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yO(ԍ47 C.F.R. 78.5(a).>  x ` `    Licensees of CARS stations are authorized to relay signals for and to supply program material to cable  S8( xtelevision systems and other eligible entities using pointtopoint and pointtomultipoint transmissions.U8X6( {O0(ԍSee 47 C.F.R. 78.11(a),(c),(d).U  S( xFranchised cable systems and other eligible services use 18 GHza6( yO (#X\  P6G;QwP#э17.70 to 19.70 GHza and 12 GHzaz6( yO* (#X\  P6G;QwP#э12.70 to 13.20 GHza for microwave relays  S( xpursuant to Part 78.| 6( yO(#X\  P6G;QwP#э47 C.F.R.  78.1, 78.11, 78.13, 78.18.| These relay stations enable cablesystemsand other CARS licensees to transmit  S( xtelevision and related audio signals from one point (e.g., on one side of a river or mountain) to another  S( xLpoint (e.g., the other side of the river or mountain) or many points ("multipoint") via microwave. In this  x way, they allow a cable system to link a community divided by a geographic barrier without building  xadditional headends. Part 78 of the Commission's rules governs the licensing and operations of fixed or  S$ ( xmobile CARS stations.R$ 6( {O^(ԍSeeĠ47 C.F.R. 78.1 et seq.R Section 78.11 authorizes CARS stations to relay television broadcast and low  x`power television and related audio signals, AM and FM broadcast stations, Instructional Television Fixed  S ( xService ("ITFS") signals and cablecasting for use by cable television systems or other eligible systems. < , 6( yO(ԍ47 C.F.R. 78.11.<  xSection 78.13 of the Commission's rules specifies that a license for a CARS station can only be issued  xto owners and operators of cable television systems and qualified cable networkentities, licensees and  xconditional licensees of channels in the Multipoint Distribution Service ("MDS"), Multichannel, Multipoint  S4(Distribution Service ("MMDS"), and ITFS operators.<4 6( yO(ԍ47 C.F.R. 78.13.<  S( ` 7.` ` Part 101 of the Commission's rules governs the manner in which portions of the radio  xspectrum may be made available for use by private operational, common carrier, Local Multipoint  S( xDistribution Service ("LMDS"), and certain fixed microwave operations.SL 6( {O!(ԍSee 47 C.F.R. 101.1 et seq.S PCOs currently obtain licenses  Sl( xzunder Part 101 for certain frequencies when their operations use microwave distribution.l6( yO#( xԍPCOs that do not use microwave frequencies to deliver services to their customers are not required to be licensed. PCOs are  SD( xpermitted by Part 101 to use the 18 GHz (18.142 GHz18.580 GHz) and 23 GHz (21.20 GHz 23.60 "D6,`(`(88"  S( x GHz) frequency bands to distribute video programming.H6( {Oh(ԍSee 47 C.F.R. 101.603.H Optel states that it operates, through  xsubsidiaries, private/cable/ telecommunications systems and franchised cable systems that provide service  S( x to over 314,000 homes in nine cities.6Z6( yO(ԍPetition at 2.6 Optel's microwave facilities are based on a "hubandspoke"  x4architecture. Optel and other PCOs currently use microwave links in the 18 GHz frequency band to  xjinterconnect their cable headend and telephone switching facilities to residents of MDUs. In its simplest  xform, cable headend and telephone switching facilities are located at a "hub" and 18 GHz microwave  xj"spokes" are used to deliver video and telecommunications services to MDUs. Optel seeks to use the 12  xGHz CARS band as an efficient means for "hubtohub" communications. By interconnecting hubs, the  xneed for duplicative headend and switching facilities is eliminated or substantially reduced, thus, Optel  S(argues, reducing costs and enabling PCOs to compete more effectively with franchised cable systems.@6( {O" (ԍSee Petition at 3.@  SH ( ` 28.` ` Optel requests that the Commission add PCOs as eligible users of the band of frequencies  x`from 12.70 GHz to 13.20 GHz, which comprise the 12 GHz CARS band. To allow PCOs to use the 12  x GHz CARS band, Section 78.13 must be amended to include PCOs as an entity eligible for a CARS  xtlicense. Optel also requests use of the frequency band segment from 13.20 to 13.25 GHz for delivery of  xvideo programming. However, 13.20 13.25 GHz is not designated for CARS use but rather for television  x.broadcast auxiliary service ("BAS"), including onsite mobile transmissions for electronic newsgathering.  xWe are concerned about the compatibility of shared use of the spectrum between fixed PCOs and mobile  S0( xVBAS and we seek comment in this regard.0|6( {OL( xZԍSee Petition at 1; 47 C.F.R.  78.18(a) (Frequency Assignments for CARS stations) and 47 C.F.R.  74.602(a) (Frequency Assignments for Television Broadcast Auxiliary Stations). Further, we seek comment on any existing or future impact this sharing may have with BAS, especially as it relates to the required digital transition for broadcasters.  S( ` 9.` ` Optel's petition also requests amendment of Section 101.603(a)(2)D6( yO.(ԍ47 C.F.R. 101.603(a)(2).D to add the 12 GHz  x>band to those frequency bands on which PCO licensees may deliver video programming and Section  Sh( x101.603(b)(3)Dhf 6( yOn(ԍ47 C.F.R. 101.603(b)(3).D to include the 12 GHz band among those frequency bands that may be used to provide  x`the final Radio Frequency ("RF") link in the chain of transmission of program material to cable television  S( xsystems, MDS, or Master Antenna Television Systems ("MATVs").6 6( yO!