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(#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааStyle 3Style 3oаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ\А%я ЙžƒhM2ќсЦЋ!(#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааб#&Qєнz PПФQ&P#бггггб#Xvў6X@ЩќCX@#баа\А%я ЙžƒhM2ќсЦЋ!(#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааStyle 4Style 4p11б#w8ф2МPБŠQwP#бггггб#Xvў6X@ЩќCX@#бћџ2іƒqКrРМsР|‚tК<ƒStyle 1Style 1q11б#&Qєнz PПФQ&P#бггггб#Xvў6X@ЩќCX@#бStyle 2Style 2r44б#&YЗopL1 Q&#бггУУФФггб#Xvў6X@ЩќCX@#бStyle 5Style 5s44б#R‰ЗopL1 QR#бггУ УФ Фггб#Xvў6X@ЩќCX@#бStyle 7Style 7t11б#&Qф2МPБŠQ&P#бггггб#Xvў6X@ЩќCX@#бћџ2&ŒuК(„vlт„wlN‡xlК‰Style 6Style 6u11б#Ѓcєнz PПФQЃP#бггггб#Xvў6X@ЩќCX@#бStyle 10Style 10vаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ\А%я ЙžƒhM2ќсЦЋ!(#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааб#&Qєнz PПФQ&P#бггггб#Xvў6X@ЩќCX@#баа\А%я ЙžƒhM2ќсЦЋ!(#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааStyle 8Style 8wаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ\А%я ЙžƒhM2ќсЦа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааб#&Qєнz PПФQ&P#бггггб#Xvў6X@ЩќCX@#баа\А%я ЙžƒhM2ќсЦа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааStyle 9Style 9xаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ\А%я ЙžƒhM2ќсЦа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааб#&Qєнz PПФQ&P#бггггб#Xvў6X@ЩќCX@#баа\А%я ЙžƒhM2ќсЦа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааћџ2•ylXŒzФŽ{т|“UpdateUpdateyаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ\А%я ЙžƒhM2ќсЦЋ!(#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааб#&Qєнz PПФQ&P#бггггб#Xvў6X@ЩќCX@#баа\А%я ЙžƒhM2ќсЦЋ!(#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааParagraph 1Paragraph 1zшоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааParagraph 2Paragraph 2{шоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааParagraph 3Paragraph 3|шоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааћџ2Ш}P•~n—Œ™€Њ›Paragraph 4Paragraph 4}шоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааParagraph 5Paragraph 5~шоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааParagraph 6Paragraph 6шоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааParagraph 7Paragraph 7€шоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааћџ2hЁњ‚l ƒx„ „lќ Paragraph 8Paragraph 8шоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааDocument[8]Document[8]‚ ггггDocument[4]Document[4]ƒггУУУ УФФФ ФггDocument[6]Document[6]„ ггггћџ2ќЄ…lšЁ†lЂ‡lrЂˆоЂDocument[5]Document[5]… ггггDocument[2]Document[2]† ггггDocument[7]Document[7]‡ ггггRight Par[1]Right Par[1]ˆшоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ0ААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ0` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааћџ2єЋ‰.ЅŠlLЇ‹ИЇŒжЉRight Par[2]Right Par[2]‰шоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааDocument[3]Document[3]Š ггггRight Par[3]Right Par[3]‹шоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ0ААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ0` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааRight Par[4]Right Par[4]Œшоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааћџ2žД&ЌŽDЎbА€ВRight Par[5]Right Par[5]шоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ0ААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ0` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааRight Par[6]Right Par[6]Žшоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааRight Par[7]Right Par[7]шоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ0ААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ0` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааRight Par[8]Right Par[8]шоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааћџ2ЌЛ‘(аД’$јЖ“$Й”l@ЛDocument[1]Document[1]‘эуХХаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааХХTechnical[5]Technical[5]’ысаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггУ УФ ФггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааTechnical[6]Technical[6]“ысаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггУ УФ ФггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааTechnical[2]Technical[2]” ггггћџ2ўР•lоЛ–$JМ—lnΘ$кОTechnical[3]Technical[3]• ггггTechnical[4]Technical[4]–ысаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггУ УФ ФггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааTechnical[1]Technical[1]— ггггTechnical[7]Technical[7]˜ысаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггУ УФ ФггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааћџ2ЎЩ™$0СšTУ›rХœЧTechnical[8]Technical[8]™ысаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггУ УФ ФггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааParagraph[1]Paragraph[1]šшоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа 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xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ0` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааa82a82ўшоаааа` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааггггааXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџААааCG Times (Scalable)CG Times Bold (Scalable)CG Times Italic 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NO. д YмУ4дI.С•СINTRODUCTION AND STATEMENT OF POLICYСШШ&СС  XССxxŠС1аа д YЎУ4дII.С•СGENERAL MARKET ENTRY BARRIERSСppєССШШ&СС  XССxxŠС12 д Y—У4д С•СA.С` ` ШСDefinitions and CharacteristicsССССppєССШШ&СС  XССxxŠС12 д Y€У4д С•СС` ` ШС1.СИ И њСDefinition of "Market Entry Barrier" СШШ&СС  XССxxŠС12Са а ЛС д YiУ4дС•СС` ` ШС2.СИ И њСDefinition of "Small Business"СppєССШШ&СС  XССxxŠС20 д YRУ4дС•СС` ` ШС3.СИ И њСCharacteristics of Small Telecommunications д Y;У4дС•СС` ` ШССИ И њСBusinessesСhh]ССРРСССССppєССШШ&СС  XССxxŠС29 д Y$У4дС•СB.С` ` ШСFinancial ImpedimentsСРРСССССppєССШШ&СС  XССxxŠС35Са а ЛСС(#(#эСд Y У4дС•СС` ` ШС1.СИ И њСThe RecordСhh]ССРРСССССppєССШШ&СС  XССxxŠС35 д YіУ4дС•СС` ` ШС2.СИ И њСCommission Measures ССССppєССШШ&СС  XССxxŠС42 д YпУ4д С•СC.С` ` ШСGeneral Regulatory ObstaclesССССppєССШШ&СС  XССxxŠС52 д YШ У4д С` ` ШС1.СИ И њСAccess to Commission Decisionmakers СШШ&СС  XССxxŠС53 д YБ!У4дС•СС` ` ШС2.СИ И њСCommission Procedure as an ObstacleСШШ&СС  XССxxŠС70 д Yš"У4дС•СС` ` ШС3.СИ И њСAccess to InformationССССppєССШШ&СС  XССxxŠС72 д"l$0*Ќ&Ќ&44˜&ї"д д YУ4дIII.С•СIMPEDIMENTS IN SPECIFIC SERVICES СppєССШШ&СС  XССxxŠС82 д YщУ4дС•СA.С` ` ШСCommon Carrier Services СРРСССССppєССШШ&СС  XССxxŠС82 д YвУ4да Шщ аС•СС` ` ШС1.СИ И њСInterconnection and Resale BarriersСШШ&СС  XССxxŠС84 д YЛУ4дС•СС` ` ШС2.СИ И њСEnforcement and the Complaint ProcessСШШ&СС  XССxxŠС86 д YЄУ4дС•СС` ` ШС3.СИ И њСInformation Filing Burdens ССССppєССШШ&СС  XССxxŠС91 д YУ4дС•СС` ` ШС4.СИ И њСImpact of Commission Proceedings on д YvУ4дС•СС` ` ШССИ И њСSmall TelcosСhh]ССРРСССССppєССШШ&СС  XССxxŠС93Са а ЛСС(#(#эСд Y_У4дС•СС` ` ШС5.СИ И њСExisting Universal Service Funding MechanismsС  XССxxŠС95 д YHУ4дС•СС` ` ШС6.СИ И њСImpartial Administration of NXXsСppєССШШ&СС  XССxxŠС100 д Y1У4дС•СС` ` ШС7.СИ И њСPreemption of Onerous State Requirements С  XССxxŠС106 д Y У4дС•СB.С` ` ШСWireless Services Сhh]ССРРСССССppєССШШ&СС  XССxxŠС109 д Y У4дС•СС` ` ШС1.СИ И њСSpectrum Assignment Policies СppєССШШ&СС  XССxxŠС110 д Yь У4дС•СС` ` ШС2.СИ И њСSpectrum Warehousing and Construction д Yе У4дС•СС` ` ШССИ И њСRequirements СРРСССССppєССШШ&СС  XССxxŠС117 д YО У4дС•СС` ` ШС3.СИ И њСApplication Processing and FilingСppєССШШ&СС  XССxxŠС122 д YЇ У4дС•СС` ` ШС4.СИ И њСEnforcement Policies ССССppєССШШ&СС  XССxxŠС126 д YУ4дС•СС` ` ШС5.СИ И њСOutreach Efforts СРРСССССppєССШШ&СС  XССxxŠС131 д YyУ4дС•СС` ` ШС6.СИ И њСInterconnection and Resale СppєССШШ&СС  XССxxŠС133 д YbУ4дС•СС` ` ШС7.СИ И њСDefinition of "Covered SMR"СppєССШШ&СС  XССxxŠС137 д YKУ4дС•СС` ` ШС8.