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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Request of ) Licensees in the 218-219 MHz Service for) Waiver of the Five-Year Construction Deadline ) ORDER Adopted: March 26, 1999 Released: March 26, 1999 By the Chief, Public Safety and Private Wireless Division, Wireless Telecommunications Bureau: I. INTRODUCTION 1. On February 16, 1999, Bay Interactive Ventures, LTD. ("Bay"), a licensee in the 218-219 MHz Service, filed a request seeking a waiver of the five-year construction deadline for the service. Additionally, other 218-219 MHz Service licensees, who are required to meet a five-year construction benchmark, have filed waiver requests with the Commission seeking relief similar to that requested by Bay. Under the Commission's current rules, all 218-219 MHz Service licensees are required to meet certain construction benchmarks during their initial license term. The 218-219 MHz Service licensees who obtained their licenses by lottery, which includes the Parties, are required to meet certain service requirements by March 28, 1999. By this Order, we grant the Parties' waiver requests to the extent described below. II. BACKGROUND 2. Eighteen licenses in the 218-219 MHz Service were awarded by lottery held September 15, 1993, and granted on March 28, 1994. Section 95.833 of the Commission's Rules provides, inter alia, that 218-219 MHz Service licenses cancel automatically if a licensee fails to provide service to at least fifty percent of the population or land area within five years of grant of its system license. Therefore, the five-year construction benchmark for the lottery licenses is March 28, 1999. In addition, each 218-219 MHz Service licensee must file a progress report at the conclusion of the benchmark period to inform the Commission of the construction status of its system. 3. On September 4, 1996, Euphemia Banas, et al. filed a formal Petition for Rulemaking requesting that the Commission amend certain rules applicable to the 218-219 MHz Service. Beginning January 28, 1997, Euphemia Banas, et al. filed amendments to its Petition for Rulemaking, and sought Commission review of additional 218-219 MHz Service rules, including those relating to the construction buildout requirements in Section 95.833 of the Commission's Rules. 4. Between January 22, 1997, and February 25, 1997, several 218-219 MHz Service lottery winners (collectively, "Lottery Licensees") filed separate requests to waive Section 95.833 of the Commission's Rules pertaining to the three-year construction benchmark. The Lottery Licensees based their requests for waiver, in part, on the statements made by Bureau staff at an informal 218-219 MHz Service forum held January 30, 1997, indicating that the Commission was considering revision of certain rules applicable to the 218-219 MHz Service -- including rules relating to construction build-out requirements -- as part of an upcoming rule making proceeding. On March 13, 1997, the Bureau suspended the three-year construction buildout deadline for those 218-219 MHz Service licensees whose licenses had been issued on March 28, 1994, pending resolution of the construction requirement by Commission or Bureau action. The Bureau found that enforcement of the three-year construction benchmark requirements, in light of the pendency of a rule making proceeding for the 218-219 MHz Service that would likely address, inter alia, buildout requirements, would be "unreasonable and contrary to the public interest." Further, the Bureau found that circumstances existed warranting the grant of a waiver pursuant to Section 1.3 of the Commission's Rules. 5. On January 14, 1998, and in response to waiver requests filed by fifty-two licensees in the 218-219 MHz Service who had obtained their licenses by auction, the Bureau waived the three-year construction benchmark for auction licensees. The auction licensees, who had obtained their licenses on January 18, 1995, and February 28, 1995, had been obligated to meet the three-year construction benchmark by January 18, 1998, and February 28, 1998, respectively. In granting this waiver, the Bureau "reaffirm[ed] the reasoning behind [its] suspension of the three-year construction benchmark for [the] [L]ottery [L]icensees," and found that requiring 218-219 MHz Service auction winners to comply with Commission rules that were under review would not serve the public interest. As before, the waiver was conditioned on the resolution of the construction requirement by Commission or Bureau action. 6. On September 15, 1998, subsequent to the Bureau's grant of waivers for the three-year construction benchmark, the Commission adopted the 218-219 MHz Service Flexibility Order and NPRM. In the 218-219 MHz Service Flexibility Order and NPRM, the Commission proposed numerous changes to the construction benchmark requirements, as anticipated in the Three-Year Benchmark Waiver Order. The Commission indicated its belief that strict construction requirements were not the most suitable and effective means of addressing its statutory obligations given that the 218-219 MHz Service spectrum any be used to offer a variety of fixed and mobile services that may compete with the capabilities of other wireless services. Specifically, the Commission proposed to eliminate both the three- and five-year construction benchmarks and replace them with a "substantial service requirement" to be met within five years of license grant. The Commission also proposed that, in the event it extends the license term from five years to ten years, 218-219 MHz Service licensees would either provide service to at least twenty percent of the population or land area or demonstrate substantial service within ten years of license grant. 