(ԍPetition at 1.6 As noted above, Sections 78.11 and  S( x78.13 govern both the eligibility criteria and the permissible services for CARS licensees.K 6( {O$(ԍSee paragraph 6, supra.K If at the  xconclusion of this rulemaking we determine to extend the use of the 12 GHz CARS band to PCOs and  xother MVPDs, procedurally it will be sufficient to amend Section 78.13 of the Commission's rules, which  x>would be consistent with the Commission's previous amendments to Section 78 of its rules to extend"x,`(`(88"  S( xbCARS eligibility to other service providerst6( {Oh(ԍFor example, MDS providers. See discussion paragraph 17, infra.t and would ensure that all users of this band for video  xdistribution purposes are governed by the same rules and licensing criteria. No amendment to Part 101  xis necessary. We note that amending Part 78 to make PCOs and other MVPDs eligible for 12 GHz CARS  xlicenses would also make them eligible for CARS licenses in the 18 GHz band, as are other current CARS  S`(licenses. \`Z6( {OZ( xԍSee 47 C.F.R.  78.18(a)(4). Thus, a PCO could choose between applying for a license to use 18 GHz under  xVPart 101, which can be used for data and voice, as well as video, or applying for a CARS license, which must be  {O(used principally for video. See 47 C.F.R. 78.11(b) and 101.603.  S( III.DISCUSSION  S(  S( `  10.` ` Optel argues that CARS eligibility should be extended to PCO licensees because: (1)  xLopening the 12 GHz CARS band to PCO licensees would enhance competition with the franchised cable  xpindustry; (2) the Commission has established precedent for extending CARS eligibility to other similar  SH ( xusers such as MDS and MMDS operators; !$H ~6( {Of( xԍSee Amendment of Parts 21, 43, 74, 78, and 94 of the Commission's Rules Governing Use of the Frequencies  {M0( xin the 2.1 and 2.5 GHz Bands Affecting: Private OperationalFixed, Microwave Service, Multipoint Distribution  xService, Multichannel Multipoint Distribution Service, Instructional Television Fixed Service, and Cable Television  {O(Relay Service, 5 FCC Rcd 6410, 6423 (1990) ("CARS Order").  and (3) the 18 GHz frequency band, because of technical  xtdifficulties and recent and pending Commission rulemakings, can no longer support the services provided  S ( xVby the PCO industry.g" j 6( {O(ԍ See Redesignation NPRM, supra at n. 5.g Optel also argues that, in the 12 GHz CARS band, it can provide more channels  x(up to 82 channels if the CARS band includes 13.20 GHz13.25 GHz) and, therefore, can be more competitive with franchised cable systems.  SX( A.` ` Competition in the Video Programming Distribution Industry  S( `  11.` ` Optel states that, as a PCO, it competes directly with incumbent franchised cable operators  S( xin its distribution of video programming.6# 6( yO|(ԍPetition at 2.6 RCN Telecom Services, Inc. ("RCN"), an operator of open  xvideo systems ("OVS"), supports Optel's petition and argues that extending CARS eligibility to PCO  xHlicensees would establish parity between franchised cable operators who use the CARS band to relay  Sh( x~programming material and PCO licensees who would use the 12 GHz CARS band for similar purposes.7$h 6( {O!(ԍId. at 7.7  xWe seek comment on the effect on incumbent CARS licensees of permitting PCO licensees to use the 12  xGHz CARS band. We seek comment as to whether the proposed use of the 12 GHz CARS band by Optel  xis consistent with the current channelization scheme for 12 GHz CARS licensees. The channelization  x scheme sets the upper and lower frequency boundaries for each assigned channel used in the CARS"$,`(`(88"  S( xband.m%6( {Oh(ԍSee 47 C.F.R.  78.18. See also  27, infra.m We further inquire as to whether there are other technical considerations or issues of spectrum congestion or coordination among licensees which should be considered.  S(   S( ` 2 12.` ` Optel argues that, by opening the 12 GHz CARS band to PCO licensees, the Commission  xwould enhance competition to incumbent franchised cable operators, promote more efficient use of the  xradio spectrum, and satisfy its public interest obligations consistent with the procompetitive requirements  S( xof the Telecommunications Act of 1996.&Z6( {O ( x ԍPetition at 6. See Telecommunications Act of 1996, Pub.L.No. 104104, 110 Stat. 56, 104th Cong., 2d Sess. 1 (1996) (the "1996 Act"). We seek comment on the potential competitive effects resulting from the expansion of the CARS band to include PCO licensees.  S( ` P 13.` ` Commenters agree with Optel's contentions with regard to the alleged competitive benefits  xof extending CARS eligibility to PCO licensees. Independent Cable & Telecommunications Association  x("ICTA") states that Optel's request, if denied, would "[inhibit] the ability of private cable operators  x`("PCOs") to compete with franchised cable and unnecessarily limit[s] the ability of PCOs to service over  S ( x1.5 million subscribers ... .";' 6( yOL(ԍICTA Comments at 2.; ICTA states that PCOs present both current and future potential to provide  xeffective competition to incumbent franchised cable operators. The Joint Commenters state that the grant  S ( xof Optel's petition would "encourage more robust competition" in the distribution marketplace.<( D6( yO(ԍJoint Comments at 3.