7 FCC Rcd 1591 (1992). As a result of the Private Radio Bureau's decision, licensees were expected to establish mutually agreeable guidelines on a voluntary"m E0*(("  X-basis.7F {Oy-ԍ See id.7 We ask commenters to discuss whether this approach has been successful and to  X-provide examples where the procedure has been unsuccessful, e.g., where licensees have chosen to degrade their service quality rather than reach agreement.  X-x 2. Defining the Service Areas  Xx-x 33. As part of our geographic licensing proposal, we must determine the size of the geographic areas that will be used to define paging service area boundaries. We have used several different geographic definitions in other CMRS services. Cellular service areas are  X3-based on Metropolitan Statistical Areas (MSAs) and Rural Service Areas (RSAs).G3Z yO> -ԍ The U.S. and its possessions are divided into 734 cellular markets: 306 MSAs (including the Gulf of Mexico Statistical Area) and 428 RSAs. We have  X -used Basic Trading Areas (BTAs),H  {O-ԍ Rand McNally organizes the 50 states and the District of Columbia into 47 MTAs and 487 BTAs. See  {OI-Rand McNally, Inc., Commercial Atlas & Marketing Guide, 123rd Edition, pp. 3839 (1992). Major Trading Areas (MTAs),4I  {O-ԍ Id. 4 Regional Areas,J  yOm-ԍ Narrowband PCS regional licenses are awarded for five regional areas (Northeast, South, Midwest,  {O5-Central, and West) that are made up of MTAs. See 47 C.F.R.  24.102(b). and a nationwide geographic area for PCS licensing. Other alternatives exist as well, including the Economic Areas (EAs) developed by the Bureau of Economic Analysis of the U.S.  X -Department of Commerce,K  yO-ԍ The Department of Commerce's Bureau of Economic Analysis has divided the U.S. into 172 EAs for purposes of economic analysis. Each EA consists of one or more economic nodes metropolitan areas or similar areas that serve as centers of economic activity and the surrounding counties that are economically  {O-related to the nodes. See "Final Redefinition of the BEA Economic Areas," 60 Fed. Reg. 13,114, 13,114118  {O-(Mar. 10, 1995). We have proposed to use EAs for the assignment of 60 channels in the 220 MHz band.  See Amendment of Part 90 of the Commission's Rules to Provide for the Use of the 220222 MHz Band by the  {O6-Private Land Mobile Radio Service, Second Memorandum Opinion and Order and Third Notice of Proposed  {O-Rulemaking, PR Docket No. 89552, FCC 95312, 60 Fed. Reg. 46,564, 46,564565,  117118 (1995) (220  {O-MHz Second Memorandum Opinion and Order).  and regions defined by state boundaries. We believe that the geographic definition used should correspond as much as possible to the geographic area that paging licensees seek to serve.  X{-x!34. We tentatively conclude that MTAs form the most appropriate geographic area boundaries for paging systems, because they are economicallydefined regions that appear to best mirror the size and development of existing paging systems. MTAs also offer advantages from an administrative perspective, because they are more efficient for the Commission to license than smaller areas that require issuance of more licenses. At the same time, MTAs offer more opportunities for entry than larger regional areas, while affording paging operators"K0*((" the opportunity to aggregate if they seek to provide regional or nationwide service. We tentatively conclude that if we adopt MTA service areas we would establish three licensing regions in addition to the 47 Rand McNally MTAs to cover United States territories: Guam and the Northern Mariana Islands would be licensed as a single area, Puerto Rico and the U.S. Virgin Islands as a single area, and American Samoa as a single area. We also would license Alaska as a single area separate from the Seattle MTA. This is consistent with our MTA Xv-based service area definitions for broadband PCS and the 900 MHz SMR service.WLv {O-ԍ See 47 C.F.R.  24.102 and 90.7.W 0 x  XH-x"35. We note that Rand McNally is the copyright owner of the MTA/BTA Listings, which list the counties contained in each BTA/MTA, as embodied in Rand McNally's Trading Area System BTA/MTA Diskette and geographically represented in the map contained in  X -Rand McNally's Commercial Atlas & Marketing Guide. Rand McNally has licensed the use of its copyrighted MTA/BTA Listings and maps for certain services such as PCS, 800 MHz and 900 MHz SMR, and Local Multipoint Distribution Services. These blanket licensing agreements authorize the conditional use of Rand McNally's copyrighted material in connection with these particular services, require interested persons using the material to include a legend on reproductions (as specified in the license agreement) indicating Rand  X{-McNally's ownership, and provide for a payment of a license fee to Rand McNally.M{Z yO-ԍ The Rand McNally Commercial Atlas is available for public inspection in the Federal Communications Commission Library, 1919 M St., N.W., Room 639, Washington, D.C. Currently, paging services are not covered by a blanket copyright license agreement. While current and prospective paging providers and other parties interested in using the copyrighted materials may negotiate their own licensing arrangement with Rand McNally, as in other services, we encourage interested parties and Rand McNally to explore the possibility of entering into blanket license agreements similar to those noted above. A paging authorization grantee who does not obtain a copyright license (either through a blanket license agreement or some other arrangement) from Rand McNally for use of the copyrighted material may not rely on grant of a Commission authorization as a defense to any claim of copyright infringement brought by Rand McNally against such grantee.  X- x  X~-x#36. We invite discussion both on the use of MTAs and on other options for defining service areas for all of the various paging services. Specifically, commenters should provide empirical data on the area covered by existing paging systems and how such coverage areas compare to MTAs. Would an alternative geographic definition better correspond to the service area of existing paging systems? Should different size geographic areas be used for 929 MHz and 931 MHz paging, or for lower band paging channels? What effect does the service area definition have on the potential for entry and aggregation? Should we designate any channels for national or regional licensing, such as the nationwide and the five regional areas we designated for licensing in narrowband PCS? x` `  X"-x 3. Treatment of Incumbents ""M0*((!"Ԍ X-ԙx$37. An important issue associated with our geographic licensing proposal is its potential impact on paging systems that have been licensed already on a sitespecific basis.  X-As noted in Section III(A)(1), supra, we tentatively conclude that the public interest would be best served by allowing all incumbent paging licensees either (1) to continue operating under existing authorizations or (2) to trade in their sitespecific licenses for a single systemwide license, demarcated by the aggregate of the service contours around each of the incumbent's contiguous sites operating on the same channel. We also tentatively conclude that there is no feasible or equitable means of requiring incumbents to relocate to alternative channels, because there are no alternative channels to accommodate incumbents on this basis. Under our proposal, therefore, incumbent licensees would be allowed to continue to operate under their existing sitespecific authorizations or a single systemwide license, and geographic licensees would be required to provide protection to all cochannel systems that are constructed and operating within their service areas. No incumbent licensee would be allowed  X -to expand beyond its existing interfering contourN   yOP-ԍ An interfering contour refers to the "locus of points surrounding a transmitter where the predicted median field strength of the signal from that transmitter is the maximum field strength that is not considered to cause interference at the service contour [area in which a transmitter provides reliable service to mobile stations] of another transmitter." 47 C.F.R.  22.99. and into the geographic licensee's territory, however, without the consent of the geographic licensee (unless, of course, the incumbent in  X -question is itself the geographic licensee for the relevant channel).O  {O -ԍ Specific interference protection criteria are discussed in Section III(A)(5), infra. This proposal is similar to the rules we adopted for the benefit of incumbent licensees in the 900 MHz SMR service,  X{-where we have established a geographic licensing scheme.P({B {On-ԍ See Amendment of Parts 2 and 90 of the Commission's Rules to Provide for the Use of 200 Channels  {O8-Outside the Designated Filing Areas in the 896901 MHz and the 935940 MHz Bands, FCC No. 95159, Second  {O-Report and Order and Second Further Notice of Proposed Rule Making, GN Docket No. 93252, 10 FCC Rcd  {O-6884, 6901,  47 (900 MHz Second Report and Order). We seek comment on this proposal.  X6-x%38. We also note that some noncommercial services (e.g., internal paging systems)  X!-operate on PCP channels. Consistent with our decision in the PCP Exclusivity Order, we  X -propose to treat incumbent commercial and noncommercial services similarly.Q 2  {O-ԍ PCP Exclusivity Order, 8 FCC Rcd at 8325,  20 (eliminating the division of 929930 MHz into separate pools for commercial and noncommercial service). Thus, commercial and noncommercial incumbents would be permitted to continue to operate under  X-their existing authorizations, and they would receive the same level of cochannel protection.R"  yO$-ԍ Cochannel protection refers to certain technical assignment criteria designed to ensure that signals sent from a transmitter to a receiver within the transmitter's service area (area reliably served by the transmitter, 47  {O%-C.F.R.  22.99) are protected from interference caused by the operation of independent cochannel stations. See 47 C.F.R.  22.537, 22.567. We seek comment on this proposal. We also ask commenters to discuss whether there are"vR0*((" any circumstances under which commercial and noncommercial incumbents should be treated differently.  X-x&39. We believe that it is in the public interest to give incumbents the flexibility to modify or augment their systems as long as they do not encroach on adjacent operations of a geographic licensee. We note that under current rules, CCP licensees may make modifications to their stations or add internal transmitters without obtaining prior Commission approval, as long as such modifications do not affect their service contours or interference  XH-contours.SH {O -ԍ Part 22 Rewrite Order, 9 FCC Rcd at 651819,  2228 (adopting 47 C.F.R.  22.163 and 47 C.F.R.  22.165). We propose that incumbent licensees, both CCP and PCP licensees, should be allowed to make such modifications. Under this proposal, we would use the interference contour as the outermost boundaries of modification, in lieu of using both the interference and service contours. This would allow PCP incumbent licensees the same flexibility currently afforded to the CCP licensees, and would also enable incumbents to fill in "dead spots" in coverage or to reconfigure their systems to increase capacity within their service area and better serve the public. In addition, we emphasize that incumbents would be free to negotiate voluntary arrangements with geographic licensees to allow incumbent expansion within a geographic area. We seek comment on whether this proposal strikes a proper balance between the competing interests of geographic and incumbent licensees. For example, we recognize that there may be circumstances in which an incumbent should be permitted to  XK-make minor modifications to its service area to preserve system viability (e.g., moving a transmitter to another location because a newlyconstructed building interferes with signal transmission). We ask commenters to address whether there are any circumstances under which incumbents should be permitted to expand into unserved areas without the geographic licensee's consent.  X-x 4. Coverage Requirements  X-  X-x'40. We seek comment on whether geographic paging licensees should be subject to minimum coverage requirements as a condition of licensing. We have imposed such requirements on licensees in other CMRS services to ensure that spectrum is used effectively and service is implemented promptly. For example, in narrowband PCS, we require MTA licensees to construct base stations that serve 37.5 percent of the population or to provide coverage to a composite area of 75,000 square kilometers or 25 percent of the geographic area  X -within five years of the initial license grant.T " yO"-ԍ Amendment of the Commission's Rules to Establish New Narrowband Personal Communications  {O#-Services, Memorandum Opinion and Order, 9 FCC Rcd 1309, 1314,  32 (1994) (Narrowband PCS Order). In the 900 MHz SMR service, licensees must provide coverage to onethird of the population of their service area within three years and to twothirds of the population within five years or, in the alternative, demonstrate that they are"|T0*(("  X-providing substantial service to the MTA five years from license grant.+U~ {Oy-ԍ See, e.g., Amendment of Parts 2 and 90 of the Commission's Rules to Provide for the Use of 200 Channels Outside the Designated Filing Areas in the 896901 MHz and the 935940 MHz Bands Allotted to the Specialized Mobile Radio Pool, PR Docket No. 89553, and Implementation of Sections 3(n) and 322 of the  {O-Communications Act, Third Order on Reconsideration, GN Docket No. 93252, FCC 95429, 60 Fed. Reg.  {O-55484,  2 (rel. Oct. 20, 1995) (900 MHz Third Order on Reconsideration), in which the following examples of "substantial service" are given: a licensee who provides a "niche service" to businesses, or focuses on serving populations outside of areas currently served by incumbent licensees. + For the 800 MHz SMR service, we adopted the rule that EAbased licensees provide coverage to onethird of the population within their EA within three years of initial license grant and to twothirds of  X-the population by the end of their fiveyear construction period.V {Oz -ԍ See Amendment of Part 90 of the Commission's Rules to Facilitate Future Development of SMR Systems  {OD -in the 800 MHz Frequency Band, First Report and Order, PR Docket No. 93144, Eighth Report and Order, GN  {O -Docket No. 93252, and Second Further Notice of Proposed Rule Making, PR Docket No. 93253, FCC 95501,  {O -__FCC Rcd__,  104110 (rel. Dec. 15, 1995) (800 MHz Second Further Notice of Proposed Rulemaking). See  {O-also Amendment of Part 90 of the Commission's Rules to Facilitate Future Development of SMR Systems in the  {Ol-800 MHz Frequency Band, Further Notice of Proposed Rule Making, PR Docket No. 93144, 10 FCC Rcd 7970,  {O6-7997,  48 (1994) (800 MHz Further Notice).  X-x(41. We tentatively conclude that geographic licensees should be required to provide coverage to onethird of the population within their geographic areas within three years of initial license grant and to twothirds of the population by the end of five years, or in the alternative, provide substantial service to the geographic license area at five years. A geographic licensee must, three years from license grant, either submit a showing that the onethird population coverage standard has been met, or provide written notification that it has elected to show substantial service to the geographic license area five years from license  X -grant.yW^ \  {O-ԍ See Amendment of Parts 2 and 90 of the Commission's Rules to Provide for the Use of 200 Channels  {O-Outside the Designated Filing Areas in the 896901 MHz and the 935940 MHz Bands, Second Erratum, GN  {O-Docket No. 93252, __FCC Rcd ___ (rel. Nov. 18, 1995) (900 MHz Second Erratum).y Furthermore, as part of the election to provide a substantial service showing, each geographic licensee must, three years from license grant, indicate how it expects to  X -demonstrate substantial service at five years.cX  {O-ԍ See 900 MHz Second Erratum, 60 Fed. Reg. ___.c We believe that these coverage requirements serve the public interest by ensuring the speedy delivery of paging service to the public and satisfy the requirement of Section 309(j) of the Act that the spectrum is used efficiently and  Xy-deployed rapidly.FYy yO>#-ԍ 47 U.S.C.  309(j).F We also tentatively conclude that populationbased coverage requirements are more appropriate than geographicbased coverage requirements, because strictly geographicbased requirements may lead to coverage in sparsely populated areas where service is not needed or is economically unjustified. Furthermore, we believe that the threeyear and fiveyear requirements provide geographic licensees with sufficient time to comply with our proposed coverage requirements, because of the mature nature of the industry and the large"Y0*((" number of existing systems. We propose the "substantial service" alternative because, like 900 MHz SMR and smaller PCS blocks, geographic licensees may choose to target niche markets or provide specialized services. We request comment on the costs and benefits of imposing coverage requirements on geographic licensees, the specific coverage criteria proposed, and any alternative criteria. We also seek comment on whether accelerating build X-out requirements (e.g., requiring provision of coverage to onethird of the population by the end of one year) is appropriate given the maturity of the services and extensive existing construction. x  X3-x)42. Additionally, we tentatively conclude that our transition to geographic licensing obviates the need for extensions of our construction requirements for paging systems in the 929930 MHz spectrum. When we first contemplated granting channel exclusivity in that spectrum, we realized that construction of larger systems might extend beyond the eight  X -month construction period.ZZ  yOP-ԍ Amendment of the Commission's Rules to Provide Channel Exclusivity to Qualified Private Paging  {O-Systems at 929930 MHz, PR Docket No. 9335, Notice of Proposed Rule Making, 8 FCC Rcd 2227, 223132,  3031 (1993). Consequently, we adopted a "slow growth" option allowing systems comprised of more than 30 transmitters up to three years to construct based on a showing of reasonable need for the extension, a detailed construction timetable and cost estimate, and placement in escrow of a sum equal to the construction cost estimate or  X{-procurement of a performance bond in that amount.t[{ {O-ԍ PCP Exclusivity Order, 8 FCC Rcd at 832627,  2324 (1993). t We tentatively conclude that under our geographic licensing scheme, "slow growth" extensions are unnecessary and that such extensions could hinder geographic licensing because an incumbent licensee obtaining a construction extension could effectively occupy an entire market area. We therefore propose  X-to dismiss all "slow growth" applications pending at the time an order pursuant to this Notice is adopted without prejudice to refile under our new geographic licensing scheme. We believe such dismissals will effectuate our geographic licensing scheme. We seek comment on our tentative conclusion concerning the dismissal of pending "slowgrowth" extensions and the underlying bases for our tentative conclusions. x  X-x*43. We also tentatively conclude that, regardless of the extent to which their respective service areas are occupied by cochannel incumbents, geographic licensees should be responsible for meeting their coverage requirements. We believe this rule will deter applicants who have a limited ability to provide coverage in a geographic area from seeking  X;-the geographic license for anticompetitive reasons, e.g., to block expansion by an incumbent who already provides substantial coverage. We also believe that our proposal of a "substantial service" option will provide an incentive for incumbents already providing substantial coverage to seek geographic licenses in the areas they serve. Thus, we propose to require the  X-geographic licensee to meet its coverage requirement directly (e.g., by utilizing vacant"|[0*(("  X-spectrum or acquiring such spectrum through buyouts of incumbent licensees).