СИ И њСCompetitive Bidding Incentives СppєССШШ&СС  XССxxŠС138 д Y4У4дС•СC.С` ` ШСCable Services Сhh]ССРРСССССppєССШШ&СС  XССxxŠС153Са а ЛС д YУ4дС•СС` ` ШС1.СИ И њСAccess to Programming and Related Obstacles С  XССxxŠС155 д YУ4дС•СС` ` ШС2.СИ И њСCable Technical Standards ССССppєССШШ&СС  XССxxŠС159 д YяУ4дС•СС` ` ШС3.СИ И њСAccess to Capital and the Definition д YиУ4дС•СС` ` ШССИ И њСof "Affiliate"Сhh]ССРРСССССppєССШШ&СС  XССxxŠС162 д YСУ4дС•СС` ` ШС4.СИ И њСFranchise Renewal Process ССССppєССШШ&СС  XССxxŠС165 д YЊУ4дС•СС` ` ШС5.СИ И њСLeased Access Requirements СppєССШШ&СС  XССxxŠС167 д Y“У4дС•СС` ` ШС6.СИ И њСAccess Contracts to Multiple Dwelling Units С  XССxxŠС170 д Y|У4дС•СС` ` ШС7.СИ И њСPole AttachmentЉRelated Impediments СШШ&СС  XССxxŠС173 д YeУ4дС•СС` ` ШС8.СИ И њСOther Matters СРРСССССppєССШШ&СС  XССxxŠС176 д YNУ4дС•СD.С` ` ШСMass Media Services СРРСССССppєССШШ&СС  XССxxŠС178 д Y7У4дС•СС` ` ШС1.СИ И њСLow Power Television ССССppєССШШ&СС  XССxxŠС180 д Y У4дС•СС` ` ШС2.СИ И њСWireless Cable СРРСССССppєССШШ&СС  XССxxŠС186 д Y У4дС•СС` ` ШС3.СИ И њСBroadcast Ownership ConsolidationСШШ&СС  XССxxŠС190 д YђУ4дС•СС` ` ШС4.СИ И њСFCC Policing of Abuse and Enforcement д YлУ4дС•СС` ` ШССИ И њСof RulesСhh]ССРРСССССppєССШШ&СС  XССxxŠС195 д YФ У4дС•СE.С` ` ШСOther Services Сhh]ССРРСССССppєССШШ&СС  XССxxŠС197 д Y­!У4дС•СС` ` ШС1.СИ И њСInternational Bureau ССССppєССШШ&СС  XССxxŠС197 д Y–"У4д С•СС` ` ШС2.СИ И њСOffice of Engineering and Technology СШШ&СС  XССxxŠС201 д Y#У4дС•СС` ` ШС3.СИ И њСCompliance and Information Bureau СШШ&СС  XССxxŠС206 д"Q%0*Ќ&Ќ&44'ї"д д YУ4дIV.ТX•ТUNIQUE OBSTACLES FOR SMALL BUSINESSES OWNEDЦ(#Ц д YщУ4дС•СBY WOMEN OR MINORITIES СРРСССССppєССШШ&СС  XССxxŠС210 д YвУ4д С•СA.С` ` ШСBackground СРРСССССppєССШШ&СС  XССxxŠС210 д YЛУ4д С•СB.С` ` ШСPrincipal Obstacles and Proposals д YЄУ4дС•СС` ` ШСIdentified in the RecordСРРСССССppєССШШ&СС  XССxxŠС215 д YУ4дС•СC.С` ` ШСOngoing Commission Evaluation ССССppєССШШ&СС  XССxxŠС221 д Y_У4дV.ТX•ТCONCLUSION С,ССhh]ССРРСССССppєССШШ&СС  XССxxŠС226Ц(#Ц д Y1У4дVI.С•СORDERING CLAUSESСhh]С СРРСССССppєССШШ&СС  XССxxŠС227 д Y У4дAPPENDIX AСИ И њСС,СList of Commenters and Forum Panelists д Yе У4дAPPENDIX BСИ И њСС,СFCC Outreach д ”UО У4дУУУ УФ ФФФУ УУУ д ”UУ4дI.С•СINTRODUCTION AND STATEMENT OF POLICY Ф Фб#XR,ф  P7ёjQ[hXP#бСШШ&С д YyУ4дФФ д YbУ4дС•Си‚1.иС` ` ШСSection 257 of the Telecommunications Act of 1996 (Telecommunications Act д YKа4дor 1996 Act)ж‰вKYд YФа4дСŠСTelecommunications Act of 1996, Pub. L. No. 104Љ104, 110 Stat. 56 (1996), Section 257. ‰ж requires the Commission to identify and eliminate "market entry barriers for entrepreneurs and other small businesses in the provision and ownership of telecommunications services and information services, or in the provision of parts or services д Yа4дto providers of telecommunications services and information services."жшвbYд Yа4дСŠС47 U.S.C. РР УУФФУУФФ257(a). Section 257 requires completion of the market entry barriers proceeding within fifteen months of enactment of the 1996 Act, which is May 8, 1997. шж In carrying out this mandate, the Commission must "promote the policies and purposes of this Act favoring diversity of media voices, vigorous economic competition, technological advancement, and д YСа4дpromotion of the а щщ аpublic interest, convenience and necessity."жmЄСќYд Ynа4дСŠС47 U.S.C. РР 257(b). In addition, every three years following the completion of the market entry barriers proceeding, the Commission must report to Congress on regulations that have been issued to eliminate barriers and any statutory barriers that the Commission recommends be eliminated. 47 U.S.C. РР 257(c). mж д ’Y“У4дС•Си‚2.иС` ` ШСThis УУReportФФ summarizes the Commission's implementation of Section 257, describes our strong commitment to continue to achieve its statutory goals, and outlines stepsд"~h 0*ћ$ћ$44+ї"д we plan to take in the future. Over the years, the Commission has undertaken various д Yща4дinitiatives to advance opportunities for small businesses.жQыщYд ’Ybа4дСŠСУУSee infraФФ n.12 at 6285Љ98.Qж We have been implementing д YвУ4дSection 257 agencyЉwide since its enactment on February 8, 1996. Our actions УУФФdemonstrate our intention to comply fully with the congressional directive of Section 257 and to advance д YЄУ4дthe clear proЉcompetitive and deregulatory goals of the 1996 Act. Specifically, УУФФwe have acted to identify and eliminate market entry barriers for small businesses, to remove or reduce impediments, and to increase opportunities for small business participation in the д Y_У4дtelecommunications market. УУФФThe Commission also has taken numerous measures designed to enhance new entry, competition, and innovation in the telecommunications market generally, д ’Y1У4дmost or all of which should benefit small businesses as well. The УУReportФФ details all of these д ’Y У4дefforts. Many of the measures described below occurred apart from this УУReportФФ УУФФin other Commission proceedings or through agency access and outreach endeavors, in which we integrated the mandate and policy goals of Section 257. д ’YТ У4дС•Си‚3.иС` ` ШСThe УУReportФФ also demonstrates our commitment to achieving the policy goals of д Y­ У4дSection 257(b). As described below, УУФФthe Commission has taken a variety of measures to fulfill the four national policy objectives set forth in Section 257(b). First, with respect to д YУ4д"vigorous economic competition," УУФФwe have defined the term "market entry barrier" in a manner that facilitates entry by small businesses yet avoids unwarranted regulatory д YQа4дintervention that could distort a competitive marketplace.жPыQ{Yд ’Y}а4дСŠСУУSee infraФФ РРРР 12Љ19.Pж By including only those impediments that significantly distort market operations and harm consumer welfare within the definition of "market entry barriers," the Commission has recognized that economically unjustified intervention actually would thwart the policy goal of promoting vigorous д YѕУ4дcompetition. УУФФ д YЧУ4дС•Си‚4.иС` ` ШСSecond, to promote "technological advancement," the Commission has taken steps to eliminate outdated, unnecessary, or burdensome requirements and procedures. We have undertaken substantial efforts to disseminate information to small entities and entrepreneurs about Commission processes and communications opportunities, and to increase access to Commission decisionmakers. We also have made additional spectrum д YTУ4дavailable which in turn should spur technological advancement.У УФ Ф These actions should foster the transfer of innovative ideas from the research laboratory to the consumer marketplace, and thereby advance technological development. Third, we will continue to consider the policy favoring "diversity of media voices," in our review of broadcast ownership rules andд".0*ћ$ћ$44ёї"д д Yа4дin other appropriate contexts,жXыYд ’Yyа4дС•СУУSee infraФФ РРРР 190Љ194 & 196.Xж as well as in our further evaluation of issues relating to small д Yща4дbusinesses owned by women or minorities.жRыщ{Yд ’Yа4дС•СУУSee infraФФ РРРР 221Љ225.Rж Finally, we anticipate that our Section 257 actions thus far, combined with our ongoing commitment to enhance opportunities for small businesses, will promote the fourth policy goal of serving the "public interest, convenience, and necessity" by expediting entry in the telecommunications market, encouraging development of new, innovative communications services, facilitating the availability of services in various geographic markets, and contributing to a vibrant, competitive telecommunications marketplace. д ’Y1У4дС•Си‚5.