< RCN  x.believes that granting Optel's petition would result in increased competition for two reasons. First, RCN  x states that extending CARS eligibility to PCOs would satisfy the underlying goals of the 1996 Act by  S0( xpremoving competitive obstacles and fostering competition.:)06( yO(ԍRCN Comments at 5.: Second, RCN states that Optel correctly  xcompares the status of PCO licensees with that of MDS licensees who were found to be competitors of  S(franchised cable operators and eligible for CARS licenses.x*d 6( {O(ԍRCN Comments at 6. See also discussion supra at  6.x  S( `  14.` ` We note that PCOs currently are permitted to use 18 GHz and 23 GHz for video, as well  Sh( xpas for data and voice.Y+h 6( {O(ԍSee 47 C.F.R.  101.101 and 101.603.Y We seek comment on the costs for PCOs associated with the use of multiple  x4frequency bands that they could use under the existing rules. Specifically, we request a detailed cost  x8analysis and comparison, including equipment costs, comparing use of 18 GHz or 23 GHz versus use of the 12 GHz CARS band.  S( ` 15.` ` We believe that Optel's petition presents an opportunity to consider expanding eligibility  xVfor the CARS band to MVPDs other than PCOs. Thus, on our own motion, this Notice seeks comment  x\on expanding eligibility for the CARS band to entities such as OVS operators and others who provide  xvideo programming as their dominant service. An example of an MVPD which provides video  xprogramming as its dominant service is an MVPD that offers 60 channels of video programming and 2" +,`(`(88"  S( xchannels of ancillary services. A principle stated in the past by the Commission that "use of the  xmicrowave radio spectrum should be governed by type of use rather than type of licensee" is applicable  S( xhere.P,6( {O(ԍSee CARS Order, 5 FCC Rcd at 6423.P  Based on that principle, the Commission expanded eligibility for the CARS band to MDS licensees  S( xand further stated that similarlysituated entities should have parity of access to the spectrum.1-Z6( {O(ԍId.1 In the  Sb( xCARS Order, the Commission stated that cable and wireless cable, respectively, have similar needs for  x*CARS frequencies and there was no evidence to justify disparate treatment with regard to use of the  x CARS band. Thus the Commission amended Part 78 of its rules to extend CARS eligibility to MDS  xRlicensees on the condition that, "[t]o be eligible to apply for CARS facilities, a wireless cable operator  xmust hold an MDS license or conditional license or hold an executed lease agreement with an MDS  S(licensee or conditional licensee or an ITFS licensee or permittee."2.6( {O( (ԍId. 2  SL ( ` >16.` ` We note that franchised cable systems that are currently eligible for CARS licenses  xgenerally are required to provide service to an entire community. In contrast, PCOs can select those areas  xand buildings where they wish to provide service and ignore less desirable areas or buildings. We seek  x\comment on whether PCOs should have the same access to CARS stations without being required to  xprovide the same level of service. In addition, we seek comment on the conflict that could arise where  xRa franchised cable system may be unable to serve a part of a community which it is required to serve  xbecause a PCO already has the CARS license for those frequencies. We seek comment on whether PCOs  xand other MVPDs would first have to exhaust their spectrum usage in the 18 GHz and 23 GHz frequency  xbands, as provided by Part 101 of the Commission's rules, before being eligible to use the 12 GHz CARS  x.band. We further seek comment on whether PCO use of the 12 GHz band for CARS should be limited  x~to secondary use where it will not interfere with cable systems or MMDS licensees that have actual plans  x8to use a CARS station. We inquire further as to whether there are other conditions or restrictions which  xHshould be imposed. For example, should we limit CARS eligibility to only those PCOs with a certain minimum number of subscribers?  S(  S( B.` ` Technical Limitations in the 18 GHz Band  S( ` B17.` ` Since 1991, PCO licensees have been permitted to distribute video programming using  S|( xthe 18 GHz band. /|~6( {O( xԍSee Amendment of Part 94 of the Commission's Rules to Permit Private Video Distribution Systems of Video  {Od (Entertainment Access to the 18 GHz Band, 6 FCC Rcd 1270 (1991).   Optel states that it uses microwave distribution centers in the 18 GHz band to  ST( x.interconnect private cable systems to a central headend facility.60T6( yO"(ԍPetition at 2.6 Optel maintains, however, that the 18  S,( xGHz band can no longer support the range of services offered by itself and other PCOs.1",j 6( {O6%( x8ԍIn the Redesignation NPRM the Commission noted: "There are tens of thousands of terrestrial fixed links  xcurrently licensed in the 17.719.7 GHz band. Terrestrial fixed service [including CARS] use of this band is  xexpected to increase as a result of migration of users from the congested lower terrestrial fixed service bands to this band . . ." at  8. Optel argues",T 1,`(`(88"  xthat the propagation limitations of the 18 GHz band significantly restrict its ability to expand. Optel  xasserts that, absent access to the 12 GHz band, its costs to provide service over a large area would be  S(substantially greater.626( yO(ԍPetition at 2.6  S`( ` 18.