\~ {Oy-ԍ See, e.g., Amendment of Parts 2 and 90 of the Commission's Rules to Provide for the Use of 200 Channels Outside the Designated Filing Areas in the 896901 MHz and the 935940 MHz Bands Allotted to the Specialized Mobile Radio Pool, PR Docket No. 89553, Implementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket No. 93253, Implementation of Sections 3(n) and 322 of the  {O-Communications Act, GN Docket No. 93252, Second Order on Reconsideration and Seventh Report and Order,  {Oe-60 Fed. Reg. 48,913 at  4 (900 MHz Second Order on Reconsideration) (rel. Sept. 14, 1995). See also 47 C.F.R.  90.665. We ask commenters to address the advantages and disadvantages of these proposals and any alternatives. Finally, we seek comment on whether licensees that trade in sitespecific authorizations for a systemwide authorization or partitioned license, as discussed in Section III(A)(3), should be subject to the same construction requirements within their service areas. x  Xv-x+44. If we adopt coverage requirements, we also must consider what action we must take if the geographic licensee fails to comply. We tentatively conclude that a geographic licensee's failure to meet the coverage requirements should result in automatic cancellation of the geographic license. This sanction for failure to comply with construction requirements is consistent with the sanctions provided in our rules for broadband PCS, 900 MHz SMR, and  X -Multipoint Distribution Services (MDS).]  {O-ԍ See 47 C.F.R.  24.203, 90.665, and 21.930. See also Amendment of the Commission's Rules to  {O-Establish New Personal Communications Service, GEN Docket No. 90314, Second Report and Order, 8 FCC  {OV-Rcd 7700, 7754,  134 (1993) (PCS Second Report and Order); 900 MHz Second Report and Order, 10 FCC Rcd at 6899,  43; Amendment of Parts 21 and 74 of the Commission's Rules with Regard to Filing Procedures  {O-in the Multipoint Distribution Service and in the Instructional Television Fixed Service, Report and Order, FCC  {O-No. 95230, 10 FCC Rcd 9589, 9613,  43 (1995) (MDS Report and Order). In addition, automatic cancellation of the license would allow the spectrum to be made available expeditiously to other qualified applicants. We also tentatively conclude that, if the licensee loses its geographic license for failure to comply with coverage requirements, we would reinstate any authorizations that (1) the licensee held prior to the auction and (2) are constructed and operating. We request comment on our proposal and any alternatives. If the geographic licensee loses its license for failure to comply with coverage requirements, should the licensee be prohibited from bidding on the geographic license for the same territory in the future? Is there a sanction more appropriate than automatic cancellation? x` `  X-x 5. CoChannel Interference Protection  X-x,45.ؠUnder our proposal to convert to geographic licensing for paging services, geographic licensees will be required to provide interference protection both to incumbent cochannel facilities and to cochannel licensees in neighboring service areas. Accordingly, we seek comment on the appropriate interference protection criteria for both situations. In addition, we propose to adopt a consistent methodology for determining interference in all paging services. We seek comment on these proposals and invite commenters to provide other options for addressing these issues."e ]0*(("Ԍx  X-x` ` a. Protection of Incumbent Systems  X-x-46. Under our existing rules, paging systems are protected from cochannel interference by a variety of rules that govern transmitter height and power, distance between stations, the licensee's protected service area, and/or the field strength of the licensee's service and interfering signals. In general, we propose to retain these criteria to define the interference protection rights of incumbent licensees under any geographic licensing scheme that may be adopted. There are some variations, however, in the specific methodologies used to measure interference in the different paging services. Therefore, we seek comment on whether to adopt a standard methodology for measuring interference in all paging bands or to retain existing variations in our rules.  X -x.47. Lower Band CCP Channels. Under our existing rules, lower band CCP licensees receive protection based on whether the interfering contours of adjacent cochannel stations overlap with the service contour of the licensee's station. These contours are not based on measured field strength, but on a standard model that establishes the distance from the transmitting antenna site to the contour, based on effective antenna height and transmitter  Xb-power. In the Part 22 Rewrite Order, we adopted a series of mathematical formulas to determine service and interfering contours in each CCP frequency range, other than 931  X6-MHz.n^6 {O-ԍ See 47 C.F.R.  22.537(d), 22.567(d), (f), and (g)(2). n These formulas are used with an "eightradial contour method," which determines the distance from the transmitting antenna site to the service and interfering contours along the  X-eight cardinal radials from the transmitter site.Y_Z {O-ԍ Part 22 Rewrite Order, 9 FCC Rcd at 6564.Y The resulting contours very closely  X-approximate those that would result from use of the propagation curves in the Carey Report` yO-ԍ Roger B. Carey, Technical Factors Affecting the Assignment of Facilities in the Domestic Public Land  {OV-Mobile Radio Service, Report No. R6406 (June 24, 1964) (Carey Report). which were used for several decades to make assignments in the Public Mobile Services. We  X-determined in the Part 22 Rewrite Order, however, that using mathematical formulas would  X-be easier and less susceptible to dispute.\aF {O-ԍ Part 22 Rewrite Order, 9 FCC Rcd at 656364.\  X-x/48. If we convert lower band CCP channels to geographic licensing, we propose to retain the mathematical formulas and contour overlap provisions we recently adopted in the  XT-Part 22 Rewrite Order to define the interference protection rights of incumbents. Thus, the allowable placement of facilities by a geographic licensee in relation to those of an incumbent would be defined by the incumbent's service contour and the geographic licensee's interference contour, as calculated under the current rules. We seek comment on this"a0*((y" proposal. Specifically, we ask commentators to provide empirical evidence showing whether the current Part 22 formulas would provide satisfactory cochannel protection to incumbents. x  X-x049. 931 MHz Channels. Our existing rules for 931 MHz paging resemble our lower band CCP rules, in that protection is determined by the overlap of the licensee's service contour and the interfering contours of cochannel stations. The 931MHz rules differ from the lower band CCP rules, however, in that service and interfering contours are circles based on a table of standard radii, rather than the eightradial contour method and mathematical  XH-formulas used in the lower band CCP rules.bH {O -ԍ See 47 C.F.R. 22.537(e), (f). See also Tables E1 and E2, 47C.F.R.22.537.  X -x150. We seek comment on whether we should continue to base protection of incumbents on our existing tables if geographic licensing is adopted for 931 MHz channels. While use of a standard radius is simpler from an administrative perspective than using the lower band mathematical model, it is less flexible and far less precise in predicting actual interference, because it does not account for variations in the terrain and effective radiated power in different directions from the transmitter. We tentatively conclude that the eightradial contour method may be preferable to a fixed radius method, because it will more reasonably predict potential interference to incumbents and provide geographic licensees with greater flexibility in placing their facilities. We invite comment on this tentative conclusion. Would use of the eightradial contour method for 931 MHz cochannel interference protection enable independent incumbent and geographic licensees to coexist more easily? Are there better means of providing cochannel protection?  X-x251.ؠ Assuming that we adopt the eightradial contour method for 931 MHz channels, we seek comment on the appropriate mathematical formula for determining service and interference contours. We propose to use the following mathematical formula, which is similar to the formulas used in the lower band CCP services:  X|-&d=k'hxĠ'pyă The proposed formula is derived from the form of equations commonly used for propagation  X7-path loss.c"7Z yOB -ԍ Median path loss is generally given as L=KXlogh+Ylogd, where L is loss expressed in  {O !-dB, and K, X and Y are constants derived empirically or theoretically. See, e.g., "Coverage Prediction for Mobile Radio Systems Operating in the 800/900 MHz Frequency Range", Section IV., p. 20., IEEE Transactions on Vehicular Technology, February 1988. In this formula, "d" is the radial distance to the contour, "h" is the antenna center of radiation height above average terrain along the cardinal radial, "p" is the radial effective  X -radiated power.d D yO%-ԍ We propose that the values used for the radial parameters (antenna height above average terrain and  yO&-effective radiated power) be representative of the 45$ sector centered on the cardinal radial. The remaining factor "k" and exponents "x" and "y" are numerical figures" d0*(([" that can be determined experimentally by matching the resulting curve to that of an established propagation model for a given signal field strength.  X-x352. To determine the appropriate formula for the 931 MHz service and interference  X-contour calculations, we propose to assume a median field strength of 47dBV/m as the basis for the service contour. Statistically, this equates to a reasonably strong field strength (in the  Xv-32 to 40dBV/m range) at more than 90% of locations in a suburban environment. For  X_-similar reasons, we propose to assume a median field strength of 21dBV/m as the basis for  XH-the interfering contour.reH yO -ԍ This provides a carrier to interference (C/I) ratio of 26 dB on average.r We propose to derive corresponding distances from these field  X1-strengths by using the Okumura 900MHz propagation curves as our propagation model.f1X {O: -ԍ See Y. Okumura et al., Field strength and its variability in VHF and UHF landmobile radio service, 16 Rev. Elec. Commun. Lab., 825-873 (1968). The 900MHz propagation curves are shown as Fig.41(c) on page 865. The curves are based on a mobile receive antenna height of 1.5meters above ground, which seems  {O-appropriate for paging receivers. We also propose to use Okumura's correction for suburban areas (id., Figure20 at 845), and the correction for rolling, hilly terrain with a terrain roughness factor of  {O&-h 50meters. Id. at Figure28(b) at 851. We believe that this is an appropriate model for general use throughout the U.S. and is  X -suitable for devising the proposed mathematical formulas.g  yO-ԍ The current stepwise 931MHz service and interfering radii (22.537, TablesE-1 and E-2, 47C.F.R.22.537) were based on the Okumura 900MHz curves. The specific formulash .  yO-ԍ In this formula, "km" represents kilometers, "m" represents meters, and "w" represents watts. would be: x  X ix` ` Service:hhdkm = 0.108 ' hm0.61  ' pw0.32  X@ix ` ` Interfering:hhdkm = 3.033 ' hm0.38 ' pw0.16  V)-  X-Appendices B and C provide examples of service and interfering contours for a variety of antenna heights and transmitter powers. x  X-x453. We seek comment on the formulas proposed above and their suitability for calculating service and interfering contours for 931 MHz paging systems. Applying the formula, we note that a paging station operating at 1000 watts effective radiated power with an antenna height of 305 meters (1000 feet) above average terrain would have a service contour of approximately 32.2 kilometers (20 miles), which is consistent with the service radius afforded under our current rules. Nonetheless, we invite commenters to indicate whether any variations in the formula are needed. We also seek comment on the field strength proposed for service and interfering contours. We encourage commenters to propose alternative formulas, provided that such alternatives have a sound technical basis and are not unduly complex. " h0*((\"Ԍ X-x554. 929 MHz Exclusive Channels. Interference protection for exclusive 929MHz licensees currently is provided by rules requiring standard minimum geographic separations  X-between stations, which are based on station height and power.i yOK-ԍ Under our current rules, 929 MHz licensees are required to comply with cochannel separation standards set forth in a table in 47 C.F.R.  90.495(b)(2) (Minimum Separation Between CoChannel Stations). These separations are based on the same heightpower table that is used for 931 MHz paging. Unlike our CCP rules, however, our PCP rules do not formally define a protected service contour or interference contour for each station.  X_-x655. If we adopt geographic licensing for exclusive 929 MHz channels, we believe that 929 MHz incumbents should be entitled to interference protection on the same basis as 931 MHz incumbents, because the technical characteristics of 929 and 931 MHz systems are virtually identical. Thus, we propose to adopt service and interference contour criteria for 929 MHz paging using the same methodology proposed above for 931 MHz. We seek comment on this proposal. Is there any reason to use a different method to define the interference protection rights of 929 MHz licensees, as opposed to 931 MHz licensees? Are there any alternative methods that we should consider?  X-x756. NonExclusive PCP Channels. By definition, paging systems on nonexclusive PCP channels do not receive protection from interference under our rules. Instead, our rules prescribe operating requirements such as monitoring prior to transmitting to determine if the channel already is in use, minimizing the length of messages, and yielding to others  X4-transmitting communications related to the immediate safety of life.Qj4  {O-ԍ See, e.g., 47 C.F.R. 90.403.Q If we convert any of these channels to exclusive licensing, however, the issue arises as to whether incumbent licensees should receive interference protection. If so, should the interference protection be different or the same as for other exclusive channels?  X-x` ` b. Maximum Power and HeightPower Limits  X-x ` `    X-x857. Maximum Power Limits. Under our existing rules, the maximum effective radiated power (ERP) limit for 931MHz, nationwide 929MHz, and narrowband PCS  Xe-facilities is 3500Watts ERP.ke {O -ԍ See 47 C.F.R.  22.535(a), 47 C.F.R.  90.494(g) and 47 C.F.R. 24.132(c). In the Part 22 Rewrite proceeding, we concluded that a maximum power limit of 3500Watts ERP is appropriate for paging facilities in the 931MHz band, because it allows for the use of high power facilities where needed, yet provides  X"-sufficient protection from intermodulation interference and receiver desensitization.gl$"D {O%-ԍ See Part 22 Rewrite Order, 9 FCC Rcd at 6513,  7282. Intermodulation interference occurs wherever  {O%-a number of base stations, transmitters, and receivers, operate in close proximity to each other, i.e., on the same or immediately adjacent roof tops, mountain peaks, etc. Under such conditions, strong signals from adjacent transmitters may interact with each other in the receiver of a neighboring base station to produce interfering"s'k0*(('"  {O-signals on other frequencies, including that of the mobile station being received. See Frequency Allocations,  {OZ-Docket No. 13847, Further Notice of Proposed Rule Making, 10 FCC.2d 885, 88687,  4 (1967). Receiver  {O$-desensitization occurs where a strong signal causes a receiver to not detect other low level signals. See, e.g.,  {O-Amendment of Part 87 of the Commission's Rules, PR Docket No. 93199, Notice of Proposed Rule Making, 8 FCC Rcd 4763, 4763 n.4 (1993).g For""l0*((z" example, high power facilities might be needed in areas where shadowing or building penetration is a problem, for high speed data transmission, or where the use of several smaller facilities would not be economical. Under our rules, the maximum power for 929MHz non X-nationwide facilities currently is 1000Watts.Mm {O -ԍ See 47 C.F.R.  90.494(f).M We tentatively conclude that the maximum ERP limit for these facilities should be raised to a maximum of 3500Watts in order to bring the rules governing nonnationwide 929 MHz facilities into conformity with those already in effect for 931 MHz, nationwide 929 MHz, and narrowband PCS facilities. We believe that this change would provide 929 MHz licensees with the benefits of higher power operation without unduly increasing the risk of interference.  X -x958.ؠWe propose to retain the current maximum ERP limits for the various lower band  X -paging channels.On  yO-ԍ See 47 C.F.R  22.535, 22.565.O We increased these limits in CC Docket No. 88135 after careful  X -consideration, and we believe that the limits adopted in that proceeding remain appropriate.o  {O?-ԍ See Height and Power Increases in the Public Mobile Service, CC Docket No. 88135, Report and Order,  {O -4 FCC Rcd 5303 (1989), modified, Order on Reconsideration, 5 FCC Rcd 4604 (1990). We seek comment on this proposal and any alternatives.  X -x:59. HeightPower Limits. Heightpower limits serve to limit the service and interfering range of a facility to a constant distance. Thus, if a facility is modified to raise the antenna height, the power must be lowered so that the service and interfering ranges remain essentially unchanged. Heightpower limits are useful when cochannel assignments are made on a sitebysite basis using a single fixed minimum geographical separation distance requirement, because they allow licensees some flexibility to employ various combinations of antenna height and transmitting power while maintaining the validity of the fixed separation  X-method.p  yO -ԍ Both 929MHz and 931 MHz paging facilities originally were licensed on a single minimum geographical separation distance of 70 miles between transmitters. x  X-x;60. Heightpower limits are also useful for limiting the area that can be covered by a single facility. Therefore, they are more effective for services where independent systems consist of a single transmitter than for services with widearea systems. In the 931 MHz band, we recently eliminated the heightpower limit, because most systems in that band are multitransmitter widearea systems covering large areas. We concluded that it is more cost"|V p0*((" effective for licensees to cover a large area with a high power facility than with numerous  X-smaller facilities.fq {Ob-ԍ See Part 22 Rewrite Order, 9 FCC Rcd at 6528,  74.f We propose to eliminate the heightpower limit for 929 MHz licensees, because many of the paging systems in the 929MHz band are multitransmitter widearea systems that are similar to systems in the 931 MHz band. We note, however, that some licensees with facilities located near international borders still may be subject to certain heightpower limits as a result of international agreements.  X_-x<61. With respect to the lower band channels most of which continue to be occupied by smaller systems we propose to maintain the current heightpower limits, so that we can  X1-continue to limit the range of each facility and promote spectrum efficiency.Tr1Z {O< -ԍ See, e.g., 47 C.F.R.  22.535(c).T We invite  X -comment on any and all aspects of our proposals concerning heightpower limits.   