7. In its request for waiver of the five-year construction benchmark rule, Bay recounts the circumstances that led the Bureau to previously waive the three-year construction benchmark requirement, notes that proposed changes to the 218-219 MHz Service rules would affect the buildout requirements for the service, and asserts that "[t]he Bureau's finding still applies to the present situation of 218-219 MHz Service Licensees." Bay argues that the unique circumstances that previously justified the waiver of the Commission's buildout rules under Section 95.833 of the Commission's Rules continue to exist, and that application of the five-year buildout requirement would be unduly burdensome and contrary to the public interest. Other Lottery Licensees present similar arguments in their waiver requests. III. DISCUSSION 8. Section 1.3 of the Commission's Rules allows the waiver of a rule provision "if special circumstances warrant a deviation from the general rule and such deviation will serve the public interest." The construction buildout benchmarks were established in the 218-219 MHz Service in order "to ensure that the system is actually built," and "to reduce the attractiveness of licenses to entities interest in them only as a speculative vehicle." On the facts before us, we find that a waiver of Section 95.833 of the Commission's Rules is warranted. Bay has detailed the time and expense it has invested in building its system, despite the apparent limitations of commercially deployable consumer equipment and lack of consumer services to deploy over a system. In addition, waiver of the five-year construction benchmark requirement would promote the maximization of the efficient and effective use of the 218-219 MHz Service envisioned in the 218-219 MHz Service Flexibility Order and NPRM and other Commission actions by not requiring the affected licensees to follow buildout criteria derived from rules that ultimately may be changed in the context of this rule making proceeding. 9. We therefore conclude that requiring the licensees in the 218-219 MHz Service to meet the five-year construction buildout requirement on March 28, 1998, would be unreasonable, would not promote efficient use of the spectrum, and would be contrary to the public interest. Thus, we will grant the relief requested by the parties in part. This approach is consistent with and supported by the same rationale as previous Bureau action in this area. The Commission has not yet released a final order addressing the proposed rule changes in the 218-219 MHz Service -- in particular, those rules that would affect construction and buildout requirements. As such, release of the 218-219 MHz Service Flexibility Order and NPRM has not resolved the construction benchmark issues, nor has it affected the underlying rationale for waiving the construction benchmark requirements for the licensees who obtained their licenses by lottery on March 28, 1994. The proposed rule changes to the 218-219 MHz Service continue to be "inextricably tied to [the licensees'] construction requirements and the mechanisms used to satisfy those benchmarks." Accordingly, by this Order, and on our own motion, we will expand the relief requested by the Parties to all 218-219 MHz Service licenses with a five- year construction benchmark deadline ending on March 28, 1999. By suspending the five-year construction benchmark deadline for these 218-219 MHz Service licenses, the Commission will be able to evaluate the record in the 218-219 MHz Service NPRM proceeding and reach a conclusion regarding construction benchmarks that can be applied uniformly to all licenses. Further, by extending the relief to all 218-219 MHz Service licensees rather than requiring each licensee to file an individual waiver request, we conserve staff resources. IV. ORDERING CLAUSES 10. For the foregoing reasons, IT IS ORDERED that, pursuant to Section 4(i) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), and Section 1.3 of the Commission's Rules, 47 C.F.R.  1.3, the waiver requests of Bay Interactive Ventures, LTD, Legacy TV, Inc., Chicago IVDS Company, Inc., Houston IVDS Company, L.L.C., Maritime Communications Corp., Self Communications, Inc., and Kingdon R. Hughes, IS GRANTED with respect to Section 95.833(a) of the Commission's Rules, 47 C.F.R. 95.833(a). This waiver will remain in effect pending resolution of the construction requirement by Commission or Bureau action. 13. IT IS FURTHERED ORDERED, on our own motion, pursuant to Section 4(i) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), and Section 1.3 of the Commission's Rules, 47 C.F.R.  1.3, that a waiver of Section 95.833(a) of the Commission's Rules IS GRANTED. This waiver suspends the five-year construction deadlines for those 218-219 MHz Service licenses that were required to meet a five-year construction benchmark on March 28, 1999. This waiver will remain in effect pending resolution of the construction requirement by Commission or Bureau action. 14. IT IS FURTHER ORDERED that this action is taken pursuant to delegated authority under Section 0.131 and 0.331 of the Commission's Rules, 47 C.F.R.  0.131 and 0.331. FEDERAL COMMUNICATIONS COMMISSION D'wana R. Terry Chief, Public Safety and Private Wireless Division Wireless Telecommunications Bureau