` ` Optel maintains that the signal propagation characteristics (e.g., the distance over which  xthe signal remains strong) of the 18 GHz band make it unsuitable for widely distributed systems and limits  xgrowth within the PCO industry. Optel states that transmissions in the 18 GHz band have an effective  xrange up to 8 miles and that, normally, PCOs can serve numerous individual communities or multiple xpdwelling units from a single headend. Optel argues that, because of the technical limitations of the 18  xLGHz band, PCOs who wish to provide service outside of the 8 mile area would be forced to build a new  xRheadend closer to the outlying systems, add microwave relay stations, or abandon expansion projects  SJ ( x`altogether.13J X6( {OB (ԍId.1 RCN suggested in its comments that in one of its markets the propagation characteristics of  xthe 18 GHz band only allows RCN to reach customers within an approximate 23 mile range of its central  xheadend but the propagation characteristics of the 12 GHz CARS band would allow RCN to deliver its  S ( xsignals 2530 miles away without signal degradation.E4 6( yO\( x ԍRCN Supplemental Comments at 23. Depending upon path conditions, it has been the Commission's  xexperience that CARS stations in the 12 GHz frequency band using Amplitude Modulated Links (AML) can travel  x"1115 miles and, in the 18 GHz frequency band, 811 miles. We note that section 78.108 of the Commission's rules  {O( xrequires minimum path lengths of 5 km between the end points of a fixed link using the 12 GHz CARS band. See 47 C.F.R.  78.108.E While we recognize that there are some differences  xin the propagation characteristics of the spectrum at 12 and 18 GHz, we do not believe, based upon our  S ( xexperience, that the range differences are as significant as Optel and RCN suggest.65 6( yO(ԍPetition at 2.6 We seek comment  xon these estimates of effective range and the assertion that PCOs need additional range. If Optel's  x8assertion is valid, should PCOs be required to demonstrate that they need to transmit over more than 10  x\miles before they are eligible for a CARS license? We also request comment on the impact to CARS  xoperations, including franchised cable systems that are currently CARS licensees or may need access to  xCARS in the future, if PCO entities are allowed access to the 12.7513.25 GHz band. Will cable systems'  xtransition to fiber optics obviate their need for CARS stations thus lessening any potential negative impact  xand making more spectrum available to other applicants, such as PCOs and other MVPDs? We also seek comment on the technical impact on PCOs which continue to operate in the 18 GHz band.  S(   S(C.` ` Effect on PCOs of Other Ongoing Commission Rulemakings  S( ` D19.` ` Optel argues that recent changes in Commission rules and pending Commission  xrulemakings governing use of the 18 GHz band are likely to force PCO licensees to find another band  SR( xfrom which to provide service.66R, 6( yO%(ԍPetition at 5.6 By way of illustration, Optel asserts that the establishment of "exclusion  xzones" in connection with the relocation of the Digital Electronic Message Services ("DEMS") severely  xlimits the ability of PCOs to compete with franchised cable operators in the Denver, CO and Washington," 6,`(`(88"  S( xD.C. markets.676( yOh(ԍPetition at 5.6 DEMS systems are pointtomultipoint microwave networks designed to communicate  xBinformation between a fixed main station and a number of fixed user terminals and are governed by Part  S( x101 of the Commission's rules.~8X6( {O( xԍSee Amendment of Parts 2, 21, 74 and 94 of the Commission's Rules to Allocate Spectrum at 18 GHz for, and  xto Establish other Rules and Policies Pertaining to the Use of Radio in Digital Electronic Message Services, and  xfor other Common Carrier, Private Radio, and Broadcast Auxiliary Services; and to establish Rules and Policies for  {O( xthe Private Radio Use of Digital Termination Systems at 10.6 GHz, 54 R.R.2d 1091 (1983). The Commission  xrecently established new rules relocating DEMS from the 18.8218.92 GHz and 19.1619.26 GHz bands to spectrum  {O ( xabove 24 GHz. See In the Matter of Amendment of the Commission's Rules to Relocate the Digital Electronic  {O^ ( xMessage Service From the 18 GHz Band to the 24 GHz Band and to Allocate the 24 GHz Band for Fixed Service,  {O( ( xOrder, ET Docket No. 9799, 12 FCC Rcd 3471 (1997);  recon. denied, Memorandum Opinion and Order, 13 FCC Rcd 15147 (1998).~ At the request of the National Telecommunications and Information  xAdministration ("NTIA"), the DEMS relocation proceeding established permanent exclusion and  xcoordination zones applicable to terrestrial fixed operations in the 17.819.7 GHz band in the Washington,  S8( xjD.C. and Denver, CO areas.T9\82 6( {O ( x^ԍSee In the Matter of Amendment of the Commission's Rules to Relocate the Digital Electronic Message Service  {O( xFrom the 18 GHz Band to the 24 GHz Band and to Allocate the 24 GHz Band for Fixed Service, Order, ET Docket No. 9799, 13 FCC Rcd 3581 (1998).T NTIA made this request to protect Department of Defense facilities from  S( xinterference.D:V 6( {O(ԍId. at  1. D In response, theCommission prohibited nonfederal terrestrial fixed operations in the 17.8 xB19.7 GHz band in the Washington and Denver areas in certain locations, and required prior Commission  xcoordination with the Federal Government to permit nonfederal terrestrial fixed use of that band in those  S( x`two areas in other locations.O;6( {O (ԍId. at  4 and Rules Appendix.O We note that the areas encompassed by the exclusion zones are limited in  xsize relative to the areas encompassed by the coordination zones. Therefore, we question whether the  xeffect of these zones on PCOs is so widespread or significant as to warrant granting use of the 12 GHz  xpCARS band, as Optel contends, particularly given the availability of the 23 GHz band for comparable service.  