X -x` ` c. Adjacent Geographic Licensees x  X -x=62. As part of our geographic licensing proposal, we must determine the interference protection obligations of geographic licensees with respect to neighboring geographic licensees with shared borders. We tentatively conclude that geographic licensees should provide interference protection either by (1) reducing the signal level at their service area boundary  Xb-(e.g., by positioning directional antennas in such a way that the contour does not encroach on a geographic licensee's adjacent territory), or (2) negotiating some other mutually acceptable  X6-agreement with all potentially affected geographic licensees in adjacent areas.9sZ6 yO-ԍ Similar interference protection was given to PCS operators with respect to interference from other PCS  {O-operators. See 47 C.F.R.  24.134, 24.237. See also PCS Second Report and Order, 8 FCC Rcd at 77737775,  17577.9 Our goal is to provide licensees with as much flexibility as possible, without compromising our ability to ensure interference protection from geographic licensees in adjacent areas. We seek comment on our proposal and any alternatives. x` `  X-x 6. Licensing in Mexican and Canadian Border Areas  X-x>63. In the Mexican and Canadian border areas, paging channel availability may be restricted by treaty and limitations on ERP and antenna height may be placed on additional  Xg-channels.t"g yO&#-ԍ For instance, we have an agencytoagency understanding with the Canadian Department of  {O#-Communications for sharing arrangements in portions of the 929932 MHz band. See 47 C.F.R  1.955. We have a December 19, 1995 letter of understanding with Mexico related to the temporary use of 929932 MHz frequencies for paging services within 120 kilometers (75 miles) of the common border. As a result, geographic licensees may not be able to operate on paging channels in border areas, or there may be significant restrictions on ERP or antenna height, which may make these geographic areas less attractive. In other services where we have converted to"9 t0*((" geographic licensing, we have decided not to distinguish between border areas and nonborder  X-areas for licensing purposes.u {Ob-ԍ See, e.g., 900 MHz Second Report and Order, 10 FCC Rcd at 6908,  6263. Our rationale has been that applicants will assess the impact of the border requirements when valuing those geographic licenses for competitive bidding  X-purposes.3vZ {O-ԍ Id.3 x  X-x?64. We tentatively conclude that, if we convert paging services to geographic licensing, all geographic areas should be licensed on a uniform basis without distinguishing border from nonborder areas, even if some spectrum is unusable. We believe that applicants for paging services, like those in other services, will be able to assess the impact of more limited spectrum availability when valuing those geographic areas for competitive bidding purposes. Moreover, altering the size of particular geographic areas because they are located near an international border is likely to be administratively unworkable. Thus, we propose that geographic licensees be entitled to use any available borderarea channels, subject to the relevant rules regarding international assignment and coordination of such channels. We seek comment on this proposal.  X-x 7. Eligibility  Xb-x@65. In proposing to adopt competitive bidding rules for all exclusive paging channels, we seek comment on whether there should be any restrictions on eligibility for geographic licenses. For example, we recognize that incumbent licensees may be concerned about competing applications where they already have substantial operations and there is little unoccupied spectrum in which a new entrant could operate. On the other hand, restricting eligibility in favor of incumbents simply may allow incumbents to obtain the benefits of geographic licensing for less than full market value and preclude new entrants, because incumbents would be insulated from the possibility of competing applications.  X-xA66. We tentatively conclude that both incumbents and new entrants should be allowed to apply for geographic licenses without restrictions on eligibility. We believe that a key purpose of competitive bidding is to let the marketplace determine the level of demand for licenses. Use of competitive bidding also seeks to ensure that licenses are granted to those  X7-who value the spectrum most highly.w7 {O!-ԍ See Competitive Bidding Second Report and Order, 9 FCC Rcd at 234950,  5. Where multiple applicants are interested in serving a certain geographic area, we believe it is inappropriate to limit eligibility to certain applicants while preventing others from bidding on the license. We also are skeptical of claims that incumbents will be required to pay more than market value for geographic licenses if eligibility is unrestricted. To the extent that an incumbent already provides service to a substantial portion of a geographic area, there is little incentive for other applicants to bid for that geographic area. Indeed, it is possible that in many instances, incumbents will not be"! ~w0*(( " subject to competing applications, because most likely no other applicant will be interested in applying for the geographic area given the extent of incumbent presence. Similarly, in cases where there are multiple cochannel incumbents in a geographic area, we tentatively conclude that incumbents can form consortia or joint ventures and apply collectively for the geographic  X-license, or enter into partitioning agreements.(xZ yO-ԍ We observe that the consortium, as a licensee, would be subject to the same conditions as all other  {O-licensees, including issues of control. See rural telephone company partitioning discussed infra at Section III(B)(6)(f).( In proposing use of auctions without restricting eligibility, we believe the rules should allow parties a reasonable opportunity to  Xv-explore these options prior to the filing deadline.yv {O -ԍ In forming joint ventures or consortia, the parties may not collude. See proposed rules prohibiting  {O -collusion, discussed infra at Section III(B)(4)(d). Of course, formation of consortia, joint ventures or other bidding arrangements remains subject to Commission review under the public interest standard, and we would expect that entities entering into such arrangements  X1-comply with all relevant Commission rules, policies and all other applicable antitrust laws.Kz 1F yO(-ԍ Applicants will also be subject to existing antitrust laws. For example, we would expect that this would prohibit discussions with respect to bid prices between any applicants who have applied for licenses in the same  {O-geographic market. See United States v. Champion Int'l Corp., 557 F.2d 1270 (9th Cir.), 434 U.S. 938 (1977);  {O-see also United States v. Addyston Pipe & Steel Co., 85 F. 271, 293 (6th Cir.1898), modified and aff'd 175 U.S. 211 (1899). In addition, agreements between two or more actual or potential competitors to submit collusive,  {O-non-competitive or rigged bids are per se violations of Section One of the Sherman Antitrust Act, 15 U.S.C.  1  {O-et seq. See, e.g., United States v. MMR Corporation (LA), 907 F.2d 489 (5th Cir. 1990); United States v. W.F.  {O-Brinkley & Sons Construction Co., 783 F.2d 1157 (4th Cir. 1986); United States v. Finis P. Renest, Inc., 509  {Or-F.2d 1256 (7th Cir. 1975), cert. denied, 423 U.S. 874. Similarly, agreements between actual or potential  {O<-competitors to divide or allocate territories horizontally in order to minimize competition are per se violations of  {O-the Sherman Act (United States v. Topco, 405 U.S. 596 (1972); Affiliated Capital Corporation v. City of  {O-Houston, 700 F.2d 226, 236), and such agreements are anticompetitive regardless of whether the parties split a market in which they both do business or whether they merely reserve one market for one party and another for  {Ob-the other party. See Palmer v. BRG of Georgia, Inc., 498 U.S. 46, 49 (1990).K x  X -xB67. We seek comment on these proposals. In particular, commenters are requested to discuss the relationship between the coverage already provided by an incumbent in a geographic area and the perceived value of the geographic license to that incumbent and other potential applicants. What is the likelihood that incumbents who have achieved substantial coverage in their geographic areas will be subject to competing applications for geographic licenses? Should we allow incumbents to form joint ventures or consortia to apply for geographic licenses? Would not imposing restrictions on eligibility affect the potential for applicants to engage in anticompetitive conduct against competitors? Do the antitrust laws provide adequate safeguards against the risk of such anticompetitive conduct?  X-x 8. Channel Aggregation Limit  X-"!z0*(("Ԍ X-xC68. We propose to assign geographic licenses on a channelbychannel basis, which raises the issue of whether we also should impose a limit on the number of paging channels that a single licensee may hold in each geographic area. Under our sitespecific paging  X-licensing rules, aggregation per se is not restricted, but applicants generally are limited to  X-applying for one channel at a time in a given area to prevent channel warehousing.{ {O-ԍ See Part 22 Rewrite Order, 9 FCC Rcd at 6523,  48. This rule was implemented to eliminate an inconsistency between the additional channel policies for oneway paging channels and twoway paging channels. On the other hand, in narrowband PCS, which resembles paging in some respects, we have imposed an outright limit on applicants acquiring more than three channel pairs in any geographic area, which limits narrowband licensees to between 150300 kHz of spectrum, depending on the  XJ-bandwidth of the particular channels involved.k|J" {O -ԍ See Narrowband PCS Order, 9 FCC Rcd at 1314,  34.k  X -xD69. We seek comment on whether an aggregation limit is appropriate for paging frequencies, and if so, what that limit should be. To date, significant aggregation of paging channels has not occurred. In most markets, channels are allocated among numerous providers, and it is rare for a single licensee to hold more than three or four channels in a market. The risk of channel warehousing also appears limited; where licenses are subject to competitive bidding, licensees are unlikely to bid for more channels than they actually need or can use. Finally, it is questionable whether allowing licensees to aggregate paging spectrum  X{-freely poses any risk of competitive harm. In the CMRS Third Report and Order, we imposed a 45 MHz cap on aggregation of cellular, broadband PCS, and SMR spectrum, because of the potential that aggregation in excess of this amount would limit entry by other  X8-competitors.p}8 {O-ԍ See CMRS Third Report and Order, 9 FCC Rcd at 810910,  263.p In that decision, however, we excluded narrowband services (including paging) from the cap altogether, concluding that there is little risk that an entity could use  X -narrowband allocations to exert undue market power over CMRS as a whole.F~ F {O-ԍ Id. at 8111,  267.F We further recognized that the services provided by narrowband radio service licensees can, for the most  X-part, be provided by the licensees subject to the cap.3 {Oe-ԍ  Id.3 In sum, it may be that even if one entity aggregated all the paging channels, new entrants from broadband and narrowband PCS, cellular service, and other CMRS spectrum, would ensure that paging service continued to be provided at market rates and other competitive conditions.  Xi-xE70. While these factors may weigh against limiting paging channel aggregation, other  XR-factors may support it. In the CMRS Third Report and Order, our decision to exclude narrowband services from the 45 MHz cap was based, in part, on the presence of intraservice caps such as the narrowband PCS aggregation limit. An aggregation limit nonetheless may be necessary to protect competition in the paging market, even if paging has only a negligible""j 0*((" effect on competition in the CMRS market as a whole. Finally, we question whether it is appropriate not to limit aggregation by paging licensees when their narrowband PCS competitors are subject to such limits. In light of these factors, we seek comment on whether we should impose limits on aggregation of paging channels similar to the limits now imposed on narrowband PCS. We also note that some narrowband PCS licensees may attempt to aggregate system capacity across services. Thus, we seek comment on whether it would be  Xv-more appropriate to cap the combined aggregation of paging and narrowband PCS spectrum rather than imposing a limit on paging only. If we impose a cap, we also must consider how it would affect incumbent paging operators who already are licensed on multiple channels in a geographic area. We tentatively conclude that, if a cap is imposed, it should not prevent an incumbent from obtaining geographic licenses for any channel on which it is licensed in the geographic area. We believe that this approach strikes an appropriate balance between the goal of encouraging competition while at the same time preserving the rights of incumbents.  X -We seek comment on this tentative conclusion. h  X - B. Competitive Bidding Issues  Xy- x1. Auctionability of Paging Services  XK-xF71. In the Competitive Bidding Second Report and Order, we concluded that mutually exclusive applications in the Part 22 Public Mobile Services, including common carrier  X-paging, generally would be subject to competitive bidding.| {O-ԍ See Competitive Bidding Second Report and Order, 9 FCC Rcd at 2359,  61.| We reiterated this conclusion in  X-the Part 22 Rewrite Order, in which we determined that competitive bidding procedures  X-should be used to resolve mutually exclusive applications in the 931 MHz paging service.cZ {O-ԍ Part 22 Rewrite Order, 9 FCC Rcd at 6536,  105.c To date, however, we have not adopted specific competitive bidding rules for Part 22 paging  X-applications. As discussed in greater detail below, therefore, we seek comment in this Notice on what competitive bidding methods should be used to award licenses in conjunction with our proposal to adopt geographic licensing for Part 22 paging services.  Xk-xG72. We also seek comment on whether to adopt equivalent competitive bidding  XT-procedures for competing applications for exclusive PCP channels. In the Competitive  X?-Bidding Second Report and Order, we indicated our intention to use competitive bidding to select from among competing applications if two or more PCP systems file mutually exclusive initial applications because our rules explicitly contemplate the provision of service to eligible  X-subscribers for compensation. {O$-ԍ See Competitive Bidding Second Report and Order, 9 FCC Rcd at 2359,  63. In the Competitive Bidding Second Report and Order, we noted that although mutually exclusive 900 MHz PCP applications should be subject to competitive bidding, exclusivity in the 900 MHz PCP service was a very recent phenomenon and existing firstcome, firstserved licensing procedures, frequency coordination, and private"!#~0*(( " settlement among conflicting applicants may obviate the need for the agency to resolve  X-conflicting PCP applications in most, and perhaps all, cases.E {Ob-ԍ Id. at 2360,  67.E Therefore, we deferred consideration of specific auction rules until we reasonably could be certain they were  X-needed.MZ {O-ԍ Id. at 2359,  6367. M  X-xH73. We anticipate that a large number of applicants will file mutually exclusive geographic applications for PCP services. In addition, while coordination may reduce the likelihood of mutual exclusivity, it may result in the exclusion of qualified applicants, and does not necessarily award spectrum to the applicant that values it the most. Competitive bidding, by contrast, ensures that qualified applicants who place the highest value on the available spectrum, and who will provide valuable services rapidly to the public, will prevail in the selection process. Thus, we tentatively conclude that all potential conflicts among PCP applicants will not be eliminated by our proposed geographic licensing scheme and that competitive bidding procedures will be necessary to select among mutually exclusive applicants for exclusive PCP channels. We seek comment on this tentative conclusion.  X-xI74.ؠ Our tentative conclusion is a logical outgrowth from our decision in the CMRS  X{-Third Report and Order that PCP and CCP are "substantially similar" services that should be  Xf-subject to comparable regulation.hf {O-ԍ CMRS Third Report and Order, 9 FCC Rcd at 7988,  67.h Assuming that we establish geographic licensing for both services, we believe it would be incongruous to require competing CCP applicants to bid for licenses, while allowing "comparable" PCP applicants to use firstcome, firstserved procedures that give one applicant priority over another based upon the speed of filing. Indeed, we are concerned that using disparate licensing procedures could create a competitive imbalance between the two services, which would run counter to our regulatory symmetry goals. Therefore, we propose to adopt comparable competitive bidding procedures for both exclusive PCP channels and CCP channels. We seek comment on our proposal.   X- x2. Competitive Bidding Design  Xi-x` ` a. Bidding Methodology  XR-  X;-xJ75.ؠ In the Competitive Bidding Second Report and Order, we established criteria to  X&-select which auction design method to use for particular auctionable services.&~ {OU$-ԍ See Competitive Bidding Second Report and Order, 9 FCC Rcd at 23602375,  68156. Generally, we concluded that awarding licenses to those parties who value them most highly will foster Congress's policy objectives of stimulating economic growth and enhancing access to telecommunications services. We further noted that, because a bidder's ability to introduce"$0*((;" valuable new services and to deploy them quickly, intensively, and efficiently increases the value of a license to that bidder, an auction design that awards licenses to those bidders with the highest willingness to pay tends to promote the development and rapid deployment of new  X-services and the efficient and intensive use of the spectrum.O {O4-ԍ  Id. at 236061,  7075.O In determining how best to promote this objective, we identified several auction design elements which, in combination, produce many different auction types. The two most important design elements are: (1) the number of auction rounds (single or multiple), and (2) the order in which licenses are  X_-auctioned (sequentially or simultaneously).O_Z {Oj -ԍ See id. at 2361,  79.O These two elements can be combined to create four basic auction designs: sequential single round, simultaneous single round, sequential  X1-multiple round, and simultaneous multiple round.1 {O -ԍ Id. at 23622365,  8097. The four auction designs are described in detail in the Competitive Bidding  {O-Second Report and Order.  X -xK76.ؠ We seek comment on which of the above auction methodologies should be used  X -for the auction of paging licenses. In the Competitive Bidding Second Report and Order, we stated that simultaneous multiple round auctions would be the preferred method where  X -licenses have strong value interdependencies.O H {O-ԍ Id. at 2367,  109111. O Accordingly, we have used this method in  X -both broadband and narrowband PCS services,(  {O4-ԍ  See Competitive Bidding Fifth Report and Order, 9 FCC Rcd at 554244,  2732 (broadband PCS);  {O-Implementation of Section 309(j) of the Communications Act Competitive Bidding, Third Report and Order,  {O-PP Docket No. 93253, 9 FCC Rcd 2941, 295154,  1721 (1994) (Competitive Bidding Third Report and  {O-Order) (narrowband PCS). the 900 MHz SMR service,  {O$-ԍ  See 900 MHz Second Order on Reconsideration, 60 Fed. Reg. 48,913 at  153. and the  X-Multipoint Distribution Service (MDS).y\  {O-ԍ See MDS Report and Order, 10 FCC Rcd at 964041,  106108 .y We seek comment on whether the same value interdependencies apply to paging licenses. For example, paging appears to be similar to PCS, SMR and MDS in that applicants are likely to seek to aggregate geographic licenses to create regional or nationwide networks. On the other hand, there may be less substitutability among paging licenses for different channels, both because channel aggregation is not required to provide paging service and because channel selection may be largely dictated by which channels are currently licensed to incumbents in each market.  