иС` ` ШСThis УУReportФФ also reflects our independent recognition of the crucial role that small businesses play in the U.S. economy. As we already emphasized earlier in this proceeding, small businesses not only constitute the vast majority of all employers in this country, but are able to innovate faster than larger firms and to serve niche markets that may д Yз а4дnot be served by large corporations.жQыз .Yд ’YЖа4дС•СУУSee infra ФФn.12 at 6283Љ84.Qж У УФ ФSmall businesses contribute 47% of all sales in the United States, are responsible for 50% of the private gross domestic product, employ 53% of the private workforce, and produced an estimated 75% of the 2.5 million new jobs created д Y’а4дduring 1995.жд ж’сYд ’Y$а4дС•СУУФФU.S. Small Business Administration, УУThe Facts About Small BusinessФФ, information д ’YУ4дpamphlet FS0040, dated Aug. 1996 (УУSBA FactsФФ).дж Small businesses also produce more than twice the number of innovations per employee as large firms. In addition, while only 3% of the employees in large enterprises work in research and development, 19% of the employees in comparable small enterprises д YMа4дwith intellectual property work in research and development.ж: ыMYд ’Y}а4дС•СУУId.ФФ:ж Despite their important role, д Y6а4дsmall businesses represent only a small portion of the businesses in telecommunications.ж) П62 Yд ’Yа4дС•СУУSee ФФSmall Business Administration Comments at 5Љ9. For example, in 1991, 93% of firms in highЉtechnology industries were small (fewer than 500 employees) but had only 19% д ’YэУ4дof total industry receipts. УУSBA FactsФФ. )ж д YУ4дУ УТX•ТФ ФЦ(#Ц д YУ4дУ УФ ФС•Си‚6.иС` ` ШСWe initiated an omnibus Section 257 proceeding in May 1996 by adopting a д ’YёУ4дУУNotice of InquiryФФУУФФ. УУ Section 257 Proceeding to Identify and Eliminate Market Entry Barriersд"ёЙ 0*ћ$ћ$44ї"д д ’Yа4дfor Small Businesses (Market Entry Barriers Notice of InquiryФФ).ж~ ыYд ’Yyа4дС•СУУMarket Entry Barriers Notice of InquiryФФ, 11 FCC Rcd 6280 (1996). УУФФ~ж УУФФWУУФФe asked how to define small businesses, requested profile data about the characteristics of small telecommunications д YдУ4дbusinesses, inquired about market entry barriers for small businesses generally, and У УФ ФУ УФ ФУ УФ ФУУФФasked д YНУ4дwhether УУФФsmall businesses owned by minorities or women face unique market entry barriers. д YІУ4дOver 80 entities filed УУФФcommentsУУФФ. The commenters rУУФФУУФФepresent every sector of the telecommunications market and include individual entrepreneurs, small businesses, large communications companies, associations, federal and state government representatives, д Yaа4дtelecommunications policy groups, women's organizations, and minority interests.ж• дa{Yд ’Y а4дС•СA list of parties and the abbreviations of each used in this УУReportФФ is provided in Appendix A.•ж Three д YJУ4дparties ЉЉ УУФФAmerican Mobile Telecommunications Association, Small Business in Telecommunications and the National Wireless Resellers Association ЉЉ conducted д Y а4дindependent surveys of their members and provided УУФФsurvey results in their comments.жРO Yд Yфа4дС•СAmerican Mobile Telecommunications Association Comments at 1Љ11 (50 survey respondents); Small Business in Telecommunications Comments at 62Љ66 (10,000 surveys д ’YЖУ4дsent); National Wireless Resellers Association Comments at УУФФ3 (19 survey respondents). УУSee д ’YЁУ4дalsoФФ Shark Testimony at 1Љ2. УУФФУУФФУУФФ We discuss the survey results in various sections below. American Mobile Telecommunications Association is a nationwide, nonЉprofit trade association representing the interests of the specialized wireless communications industry. Its members include trunked and conventional 800 MHz and 900 MHz Specialized Mobile Radio (SMR) operators, licensees of wideЉarea SMR systems, and commercial licensees in the 220 MHz band. American Mobile Telecommunications Association states that its members provide commercial wireless services throughout the country and include a significant number of entities that would qualify as "small business" under even the most stringent definition. Small Business in Telecommunications is a nonЉprofit trade association representing paging companies, tower owners, private carriers, commercial mobile radio service operators, microwave licensees and community repeater operators. The association limits voting rights to persons and companies with annual revenues of less than $20 million. National Wireless Resellers Association represents resellers of cellular, longЉdistance, paging, landline local exchange, personal communications, and specialized mobile radio services. The majority of respondents to its survey report annual gross revenues of $15 д YJ У4дmillion or less.УУФФРж д Y У4дFinally, in conjunction with this proceeding, УУФФthe Office of General Counsel and the Office of Communications Business Opportunities (OCBO) held a public forum on September 24,д"ю .0*ћ$ћ$44Л ї"д д Yа4д1996.жЬжYд ’Yyа4дС•СFCC Public Notice, УУForum on Small Business Market Entry BarriersФФ, No. 64975 д ’YdУ4д(Sept. 5, 1996) (УУMarket Entry Barriers ForumФФ). Ьж УУФФThe panelists represented small telecommunications businesses, associations, government entities, public interest organizations, and the financial and advertising д Yва4дindustries.жŒывfYд ’Yща4дС•СУУSeeФФ УУФФAppendix A (identifies panelists at the УУMarket Entry Barriers ForumФФ).Œж д YЄУ4дС•Си‚7.иС` ` ШСIn October 1996, when the formal comment period closed in the omnibus д Yа4дSection 257 proceeding,жœ=Yд ’YW а4дС•СThe original filing deadlines established for the УУMarket Entry Barriers Notice of д ’YB У4дInquiryФФ were July 24, 1996 (comments) and August 23, 1996 (reply comments). In response д ’Y- У4дto subsequent public requests, we twice extended the original filing deadlines. УУSection 257 д ’YУ4дProceeding to Identify and Eliminate Market Entry Barriers for Small Businesses, ФФOrder,УУ д YУ4дФФDA96Љ1100 УУФФ(released July 9, 1996) (extending deadlines to August 23, 1996 (comments) and д ’YьУ4дSeptember 12, 1996 (reply comments)); УУФФУУSection 257 Proceeding to Identify and Eliminate д ’YзУ4дMarket Entry Barriers for Small Businesses, ФФOrder,УУ ФФDA96Љ1433 УУФФ(released Aug. 23, 1996) (extending deadlines to September 27, 1996 (comments) and October 11, 1996 (reply comments)).œж we began immediately to evaluate the barriers and impediments identified by the commenters, and to consider the specific suggestions in the record, which relate to every communications service within our jurisdiction. Many of the parties' recommendations concern other ongoing Commission rulemakings, and therefore, must be addressed and resolved under the timeframes and in the context of the records in those д Y У4дseparate proceedings. С,С д Yь У4дС•Си‚8.иС` ` ШСУУФФHowever, we have adopted many of the commenters' principal proposals. We д ’Yе У4дalso have initiated other measures. As described in this УУReportФФ, some of our key measures д YР У4дimplementing Section 257 to date are: УУФФdeciding to use serviceЉspecific definitions of small businesses, rather than adopting a general definition; planning new initiatives that will better enable small businesses to file comments and participate in Commission proceedings; requiring the Bureaus and Offices to ensure that our rulemaking processes enable meaningful comment on Commission proposals and their impact on small businesses; instituting rulemaking proceedings so as to ensure effective and prompt enforcement of the Communications Act and our rules; reducing information filing and other burdens that create obstacles to entry for small businesses; ensuring that the Commission fully considers the interests of small carriers in proceedings to determine funding mechanisms for universal service support; adopting licensing incentives to facilitate small business participation in spectrum auctions; adopting and proposing policies that permit geographic partitioning andд"к0*ћ$ћ$44Oї"д spectrum disaggregation in various wireless communications services; adopting spectrum initiatives to encourage technological innovation by equipment manufacturers and others; speeding resolution of complaints; sponsoring conferences on telecommunications services and financing options; increasing public access to the Commission through technology by creating sites on the World Wide Web and establishing the National Call Center; and making continued efforts to ensure that the Telecommunications Development Fund (TDF or Fund) becomes an effective vehicle for removing financial obstacles to entry. д YHУ4дС•Си‚9.