S ( ` V20.` ` Optel also argues that its future use of the 18.142 GHz18.580 GHz segment of the 18  S ( xGHz band is impaired by the Notice of Proposed Rulemaking, Redesignation of the 17.719.7 GHz  xFrequency Band, Blanket Licensing of Satellite Earth Stations in the 17.720.2 GHz and 27.530.0 GHz  xFrequency Bands, and the Allocation of Additional Spectrum in the 17.317.8 GHz and 24.7525.25 GHz  S ( x~Frequency Bands for Broadcast Satellite Service Use ("Redesignation NPRM ")M< z6( yO$"(ԍFCC 98235 (IB, rel. Sept. 18, 1998).M that would resegment  S( x`the 18 GHz band and grant blanket licenses to FSS operators.f= 6( {O$(ԍRedesignation NPRM, see n. 11, supra. f The 17.7019.70 GHz band is currently  xallocated for shared use between satellite services and terrestrial fixed services. The shared use of this  xspectrum prevents either service from achieving ubiquitous deployment and requires coordination of each  xindividual operation. In order to promote the growth of satellite and terrestrial fixed services in the 17.70"l =,`(`(88"ԫ x19.70 GHz band, the Commission proposed to separate terrestrial fixed service operations from the  S( xoperations of nongovernment ubiquitously deployed FSS earth stations into dedicated subbands.>D6( {O@(  4ԍSpecifically, the Redesignation NPRM proposed to provide primary designations for: (1)terrestrial fixed  xservices use in the 17.718.3 GHz band; (2) Geostationary Orbit Fixed Satellite Service ("GSO/FSS") use in the 18.3 x18.55 GHz band; and, (3) NonGeostationary Orbit Fixed Satellite Service ("NGSO/FSS") use in the 18.819.3 GHz  xFband. Further it proposed to retain the co-primary designations for: (1) terrestrial fixed service use and GSO/FSS  xLuse in the 18.55-18.8 GHz band; and, (2) terrestrial fixed service use and Mobile Satellite Service Feeder Link  x("MSS/FL") use in the 19.319.7 GHz band. In bands where the terrestrial fixed service would lose its current co {O( xprimary status (18.318.55 GHz and 18.819.3 GHz), the Redesignation NPRM proposed to grandfather existing terrestrial fixed service operations.  Optel  xand other PCOs, as terrestrial fixed service operators, would be affected by the Commission's proposed  xactions. Specifically, the Commission proposed blanket licensing of geostationary orbit ("GSO")/FSS earth  xLstations to operate in the 18.3018.55 GHz, 19.7020.20 GHz, 28.3528.60 GHz, and 29.5030.00 GHz  S8( xbands.L?86( {O (ԍRedesignation NPRM at  44.L As part of this segmentation plan, the Commission proposed that existing fixed operations in the  x18.3018.55 and 18.8019.30 GHz bands would maintain their primary status, but that future fixed  xapplications in this frequency range would only be granted on a secondary basis to satellite services.  xUnder this proposal, terrestrial fixed service systems, including PCOs, would lose their current coprimary  xLstatus in the 18.30 GHz18.55 GHz and 18.80 GHz19.30 GHz bands but gain primary status in 17.70  Sp( x18.30 GHz.<@pf 6( {Ov(ԍId. at  2.< The Commission stated that fixed services could continue to file for authorization to use  SH ( xthese bands, but after the issuance of the Redesignation NPRM on September 18, 1998, such applications  xzwould be accorded secondary status to promote exclusive use of this spectrum by satellite operations.  xHowever, based on the concerns raised by PCOs with respect to their interim operations in the 18 GHz  S ( xband, the Commission released an Order on February 10, 1999 modifying its proposed coprimary status  x`cutoff deadline for PCO applicants that meet certain criteria until the release date of a Report and Order  S (in this proceeding.A$ 6( {O( xrԍSee In the Matter of Redesignation of the 17.719.7 GHz Frequency Band, Blanket Licensing of Satellite Earth  x"Stations in the 17.720.2 GHz and 27.530.0 GHz Frequency Bands, and the Allocation of Additional Spectrum in  {O( xthe 17.317.8 GHz and 24.7525.25 GHz Frequency Bands for Broadcast Satellite Service Use, Order, FCC No. 9918 (IB, rel. Feb. 11, 1999).   S4( ` `21.` ` Regardless of what specific action the Commission takes in IB Docket No. 98172, we  xfanticipate that future use of the 18 GHz band by terrestrial services, such as PCOs, will be limited by  xincreasing use by satellite systems, either on a cofrequency basis, as the rules currently provide, or on  S( xthe basis of the band segmentation proposed in the Redesignation NPRM. We have already sought  S( xcomment on and will address in IB Docket No. 98172 the question of which of these alternatives  xwould maximize the public benefit derived from the 18 GHz band. For purposes of this Notice  xjconcerning the 12 GHz CARS band, we seek comment on whether the increasing constraints that will be  x.presented for terrestrial services at 18 GHz warrants making the 12 GHz CARS band available for PCO  xservice, or whether other alternatives, such as 23 GHz, or use of fiber optic cable, can reasonably provide necessary capacity. " A,`(`(88X"Ԍ S( h22.