X-xL77. Even if we conclude that paging licenses are sufficiently interdependent to justify use of the simultaneous multiple round auction design in theory, there are practical considerations that could affect our decision. For example, the number of potential licenses that are subject to auction is likely to be quite large: MTAbased licensing of the 37 non"%0*((o"ԫnationwide 931 MHz channels alone would involve over 1,800 licenses, and this number will  X-increase substantially if we license other paging channels on an MTA basis as well.Z {Ob-ԍ As discussed in Section III(A)(2), supra, we have tentatively concluded that MTAs form the most appropriate marketbased service area for paging systems, and we seek comment on this and other options for defining marketarea boundaries. We seek comment on whether simultaneous multiple round auctions would be too burdensome to implement from an administrative perspective, given the large number of paging licenses. We also seek comment on whether any procedures we might implement, such as license  X-grouping,P {O( -ԍ See  7779, infra.P could ease this administrative burden. We ask commenters to address whether simultaneous multiple round auctions or another competitive bidding methodology such as oral outcry is most appropriate for the paging services.  X1-x` ` b. License Grouping(#`  X -x  X -xM78. Depending upon the auction methodology chosen, there are several alternatives for  X -grouping of paging licenses. For example, the Commission determined in the Competitive  X -Bidding Second Report and Order that in a multiple round auction, highly interdependent licenses should be grouped together and put up for bid at the same time, because such grouping provides bidders with the most information about the prices of complementary and  X-substitutable licenses during the course of an auction.| {O-ԍ Competitive Bidding Second Report and Order, 9 FCC Rcd at 2366,  106107. We also determined that the greater the degree of interdependence among the licenses, the greater the benefit of auctioning a  Xf-group of licenses together in a simultaneous multiple round auction.Wf {O%-ԍ Id. at 23632364,  8994.W  X8-xN79. We seek comment on how paging licenses should be grouped for competitive bidding purposes and on possible license groupings. As noted above, we are unsure how much interdependence exists between paging licenses. We therefore seek comment on the benefits of possible license groupings. For example, it may be feasible to conduct one simultaneous multiple round auction for all channels, which would enable bidders to pursue many bidding strategies. However, it may be desirable to group licenses by channel, and auction the licenses on a channelbychannel basis by geographic area. In a simultaneous multiple round auction, we could auction all of the markets for a single channel  X-simultaneously. Another alternative would be to begin with the largest (i.e., most populated) markets first and then move to smaller markets. If the markets with the largest populations which also are likely to be the most highly valued are auctioned first, losing bidders would have the opportunity to bid on licenses for smaller areas and aggregate them into the desired coverage area. Another license grouping alternative would be to group licenses by region, because many of the paging service providers tend to pursue regional service plans. Grouping"&0*((y" by region may best reflect one set of interdependencies within the markets. We seek comment on these proposals for license grouping and any other grouping alternatives. x` `  X-x` ` c. Bidding Procedures  X-xO80. In the Competitive Bidding Second Report and Order, the Commission established general procedures for simultaneous multiple round auctions, including bid increments, duration of bidding rounds, stopping rules, and activity rules. We further noted that these procedures could be modified on a servicespecific basis. We seek comment on the bidding procedures that should be used for licensing of paging services.  X -xP81. Bid Increments. If we use a multiple round auction, we propose to establish minimum bid increments for bidding in each round of the auction, based on the same  X -considerations in our prior orders.  {OP-ԍ See, e.g., Competitive Bidding Third Report and Order, 9 FCC Rcd at 2953,  3032. The bid increment is the amount or percentage by which the bid must be raised above the previous round's high bid in order to be accepted as a valid  X -bid in the current bidding round.E Z {O-ԍ Id. at 2953,  30.E The application of a minimum bid increment speeds the progress of the auction and, along with activity and stopping rules, helps to ensure that the  X{-auction comes to closure within a reasonable period of time.3{ {O-ԍ Id.3 Establishing an appropriate minimum bid increment is especially important in a simultaneous auction with a simultaneous closing rule, because all markets remain open until there is no bidding on any license and a delay in closing one market will delay the closing of all markets. We seek comment on the appropriate minimum bid increments for paging services.  X-xQ82. For example, if we use simultaneous multiple round auctions for paging services, we believe that such auctions should start with relatively large bid increments, and reduce the  X-increments as the number of active bidders declines.~ {O-ԍ Id. at  3233; see also 220 MHz Second Memorandum Opinion and Order, 60 Fed. Reg. at 46,564,  117118. We also propose to adopt a minimum  X-bid increment of five percent of the high bid in the previous round or $0.01 per activity  X-unit,DX yO"-ԍ The term "activity unit" is defined as the number of megahertz of spectrum block multiplied by the population of the relevant service area, or "pops." The activity units/MHzpops measurement is used to describe the activity rules, stage transition rules, bid increment rules, etc. D whichever is greater. We believe that applying a $0.01 per activity unit minimum bid increment in addition to the percentage calculation is appropriate to provide flexibility for a wide range of different license values, and to ensure timely closure of the auction. In addition, we propose to retain the discretion to vary the minimum bid increments for individual licenses or groups of licenses at any time before or during the course of the"9' 0*((" auction, based on the number of bidders, bidding activity, and the aggregate high bid amounts. We also ask commenters to address whether the minimum bid increments would vary depending upon the particular competitive bidding methodology employed for the paging services, and, if so, how the minimum bid increments would vary. We also propose to retain the discretion to keep an auction open if there is a round in which no bids or proactive waivers are submitted. We seek comment on these proposals.  X_-xR83. Stopping Rules for Multiple Round Auctions. In a multiple round auction, a stopping rule must be established for determining when the auction is over: markets may  X1-close individually, simultaneously, or a hybrid approach may be used.1 {O -ԍ See Competitive Bidding Third Report and Order, 9 FCC Rcd at 2954,  33. See also 220 MHz Second  {Ot -Memorandum Opinion and Order, 60 Fed. Reg. 46,564 at  119. If we decide to use a multiple round auction, we believe that a marketbymarket stopping rule would be most appropriate for the paging services. We also believe that a marketbymarket stopping rule would be the least complex approach from an administrative perspective. Under a marketbymarket approach, bidding closes on each license after one round passes in which no new  X -acceptable bids are submitted for that particular license. $ {O-ԍ See Competitive Bidding Second Report and Order, 9 FCC Rcd at 237071,  132. However, if we do not use a simultaneous multipleround auction, we seek comment on whether a stopping rule is needed and if so, which one should be used. With a simultaneous stopping rule, bidding remains open on all licenses until there is no bidding on any license. Under a hybrid approach, a simultaneous stopping rule, coupled with an activity rule designed to bring the markets to close within a reasonable period of time, could be used to close auctions with high value licenses. For lower value licenses, the simpler marketbymarket closing could be  X-employed. {O-ԍ We also have sought comment on a hybrid stopping rule approach for 220 MHz EA licenses. See 220  {ON-MHz Second Memorandum Opinion and Order, 60 Fed. Reg. 46,564 at 120. We propose to announce by Public Notice, before each auction, the stopping rule that we will use. Regardless of which stopping rule we ultimately apply, we further propose to retain the discretion to declare when the auction will end, or whether it be after one additional round or some other specified number of rounds. This proposal will ensure ultimate Commission control over the duration of the auction. We seek comment on this proposal.  X|-xS84. Activity Rules. If we employ a marketbymarket stopping rule, we tentatively conclude that it is unnecessary to implement an activity rule. An activity rule is less important when markets close one by one, because failure to participate in any given round may result in a lost opportunity to bid at all, if that round turns out to be the last. We seek comment on this tentative conclusion. We also ask commenters to address what activity rules, if any, would be appropriate if an alternative stopping rule was adopted. For example, in order to ensure that simultaneous auctions with simultaneous stopping rules close within a reasonable period, it may be necessary to impose an activity rule to prevent bidders from"(0*((" waiting until the end of the auction before participating. Because simultaneous stopping rules generally keep all markets open as long as anyone wishes to bid, they also create incentives for bidders to hold back until prices approach equilibrium, before making a bid and risking  X-payment of an additional payment for withdrawing. {O4-ԍ See Competitive Bidding Third Report and Order, 9 FCC Rcd. at 2955,  36. See also 900 MHz Second  {O-Report and Order, 10 FCC Rcd at 6915,  83. This could lead to very long auctions. x  X-xT85. Thus, in the Competitive Bidding Second Report and Order, we adopted the MilgromWilson activity rule as our preferred activity rule where a simultaneous stopping rule  Xa-is used.a$ {O6 -ԍ Competitive Bidding Second Report and Order, 9 FCC Rcd at 237273,  144145. We have subsequently adopted or proposed the MilgromWilson rule in each of  XJ-our simultaneous multiple round auctions.J {O -ԍ See, e.g., 900 MHz Second Report and Order, 10 FCC Rcd at 6917,  88. See also MDS Report and  {O{-Order, 10 FCC Rcd at 9643,  115. The MilgromWilson approach encourages bidders to participate in early rounds by limiting their maximum participation to some  X -multiple of their minimum participation level.  {O-ԍ See, e.g., Competitive Bidding Third Report and Order, 9 FCC Rcd at 2955,  37. Bidders are required to declare their  X -maximum eligibility in terms of activity units  {OZ-ԍ See, e.g., 900 MHz Second Report and Order, 10 FCC Rcd at 6917,  87. See also 220 MHz Second  {O$-Memorandum Opinion and Order, 60 Fed. Reg. 46,564 at  123. and make the required upfront payment.z  {O-ԍ See Section III(B)(5)(c), infra, for discussion of upfront payments.z That is, bidders will be limited to bidding on licenses encompassing no more than the number of activity units covered by their upfront payment. Licenses on which a bidder is the high bidder from the previous round, as well as licenses on which a new valid bid is placed, count toward this activity units limit. Under this approach, bidders have the flexibility to shift their bids among any licenses for which they have applied so long as the total activity units encompassed by those licenses does not exceed the number for which they made an upfront payment. Moreover, bidders are able to secure the freedom to participate at whatever level they deem appropriate by making a sufficient upfront payment. To preserve their maximum eligibility, however, bidders are required to maintain some minimum activity level during each round of the auction.  X-xU86. Under the MilgromWilson approach, the minimum activity level, measured as a fraction of the selfdeclared maximum eligibility, will increase during the course of the  X-auction. For this purpose, Milgrom and Wilson divide the auction into three stages.   yO%-ԍ The auction would move from stage one to stage two when, after three rounds of bidding, the high bid has changed on five percent or fewer of the licenses (measured in terms of activity units) being auctioned. Stage three would begin when the high bid has changed on two percent or fewer licenses (measured in terms of activity units) over three rounds. We retain the discretion to modify this method and announce such"^'0*(('"  {O-modification by Public Notice. See, e.g., Competitive Bidding Third Report and Order, 9 FCC Rcd at 2956,  38 n.16. ")"0*((" During the first stage of the auction, a bidder is required to be active on licenses encompassing at least 60 percent of the activity units for which it is eligible. The penalty for  X-falling below that activity level is a reduction in eligibility.E" {O-ԍ Id. at 2956,  38.E During the first stage, if activity is below the required minimum level, eligibility in the next round will be calculated  X-by multiplying the current round activity by fivethirds (5/3).kZ {O -ԍ These activity rules are similar to those of our C Block auction. See Public Notice, "Auction Notice and Filing Requirements for 493 BTA Licenses Located on the C Block for Personal Communication Services in the 2 GHz Band, Scheduled for August 2nd, 1995," Report No. AUC9505, Auction No. 5, p. 38, May 11, 1995.k In the second stage, a bidder who wishes to maintain its current eligibility is required to be active on 80 percent of the activity units for which it is eligible in the current round. During the second stage, if activity is below the required minimum level, eligibility in the next round will be calculated by  XH-multiplying the current round activity by fivefourths (5/4).3H {O-ԍ Id.3 In the third stage, a bidder who wishes to maintain its current eligibility is required to be active on licenses encompassing 95 percent of the activity units for which it is eligible in the current round. In the final stage, if activity in the current round is below the required activity level, eligibility in the next round  X -will be calculated by multiplying the current round activity by twentynineteenths (20/19).3 h  {O-ԍ Id.3 We tentatively conclude that if we decide to use an activity rule, we will use the MilgromWilson approach, and we seek comment on this tentative conclusion.  X-xV87. Duration of Bidding Rounds. We propose to retain the discretion to vary the  Xy-duration of bidding rounds or the interval at which bids are accepted (e.g., run two or more rounds per day rather than one), in order to move the auction toward closure more quickly. If such discretion is employed we would most likely shorten the duration and/or intervals between bidding rounds where there are relatively few licenses to be auctioned, where the value of the licenses is relatively low, or in early rounds to speed the auction process. Where license values are expected to be high or where large numbers of licenses are being auctioned, we propose to increase the duration and/or intervals between bidding rounds. We would announce by Public Notice, and may vary by announcement during an auction, the duration and intervals between bidding rounds. We seek comment on these proposals. x"* 0*((R"Ԍ X-x` ` d. AntiCollusion Rules  X-xW88.ؠ In the Competitive Bidding Second Report and Order, we adopted a special rule  X-designed to prevent collusive conduct in the context of competitive bidding.M {O6-ԍ See 47 C.F.R.  1.2105(c).M We observed that such a rule would serve the objectives of the 1993 Budget Act by preventing parties, especially the largest firms, from agreeing in advance to bidding strategies that divide the  Xx-market according to their strategic interests and disadvantage other bidders.}xZ {O -ԍ  See Competitive Bidding Second Report and Order, 9 FCC Rcd at 2386,  221.} The competitiveness of the auction process and of the postauction market structure will be enhanced by certain additional safeguards designed to reinforce existing laws and facilitate detection of collusive conduct.  X -xX89.ؠ We tentatively conclude that our anticollusion rules should be applied to the auctions for paging services. Specifically, we propose to apply Section 1.2105(c) of our rules, which prohibits bidders that have applied for any of the same geographic license areas from communicating with one another regarding the substance of their bids or bidding strategies after shortform applications (FCC Form 175) have been filed. Additionally, applicants may not discuss the substance of their bids or bidding strategies with bidders, other than those identified on the shortform application, that are bidding in the same geographic license  Xd-areas.Md {O-ԍ See 47 C.F.R.  1.2105(c).M The postfiling deadline prohibition on discussions extends to providing indirect  XM-information that affects bids or bidding strategy.3M~ {O|-ԍ Id.3 However, communications among bidders  X6-concerning matters unrelated to the license auction would be permitted.@6 {O-ԍ See Implementation of Section 309(j) of the Communications Act Competitive Bidding, Fourth  {O-Memorandum Opinion and Order, PP Docket No. 93253, 9 FCC Rcd 6858, 6869,  59 (1994) (Competitive  {O-Bidding Fourth Memorandum Opinion and Order). See also Letter from R. Allen, Acting Chief, Commercial Radio Division, to R.M. Senkowski (Dec. 1, 1994) (discussions that indirectly provide information that affects bidding strategy are also precluded by anticollusion rules).@ It is not our intent to discourage potential applicants from entering into consortia, joint ventures, or similar joint bidding arrangements for geographic licenses prior to the shortform filing deadline. Rather, we intend to provide parties with time to negotiate such arrangements before the application process begins. To avoid compromising the auction process, however, such negotiations must  X-end at the point that short forms are filed.$  yO:$-ԍ Amendment of Parts 21 and 74 of the Commission's Rules With Regard to Filing Procedures in the Multipoint Distribution Service and in the Instructional Television Fixed Service and Implementation of Section  {O%-309(j) of the Communications Act Competitive Bidding, Order, MM Docket No. 94131, PP Docket No. 93 {O&-253 (released Nov. 3, 1995) (Competitive Bidding Nov. 3, 1995 Order). Additionally, we propose to amend Section"+0*(("  X-22.129 to prohibit settlements between applicants after the shortform deadline has passed.F {Oy-ԍ  47 C.F.R.  22.129.F As in other services, we also propose to require winning bidders to submit with their longform application a detailed explanation of the terms, conditions and parties involved in any auctionrelated consortium, joint venture, partnership, or other agreement entered into prior to the close of bidding.  Xv-xY90. If an applicant has the high bid for a license, the applicant must include with its longform application a detailed explanation of the terms and conditions and parties involved  XH-in a bidding agreement into which it has entered.CHZ yOS -ԍ 47 C.F.R. 1.2105(c).C For purposes of the Commission's anticollusion rules, the term applicant includes the entity submitting the application, owners of  X -five percent or more of the entity, and all officers and directors of that entity.3  {O-ԍ  Id.3 If an agreement, arrangement or understanding of any kind relating to the licenses being auctioned had been entered into with a particular party before the shortform filing date, that party must be disclosed, even if the agreement, arrangement or understanding has not been reduced to  X -writing.f | {O-ԍ See Competitive Bidding Nov. 3, 1995 Order, at  5.f If the applicant and a particular party did not enter into any type of agreement, arrangement or understanding prior to the shortform filing date, but were only engaged in negotiations or preliminary discussions, the applicant should not have included the name of  Xy-such party on its application and may not amend its application to include such party.3y {O8-ԍ Id.3  XK-xZ91. There are three exceptions to the rule prohibiting discussions with other applicants after the filing of the shortform application. First, an applicant may modify its shortform application to reflect formation of bidding agreements or changes in ownership at any time before or during the auction, as long as the changes do not result in change of control of the applicant, and the parties forming the bidding agreement have not applied for licenses in any  X-of the same geographic license areas.