иС` ` ШСThe record in our omnibus Section 257 proceeding thus has provided valuable information to assist us in reducing market entry barriers, and increasing entry and expansion of small businesses in the telecommunications market. It is our goal, through the measures д ’Y У4дdescribed in this УУReportФФ and our ongoing implementation of Section 257, to facilitate delivery to the telecommunications industry the attributes and benefits that small businesses have д ’Yз У4дbrought to other sectors of the economy. As this УУReportФФ demonstrates, we shall give careful consideration to the commenters' recommendations as we proceed to vigorously pursue the statutory objective of eliminating obstacles to entry and thereby to ensure a vibrant and д Y”а4дstrong telecommunications marketplace.жЉІ”Yд Y а4дС•СBecause we are implementing Section 257 on a continuing basis and through various д ’YіУ4дCommission proceedings, the absence of discussion in this УУReportФФ of any identified barrier, obstacle, proposal, or other comment from the record in this docketed proceeding thus far does not mean that we are not still considering the idea or that we have rejected it. Љж С•С д ’YfУ4дС•Си‚ 10.иС` ` ШСWe point out that this УУReportФФ focuses primarily on initiatives that relate to small businesses generally. As explained below, prior to taking any action specifically oriented to small businesses owned by women or minorities, we must fully evaluate the Section 257 record according to the constitutional requirements that govern action by the д Y а4дfederal government based on race (strict scrutiny) or gender (intermediate scrutiny).жUы 6Yд ’Yѓа4дС•СУУSee infra ФФУУФФУУФФPart IV.Uж УУФФ We are currently evaluating these issues and expect to release a more extensive report later this д YоУ4дyear. У УФ ФAs part of this evaluation, we У УФ Фare conducting a comprehensive study of the participation of small businesses, including those owned by women and minorities, in the telecommunications market. д ’Y‚У4дС•Си‚ 11.иС` ` ШСThis УУReportФФ contains several parts. Beginning with Part II, УУФФweУУ ФФdiscuss obstacles to entry identified by commenters that affect small telecommunications businesses д YVа4дas a whole: financial impediments,жVыVщYд ’Y№#а4дС•СУУSee infraФФ РРРР 35Љ51.УУФФVж and general regulatory obstacles, which includeд"Vœ0*ћ$ћ$44 "д difficulties in obtaining access to Commission decisionmakers and information about new д Yща4дcommunications services.жVыщYд ’Ybа4дС•СУУSee infraФФ РРРР 52Љ81УУФФ.Vж We also discuss measures to address these impediments, д Yва4дincluding establishment of the TDFж\ыв{Yд ’Yўа4дС•СУУSee infraФФ РРРР 44Љ50УУФФУУФФ.\ж and outreach efforts by the FCC Office of Public д YЛа4дAffairs and Office of Communications Business Opportunities.ж\ыЛ.Yд ’Yšа4дС•СУУSee infraФФ РРРР 52Љ81УУФФУУФФ.\ж Part III УУФФfocuses on obstacles д YЄа4дthat relate to particular types of communications services: common carrier services,ж]ыЄсYд ’Y6 а4дС•СУУSee infraФФ РРРР 82Љ108УУФФУУФФ.]ж д Yа4дwireless telecommunications services,жRы”Yд ’Yв а4дС•СУУSee infraФФ РРРР 109Љ152.Rж cable services,жRыG Yд ’Y…а4дС•СУУSee infraФФ РРРР 153Љ177.Rж mass media services,жRыњ Yд ’Y8а4дС•СУУSee infra ФФРРРР 178Љ196.Rж and д Yvа4дinternational services.жRыv­ Yд ’Yда4дС•СУУSee infraФФ РРРР 197Љ200.Rж Part III also addresses spectrum allocation initiatives,ж^ыv`Yд ’Y‡а4дС•СУУSee infraФФ РРРРУУФФУУФФ 201Љ205.^ж as well as д Y_а4дoutreach activities of the Commission's Compliance and Information Bureau.жRы_Yд ’Y#а4дС•СУУSee infraФФ РРРР 206Љ209.Rж Finally, Part IV addresses unique market entry issues experienced by small businesses owned by women д Y1а4дor minorities.жeы1ЦYд ’YЈа4дС•СУУSee infraФФ РРРРУУФФУУФФУУФФ 210Љ225. eж д ”U У4дУУУ УII.С•СGENERAL MARKET ENTRY BARRIERS д Yь У4дФ ФФФ д ”Uе У4дУ УС•СУУA.С` ` ШСDefinitions and Characteristics д ”UЇ У4дС•СС` ` ШС1.СИ И њСDefinition of "Market Entry Barrier"Ф Ф д YУ4дФФ д YyУ4дС•С и‚ 12.иС` ` ШСAs discussed above, the purpose of this proceeding is to "identify and eliminate . . . market entry barriers for entrepreneurs and other small businesses" inд"b y0*ћ$ћ$44Цї"д д Yа4дtelecommunications markets.жG щYд Yyа4дС•С47 U.S.C. РР 257(a).Gж Section 257(b) states that in carrying out this task, the Commission "shall seek to promote the policies and purposes of this Act favoring diversity of media voices, vigorous economic competition, technological advancements, and promotion of д YЛа4дthe public interest, convenience, and necessity."жG!щЛyYд Yха4дС•С47 U.S.C. РР 257(b).Gж д ’YУ4дС•С и‚ 13.иС` ` ШСIn the УУMarket Barriers Notice of InquiryФФ, we observed that "market entry barriers" could include: ТX•ТТX` ` ШТobstacles that deter individuals from forming small businesses, barriers that impede entry into the telecommunications market by existing small businesses, and obstacles that small telecommunications businesses face in providing service or д Yю а4дexpanding within the telecommunications industry. . . .жВ"Јю *Yд ’YЩа4дС•СУУMarket Barriers Notice of InquiryФФ, 11 FCC Rcd at 6283. We also stated that д ’YДУ4дdiscrimination could be a market entry barrier as well. УУId. ФФat 6305Љ6306. УУSee also infraФФ д YŸУ4дРРРРУУФФ 210Љ225УУФФ (addresses unique obstacles facing small telecommunications businesses owned by д YˆУ4дwomen or minorities). УУФФВжЦx` Ц In their comments, parties discussed various kinds of obstacles and impediments that are д ’YЉ У4дcurrently faced by small telecommunications businesses. In this УУReportФФ, we discuss these obstacles and impediments without deciding whether they qualify as "market entry barriers." It is important to note that not all impediments to small business participation in the telecommunications industry qualify as "market entry barriers" relevant to Section 257(a). We also describe several other Commission initiatives to encourage small business д ’Y8У4дparticipation in the telecommunications industry. In this regard, we believe that this УУReportФФ goes beyond what Section 257(a) requires. д YѕУ4дС•Си‚ 14.иС` ` ШСAmerica's Carriers Telecommunications Association requests that the Commission construe "market entry barrier" in a commercially effective manner so as to "create a competitive environment which permits small business' ability to expand their д YАа4дmarket presence once entry has been achieved."жs#щАšYд Yћ!а4дС•СAmerica's Carriers Telecommunications Association Comments at 2Љ3.sж The Small Business Administration notes that Section 257 "does not define or limit" the term "market entry barrier" and recommendsд"™ K #0*ћ$ћ$44Aї"д д Yа4дthat the Commission construe the term "as aggressively as possible."ж]$щYд Yyа4дС•СSmall Business Administration Comments at 3.]