` ` NGSO 12 GHz NPRM.hhWe also note that In the Matter of Amendments of Parts 2 and 25  xof the Commission's Rules to Permit Operation of NGSO FSS Systems CoFrequency with GSO and  xTerrestrial Systems in the KuBand Frequency Range and Amendment of the Commission's Rules to  xAuthorize Subsidiary Terrestrial Use of the 12.212.7 GHz Band by Direct Broadcast Satellite Licensees  Sb( x>and Their Affiliates, Notice of Proposed Rulemaking ("NGSO 12 GHz NPRM "),|Bb6( yO(ԍFCC 98310, ET Docket No. 98206, RM9147, RM9245 (rel. Nov. 24, 1998).| the Commission  xrecently proposed to allow nongeostationary orbit ("NGSO") FSS systems to operate in the United States  xin the 10.7012.70 GHz band for NGSO spacetoearth ("downlinks") and in the 12.7513.25 GHz, 13.80 x14.50 GHz bands for NGSO earthtospace links ("uplinks"). Among other issues regarding various bands  S( x*between 10.7 and 17.8 GHz, the NGSO 12 GHz NPRM responds to a petition from SkyBridge LLC  x("SkyBridge") asking the Commission to allow NGSO FSS gateway earth station uplinks in the CARS  xtfrequencies at 12.7513.25 GHz on a coprimary basis, subject to appropriate coordination and spectrum  SN ( xsharing requirements.C|N X6( yOF ( xԍNorthpoint Technology ("Northpoint") filed a petition for rulemaking with the Commission to permit secondary  x<terrestrial use of the 12.20 GHz12.70 GHz band by direct broadcast service ("DBS") licensees and their affiliates  xto allow retransmission of local television programming and provision of oneway broadband data to DBS receivers.  {O( xSee Public Notice, Northpoint Technology Petition for Rulemaking, RM9245, Report No. 2265, March 23, 1998.  {Oh( xThe Northpoint petition has been combined with the NGSO 12 GHz NPRM. See NGSO 12 GHz NPRM at 4.  xNorthpoint's proposed use of 12.2012.70 GHz does not directly conflict with the 12 GHz CARS band, but changes in the use of this adjacent band could have an indirect effect on the 12 GHz CARS band. The NGSO 12 GHz NPRM acknowledged the Optel Petition and requested  xcomment on the spectrum sharing compatibility between new NGSO FSS operations and Optel's proposed  S (use of the spectrum.ND 6( {O<(ԍSee NGSO 12 GHz NPRM at  35.N  S ( ` B23.` ` As noted in the NGSO 12 GHz NPRM, 12.7513.25 GHz is currently subject to heavy  S ( xusage.E . 6( {OX( xԍThere are more than 105,000 terrestrial operations in the 12.7013.25 GHz band. NGSO 12 GHz NPRM at  32. Optel's request for use of the 12 GHz CARS band and that of SkyBridge, if granted, could  xgreatly increase the terrestrial use of the 12 GHz band, although Optel's use of the 12 GHz CARS band  x.for pointtopoint and pointtomultipoint relay of signals will not differ from the current use of the band  xby CARS licensees. Spectrum sharing issues with respect to the proposed NGSO FSS operations in the  xt12.7513.25 GHz band will be considered in ET Docket No. 98206. Consideration of these issues need  S( xnot be repeated in this docket. We invite comment in this proceeding only on any additional issues  S( specifically related to the question of expanding CARS eligibility.  SJ(  D.` ` Other Issues  S( ` z24.` ` Section 309(j) of the Telecommunications Act of 1996, requires the Commission to  ximplement a system of competitive bidding when mutually exclusive applications are accepted for filing  S( x:for any initial license or permit involving use of the spectrum.F 6( {O%(ԍSee Telecommunications Act of 1996, Pub.L. No. 104104, 110 Stat. 56, 47 U.S.C.  309(j). Currently CARS licenses are not  xRauctioned. However, if the Commission determines that opening the CARS band to PCOs and other  xlMVPDs creates mutually exclusive applications, the CARS spectrum would be subject to auction. "Z F,`(`(88"  xAlternatively, the Commission could adopt priority of use rules, which would avoid mutual exclusivity  S( xand the auctioning of the CARS spectrum.%G6( {O@( xԍSee 47 U.S.C.  309(j)(6)(E). See also Implementation of Sections 309(j) and 337 of the Communications Act  {O (of 1934 as Amended, WT Docket No. 9987, RM9332 and RM 9405 (FCC 9952, released March 25, 1999).% We seek comment on the effect of auctioning CARS  xspectrum or adopting priority of use rules. We also seek comment on the applicability of our Part 1  xLauction rules to this service in the event we decide to award CARS licenses through competitive bidding.  xWe also seek comment on whether we should adopt a minimum subscriber requirement to avoid  xpermitting a PCO with a small number of subscribers to use a CARS station that could have been licensed,  xinstead, to a cable system serving significantly more subscribers. Another option for consideration and  xcomment is granting PCOs and other MVPDs secondary, but not primary, eligibility for using the 12 GHz CARS band, as discussed in paragraph 5, above.  Sp( ` 25.` ` Some PCOs currently use 18 GHz or 23 GHz to bundle data, voice, video and other  xservices in one package for their customers. The 12 GHz CARS band must be used principally for the  S ( xdelivery of video programming.JH $6( {O(ԍSee 47 C.F.R.  78.11(d).J We do not propose to change the principal use of CARS as a tool for  S ( xrelaying video programming between and among the components of a cable or other eligible system.I 6( yON( xԍFor example, a CARS licensee must provide video programming as its dominant service, but may also offer other services; such as 60 channels of video programming and 2 channels of ancillary services.  