@ yO) -ԍ 47 C.F.R.  22.115.@ Applicants may also make agreements to bid jointly for licenses, so long as the applicants have not applied for licenses in any of the same  X-geographic license areas.30  {O#-ԍ  Id.3 Finally, a holder of a noncontrolling attributable interest in an applicant may acquire an ownership interest in, or enter into a bidding agreement with other applicants in the same geographic license area, if (1) the owner of the attributable interest certifies that it has not communicated and will not communicate bids or bidding strategies of more than one of the applicants in which it holds an attributable interest or with which it has"N, 0*((0" a bidding agreement; and (2) the arrangements do not result in any change of control of an  X-applicant.3 {Ob-ԍ Id.3  X-x[92. Where the applicant does not meet one of these exceptions, it may not discuss matters relating to bidding, bids, or bidding strategies with other applicants. Even when an applicant has withdrawn its application after the shortform filing deadline, the applicant may not enter into a bidding agreement with another applicant bidding on the geographic license  X_-areas from which the first applicant withdrew._Z {Oj -ԍ Competitive Bidding Fourth Memorandum Opinion and Order, 9 FCC Rcd at 6867,  51. In addition, once the shortform application has been filed, a party with an attributable interest in one bidder may not acquire a controlling  X1-interest in another bidder bidding for licenses in any of the same geographic license areas.1 {O -ԍ Id. at 6869 n.134. We note that this change would constitute a major amendment to the shortform  {O-application. See discussion in  102 infra.  X -x\93. Even where the applicant discloses parties with whom it has reached an agreement on the shortform application, thereby permitting discussions with those parties, the applicant  X -is nevertheless subject to existing antitrust laws. H {O-ԍ Id. at 6869 n.134. See also, Sherman Act, 5 U.S.C.  1, et seq. Under the antitrust laws, the parties to an agreement may not discuss bid prices if they have applied for licenses in the same geographic license areas. In addition, agreements between actual or potential competitors to submit  X-collusive, noncompetitive or rigged bids are per se violations of Section One of the Sherman  X{-Antitrust Act.3{ {O-ԍ Id.3 Further, actual or potential competitors may not agree to divide territories horizontally in order to minimize competition, regardless of whether they split a market in which they both do business, or whether they merely reserve one market for one and another  X6-for the other.36l  {OS-ԍ Id.3   X-x]94. To the extent the Commission becomes aware of specific allegations that may give rise to violations of the federal antitrust laws, the Commission may investigate and/or refer such allegations to the United States Department of Justice for investigation. Bidders who are found to have violated the antitrust laws or the Commission's anticollusion rules in connection with participation in the auction process may, among other remedies, be subject to the loss of their down payment or their full bid amount, cancellation of their licenses, and"- 0*((o"  X-may be prohibited from participating in future auctions. {Oy-ԍ  See, e.g., 900 MHz Second Order on Reconsideration, 60 Fed. Reg. 48,913 at  94. See also 900 MHz  {OC-Second Report and Order, 10 FCC Rcd at 6920,  96. We seek comment on these proposals. x  X-x 3. Procedural and Payment Issues  X-x` ` a. PreAuction Application Procedures  Xv-  X_-x^95. In the  Competitive Bidding Secon  d Report & Order, the Commission established general competitive bidding rules and procedures which we noted may be modified on a  X3-servicespecific basis.3$ {O -ԍ See 9 FCC Rcd at 23602400,  68247. See also 47 C.F.R. Part 1, Subpart Q. As discusse  d below, we propose to follow generally those processing  X -and procedural rules, with certain modifications to address the particular characteristics of the  X -paging services . These proposed rules are structured to ensure that bidders and licensees are qualified and will be able to construct systems quickly and offer service to the public. By ensuring that bidders and license winners are serious, qualified applicants, these proposed rules will minimize the need to reauction licenses and prevent delays in the provision of paging services to the public.  X{-x_96. As geographic licensees will gain use of a large geographic area and the freedom to locate base stations anywhere within that larger geographic region, they differ from the existing paging service licenses that are essentially confined to the smaller region.  X6- Accordingly, we propose to treat all geographic applicants as initial applicants for Public Notice, application processing, and auction purposes, regardless of whether they are already incumbent operators.  X-x`97. Section 309(j)(5) of the Communications Act provides that no party may participate in an auction "unless such bidder submits such information and assurances as the Commission may require to demonstrate that such bidder's application is acceptable for  X-filing."C yO-ԍ 47 U.S.C.  309(j)(5).C Moreover, "[n]o license shall be granted to an applicant selected pursuant to this subsection unless the Commission determines that the applicant is qualified pursuant to  Xg-Section 309(a) and Section 308(b) and 310" of the Communications Act.3gF {O^"-ԍ Id.3 As the legislative history of Section 309(j) makes clear, the Commission may require that bidders' applications contain all information and documentation sufficient to demonstrate that the application is not in violation of Commission rules, and we propose to dismiss applications not meeting those  X -requirements prior to the competitive bidding.x  {O'-ԍ See H.R. Rep. No. 111, 103rd Cong., 1st Sess. 258 (1993) (House Report).x " .j 0*((y"Ԍ X-ԙxa98. In the Competitive Bidding Second Report and Order, we determined that we should require only a shortform application prior to competitive bidding, and that only winning bidders should be required to submit a longform license application after the auction. As we determined that such a procedure would fulfill the statutory requirements and objectives and adequately protect the public interest, we incorporated these requirements into  X-the rules adopted in the Competitive Bidding Second Report and Order.V {O-ԍ See 47 C.F.R.  1.2104, 1.2107.V Accordingly, we propose to extend the application of these rules to the competitive bidding process for paging services.  X5-xb99. Under this proposal, before a paging services auction, the Wireless Telecommunications Bureau would release an initial Public Notice announcing the auction. The initial Public Notice would specify the licenses to be auctioned and the time and place of the auction in the event that mutually exclusive applications are filed. The Public Notice would specify the method of competitive bidding to be used, applicable bid submission procedures, stopping rules, activity rules, and the deadline by which shortform applications  X -must be filed and the amounts and deadlines for submitting the upfront payment. Z {O-ԍ See Competitive Bidding Second Report and Order, 9 FCC Rcd at 2376,  164. Applications submitted before the release of the Public Notice would be returned as  X}-premature. Likewise, applications submitted after the deadline specified by Public Notice would be dismissed, with prejudice, as untimely. We seek comment on these proposals.  X:-xc100. All bidders would be required to submit shortform applications on FCC Form  X#-175 (and FCC Form 175S, if applicable), by the date specified in the initial Public Notice. Applicants would be encouraged to file FCC Form 175 electronically. Detailed instructions regarding electronic filing would be contained in the Bidder Information Package. Those applicants filing manually would be required to submit one paper original and one diskette original of their application, as well as two diskette copies. The shortform applications  X-would require applicants to provide the information required by Section 1.2105(a)(2) of the  X-Commission's rules.F yO6-ԍ 47 C.F.R.  1.2105(a)(2).F Specifically, each applicant would be required to specify on its FCC  X-Form 175 application certain identifying information, including its status as a designated  Xk-entity (if applicable),k| {O!-ԍ See  110119, infra, for a definition and discussion of designated entities. its classification (i.e., individual, corporation, partnership, trust, or other), the geographic areas and channel(s) or channel blocks(s) for which it is applying, and assuming that the licenses will be auctioned, the names of persons authorized to place or withdraw a bid on its behalf. We also seek comment on whether we should require further ownership disclosure. For example, we could require applicants to disclose all businesses in which an attributable stockholder owns at least 5 percent, or we could require disclosure of only controlling interests and/or real parties in interest. We could require disclosure of all"/0*((;" subsidiaries, affiliates, and partnerships of the applicant. We seek comment on what type of  X-ownership disclosure should be required, as well as when it should be required; e.g. should it be filed with FCC Form 175, FCC Form 600, or at another time? x  X-xd101. As we indicated in the Competitive Bidding Second Report and Order, if we receive only one application that is acceptable for filing for a particular license, and thus there is no mutual exclusivity, we propose to issue a Public Notice cancelling the auction for that license and establishing a date for the filing of a longform application (FCC Form 600), the  XL-acceptance of which would trigger the procedures permitting petitions to deny (as discussed at  X5- 106107, infra).5 {O -ԍ See Competitive Bidding Second Report and Order, 9 FCC Rcd at 2376,  165. If no petitions to deny are filed, the application would be grantable after 30 days. We seek comment on the proposals discussed above.  X - x` ` b. Amendments and Modifications  X -  X -xe102. To encourage maximum bidder participation for paging licenses, we propose to provide applicants with an opportunity to correct minor defects in their shortform applications prior to the auction. On the date set for submission of corrected applications,  X-applicants that on their own discover minor errors in their applications (e.g., typographical errors, incorrect license designations, etc.) would be permitted to file corrected applications. Applicants would not be permitted to make any major modifications to their applications, including changes in markets and changes in control of the applicant, or additions of other bidders into the bidding consortia, until after the auction. Applicants could modify their shortform applications to reflect formation of consortia or changes in ownership at any time before or during an auction, provided such changes would not result in a change in control of the applicant, and provided that the parties forming consortia or entering into ownership  X-agreements have not applied for licenses in any of the same geographic license areas.(Z {O-ԍ  See Implementation of Section 309(j) of the Communications Act Competitive Bidding, Second  {O-Memorandum Opinion and Order, PP Docket No. 93253, 9 FCC Rcd 7245, 7254,  52 (1994) (Competitive  {Oh-Bidding Second Memorandum Opinion and Order). See also discussion of modifications to short form  {O2-application at  102103, infra). The  X-Commission waived the ex parte rules as they apply to the submission of amended shortform applications, to maximize applicants' opportunities to seek Commission staff advice on  X-making such amendments.,ZJ yO!-ԍ Commission Announces that Mutually Exclusive "Short Form" Applications (Form 175) to Participate in  {OI"-Competitive Bidding Process ("Auctions") are Treated as Exempt for Ex Parte Purposes, Public Notice, 9 FCC Rcd at 6760 (1994)., In addition, applications that are not signed would be dismissed  Xo-as unacceptable.  XX- x  XA-xf103. Upon reviewing the shortform applications, we would release a Public Notice listing all accepted, rejected, and incomplete applications. Applicants would be given an opportunity to cure incomplete applications. An applicant who fails to submit a sufficient"0l 0*(([" upfront payment to qualify it to bid on any license being auctioned would not be identified on this Public Notice as a qualified bidder. Each applicant listed on this Public Notice would be issued a bidder identification number and further information and instructions regarding auction procedures. We seek comment on the proposals discussed above.  X-x` ` c. Upfront Payments x  X_-xg104. As in the case of other auctionable services, we propose to require paging competitive bidding participants to tender in advance to the Commission a substantial upfront payment as a condition of bidding, in order to ensure that only serious, qualified bidders participate in auctions and to ensure payment of the penalty in the event of bid withdrawal or default. For services that are licensed by simultaneous multiple round auction, we have established a standard upfront payment formula of $0.02 per activity unit for the largest combination of MHzpops a bidder anticipates bidding on in any single round of bidding.  X -The Competitive Bidding Second Report and Order also established a minimum upfront payment of $2,500, but we indicated that this minimum amount could be modified on a  X-servicespecific basis.y {O -ԍ Competitive Bidding Second Report and Order, 9 FCC Rcd at 2379,  180.y For paging services, we propose a minimum upfront payment of $0.02 per activity unit or $2,500, whichever is greater. We tentatively conclude that a minimum $2,500 upfront payment should be required regardless of the bidding methodology we employ. We seek comment on our proposal regarding the appropriate minimum upfront payment for paging applications. In particular, we seek comment on whether a minimum upfront payment of $2,500 is sufficient to discourage frivolous or speculative bidders in the competitive bidding process. x  X-xh105. Upfront payments would be due approximately 14 days before a scheduled  X-auction.FZ {O-ԍ Id. at 2380,  188.F This period should be sufficient to allow the Commission time to process upfront payment data and release a Public Notice listing all qualified bidders. The specific procedures to be followed in the tendering and processing of upfront payments are set forth in Section  X~-1.2106 of the Commission's rules.@~ yO-ԍ 47 C.F.R.  1.2106.@  XP-x` ` d. Down Payment and Full Payment  X"-xi106.ؠ In the Competitive Bidding Second Report and Order, we established a down payment requirement for winning bidders of 20 percent of the winning bid amount to discourage default between the auction and licensing and to ensure payment of the monetary  X-assessment if such default occurs.{| {O '-ԍ Competitive Bidding Second Report and Order, 9 FCC Rcd at 2380,  190. { We concluded that this requirement was appropriate to"10*((" ensure that auction winners have the necessary financial capabilities to complete payment for the license and to pay for the costs of constructing a system, while not being so onerous as to  X-hinder growth or diminish access.3 {OK-ԍ Id.3 We propose to apply the 20 percent down payment requirement to winning bidders for paging licenses. Such a down payment would be due within five business days following the Public Notice announcing the winning bidders. We further propose to require paging auction winners to pay the full balance of their winning bids within five business days following Public Notice that the Commission is about to award the  X_-license. We seek comment on this proposal.y_Z {Oj -ԍ Special provisions for small businesses are discussed in  128, infra.y   X1-x` ` e. Bid Withdrawal, Default, and Disqualification  X -xj107.ؠ We propose to adopt bid withdrawal, default, and disqualification rules for the  X -paging services based on the procedures in our general competitive bidding rules.R  yO-ԍ 47 C.F.R.  1.2104(g) and 1.2109.R Under these procedures, any bidder who withdraws a high bid during an auction before the Commission declares bidding closed, or defaults by failing to remit the required down payment within the prescribed time, would be required to reimburse the Commission. The bidder would be required to pay the difference between its high bid and the amount of the winning bid the next time the license is offered by the Commission, if the subsequent winning bid is lower. A defaulting auction winner would be assessed an additional payment of three percent of the subsequent winning bid or three percent of the amount of the defaulting bid, whichever is less. The additional payment would be satisfied first from the upfront payment, and additional funds would be required if necessary. In the event that an auction winner defaults or is otherwise disqualified, we propose to reauction the license either to existing or new applicants. The Commission would retain discretion, however, to offer the license to the next highest bidder at its final bid level if the default occurs within five business days of the  X-close of bidding. We seek comment on these proposed procedures.  xx  X- XxX` ` f. LongForm Applications(#`  X-  X|-xk108. If the winning bidder makes the down payment in a timely manner, we propose the following procedures: A longform application would be filed by a date specified by Public Notice, generally within ten (10) business days after the close of bidding. After the Commission receives the winning bidder's down payment and longform application, we will review the longform application to determine if it is acceptable for filing. In addition to the information required in the FCC Form 600, designated entities will be required to submit evidence to support their claim to any special provision available for designated entities  X-described in this Notice. This information may be included in an exhibit to FCC Form 600. This information will enable the Commission, and other interested parties, to ensure the validity of the applicant's certification of eligibility for bidding credits, installment payment"!2|0*(( " options, and other special provisions. Upon acceptance for filing of the longform application, the Commission will issue a Public Notice announcing this fact, triggering the filing window for petitions to deny. If the Commission denies all petitions to deny, and is otherwise satisfied that the applicant is qualified, the license(s) will be granted to the auction  X-winner._ {O-ԍ See generally 47 C.F.R.  90.16390.166._ We seek comment on this proposal. x  Xv-XxX` ` g. Petitions to Deny and Limitations on Settlements (#`  X_-  XH-xl109. As we have determined, the petition to deny procedures in Section 22.130 of the  X1-Commission's rules,@1Z yO< -ԍ 47 C.F.R.  22.130.@ as well as Section 90.163, adopted in the CMRS Third Report and  X -Order, will apply to the processing of applications for the paging services.  {O-ԍ CMRS Third Report and Order, 9 FCC Rcd at 8000,  21; 8138,  337; and 8142,  347. Thus, a party filing a petition to deny against a paging services application will be required to demonstrate standing and meet all other applicable filing requirements. We also have adopted restrictions  X -in Section 90.162 and Section 22.129 to prevent the filing of applications and pleadings, or  X -threats of the same, designed to extract money from paging services applicants.U | {O-ԍ See 47 C.F.R  22.129, 90.162.U Thus, we will limit the consideration that an applicant or petitioner is permitted to receive for agreeing to withdraw an application or a petition to deny to the legitimate and prudent expenses of the  X}-withdrawing applicant or petitioner. @  XO-xm110. With respect to petitions to deny, the Commission need not conduct a hearing before denying an application if it determines that an applicant is not qualified and no  X!