ж Telecommunications Resellers Association claims that the market "is an effective regulator only if market forces are adequate to discipline the behavior of all market participants; if one or more such participants retains vestiges of market power, regulatory intervention is essential to protect д YЄа4дthe public interest."жl%щЄyYд YЮа4дС•СTelecommunications Resellers Association Comments at 13Љ14.lж It argues further that "[r]egulatory intervention, therefore, continues to be necessary to ensure opportunities for small resale carriers in markets that are still dominated by much larger providers . . . [and that] [s]uch action could be deregulatory, д Y_а4дbut it also could require regulatory measures."жA&ы_*Yд ’Y: а4дС•СУУId.ФФ at 14.Aж д Y1У4д С•Си‚15.иС` ` ШСAT&T opposes our original construction of "market entry barrier," stating that the 1996 Act did not intend the Section 257 proceeding "to carve out certain market niches as д Y а4дthe preserve of small companies, or to subsidize their competition against larger entities."жD'щ нYд Y‘а4дС•СAT&T Comments at 2.Dж AT&T points out that barriers to small firm entry may simply result from the fundamental structure of a given market ЉЉ for example, a market where there may be efficiencies due to д YО а4дeconomies of scale, or where a large upЉfront investment is required to begin operations.ж:(ыО ŽYд ’Y§а4дС•СУУId.ФФ:ж д YУ4дС•Си‚16.иС` ` ШСFrom a public policy perspective, and consistent with the "proЉcompetitive, deЊд Yyа4дregulatory national policy framework" established by Congress in the 1996 Act,жЃ)вyA Yд Ykа4дС•СStatement of Managers, S. Conf. Report No. 104Љ230, 104th Cong., 2nd Sess. 1 (1996) (Joint Explanatory Statement).Ѓж we do not regard all impediments or obstacles to small business entry to necessarily be "market entry barriers" that require governmental intervention under Section 257. Instead, we believe that the term "market entry barrier" as used in Section 257(a) is primarily intended to encompass those impediments to entry within the Commission's jurisdiction that justify regulatory intervention because they so significantly distort the operation of the market and harm consumer welfare. Removing these impediments will, in our opinion, facilitate the entry or expansion of small businesses into telecommunications markets as required by Section 257(a) and also fulfill the national policy goals articulated in Section 257(b). д"Њ л )0*ћ$ћ$44dї"дŒд YУ4дС•Си‚17.иС` ` ШСOur decision that not all obstacles or impediments to small business entry warrant regulatory intervention under Section 257 is consistent with economic teaching and Commission precedent. In particular, economists have not regarded all obstacles and impediments to entry as fitting within the definition of "barrier to entry" and have instead proffered more narrow definitions. Two rival definitions of entry barriers currently dominate д Yа4дindustrial organization economics.жJ*СYд ’Yа4дС•СУУSee generallyФФ УУAnnual Assessment of the Status of Competition in the Market for the д ’YёУ4дDelivery of Video ProgrammingФФ, First Report, 9 FCC Rcd 7442, Appendix H at 7621Љ27, д ’YмУ4дРРРР 29Љ44 (1994) (УУ1994 Cable Competition ReportФФ).Jж First, economist J.W. Bain specified three sources of entry barriers in discussing the benefits of incumbency: the absolute cost advantages of an incumbent firm, economies of scale, and product differentiation advantages of an д YHа4дincumbent.жe+ыHQYд ’YJ а4дС•СJ.W. Bain, УУBarriers to New CompetitionФФ (1956).eж In general, Bain viewed the value of incumbency as a "barrier to entry."жи,вHYд Y§а4дС•СArguments that the FCC should act affirmatively to counterbalance these benefits of size and incumbency so as to advantage smaller firms reflect the Bainian viewpoint.иж In contrast, economist George Stigler sought to define a barrier to entry as "a cost of producing . . . which must be borne by a firm which seeks to enter an industry but is not borne by д Y а4дfirms already in the industry."жq-ы žYд ’YRа4дС•СGeorge J. Stigler, УУThe Organization of IndustryФФ 67 (1968).qж More recently, Christian von Weizsacker proposed to restrict Stigler's definition to encompass costs that create inefficiency and thus distort the д Yе а4дoperation of the market to a sufficient degree that regulatory intervention is warranted.жк.Ф е Q Yд ’Yза4дС•СC.C. von Weizsacker, УУA Welfare Analysis of Barriers to EntryФФ, 11 Bell J. Econ. 400 (1980). Baumol, Panzar and Willig discuss a concept similar to von Weizsacker's, calling those types of impediments as being those of most concern to government. William J. д ’Y”У4дBaumol, John C. Panzar & Robert D. Willing, УУContestable Markets and the Theory of д ’YУ4дIndustry StructureФФ 282 (1982) ("unlike von Weizsacker's, our definition seeks to specify operationally what types of impediments meet its criteria, [and] we hope to show . . . that our criterion and his overlap in substance. That is, we argue that anything that is an entry barrier by our definition does reduce the sum of consumers' and producers' surplus, while phenomena such as fixed costs and scale economies need not do so."). С•СThe Stigler/von Weizsacker position is roughly analogous to AT&T's position that advantages of size and scope often are beneficial to consumers. Therefore, AT&T contends, an affirmative governmental policy to force viable smallЉscale entry would not only forego the efficiencies of size and scope but also would be contrary to the intent of Section 257.кж д"е н.0*ћ$ћ$44В "дŒд YУ4д™С•Си‚18.иС` ` ШСA critical difference between the Bainian definition and the others involves д Yща4дeconomies of scale and scope.ж:/|щYд Ybа4дС•СAn "economy of scale" describes a condition where relatively large producers can produce and market their products at a lower average cost per unit than relatively small д ’Y4У4дproducers. УУSee ФФF.M. Scherer & David Ross, УУIndustrial Market Structure and Economic д ’YУ4дPerformanceФФУУ 97ФФ (1990). An "economy of scope" describes a condition where "costs are д ’Y У4дreduced by producing two or more products jointly, rather than in specialized firms." УУId.ФФ at 361.:ж The Bainian definition would consider economies of scale and scope to be a barrier to entry, while the others would view such economies as a barrier only under certain circumstances. The Stiglerian approach would state that as long as both the incumbent and the entrant can achieve largeЉscale production facilities at the same cost, economies of scale do not meet the definition of a barrier to entry, but if the cost of achieving scale or scope economies is higher for the entrant than the incumbent, the efficient д Y_а4дoperation of the market may be affected to the detriment of consumer welfare.ж0F_ Yд Yа4дС•СThe presence of sunk costs can have this effect. Sunk costs are costs that cannot be д ’YУ4дeliminated even by a total cessation of production. УУSeeФФ Baumol, Panzar & Willig at 280. For example, the costs of constructing a telecommunications network may be viewed as sunk costs ЉЉ that is, the network may not be useful for anything else. If entry into an industry requires large sunk costs, the firm that incurs these sunk costs first (the incumbent) can have a tremendous advantage. Potential new entrants may realize that any large scale facilitiesЊbased entry into the market will probably force prices to decrease and those prices may be in fact below the point necessary to recover the sunk cost investment. As a result, facilitiesЊд ’YfУ4дbased entry will be deterred. УУSeeФФ Robert Wilson, УУStrategic Models of Entry DeterrenceФФ, 1 д ’YQУ4дУУHandbook of Game Theory with Economic ApplicationsФФ (1992). To counterbalance these entry barriers, the 1996 Act provides two means of entry that do not require competitive local exchange companies to construct complete networks before they can begin to offer services ЉЉ the use of unbundled elements of the incumbent's network, and resale. Resale also has been used by entrants to enter other telecommunications markets, such as longЊд ’YрУ4дdistance. УУSee Implementation of the Local Competition Provisions of the Telecommunications д ’YЫУ4дAct of 1996ФФ, First Report and Order, 11 FCC Rcd 15499, 16145 (1996) (УУFirst ФФУУLocal д ’YЖУ4дCompetition OrderФФ), Order on Reconsideration, 11 FCC Rcd 13042 (1996), УУpetition for д ’YЁУ4дreview and partial stay granted sub nom.