xHowever, we seek comment on whether and to what extent CARS licensees should be permitted to  xprovide voice or data using the 12 GHz CARS band provided the principal use remains the delivery of video programming and subject to existing technical and operating requirements.  S0( ` 26.` ` On our own motion, we also seek comment on the realignment and the reassignment of  x`the channel frequency assignments set forth in Section 78.18(a) of the Commission's rules to provide for  x\more efficient use of channels by facilitating continuous channel transmissions. Specifically, we seek  xcomments on: 1) designating the unassigned guard band (12.946512.9525 GHz) as channel C43, and the  xunassigned second guard band (13.005713.0125) as channel D43; and 2) allowing CARS operators to  x.slightly shift the frequencies of channels C04C10, channels D04D10, channels E04E10, and channels  x8F04F10 to produce 6 6 MHz video channels for each channel group (i.e., C group, D group, E group,  xand F group). Currently, applicants must seek waivers for a change in the frequency assignments pursuant  xto Section 78.18 of the Commission's rules for such minor frequency shifts and to use the guard band.  x We additionally seek comment on whether other changes in frequency assignments are necessary to provide for more seamless and efficient use of the CARS frequency spectrum.  SP( IV.PROCEDURAL MATTERS  S( A.` ` Initial Regulatory Flexibility Analysis  S( ` 27.` ` As required by Section 603 of the Regulatory Flexibility Act, 5 U.S.C. 603, the  xCommission is incorporating an Initial Regulatory Flexibility Analysis ("IRFA") of the expected impact  xHon small entities of the policies and proposals in this Notice of Proposed Rulemaking. Written public  x~comments concerning the effect of the proposals in the NPRM, including the Initial Regulatory Flexibility  xAct, on small businesses are requested. Comments must be identified as responses to the IRFA and must" I,`(`(88 "  xbe filed by the deadlines for the submission of comments in this proceeding. The Secretary shall send  x4a copy of this NPRM, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration in accordance with paragraph 603(a) of the Regulatory Flexibility Act.  S`( ` 28.` ` Reasons Why Agency Action is Being Considered. This NPRM is in response to a petition for rulemaking filed by Optel.  S( ` >29.` ` Need for Action and Objectives of the Proposed Rule Change. We undertake this  xproceeding to address the spectrum sharing and technical issues presented by Optel's petition. Optel's  x~petition, if granted, could increase competition to incumbent, franchised cable operators, particularly with  xregard to video programming service to multidwelling units. While we desire to promote competition  xHand innovation by allowing for new services or additional spectrum use, we also need to consider the  S$ ( xBcompeting interests of the incumbent services in the 12 GHz CARS band. We also need to consider the  ximpact on PCOs of recent and pending Commission rulemakings involving the 18 GHz band. Thus we  xseek comment on whether the proposed blanket licensing of GSO/FSS operators in the 18 GHz will unduly constrain future growth of incumbent PCO users.  S\( <30.` ` Legal Basis.hThe authority for the action proposed for this rulemaking is contained in  S6(Sections 4(i)(j), 303(c), (f), (g), and (r), and 309(j) of the Communications Act of 1934, as amended.FJ66( yO(ԍ47 U.S.C.  154(i)(j).F  S( ` 31.` ` Description and Estimate of the Number of Small Entities Impacted. The IRFA directs  xthe Commission to provide a description of and, where feasible, an estimate of the number of small  xentities that will be affected by the proposed rules. The IRFA defines the term "small entity" as having  xthe same meaning as the terms "small business," "small organization," and "small business concern" under  x*Section 3 of the Small Business Act. Under the Small Business Act, a small business concern is one  x\which: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration.  S( ` 32.` ` The proposal to permit PCOs to use the 12 GHz CARS band applies to all private cable  xsystem operators. The Commission has developed, with the approval of the Small Business  x8Administration ("SBA"), its own definition of a small cable system operator for rate regulation purposes.  xUnder the Commission's rules, a "small cable company" is one serving fewer than 400,000 subscribers  xnationwide. Based on our most recent information, we estimate that there were 3,400 private cable  S( xloperators serving multiple dwelling unitsKX6( {O( xԍAnnual Assessment of the Status of Competition in Markets for the Delivery of Video Programming, Fourth  {O (Annual Report, 13 FCC Rcd 1034, 1087 (1998). that qualified as small cable companies. Some of those  S( xcompanies may have grown to serve from 800,000 to 1.5 million subscribers,L6( {O #( x ԍAnnual Assessment of the Status of Competition in Markets for the Delivery of Video Programming, Fifth  {O#(Annual Report, FCC 98335 (rel. Dec. 23, 1998). and others may have been  x8involved in transactions that caused them to be combined with other cable operators. Consequently, we  x$estimate that there are fewer than 3,400 small entity cable system operators that may be affected by the decisions and rules we are adopting. " L,`(`(88 "Ԍ S( `  33.