-substantial and material issue of fact exists concerning that determination.y! {O-ԍ Competitive Bidding Second Report and Order, 9 FCC Rcd at 2328,  202.y In the event the Commission identifies substantial and material issues of fact, Section 309(i)(2) of the Communications Act permits the submission of all or part of evidence in written form in any hearing and allows employees other than administrative law judges to preside over the taking  X-of written evidence.C yO!-ԍ 47 C.F.R.  309(i)(2).C  X-x x` ` h. Transfer Disclosure Requirements(#`  X-x  Xi-x n111. In Section 309(j) of the Communications Act, Congress directed the Commission to "require such transfer disclosures and antitrafficking restrictions and payment schedules as may be necessary to prevent unjust enrichment as a result of the methods employed to issue";30 0*(("  X-licenses and permits."F yOy-ԍ 47 U.S.C.  309(j)(4)(E).F In the Competitive Bidding Second Report and Order, the Commission adopted safeguards designed to ensure that the requirements of Section  X-309(j)(4)(E) are satisfied.X {O-ԍ Competitive Bidding Second Report and Order, 9 FCC Rcd at 238488,  210216, 258265. We decided that it was important to monitor transfers of licenses awarded by competitive bidding to accumulate the necessary data to evaluate our auction designs and to judge whether "licenses [have been] issued for bids that fall short of  X-the true market value of the license." {O* -ԍ See House Report at 257; Competitive Bidding Second Report and Order, 9 FCC Rcd at 2385,  214. Therefore, we imposed a transfer disclosure requirement on licenses obtained through the competitive bidding process, whether by a  Xa-designated entity or not.Ma| {O -ԍ See 47 C.F.R.  1.2111(a).M  X3-xo112. We tentatively conclude that the transfer disclosure requirements of Section 1.2111(a) should apply to all paging services licenses obtained through the competitive bidding process. Generally, licensees transferring their licenses within three years after the initial license grant would be required to file, together with their transfer applications, the associated contracts for sale, option agreements, management agreements, and all other documents disclosing the total consideration received in return for the transfer of its license.  X -As we indicated in the Competitive Bidding Second Report and Order, we would give particular scrutiny to auction winners who have not yet begun commercial service and who seek approval for a transfer of control or assignment of their licenses within three years after the initial license grant, so that we may determine if any unforeseen problems relating to  XO-unjust enrichment have arisen outside the designated entity context.O^O {O-ԍ See Competitive Bidding Second Report and Order, 9 FCC Rcd at 2385,  214. We note that these  {O-transfer disclosure requirements are in addition to the unjust enrichment provisions discussed in this Notice at   {O-130131, infra.O We seek comment on these proposals.  X -x` ` i. Performance Requirements x  X-xp113.ؠ Section 309(j)(4)(B) of the Communications Act requires the Commission to establish rules for auctionable services that "include performance requirements, such as appropriate deadlines and penalties for performance failures, to ensure prompt delivery of service to rural areas, to prevent stockpiling or warehousing of spectrum by licensees or permittee, and to promote investment in and rapid deployment of new technologies and  Xi-services."Fi4  yON&-ԍ 47 U.S.C.  309(j)(4)(B).F In the Competitive Bidding Second Report and Order, we decided that in most auctionable services, existing construction and coverage requirements provided in our service"T4 0*((" rules would be sufficient to meet this standard, and that it was unnecessary to impose  X-additional performance requirements. As discussed in Section III(A)(4), supra, we have proposed service rules for paging that would require geographic licensees either to meet minimum population coverage requirements or demonstrate substantial service in their licensing areas. We tentatively conclude that these proposed coverage requirements are sufficient to meet the requirements of Section 309(j)(4)(B) of the Communications Act. As  Xx-discussed infra, we propose that failure to meet these requirements would result in automatic license cancellation. Accordingly, we do not propose to adopt additional performance requirements for paging services. We seek comment on this proposal.  X - Xx4. Treatment of Designated Entities (#  X -x` `  hh@  X - XxX` ` a. Overview and Objectives (#`  X -xq114. Section 309(j)(3)(B) of the Communications Act provides that in establishing auction eligibility criteria and bidding methodologies, the Commission shall "promot[e] economic opportunity and competition and ensur[e] that new and innovative technologies are readily accessible to the American people by avoiding excessive concentration of licenses and by disseminating licenses among a wide variety of applicants, including small businesses, rural  XO-telephone companies, and businesses owned by members of minority groups and women."FO yO-ԍ 47 U.S.C.  309(j)(3)(B).F Section 309(j)(4)(A) provides that to promote the statute's objectives the Commission shall "consider alternative payment schedules and methods of calculation, including lump sums or guaranteed installment payments, with or without royalty payments, or other schedules or  X-methods . . . and combinations of such schedules and methods."FX yO-ԍ 47 U.S.C.  309(j)(4)(A).F  X-xr115. In the Competitive Bidding Second Report and Order, we established eligibility criteria and general rules regarding special measures for small businesses, rural telephone companies, and businesses owned by women and minorities (sometimes referred to  X-collectively as "designated entities"). {O-ԍ See Competitive Bidding Second Report and Order, 9 FCC Rcd at 2388,  227. We also identified several measures, including installment payments, spectrum setasides, and bidding credits, from which we could choose when establishing rules for auctionable services. We stated that we would decide whether and how to use these special provisions, or others, when we developed specific competitive bidding rules for particular services. In addition, we set forth rules designed to prevent unjust enrichment, by designated entities who transfer ownership in licenses obtained through the use of these special measures or who otherwise lose their designated entity status.  X -xs116. When deciding which provisions to adopt to encourage designated entity participation in particular services, we have closely examined the specific characteristics of the"!5z0*(( " service and determined whether there were any particular barriers to accessing capital by designated entities. In accordance with our statutory directive, we have adopted measures designed both to enhance the ability of designated entities to acquire licenses and to increase the likelihood that designated entity licensees will become strong competitors in the provision of wireless services. In narrowband PCS, for instance, we have provided installment payments for small businesses and bidding credits for minorityowned and womenowned  Xv-businesses.v {O-ԍ Competitive Bidding Third Report and Order, 9 FCC Rcd at 297879,  87. Minority and womenowned  {O-businesses received a 25 percent bidding credit in the nationwide narrowband PCS auctions. Id. at 297071,   {O -72. In the regional narrowband auctions, the bidding credit was increased to 40 percent. See Implementation of  {OM -Section 309(j) of the Communications Act Competitive Bidding, Third Memorandum Opinion and Order and  {O -Further Notice of Proposed Rule Making, PP Docket No. 93253, 10 FCC Rcd 175, 201,  58 (1994)  {O -(Competitive Bidding Third Memorandum Opinion and Order). In broadband PCS, we designated certain spectrum blocks as entrepreneurs' blocks, allowed entrepreneurs' block licensees to make installment payments, and provided  XH-bidding credits for designated entities.~HL {OE-ԍ Competitive Bidding Fifth Report and Order, 9 FCC Rcd at 5591,  133. See also Implementation of  {O-Section 309(j) of the Communications Act Competitive Bidding, Fifth Memorandum Opinion and Order, PP  {O-Docket No. 93253, 10 FCC Rcd 403, 453, 459,  99, 103 (1994) (Competitive Bidding Fifth Memorandum  {O-Opinion and Order). Originally, small businesses applying for broadband PCS licenses in the entrepreneurs' blocks were eligible for a 10 percent bidding credit, businesses owned by minorities and/or women were to receive a 15 percent bidding credit, and small businesses owned by women and/or minorities were to receive an  {O-aggregated bidding credit of 25 percent. In light of the Supreme Court decision in Adarand Contractors, Inc. v.  {O-Pe9a, 115 S.Ct. 2097 (1995) (Adarand) discussed infra, we eliminated race and genderbased provisions in our C  {O-block rules in order to avoid further delay of the auction. See Implementation of Section 309(j) of the  {O[-Communications Act Competitive Bidding, Sixth Report and Order, PP Docket No. 93253, FCC No. 95301,  {O%-60 Fed. Reg. 37,786 (1995) (Competitive Bidding Sixth Report and Order). ~ In 900 MHz SMR, we provided bidding credits,  X1-installment payments, and reduced down payments for small businesses.1 {O-ԍ 900 MHz Second Order on Reconsideration, 60 Fed. Reg. 48,913 at  131170.  X -xt117.ؠ As in other auctionable services, we fully intend our paging rules to meet the statutory objectives of promoting economic opportunity and competition, avoiding excessive concentration of licenses, and ensuring access to new and innovative technologies by designated entities. As discussed in greater detail below, therefore, we seek comment on the type of designated entity provisions that should be incorporated into our competitive bidding procedures for paging services. We particularly urge commenters to address: (1) the capital requirements of the paging service in comparison to other wireless services, (2) the degree to which designated entities currently provide paging service, and (3) whether designated entities, and small businesses in particular, face barriers to entry into paging service based on lack of access to capital or other factors. x` `  X-x ` ` b. Eligibility for Designated Entity Provisions (#`  X-x "6P0*(("Ԍ X-xu118. Small Businesses. We tentatively conclude that it is appropriate to establish special provisions in our paging rules for competitive bidding by small businesses. We note that Congress specifically cited the needs of small businesses in enacting auction legislation. The House Report states that the statutory provisions related to installment payments were enacted to "ensure that all small businesses will be covered by the Commission's regulations,  X-including those owned by members of minority groups and women."l {O-ԍ See H.R. Rep. No. 111, 103rd Cong., 1st Sess. (1993) at 255.l It also states that the provisions in Section 309(j)(4)(A) relating to installment payments were intended to promote economic opportunity by ensuring that competitive bidding does not inadvertently favor  XH-incumbents with "deep pockets" over new companies or startups.3HZ {OS -ԍ Id.3  X -xv119. In addition, Congress made specific findings with regard to access to capital in the Small Business Credit and Business Opportunity Enhancement Act of 1992, that "small business concerns, which represent higher degrees of risk in financial markets than do large  X -businesses, are experiencing increased difficulties in obtaining credit."  yOr-ԍ Small Business Credit and Business Opportunity Enhancement Act of 1992, Pub. L. No. 102366,  331(a)(3), 106 Stat. 1007. As a result of these difficulties, Congress resolved to consider carefully legislation and regulations "to ensure that small business concerns are not negatively impacted" and to give priority to passage of  X-"legislation and regulations that enhance the viability of small business concerns."KD {O-ԍ Id. at  331(b)(2), (3).K For these reasons, and as discussed in greater detail below, we believe that small businesses applying for paging licenses should be entitled to some form of bidding credit and should be allowed to pay their bids in installments. We seek comment on this tentative conclusion.  X-xw120. Minority and WomenOwned Businesses. Prior to the Supreme Court's decision  X-in Adarand, we concluded that in licensing of broadband and narrowband PCS, minority and womenowned businesses might have difficulty accessing sufficient capital to be viable auction participants or service providers in the absence of special provisions in our auction  X-rules. {OJ -ԍ See Competitive Bidding Second Report and Order, 9 FCC Rcd at 2391,  242; Competitive Bidding  {O!-Fifth Report and Order, 9 FCC Rcd at 5572,  96. We therefore adopted special provisions for minorities and women in these services. We further determined that such provisions were constitutional under the "intermediate  X-scrutiny" standard used in Metro Broadcasting, Inc. v. FCC.2  {Ox$-ԍ Metro Broadcasting, Inc. v. FCC, 497 U.S. 547, 564565 (1990). See Competitive Bidding Fifth Report  {OB%-and Order, 9 FCC Rcd at 557180,  93112. "7 0*((P"Ԍ X-xx121. In Adarand, however, the Supreme Court ruled that racial classifications imposed  X-by the federal government are subject to strict scrutiny.L {Od-ԍ Adarand, 115 S. Ct. at 2113.L  This holding will apply to any proposal to incorporate racebased measures into our paging rules; thus, it introduces an additional level of complexity to implementing Congress' mandate to ensure that businesses owned by minorities and women are provided "the opportunity to participate in the provisions  X-of spectrumbased services."FZ yO-ԍ 47 U.S.C.  309(j)(4)(D).F We emphasize that we have not concluded that race or genderbased measures are unconstitutional or otherwise inappropriate for spectrum auctions  Xc-we will hold in the future.c {O -ԍ See generally Competitive Bidding Sixth Report and Order, 60 Fed. Reg. 37,786. At a minimum, however, we believe that Adarand requires us to build a thorough factual record concerning the participation of minorities and women in spectrumbased services to support race and genderbased measures. At this time, we do not believe we have a sufficient factual record with respect to spectrumbased services generally  X -or paging services specifically to sustain such measures under strict scrutiny.> | {O6-ԍ  Id. at  6.>  X -xy122. In light of these considerations, we propose to limit designated entity provisions for paging services to small businesses, and we seek comment on this proposal. We believe that such provisions can be structured in a way that would increase the likelihood of participation by women and minorityowned businesses. In adopting race and genderspecific measures for PCS, for example, we noted that such targeted provisions might not be  Xh-necessary in services that are less capital intensive.h {O'-ԍ See Competitive Bidding Second Report and Order, 9 FCC Rcd at 2391,  242; Competitive Bidding  {O-Fifth Report and Order, 9 FCC Rcd at 5572,  96. Paging is perhaps the least capitalintensive of all wireless services. In addition, our proposal to license each channel separately on a geographic area basis means that licenses will be more numerous than in PCS, which should lead to lower entry costs for applicants. We also expect that the vast majority of minority and womenowned businesses will be able to qualify as small businesses under any definition we adopt. For example, U.S. Census Data shows that approximately 99 percent of all womenowned businesses and 99 percent of all minorityowned businesses generated net  X-receipts of $1 million or less.j  {O!-ԍ WomenOwned Businesses, WB 871, 1987 Economic Census, p. 144, Table 8; Survey of Minority {O"-Owned Business Enterprises, MB 874, 1987 Economic Census, pp 8182, Table 8. For purposes of this data, these are entities that earned at least $500 and filed an IRS Form 1040, Schedule C, and in which at least 51 percent of the assets are owned by minorities or women. This definition of minorities was used for the 900  {O%-MHz SMR service. See 900 MHz Second Order on Reconsideration, 60 Fed. Reg. 37,786 at  152153. See  {O%-also 47 C.F.R.  90.814(e), 90.814(f).  We seek comment on this proposal. "80*(("Ԍ X-xz123. We also request comment on the possibility that in addition to small business provisions, separate provisions for women and minorityowned entities should be adopted for  X-paging services. To comply with the Supreme Court's ruling in Adarand, any racebased classification must be a narrowly tailored measure that furthers a compelling governmental  X-interest.P {O-ԍ See Adarand, 155 S. Ct. at 2113.P We also believe that genderbased provisions, although not addressed in Adarand,  X-should be subject to the broadest possible comment.fZ {O-ԍ See Lamprecht v. F.C.C., 958 F2d 382 (D.C. Cir. 1992).f We therefore ask that commenters discuss whether the capital requirements of paging pose a barrier to entry by minorities and women, and whether assisting women and minorities to overcome such a barrier, if it exists, would constitute a compelling governmental interest. In particular, we seek comment on the actual costs associated with acquisition, construction, and operation of paging systems and the proportion of existing paging businesses that are owned by women or minorities. We also seek comment on the analytical framework for establishing a history of past discrimination in the paging industry and urge parties to submit evidence (statistical, documentary, anecdotal, or otherwise) about patterns or actual cases of discrimination in this and related communication services. Assuming that a compelling governmental interest is established, we seek comment on whether separate provisions for women and minorities are necessary to further this interest, and whether such provisions can be narrowly tailored to satisfy the strict scrutiny standard.   Xf-x` ` c. SetAside Spectrum  X8-x{124. In the Competitive Bidding Fifth Report and Order, we established entrepreneurs' blocks on which only qualified entrepreneurs, including designated entities,  X -could bid.  {O-ԍ Competitive Bidding Fifth Report and Order, 9 FCC Rcd at 558086,  113123. In this Notice, we tentatively conclude that it is not necessary to adopt an entrepreneurs' block for paging. It appears that the capital requirements of this service are not so substantial that certain blocks of spectrum should be insulated from very large bidders in order to provide meaningful opportunities for designated entities. We seek comment on our proposal to not create a separate entrepreneurs' block for designated entities. x` `  X-XxX` ` d. Bidding Credits (#`  XV-x|125.ؠ Bidding credits allow eligible designated entities to receive a payment discount  X?-(or credit) on their winning bid in an auction. In the Competitive Bidding Second Report and  X*-Order, we determined that competitive bidding rules applicable to individual services would specify the entities eligible for bidding credits and the bidding credit amounts for each  X-particular service.z~ {O-&-ԍ Competitive Bidding Second Report and Order, 9 FCC Rcd at 2391,  241. z As a result, we have adopted a variety of bidding credit provisions for small businesses and other designated entities in auctionable services. In the nationwide"90*((;"  X-narrowband PCS auction, for example, we established a 25 percent bidding credit for minority and womencontrolled businesses, while a 40 percent credit was used in the regional  X-narrowband PCS auction. {OK-ԍ See Competitive Bidding Third Memorandum Opinion and Order, 10 FCC Rcd at 201,  58. In broadband PCS, our preAdarand entrepreneurs' block rules included a 10 percent bidding credit for small businesses, a 15 percent credit for businesses owned by minorities or women, and an aggregated 25 percent credit for small businesses  X-owned by women and/or minorities.Z {O-ԍ  Competitive Bidding Sixth Report and Order, 60 Fed. Reg. 37,786 at  4748. In the 900 MHz Second Report on Reconsideration, we adopted a 10 percent bidding credit for small businesses with gross revenues of up to $15 million for the preceding three years. For those small businesses with revenues not exceeding  XL-$3 million gross revenues, we adopted a 15 percent bidding credit.3L {O -ԍ  Id.3 In the MDS Report and  X7-Order, we allowed small businesses a 15 percent bidding credit.c7~ {Of-ԍ MDS Report and Order, 10 FCC Rcd at 9669,  188.c Finally, in the 220 MHz  X" -Second Memorandum Opinion and Order, we proposed a 40 percent small business bidding credit for nationwide and regional licenses and a 10 percent bidding credit for smaller EA  X -licenses.  {O-ԍ See 220 MHz Second Memorandum Opinion and Order, 60 Fed. Reg. 46,564 at  162.  X -x}126. We seek comment on the appropriate level of bidding credit for paging in comparison to the above services. For example, paging bears some similarities to narrowband PCS and 220 MHz service, both of which are narrowband services. In those services, we  X-have proposed or adopted high bidding credits (e.g., 40 percent) where licenses are offered on  Xn-a nationwide or regional basis, but have proposed lower credits (e.g., 10 or 25 percent) for smallerarea licenses. Similarly, we adopted a relatively low bidding credit in 900 MHz SMR, which will be licensed on an MTA basis. We believe a similar approach is appropriate in paging. Although some discount may be needed to put small businesses on equal footing with larger applicants, neither the capital requirements nor the licensing areas involved appear to call for a high bidding credit level.  X-x~127. We also seek comment on the possibility of offering "tiered" bidding credits for different sizes of small businesses. We note that small businesses may vary in their ability to raise capital depending on their size and gross revenues. By offering different levels of bidding credits depending on the size of the small business, we could increase the likelihood that the full range of small businesses would be able to participate in an auction and potentially provide service. We therefore propose to establish two levels of bidding credits: a 10 percent bidding credit for all small businesses and a 15 percent credit for small businesses that meet a more restrictive gross revenue threshold. These two levels of bidding credits".:0*(("  X-would not be cumulative. yOy-ԍ Under this proposal a qualified small business could, depending on its gross revenue threshold, either obtain a 10 percent bidding credit or a 15 percent bidding credit, but not both. We believe that tiered bidding credits can help achieve our statutory objective under Section 309(j)(3)(B) by providing varying sizes of small businesses with a meaningful opportunity to obtain paging licenses. We seek comment on this proposal. x  X-x128. We also seek comment on the appropriate definition of "small business" to be  X-applied for purposes of the bidding credits proposed above. In the Competitive Bidding  Xx-Second Memorandum Opinion and Order, we stated that we would define eligibility requirements for small businesses on a servicespecific basis, taking into account the capital requirements and other characteristics of each particular service in establishing the appropriate  X5-threshold.5  {O -ԍ Competitive Bidding Second Memorandum Opinion and Order, 9 FCC Rcd at 7269,  145. In broadband PCS and regional narrowband PCS, we defined small businesses  X -based on a $40 million annual revenue threshold.  {O-ԍ Competitive Bidding Fifth Report and Order, 9 FCC Rcd at 5608,  175; Competitive Bidding Third  {OK-Memorandum Opinion and Order, 10 FCC Rcd at 196,  46. In the 220 MHz service, we have proposed two small business definitions: (1) for purposes of bidding on a nationwide or regional license, small businesses would be defined as entities with $15 million in average gross revenues for the preceding three years; and (2) for purposes of bidding on EA licenses, small businesses be would be defined as entities with $6 million in average gross revenues for  X -the preceding three years.}  {Oj-ԍ 220 MHz Second Memorandum Opinion and Order, 60 Fed. Reg. 46,564 at  171.} After considering the record in the 900 MHz proceeding, we concluded that both $15 million and $3 million small business definitions were warranted, which would entitle applicants for geographic area licenses to 10 percent and 15 percent  Xf-bidding credits respectively.f {O-ԍ See 900 MHz Second Order on Reconsideration, 60 Fed. Reg. 48,913 at  152153.  X8-x129. In conjunction with our proposal to provide two levels of bidding credits, we propose to establish two small business definitions: to obtain the 10 percent bidding credit, an applicant would be limited to $15 million in average gross revenues for the previous three years; to obtain a 15 percent credit, the applicant would be limited to $3 million in gross revenues for the previous three years. In both cases, we would require the applicant to aggregate the gross revenues of its affiliates and attributable investors for purposes of determining eligibility. If a control group is formed, we would require the applicant to aggregate the gross revenues of its affiliates and attributable investors (which is discussed in  X-further detail in 129, infra) for purposes of determining eligibility. These proposed  Xk-thresholds are comparable to what we have adopted in the 900 MHz SMR service,3k2  {ON&-ԍ Id.3 and they reflect our tentative view of the capital requirements and potential barriers to entry in the"T; 0*((" paging service. We seek comment on whether these thresholds, and the proposed bidding credit amounts associated with them, are sufficient for paging in light of the buildout costs associated with constructing a paging system throughout a market area, or whether alternative definitions would be more suitable. We also seek comment on whether our proposed small business definitions are sufficiently restrictive to protect against businesses receiving bidding credits when in fact they do not need them.  X_-x130. We also seek comment on the degree to which the revenues of affiliates and major investors should be considered in determining small business eligibility. For example, in determining whether a PCS applicant qualifies as a small business, we include the gross revenues of the applicant's affiliates and investors with ownership interests of 25 percent or more in the applicant, but we do not attribute the gross revenues or assets of investors who  X -hold less than a 25 percent interest in the applicant if the applicant forms a control group.n  {Oe -ԍ See, e.g., 47 C.F.R.  24.720(j)(1);  24.320(b)(2)(iv).n In the 900 MHz SMR service, we do not attribute the gross revenues of investors who hold  X -up to a 20 percent interest in the application.} Z {O-ԍ  See 900 MHz Second Order on Reconsideration, 60 Fed. Reg. 48,913 at  155.} We seek comment on which attribution threshold should be applied to paging applicants seeking to qualify as small businesses. Would a lower attribution threshold be more appropriate? We also seek comment on whether, alternatively, we should count the gross revenues and assets of controlling principals of the applicant. For purposes of defining controlling principals, we would consider a "controlling principal" to mean a person or entity with majority voting equity ownership, any general partnership interest, or any means of actual working control, including negative control, over  X-the operation of the licensee, in whatever manner exercised.e {O-ԍ See, e.g., 47 C.F.R.  24.204(d) (narrowband PCS).e  X-x131. We propose to make the small business bidding credit available on all paging channels that are licensed on a geographic basis, rather than limiting its availability to certain channels. We recognize that this would be a departure from the approach taken in our PCS  X-rules, in which bidding credits were available only on designated channels.~ yO-ԍ In both narrowband PCS and broadband PCS we limited the channel blocks on which bidding credits  {O-were available to designated entities. See Competitive Bidding Third Report and Order, 9 FCC Rcd at 2941,   {Ok -72 (narrowband PCS). See also Competitive Bidding Fifth Report and Order, 9 FCC Rcd at 5532,  131 (broadband PCS). In IVDS, we permitted the use of bidding credits on both available channels, but imposed a  {O!-limit of one bidding credit per service area. See Implementation of Section 309(j) of the Communications Act  {O"-Competitive Bidding, Fourth Report and Order, PP Docket No. 93253, 9 FCC Rcd 2330, 2337,  39 (1994). Our proposal is consistent, however, with our rule for 900 MHz SMR and our proposal for 220 MHz, in which we proposed to offer bidding credits to small businesses on any available channel"|< 0*(("  X-block.H\ {Oy-ԍ See 900 MHz Second Order on Reconsideration, 60 Fed. Reg. 48,913 at  164. See also 220 MHz  {OC-Second Memorandum Opinion and Order, 60 Fed. Reg. 46,564 at  162 (proposing that bidding credits be made available on all EA and Regional channels).H Because of the presence of incumbents on all paging channels, we believe it would be impractical and inequitable to choose certain blocks for bidding credits to the potential prejudice of incumbents occupying those blocks. Additionally, we believe that we can provide greater opportunities for small businesses if we provide credits across all blocks. We seek comment on this proposal. We also seek comment on whether there is a reasonable basis for providing credits on some channels and not others.  X_- XxX` ` e. Installment Payments(#`  XH-x  X1-x132.ؠ We propose to adopt an installment payment option for small businesses that  X -successfully bid for paging licenses. As we noted in the Competitive Bidding Second Report  X -and Order, allowing installment payments reduces the amount of private financing needed by prospective small business licensees and therefore mitigates the effect of limited access to  X -capital by small businesses.  {Ov-ԍ Competitive Bidding Second Report and Order, 9 FCC Rcd at 2389,  231232. Under this proposal, licensees who qualify for installment payments would be entitled to pay their winning bid amount in quarterly installments over the tenyear license term, with interest charges to be fixed at the time of licensing at a rate equal  X-to the rate for tenyear U.S. Treasury obligations plus 2.5 percent.~ {O-ԍ See, e.g., Competitive Bidding Fifth Report and Order, 9 FCC Rcd at 559394,  139. In addition, we propose to tailor installment payments to reflect the needs of different size entities. Under our proposal, small businesses with $3 million or less in gross revenues for the preceding three years would make interestonly payments for the first five years of the license term, while small businesses with $15 million or less in gross revenues for the preceding three years would make interestonly payments during the first two years. We believe that this installment payment structure will enable entities with less immediate access to capital to increase their chances of obtaining licenses. Timely payment of all installments would be a condition of the license grant and failure to make such timely payment would be grounds for revocation of the license. We seek comment on this proposal.  X-x133. Additionally, we tentatively conclude that small businesses eligible for installment payments may pay a reduced down payment. Five percent of the winning bid would be due five days after the auction closes, with the remaining five percent down  XR-payment due five days after Public Notice that the license is ready for grant.R {O$-ԍ  See, e.g., 900 MHz Order on Reconsideration, 60 Fed. Reg. 48,913 at  168170. Under this proposal, we would grant the license within ten business days after receiving such down payment. We seek comment on this proposal. We also seek comment on the need, if any, for a reduced upfront payment for entities qualifying as a small business. x` `  "=0*((Z"Ԍ X-Xx ` ` f. Unjust Enrichment Provisions (#  X-x134. In the Competitive Bidding Second Report and Order, licensees that received bidding credits and installment payments, and also chose to transfer their licenses to entities not eligible for these benefits, were required to repay the amount of the bidding credit on a  X-graduated basis until no repayment would be required six years after the license grant. {O-ԍ Competitive Bidding Second Report and Order, 9 FCC Rcd at 23842388,  210226, and 23942395,  258265. In addition, the ineligible transferee would not have the benefit of installment payments, and  Xa-principal and accrued interest would come due.3a" {O4 -ԍ Id.3 For the 900 MHz SMR and narrowband  XJ-PCS services, we likewise imposed a five year graduated reimbursement requirement.J {O -ԍ 900 MHz Second Order on Reconsideration, 60 Fed. Reg. 48,913 at  173174 (900 MHz SMR);  {Oy-Competitive Bidding Third Report and Order, 9 FCC Rcd at 297576,  80 (narrowband PCS). In  X3-the Competitive Bidding Fifth Report and Order, we adopted restrictions on the transfer or assignment of broadband PCS entrepreneurs' block licenses to ensure that designated entities do not take advantage of special provisions by immediately assigning or transferring control  X -of the licenses.|  {O-ԍ See Competitive Bidding Fifth Report and Order, 9 FCC Rcd at 5588,  128.|  X -x135. Permitting an immediate transfer of a discounted license to an entity that is not a small business could undermine our basis for offering special provisions to small businesses, but we note that in services with no entrepreneurs' block, we have limited unjust enrichment  X}-to repayment of bidding credits or installment payments.|} {O-ԍ Competitive Bidding Third Report and Order, 9 FCC Rcd at 29752976,  80.| We therefore seek comment on whether, in services such as paging, where there is no entrepreneurs' block to further restrict the class of entities eligible for substantial governmental benefits, we would better serve the public interest by adopting an approach similar to that used in the narrowband PCS context, in which bidding credits and installment payments immediately become due upon transfer to an ineligible entity. We also seek comment on whether an approach to unjust enrichment similar to that adopted for the 900 MHz SMR service, in which a holding period was imposed, would be optimal for the paging services.  X-x` ` g. Rural Telephone Company Partitioning  X-x136. The Communications Act directs the Commission to ensure that rural telephone  Xi-companies have the opportunity to participate in the provision of spectrumbased services.@i4  yON&-ԍ 47 U.S.C.  309(j).@ Rural areas, because of their more dispersed populations, tend to be less profitable to serve"R> 0*((" than more densely populated urban areas. Rural telephone companies, however, are well positioned because of their existing infrastructure to serve these areas. In other services, such as broadband PCS, we have acknowledged this fact by allowing rural telephone companies to partition their licenses on a geographic basis, thereby increasing the likelihood of rapid  X-introduction of service into rural areas. {O-ԍ See Competitive Bidding Fifth Report and Order, 9 FCC Rcd at 55985599,  150. See also 900 MHz  {O-Second Report and Order, 10 FCC Rcd at 693940,  144145. We seek comment on whether we should incorporate similar provisions into our paging rules. Commenters are specifically encouraged to provide information on the extent to which paging service is available in rural areas. Would the public interest be served by establishing special provisions to encourage rural telephone company participation in paging?  X -x137.ؠ Assuming we adopt provisions for rural telephone companies, we believe that geographic partitioning should be made available to rural telephone companies on the same  X -basis as in PCS. $ {O-ԍ See Competitive Bidding Fifth Report and Order, 9 FCC Rcd at 559798,  150. Such a partitioning scheme would provide rural telephone companies with the flexibility to serve areas in which they already provide service, while the remainder of the  X -service area could be served by other providers.3  {O%-ԍ Id.3 Under this proposal, rural telephone companies would be permitted to acquire partitioned paging licenses in one of two ways: (1) by forming bidding consortia consisting entirely of rural telephone companies to participate in auctions, and then partitioning the licenses won among consortia participants, or (2) by acquiring partitioned paging licenses from other licensees through private negotiation and  XK-agreement either before or after the auction.@ KH {OD-ԍ Id. at  151.@ We also would require that partitioned areas conform to established geopolitical boundaries (such as county lines) and that each area include all portions of the wireline service area of the rural telephone company applicant that  X-lies within the PCS area.3  {O-ԍ Id.3 In addition, if a rural telephone company receives a partitioned license postauction from another PCS licensee, the partitioned area must be reasonably related to the rural telephone company's wireline service area that lies within the PCS service  X-area.Y Zl  {O!-ԍ Id. A partitioned service area will be presumed to be reasonably related to the rural telephone company's wireline service area if the partitioned service area contains no more than twice the population overlap between the rural telephone company's wireline service area and the partitioned area.Y We also propose to use the definition for rural telephone companies implemented in  X-the Competitive Bidding Fifth Report and Order for broadband PCS. Rural telephone companies would be defined as local exchange carriers having 100,000 or fewer access lines,  X~-including all affiliates.@ ~  {O'-ԍ Id. at  193.@ "~?  0*((P"Ԍ X-ԙx138. Although generally we only have afforded rural telephone companies the partitioning option, we ask for comment on whether CCP and PCP paging applicants would benefit from expanding this concept to other designated entities or to all paging licensees in  X-general. In the recent MDS Report and Order, we did not limit availability of partitioning to  X-rural telephone companies and instead made it broadly available to any qualified applicants.h  {O-ԍ See MDS Report and Order, 10 FCC Rcd at 9666,  180. h We also seek comment on whether partitioning should be extended to small businesses that may be able to provide niche services in a specific geographic area. Additionally, would extending partitioning to all licensees increase the possibility of rapid buildout of service to rural areas which otherwise might not receive services expeditiously due to lack of marketplace incentive? We seek comment on whether we should develop measures to encourage licensees to partition underserved areas. We also ask commenters to address whether we should allow applicants and licensees to disaggregate their spectrum, and whether to allow spectrum disaggregation in addition to, or instead of, geographic partitioning.  X - C. Interim Licensing  X-x 1. Freeze on New Applications x  Xd-x139. Because of the fundamental changes we are proposing in our paging licensing rules, we are suspending acceptance of new applications for paging channels as of the  X6-adoption date of this Notice, except as provided below. We believe that after the public has been placed on notice of our proposed rule changes, continuing to accept new applications under the current rules would impair the objectives of this proceeding. We also note that this is consistent with the approach we have taken in other existing services where we have  X-proposed to adopt geographic area licensing and auction rules.Z {O-ԍ See Licensing of General Category Frequencies in the 806809.750/851854.750 MHz Bands, DA 95 {O-2119, Order, 60 Fed. Reg. 61554 (rel. Oct. 4, 1995); see also Amendment of the Commission's Rules Regarding the 37.038.6 GHz and 38.640.0 GHz Bands, ET Docket No. 95183, RM No. 8553, Implementation of Section 309(j) of the Communications Act Competitive Bidding, 37.038.6 GHz and 38.640.0 GHz, PP Docket No.  {O -93253, Notice of Proposed Rulemaking and Order, FCC 95500, 61 Fed. Reg. 02452,  121124 (rel. Dec. 15, 1995). We stress that the interim policy described below will not apply to assignment or transfer of control applications, which will continue to be processed under existing procedures.  X-x140. We are mindful that an acrosstheboard freeze on all applications could impair the ability of existing licensees to make certain necessary modifications to their systems to respond to consumer demand while the rulemaking is pending. It is our desire to allow incumbent licensees to continue operating their businesses and meeting public demand for paging services during this rulemaking. Therefore, during the pendency of this proceeding, we will allow incumbent licensees to add sites to existing systems or modify existing sites, provided that such additions or modifications do not expand the interference contour of the"@0*(("  X-incumbent's existing system. {Oy-ԍ The interference contour is based on a median field strength of 21dBV/m. See  52, supra.Ē Under our current Part 22 rules, such additions or modifications are allowed by common carrier paging licensees without prior Commission  X-approval if the added site is within both existing service and interference contours.rZ {O-ԍ 47 C.F.R.  22.163, 22.165. See also  39, supra.r We find that the public interest is served by continuing to allow such modifications because they will give incumbents the flexibility to make internal site modifications without affecting spectrum availability to others. We also believe that it serves the public interest to exempt incumbents from the requirement that the service area not be modified so long as the licensee's interference contour is maintained. Using the interference contour as the sole basis for modification provides the same protection to other licensees as our current rules but provides a simpler analysis of determining permissible modifications.  X -x141. We believe that it is in the public interest to allow 929 MHz licensees on exclusive channels the same flexibility as Part 22 licensees to make system changes within their interference contours. Although our Part 90 rules do not provide protection to 929 MHz licensees based on interference contours, 929 MHz licensees would otherwise be disadvantaged in comparison to Part 22 licensees during the pendency of this proceeding. We believe such modifications afford incumbents flexibility and will not prejudice other licensees, as no expansion is allowed beyond the incumbent's interference contour. We also believe that such modifications will not affect any auction for geographic area licenses, as the size of an incumbent's protected interference contour will not change.  X-x142. In the case of CCP and PCP licensees who have obtained nationwide exclusivity on a paging channel, we will allow applications for additional sites without restrictions. Because we do not propose to apply geographic licensing to such channels, and no other applicant may apply for them, the addition of such sites by the nationwide licensee will not affect the spectrum available to others and is consistent with the goals of this rulemaking.  X-x143. We also seek comment on an expedited basis on whether, during the pendency of this proceeding, incumbents should be allowed to file new applications that would expand or modify their existing systems beyond their existing interference contours with such modifications receiving only secondary site authorization. Secondary operations may not cause interference to operations authorized on a primary basis, and they are not protected from interference from primary operations. Thus, under this alternative, applications to expand an incumbent's existing interference contour would receive no interference protection  X-in the event that we ultimately adopt the geographic licensing proposals in this Notice. Such an approach would be similar to our interim licensing policy in the 900 MHz SMR service, in which we have continued to authorize Phase I incumbents to obtain secondary sites until  X!-MTA licenses are awarded.! {OL'-ԍ  See 900 MHz Second Order on Reconsideration, 60 Fed. Reg. 48,913 at  4347. We seek comment on this alternative and on whether any"!A~0*(( " limitations on secondary licensing are needed. For example, we seek comment on how to address situations where two licensees file applications for secondary sites that would conflict with one another if they were granted on a primary rather than a secondary basis. Because of the urgency of interim licensing as an issue for incumbent paging licensees, we are requesting comment on the above issues under an expedited comment cycle separate from the comment  X-cycle for other issues raised by this Notice. x  Xa-x 2. Processing of Pending Applications x  X3-x144. With respect to paging applications that were filed prior to the adoption of this  X -Notice and that remain pending, we will process such applications provided that (1) they are  X -not mutually exclusive with other applications as of the adoption date of this Notice, and (2) the relevant period for filing competing applications has expired as of the adoption date of  X -this Notice. We believe that this approach gives the appropriate consideration to those applicants who filed applications prior to our proposed changes and whose applications are not subject to competing applications. Processing of mutually exclusive pending applications and applications for which the relevant period for filing competing applications has not expired will be held in abeyance until the conclusion of this proceeding. Upon the adoption of an order in this proceeding, we will process or dismiss all remaining pending applications in accordance with such new rules as are adopted.  X<-  X%-x` ` a. Licensing of 931 MHz CCP Frequencies  X-  X-x145. As discussed supra in Section II(A)(2), the Commission adopted new processing  X-rules for 931 MHz CCP licenses in the Part 22 Rewrite Order based on channelspecific applications and use of competitive bidding to select licensees in the event of mutually  X-exclusive applications.b {O/-ԍ Part 22 Rewrite Order, 9 FCC Rcd at 6534,  98.b PCIA requested that we stay implementation of these procedures on the grounds that there is a substantial backlog of paging applications filed under our old rules and that significant confusion would result from attempting to process this backlog under the  Xq-new procedures.QqZ yO|-ԍ PCIA Petition for Partial Stay at 45. Q On our own motion, we issued a temporary stay of the new Part 22  XZ-licensing rules for 931 MHz until we resolved certain pending applications.TZ {O -ԍ Part 22 Stay Order, 10 FCC Rcd 4146.T By this Notice, we retain the existing stay of the new Part 22 licensing rules until competitive bidding procedures are established in this proceeding. We will therefore process 931 MHz CCP  X-applications which were pending prior to the adoption of this Notice, and for which the 60day window for filing competing applications has expired, under the application procedures in effect prior to January 1, 1995. Consequently, pending 931 MHz CCP applications that are not mutually exclusive with other applications will be processed, while mutually exclusive 931 MHz applications will be held pending the outcome of this proceeding. Upon the adoption of"!B|0*(( " an order in this proceeding, we will process or dismiss all remaining pending applications in accordance with such new rules as are adopted. x  X-x` ` b. Licensing of Lower Band CCP Channels x  X-x146. We will process nonmutually exclusive VHF band CCP applications under our existing rules, provided that the window for filing competing applications has closed as of the  X_-date of this Notice._ yO-ԍ These applications are subject to a 30day filing window. Thus, applications filed prior to January 8, 1996 will be processed provided they are not subject to mutually exclusive applications. The processing of applications where the filing window has not closed will be held in abeyance until the closing of the proceeding. However, we will continue to hold all mutually exclusive lower band CCP applications until competitive bidding rules are established. x  X -x` ` c. Licensing of 929 MHz PCP Exclusive Channels x  X -x147. We will process nonmutually exclusive PCP applications that were filed before  X -the adoption date of this Notice, pending the outcome of this proceeding.^  {Oz-ԍ See 47 C.F.R. Part 90, Subparts G, H, and P. ^ Because these applications are subject to coordination, they are generally not subject to mutually exclusive  X}-applications.} yO-ԍ Applications are considered mutually exclusive only if filed on the same day. 47 C.F.R.  90.495(f). Nonetheless, to the extent that pending mutually exclusive applications may exist, processing of such applications will be held in abeyance until the conclusion of the rulemaking.  X!-x148. Under our current PCP exclusivity rules, applicants are granted conditional exclusivity when they are licensed, and permanent exclusivity is awarded when the licensee demonstrates that it has constructed and is operating a qualified system. As a result, numerous requests for conditional and permanent exclusivity are pending before the Commission. Because of the changes we are proposing to our PCP rules in this proceeding, we believe that consideration of such requests should be postponed while this proceeding is pending. In the event that we adopt our proposals for geographic area licensing, all existing PCP facilities would receive full protection as incumbents, and such pending exclusivity requests would be moot. We therefore will suspend action on all pending exclusivity requests until the conclusion of this rulemaking. x` `  X$-x` ` d. Licensing of NonExclusive PCP Channels x" CB0*((["Ԍ X-x149. We will to process pending applications for nonexclusive PCP channels pending  X-the outcome of this proceeding. yOb-ԍ Because these channels are shared under our current rules, there is no possibility of mutually exclusive applications. Applications will be processed through the frequency coordinator under existing procedures.  X-x` `  X-} IV. CONCLUSION ĐTP  Xv-x150. We adopt this Notice of Proposed Rule Making to solicit public comment regarding methods of converting to widearea licensing, competitive bidding procedures for  XJ-competing applications, and interim licensing. This Notice proposes revision of Part 22 and Part 90 of the Commission's rules to facilitate the future development of paging systems.  X -X V. PROCEDURAL MATTERS TP  X - A. Regulatory Flexibility Act  X -x151. As required by Section 603 of the Regulatory Flexibility Act, the Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the expected impact on small entities of the proposals suggested in this document. The IRFA is set forth in Appendix A. Written public comments are requested on the IRFA. These comments must be filed in  XO-accordance with the same filing deadlines as comments on the rest of the Notice, but they must have a separate and distinct heading designating them as responses to the Initial  X#-Regulatory Flexibility Analysis. The Secretary shall send a copy of this Notice, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration in accordance  X-with paragraph 603(a) of the Regulatory Flexibility Act.t  {O-ԍ Pub. L. No. 96354, 94 Stat. 1164, 5 U.S.C.  601 et seq. (1981).t x` `  X- B. Ex Parte Rules NonRestricted Proceeding  X- x152. This is a nonrestricted notice and comment rulemaking proceeding. Ex parte presentations are permitted except during the Sunshine Agenda period, provided they are  Xo-disclosed as provided in Commission rules.oo {O -ԍ See generally 47 C.F.R.  1.1202, 1.1203, and 1.1206(a).o x  XA- C. Comment Dates   X-x153. Interim Licensing Proposal. Pursuant to applicable procedures set forth in Sections 1.415 and 1.419 of the Commission's rules, interested parties may file comments on our interim licensing proposal or before March 1, 1996, and reply comments on or before"DD0*(("  X-March 11, 1996.W {Oy-ԍ See 47 C.F.R.  1.415 and 1.419.W To file formally in this proceeding, you must file an original and four copies of all comments, reply comments, and supporting comments. If you want each Commissioner to receive a personal copy of your comments, you must file an original plus nine copies. You should send comments and reply comments to Office of the Secretary, Federal Communications Commission, Washington, D.C. 20554. Comments and reply comments will be available for public inspection during regular business hours in the Reference Center of the Federal Communications Commission, Room 239, 1919 M Street, N.W., Washington, D.C. 20554.  X1-x154. Notice of Proposed Rulemaking Revision of Part 22 and Part 90. Pursuant to applicable procedures set forth in Sections 1.415 and 1.419 of the Commission's rules, interested parties may file comments to this Notice of Proposed Rulemaking on or before  X -March 18, 1996, and reply comments on or before April 2, 1996.W Z {O-ԍ See 47 C.F.R.  1.415 and 1.419.W To file formally in this proceeding, you must file an original and four copies of all comments, reply comments, and supporting comments. If you want each Commissioner to receive a personal copy of your comments, you must file an original plus nine copies. You should send comments and reply comments to Office of the Secretary, Federal Communications Commission, Washington, D.C. 20554. Comments and reply comments will be available for public inspection during regular business hours in the Reference Center of the Federal Communications Commission, Room 239, 1919 M Street, N.W., Washington, D.C. 20554.  X- D. Ordering Clause  X-x155. Authority for issuance of this Notice is contained in Sections 2(a), 3(n), 4(i), 302, 303(g), 303(r), 309(i), 309(j), 332(a), 332(c), 332(d), of the Communications Act of 1934, as amended, 47 U.S.C.  152(a), 153(n), 154(i), 302, 303(g), 303(r), 309(i), 309(j), 332(a), 332(c) and 332(d). x  X~-x156. IT IS ORDERED that pending applications for paging licenses that are not mutually exclusive with other paging applications will be processed to the extent possible under our existing licensing rules.  X"-x157. IT IS FURTHER ORDERED that applications for paging licenses, requests for  X -PCP exclusivity and waiver requests received after the adoption date of this Notice will be held in abeyance and not processed until further notice, except as otherwise indicated in paragraphs 139 through 148 hereof. The imposition of these changes in application processing is procedural in nature and, therefore, is not subject to the notice and comment and" E0*(("  X-effective date requirements of the Administrative Procedure Act (APA).  {Oy-ԍ See Neighborhood TV Co., Inc. v. FCC, 742 F.2d 629 (D.C. Cir. 1984); Buckeye Cablevision, Inc. v.  {OC-United States, 438 F.2d 948 (6th Cir. 1971); Kessler v. FCC, 326 F.2d 673 (D.C. Cir. 1963).  In any event, good cause exists for imposing immediately the processing changes without notice and comment because notice and comment is unnecessary. These changes will allow incumbent licensees the flexibility to make internal site modifications during the pendency of this proceeding without interfering with any other licensees' operations or affecting the spectrum availability to future applicants. Thus we believe that these changes would be noncontroversial and unlikely to provoke public comment. Moreover, since we believe that these rule changes provide limited relief to incumbent licensees without interfering with other licensees' operations or affecting the spectrum availability to future applicants, we believe that good cause exists for noncompliance with the 30day effective date provision of the APA. x` `   X - E. Further Information  X -x158. For further information concerning this proceeding, contact Mika Savir or Rhonda Lien, Legal Branch, Commercial Wireless Division, Wireless Telecommunications Bureau at (202) 4180620. x` `  FEDERAL COMMUNICATIONS COMMISSION x` `  William F. Caton x` `  Acting Secretary "F$0*(("  X-) APPENDIX A ĐTP  X-  INITIAL REGULATORY FLEXIBILITY ANALYSIS ĐTP xAs required by Section 603 of the Regulatory Flexibility Act, the Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the expected impact on small  XH-entities of the policies and rules proposed in this Notice of Proposed Rule Making (Notice). Written public comments are requested on the IRFA.  X <x Reason for Action:  This rulemaking proceeding was initiated to secure comment on proposals for establishing a flexible regulatory scheme for the common carrier paging (CCP) and private carrier paging (PCP) services, which would promote efficient licensing and promote competition in the commercial mobile radio marketplace. The proposals advanced in  X -the Notice also are designed to implement Congress's goal of regulatory symmetry in the regulation of competing commercial mobile radio services, as described in Section 3(n) and 332 of the Communications Act, 47 U.S.C.  153(n), 332, as amended by Title VI of the Omnibus Budget Reconciliation Act of 1993 (Budget Act). The Commission also seeks to adopt rules regarding competitive bidding in the 929 and 931 MHz paging services based on Sections 309(j) of the Communications Act, 47 U.S.C.  309 (j), which grants authority to the Commission to use auctions to select among mutually exclusive initial applications in certain services, including 929 and 931 MHz paging services.  X<x Objectives: The Commission proposes changes to its rules for the paging services to foster competition and innovation in these services. Specifically, the Commission seeks to enhance regulatory parity between PCP and CCP, and between paging generally and PCS. The Commission intends to establish geographic licensing for both CCP and PCP, for greater flexibility and administrative efficiency. It also seeks to encourage more efficient use of spectrum in congested areas and to accommodate technologically advanced systems. Finally,  XT-the Notice seeks to establish a new licensing mechanism for the private carrier paging service that will promote competition among services and ensure that comparable mobile services receive similar regulatory treatment.  X<x Legal Basis: The proposed action is authorized under the Communications Act, Sections 2(a), 3(n), 4(i), 303(r), 309(i), 309(j), 332(a), 332(c), 332(d), 47 U.S.C.  152(a), 153(n), 154(i), 302, 303(g), 303(r), 309(i), 309(j), 332(a), 332(c) and 332(d), as amended.  X"<x Reporting, Recordkeeping, and Other Compliance Requirements: Under the proposal  X#-contained in the Notice, paging licensees who obtain widearea licenses may be required to report information regarding location of their facilities and coverage of their service areas. Paging applicants seeking treatment as "small businesses" also may be subject to reporting and recordkeeping requirements to demonstrate compliance with our competitive bidding rules. "/'G0*((&"Ԍ X<x Federal Rules Which Overlap, Duplicate or Conflict With These Rules: None.  X<x Description, Potential Impact, and Number of Small Entities Involved: The  X-competitive bidding proposals contained in the Notice, if adopted, are expected to benefit small entities. These proposals would establish special provisions designed to facilitate small businesses' ability to access capital and to enter the wireless market. The proposed changes to Commission rules also will increase the flexibility of small businesses and lessen the administrative burden on small entities. After evaluating comments filed in response to the  XL-Notice, the Commission will examine further the impact of all rule changes on small entities and set forth its findings in the Final Regulatory Flexibility Analysis.  W <x Significant Alternatives Minimizing the Impact on Small Entities Consistent with the  X <Stated Objectives: This Notice solicits comment on a variety of alternatives. Any additional significant alternatives presented in the comments will also be considered.  X <  x IRFA Comments: We request written public comment on the foregoing Initial Regulatory  xFlexibility Analysis. Comments must have a separate and distinct heading designating them as  X-responses to the IRFA and must be filed by the comment deadlines set forth in this Notice.