ФФ, УУIowa Util. Board v. FCCФФ, No. 96Љ3221 and д ’YŒУ4дconsolidated cases (8th Cir. Oct. 15, 1996), УУpartial stay lifted in partФФ, УУIowa Util. Board v. д ’Yw У4дFCCФФ, No. 96Љ3321 and consolidated cases (8th Cir. Nov. 1, 1996). УУФФж At that point, under the Stiglerian approach, economies of scale or scope may act as a barrier to entry. д" 00*ћ$ћ$44Р ї"дŒд YУ4дС•Си‚19.иС` ` ШСAs explained above, we believe that the term "market entry barrier" as used in Section 257(a) is primarily intended to encompass those impediments to entry within the Commission's jurisdiction that so significantly distort the operation of the market and harm consumer welfare that they justify regulatory intervention. This construction of "market entry barrier" is consistent with the position the Commission has taken in the annual д Yа4дassessment of the state of competition in the cable television industry.жУ1=Yд ’Yа4дС•СУУSee 1994 Cable Competition Report,ФФ 9 FCC Rcd at 7622 ("From a public policy perspective, not all impediments, however are necessarily barriers to entry that require some д ’YкУ4дtype of government intervention or remediation. For purposes of this УУReportФФ, costs borne by entrants but not incumbents that have adverse effects on consumer welfare are defined as д ’YЎ У4дpolicyЉrelevant barriers to entry."); УУAnnual Assessment of the Status of Competition in the д ’Y™ У4дMarket for the Delivery of Video Programming, ФФSecond Annual ReportУУФФ, 11 FCC Rcd 2060 at д ’Y„ У4дРРРР 205Љ214 (1995); УУФФУУAnnual Assessment of the Status of Competition in the Market for the д ’Yo У4дDelivery of Video Programming, ФФThird Annual ReportУУФФ, CS Docket No. 96Љ133, FCC 96Љ496 д YZУ4дУУФФУУФФ(released Jan. 2, 1997).УУФФУж It is also consistent д Yvа4дwith AT&T's view that "not all markets can be easily penetrated by all firms."жD2щvЭ Yд Yєа4дС•СAT&T Comments at 2.Dж It is not our objective to make viable small business entry into every sector of the telecommunications and information services industries because there may be legitimate efficiency reasons that favor largeЉscale operation. Finally, our construction of the term "market entry barrier" does not in any way limit our broad obligation under Section 253 of the Act to preempt state or local legal requirements that "may prohibit or have the effect of prohibiting the ability of д Yь а4дany entity to provide any interstate or intrastate telecommunications service."жG3щь ~ Yд Yа4дС•С47 U.S.C. РР 253(a).Gж д ”UО У4дУ УС•СУУФ ФФФУУУ УС` ` ШС2.СИ И њСDefinition of "Small Business" Ф ФФФ д ’YУ4дУУУ УФФУУФ ФФФС•СУ УУУФ ФФФУУФФи‚20.иС` ` ШСIn the УУMarket Entry Barriers Notice of InquiryФФ, we requested comment on how small businesses should be defined under Section 257. Specifically, we asked whether we should define the term by the number of employees, gross revenues, net revenues, assets or any other factors. In addition, we asked whether we should adopt a general size standard or a specific standard for particular services. We also sought comment on whether we should use other factors such as minimum capital requirements, debt/equity ratios, cash flow, net д Yа4дworth or other indicia of a business' ability to enter and compete in the marketplace.жs4ы/ Yд ’Yш"а4дС•СУУMarket Entry Barriers Notice of InquiryФФ, 11 FCC Rcd at 6307.sж д"ёт40*ћ$ћ$44eї"дŒд YУ4дС•Си‚21.иС` ` ШСУУФФThe Commission historically has used a number of different size standards to define small businesses, depending on the particular communications service. For example, in establishing special incentives for small businesses to participate in the Commission's spectrum auctions, we have used a range of size standards, generally depending on the capital requirements of the particular service. Thus, in the broadband Personal Communications Services (PCS) "C" block auction, we limited participation to applicants д YvУ4дthat, together with their УУФФaffiliates and persons or entities that hold interests in the applicant д Y_У4дand their УУФФaffiliates, have УУФФgross revenues of less than $125 million in each of the last two д YHа4дyears and УУФФtotal assets of less than $500 million.жM5щHYд YС а4дС•С47 C.F.R. РР 24.709(a)(1).Mж A small business was defined as one that, together with its affiliates has average annual gross revenues that are not more than $40 д Y а4дmillion for the preceding three calendar years.жл6e yYд YD а4д С•С47 C.F.R. РР 24.720(b)(1995). The same approach was originally taken with the Broadband PCS "F" block. However, the Commission subsequently adopted a tiered small д ’YУ4дbusiness definition for this entrepreneur block. SУУee Amendment of Parts 20 and 24 of the Commission's Rules ЉЉ Broadband PCS Competitive Bidding and the Commercial Mobile д ’YъУ4дRadio Service Spectrum CapФФ, Report and Order, 11 FCC Rcd 7824, 7852 (1996) (УУD, E & F д ’YеУ4дBlock Competitive Bidding OrderФФ) (defining "small business" using a $40 million threshold д YРУ4дand "very small business" using a $15 million threshold).УУФФУУФФУУФФлж In contrast, for certain other auctionable д Y а4дservices, the Commission has adopted tiered size standards.жќ7…щ І Yд ’YZа4дС•СУУSee, e.g.,ФФ УУRevision of Part 22 and Part 90 of the Commission's Rules to Facilitate д ’YEУ4дFuture Development of Paging Systems,ФФ Second Report and Order and Further Notice of д ’Y0У4дProposed Rulemaking, 12 FCC Rcd 2732, 2811 (1997) (УУPaging Second Report and OrderФФ) (small business is defined as an entity that, together with affiliates and controlling principals, has average gross revenues for the three preceding years of not more than $3 million or not д ’YэУ4дmore than $15 million); УУAmendment of the Commission's Rules to Establish Part 27, the д ’YиУ4дWireless Communications ServiceФФ, Report and Order, GN Docket No. 96Љ228, FCC 97Љ50 д ’YУУ4д(released Feb. 19, 1997) at РР 194 (УУWCS Report and OrderФФ) (small business is defined as an entity with average gross revenues not exceeding $40 million or $15 million in each of the preceding three years); 47 C.F.R. РР 90.912(b)(1) (for purposes of the upper 10 MHz of 800 MHz Specialized Mobile Radio (SMR) service, a small business is defined as one that, together with its affiliates, persons or entities that hold attributable interests in such entity, and their affiliates, has average gross revenues that are not more than $3 million or not more than $15 million for the preceding three years); 47 C.F.R. РР 90.814(b)(1) (for purposes of the 900 MHz SMR service, a small business is defined as one that, together with its affiliates, persons or entities that hold attributable interests in such entity, and their affiliates, has average gross revenues that are not more than $3 million or not more than $15 millionд"і#60*ћ$ћ$ААз$ї"д for the preceding three years).ќжд" y70*ћ$ћ$44З "дŒд YУ4д™С•Си‚22.иС` ` ШСWe also have adopted small business definitions for a variety of purposes other than auctions. For example, in determining eligibility for cable rate regulatory relief under the Communications Act, the Commission defined a "small cable company" as a "cable television operator that serves a total of 400,000 or fewer subscribers over one or more cable д YЄа4дsystems."