` ` Reporting, Recordkeeping, and Other Compliance Requirements.  The Commission is not proposing to impose additional reporting or recordkeeping requirements.  S( ` !34.` ` Significant Alternatives Which Minimize the Impact on Small Entities and are Consistent  Sd( x~with Stated Objectives. The NPRM solicits comments on all alternatives to Optel's request which would minimize any adverse impact on small entities.  S( ` "35.` ` Federal Rules which Overlap, duplicate, or Conflict with the Commission's Proposal.  S(None.  Sx( ` #36.` ` Report to Congress. The Commission shall send a copy of this IRFA along with this  xNotice in a report to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of  x 1996, codified at 5 U.S.C. 801(a)(1)(A). A copy of this IRFA will also be published in the Federal Register.  S ( B. ` ` Paperwork Reduction Act Statement  Sb( ` $37.` ` The requirements proposed in this Notice have been analyzed with respect to the  x*Paperwork Reduction Act of 1995 (the "1995 Act") and do not impose new or modified information collection requirements on the public.  S( C.` ` Ex Parte Rules  Sr( ` p %38.` ` This proceeding will be treated as a "permit-but-disclose" proceeding subject to the  x "permit-but-disclose" requirements under Section 1.1206(b) of the rules. 47 C.F.R. 1.1206(b), as revised.  xEx parte presentations are permissible if disclosed in accordance with Commission rules, except during  x~the Sunshine Agenda period when presentations, ex parte or otherwise, are generally prohibited. Persons  xmaking oral ex parte presentations are reminded that a memorandum summarizing a presentation must  xcontain a summary of the substance of the presentation and not merely a listing of the subjects discussed.  x`More than a one or two sentence description of the views and arguments presented is generally required.  x$See 47 C.F.R. 1.1206(b)(2), as revised. Additional rules pertaining to oral and written presentations are set forth in Section 1.1206(b).  S( D. Filing of Comments and Reply Comments  S( ` &39.` ` Pursuant to applicable procedures set forth in Sections 1.415 and 1.419 of the  xCommission's Rules, 47 C.F.R. 1.415 and 1.419, interested parties may file comments on or before  SB( x August 16, 1999 and reply comments on or before September 20 , 1999. Comments may be filed using  S ( xthe Commission's Electronic Comment Filing System ("ECFS") or by filing paper copies.M 6( {O"(ԍSee Electronic Filing of Documents in Rulemaking Proceedings, 63 Fed. Reg. 24,121 (1998). Comments  x,filed through the ECFS can be sent as an electronic file via the Internet to . Generally, only one copy of an electronic submission must be filed. If multiple docket  xor rulemaking numbers appear in the caption of this proceeding, however, commenters must transmit one  x4electronic copy of the comments to each docket or rulemaking number referenced in the caption. In  xcompleting the transmittal screen, commenters should include their full name, Postal service mailing  xaddress, and the applicable docket or rulemaking number. Parties may also submit an electronic comment"*%ZM,`(`(88~""  xBby Internet email. To get filing instructions for email comments, commenters should send an email to  xecfs@fcc.gov, and should include the following words in the body of the message, "get formshould be accompanied by a cover letter and should be submitted in "read only" mode. The diskette  xRshould be clearly labelled with the party's name, proceeding (including the lead docket number in this  xLcase, CS Docket No. 99250), type of pleading (comments or reply comments), date of submission, and  xthe name of the electronic file on the diskette. The label should also include the following phrase "Disk  xCopy Not an Original." Each diskette should contain only one party's pleadings, referable in a single  x8electronic file. In addition, commenters must send diskette copies to the Commission's copy contractor, International Transcription Service, 1231 20th Street, N.W., washington, D.C. 20036.  S( `  )42.` ` There was an ex parte presentation made in this proceeding pursuant to 47 C.F.R. 1.1204(b)(1).  S( V.ORDERING CLAUSES  SR( ` *43.` ` Accordingly, IT IS ORDERED that, pursuant to Sections 4(i)(j) of the Communications  S*( xxAct of 1934, as amended, 47 U.S.C.  154(i)(j), 303(c), (f), and (r), and 309(j), NOTICE IS HEREBY  S( x4GIVEN of the proposed amendments to Part 78 of the Commission's rules, in accordance with the  xproposals, discussions, and statements of issues contained in this Notice of Proposed Rulemaking, and that  S( COMMENT IS SOUGHT regarding such proposals, discussions, and statements of issues.  Sb( ` +44.` ` IT IS FURTHER ORDERED that the Commission's Office of Public Affairs, Reference  xOperations Division, shall send a copy of this Notice of Proposed Rulemaking, including the Initial  xRegulatory Flexibility Analysis, to the Chief Counsel for Advocacy of Small Business Administration, in  x$accordance with paragraph 603(a) of this regulatory Flexibility Act. Pub. L. No. 96354, 94 Stat. 1164,  S!(5 U.S.C.  601 et seq. (1981). ` `  ,hFEDERAL COMMUNICATIONS COMMISSION ` `  ,hMagalie Roman Salas ` `  ,hSecretary