ж@8vЄyYд YЮа4дС•С47 C.F.R. РР 76.901(e). For purposes of determining eligibility for relief from regulation of cable programming service tier rates, Section 623(m)(2), as added by the Telecommunications Act, subsequently defined "small cable operator" as a "cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000." 47 U.S.C. РР 543(m)(2).@ж In addition, the Commission has exempted broadcast stations with fewer than д Yа4дfive employees from annual employment report requirements.жт9дЗYд ’Yѕа4дС•С47 C.F.R. РР 73.2080. УУSee alsoФФ 47 C.F.R. РР 76.79 (cable systems with fewer than six fullЉtime employees are exempt from cable annual employment report requirements).тж Finally, the Commission has used size standards as a basis for analyzing the impact of its rules on small business entities д Y_а4дpursuant to the Regulatory Flexibility Act.жC:щ_S Yд Ycа4дС•С5 U.S.C. РР 603.Cж In this regard, the Commission has relied on a number of different size standards promulgated by the Small Business Administration to д Y1а4дdetermine the number of small businesses affected by its rules.ж;З 1 Yд Yца4дС•СFor example, for purposes of an Initial Regulatory Flexibility Analysis for its proposed table of allotments for digital television, the Commission relied on the Small д ’YИУ4дBusiness Administration's size standards for television business entities. УУSee Advanced д ’YЃУ4дTelevision Systems and Their Impact upon the Existing Television Broadcast ServiceФФ, Sixth д ’YŽУ4дFurther Notice of Proposed Rulemaking, 11 FCC Rcd 10968, 11060 (1996) (УУDTV Sixth д ’YyУ4дFurther NoticeФФ). In analyzing the impact of newly promulgated cellular service auction rules, the Commission relied on the Small Business Administration's size standard applicable to д ’YMУ4дradiotelephone carriers. УУImplementation of Section 309(j) of the Communications Act ЉЉ д ’Y8У4дCompetitive BiddingФФ, Ninth Report and Order, 11 FCC Rcd 14760 (1996). Under this definition, radiotelephone carriers employing no more than 1,500 employees constitute small business concerns under the Small Business Administration's rules. 13 C.F.R. РР 121.201. In addition, in our interconnection order, the Commission stated, as it had previously, that incumbent local exchange carriers (LECs) do not constitute small businesses for purposes of д ’YЧ"У4дthe Regulatory Flexibility Act because they are dominant in their field of operation. УУФФУУFirst д ’YВ#У4дLocal Competition OrderФФ, УУФФ11 FCC Rcd at 16145. жд"1ƒ;0*ћ$ћ$44ж"дŒд YУ4д™С•Си‚23.иС` ` ШСУУФФThose parties commenting on the issue of whether we should adopt a general size standard or specific standards for particular services seem to prefer the latter approach. The Small Business Administration argues that the size standards already in place for all types of small telecommunications carriers have served small businesses well and the Commission has not explained why they should be jettisoned for purposes of this д Yа4дproceeding.жa<щYд Yа4дС•СSmall Business Administration Comments at 11Љ12.aж The Small Business Administration also notes that it would be virtually impossible to develop a single definition of small businesses given the diversity inherent in д Y_а4дthe telecommunications industry.жG=ы_yYд ’Y‰ а4дС•СУУУУФФIdФФ. at 12.Gж It argues that a single definition would be contrary to the intent of the Small Business Act, which specifies that the Administrator is to make a detailed definition and that definitions shall vary from industry to industry to the extent necessary to д Y а4дreflect differing characteristics of such industries.ж:>ы ,Yд ’Yїа4дС•СУУId.ФФ:ж Similarly, America's Carriers Telecommunications Association suggests that the Commission fashion policy on the basis of д Yь а4дidentifiable spheres of services being offered.жw?щь пYд Y|а4дС•СAmerica's Carriers Telecommunications Association Comments at 22 n.10.wж д YО У4дС•Си‚24.иС` ` ШС The Small Business Administration and other commenters also question the д YЇ а4дCommission's authority to adopt a new small business definition.ж’@вЇ Yд Yша4дС•СSmall Business Administration Comments at 11; Small Cable Business Association Comments at 22Љ24.’ж They argue that, because the 1996 Act does not give the Commission express authority to adopt a small business size standard for the specific purpose of implementing Section 257, the Commission must comply with the Small Business Act's requirement to, among other things, obtain approval from the д YKа4дSmall Business Administration Administrator for any new size standards.жgAыK* Yд ’Y&а4дС•СУУId.ФФ УУSee alsoФФ 15 U.S.C. РР 632(a)(2)(C).gж д YУ4дС•Си‚25.иС` ` ШСWe agree with those commenters who suggest that the Commission should not adopt a small business definition based on a general size standard. Rather, we believe the more appropriate course is to continue adopting specific size standards tailored to individual services. As the Small Business Administration points out, it would be extremely difficult to create a definition that transcends all of the various services that are implicated by Section 257. The comments also demonstrate that each service has its own characteristics. Differentд"Њн A0*ћ$ћ$44dї"д services have different levels of capital intensity as a result of many factors, including the д YщУ4дmethod of allocation,УУФФ service area definitions,УУФФ and the method of assignment. This necessarily affects the types of incentives we might consider for a particular service and the types of businesses to whom we would offer such incentives. д YУ4дС•Си‚26.иС` ` ШСIn light of this, we believe that the better approach would be to adopt specific size standards for individual services in proceedings implementing Section 257 incentives. We note that our decision here is consistent with our current approach to adopting small д ’YHУ4дbusiness definitions in the competitive bidding context. In the УУCompetitive Bidding Second д ’Y3У4дMemorandum Opinion and OrderФФ, the Commission stated that: ТX•ТТX` ` ШТ[g]iven the diversity of services that may be subject to competitive bidding and the varied spectrum costs and buildЉout requirements associated with each, we conclude that it is more appropriate to define the eligibility requirements for small businesses on a serviceЉspecific basis, taking into account the capital requirements of each particular service in establishing the д Y}а4дappropriate threshold.жBk}Yд ’Yіа4дС•СУУImplementation of Section 309(j) of the Communications Act ЉЉ Competitive Bidding,ФФ д ’YсУ4дSecond Memorandum Opinion and Order, 9 FCC Rcd 7245, 7269 (1994) (УУCompetitive д ’YЬУ4дBidding Second Memorandum Opinion and OrderФФ). We note that we recently proposed to д ’YЗУ4дcontinue this approach when developing competitive bidding rules for specific services. УУФФУУSee д ’YЂУ4дAmendment of Part 1 of the Commission's Rules ЉЉ Competitive Bidding ProceedingФФ, Order, Memorandum Opinion and Order and Notice of Proposed Rulemaking, WT Docket No. 97Њд ’YvУ4д82, FCC 97Љ60 (released Feb. 28, 1997) (УУCompetitive Bidding Part 1 Rules NPRMФФ) at РР 20.УУФФжЦx` Ц д ’YOУ4дС•Си‚27.иС` ` ШСRecently, we reiterated our belief in this approach in the УУCompetitive Bidding д ’Y:У4дPart I Rules NPRMФФ, where we proposed to continue soliciting comments on the appropriate д Y%а4дsmall business size standard in serviceЉspecific rulemaking proceedings.ж„Cы%ћYд ’Yба4дС•СУУSee Competitive BiddingФФ УУPart 1 Rules NPRMФФ, FCC 97Љ60 at РРРР 20Љ21.„ж We noted that in such rulemakings we would take into consideration the characteristics and capital requirements of each service. We further noted, however, that for purposes of future auctions, we would express small business definitions purely in terms of gross revenues. In this connection, we proposed to adopt size standards expressed so as to require businesses to have gross revenues "not to exceed" particular amounts, and, consistent with the Small д Y›а4дBusiness Act,жGDщ›Ў Yд Yњ#а4дС•С15 U.S.C. РР 632(a).Gж to base such standards on the applicant's average gross revenues over theд"›_ D0*ћ$ћ$44'"д preceding three years. Accordingly, we will adopt similar serviceЉspecific size standards, д YщУ4дwhere appropriate, in future proceedings implementing Section 257 initiatives.УУФФ д YЛУ4дС•Си‚28.иС` ` ШСFinally, several parties commented on the small business definitions adopted by the Commission for specific services in other contexts and proposed alternative definitions д Yа4дfor purposes of Section 257.жEYд ’Yа4дС•СУУSee, e.g., ФФAmerican Mobile Telecommunications Association Comments at 9 (the Commission should define small businesses using a gross revenue test); Community Broadcasters Association Comments at 10 (questioning the Commission's definition of entrepreneur for purposes of the Broadband PCS "C" block auction); Integrated Communications Group Comments at 1Љ2 (suggesting that the Commission define small business as one with no more than $11 million in annual receipts); Metricom Comments at 1Њ6 (suggesting that the Commission apply 47 C.F.R. РР 24.720(m) (publiclyЉtraded corporation rule) to all services); PCS Alliance Comments at 1 (calling the Commission's definition of entrepreneur for purposes of the Broadband PCS "C" block auction "mystifying"); Thompson PCS Comments at 3 (questioning the Commission's eligibility threshold for Broadband PCS "C" block); National Telephone Cooperative Association Comments at 9 (stating that the Commission should defer to Small Business Administration standards defining a small telecommunications company); Small Business Administration Comments at 14Љ16 (questioning the Commission's previous conclusion that incumbent LECs are dominant in their field of operation and, therefore, are not small businesses for purposes of the Regulatory Flexibility Act); United States Telephone Association Reply Comments at 2 (suggesting that LECs be declared small businesses if they serve fewer than 2% of the д YУ4дnation's subscriber lines installed in the aggregate nationwide);УУФФ National Cable Television Association Comments at 17 (suggesting that for purposes of cable television, the Commission use the small business definitions set forth in 47 U.S.C. РР 543(m) and 47 C.F.R. РР 76.901(e)).ж As we are not now adopting a generic small business definition for purposes of Section 257, we find it unnecessary to address those comments in д Y_а4дthis report.жЁFв_ЏYд YПа4дС•СSuch comments may, where appropriate, be considered in future proceedings addressing small business definitions.Ёж д ”U1У4дУУУУС•СС` ` ШСФФУ У3.СИ И њСCharacteristics of Small Telecommunications BusinessesФФ д Y У4дФ Ф д Y У4дС•Си‚29.иС` ` ШСIn order to identify and eliminate the market entry barriers or impediments facing small telecommunications businesses, we must also understand the typical needs and д ’Yе У4дcharacteristics of these businesses. Therefore, in the УУMarket Entry Barriers Notice of д ’YР У4дInquiryФФ, we requested profile data about small telecommunications businesses, including theirд"Р IF0*ћ$ћ$44œ ї"д financing sources, types of services provided, markets served, geographic areas of operation, д Yща4дand information concerning their employee workforces.жyGыщYд ’Ybа4дС•СУУMarket Entry Barriers Notice of Inquiry,ФФ 11 FCC Rcd at 6298УУФФ.yж As discussed below, we received much general information about the nature of small telecommunications businesses, as well as specific profile information on a number of services, including Specialized Mobile Radio (SMR) services, cable television services, and wireless resale services. д YvУ4дС•Си‚30.иС` ` ШСA number of commenters point out that, in contrast to small businesses in some other industries, small businesses in the telecommunications industry typically are startЊup companies that require a significant amount of equity capital or a combination of debt and д Y1а4дequity.ж”Hд1{Yд ’Y] а4дС•СУУSee, e.g.,ФФ Small Business in Telecommunications Comments atУУФФ 2; Williams Testimony at 3.”ж In addition, Small Business in Telecommunications notes that due to insufficient capitalization, small telecommunications businesses tend to engage in localized operations, serving only a portion of a larger market. Thus, rather than expand their systems geographically, many small telecommunications businesses find that expansion of product and service lines offered in their local markets present more costЉeffective methods of revenue д YО а4дenhancement.жfIщО Yд Y†а4дС•СSmall Business in Telecommunications Comments at 2Љ5.fж Small Business in Telecommunications also notes that unlike large companies, small businesses do not have the capital resources to spread costs over an д Yа4дextended period.ж@JыШYд ’Y а4дС•СУУId.ФФ at 7.@ж Thus, they need to earn a profit in a shorter period of time. д YbУ4дС•Си‚31.иС` ` ШСOther comments appear to support Small Business in Telecommunications' analysis. For example, American Mobile Telecommunications Association's survey indicates that 60% of its members are greatly affected by the reduced access to capital afforded small д Yа4дbusinesses.жHKщ{Yд YIа4дС•СShark Testimony at 1. Hж Most American Mobile Telecommunications Association members responding to the survey provide SMR service, while others provide a mix of SMR, paging or paging д Yяа4дresale; operate community repeaters; sell equipment and repair service; or operate antennas.ж:Lыя, Yд ’YЬ а4дС•СУУId.ФФ:ж Most of the respondents appear to fall under at least one of the small business definitionsд"ип L0*ћ$ћ$44vї"д д Yа4дused by the Commission and the Small Business Administration,жњMЉ Yд Yyа4дС•СFor example, for the 900 MHz SMR auction, the Commission defined a small business entity as having no more than $3 million in average gross revenues for the preceding three years or no more than $15 million in average gross revenues for the preceding three years. 47 C.F.R. РР 90.814(b). Half of those responding to American Mobile Telecommunications Association's survey reported annual gross revenues of less than $1 million while all of those who responded reported revenues of less than $15 million. Thus, it would appear that most of those responding to American Mobile Telecommunications Association's survey fall within the Commission's small business definition for the 900 MHz SMR service. Similarly, as noted above, under the Small Business Administration's size standards, a radiotelephone communications company is a д ’Y“ У4дsmall business concern if it employs no more than 1,500 employees. УУSee supraФФ n.59. TwoЊthirds of the respondents to American Mobile Telecommunications Association's survey reported fewer than 15 employees. Thus, it would appear that all of the survey respondents would fall under this small business definition promulgated by the Small Business Administration. њж and more than 80% emphasized that their smaller asset bases made it difficult to obtain financing. In its comments, American Mobile Telecommunications Association also stated that many of the applicants that dropped out of the 900 MHz SMR auction did so because the costs of д YЄУ4дacquiring a Major Trading Area (MTA) УУФФservice area license were too high. However, it notes that these applicants could have or would have purchased spectrum rights to a more д Yvа4дlimited geographic area.жoNщv9Yд Y`а4дС•СAmerican Mobile Telecommunications Association Comments at 11.oж д YHУ4дС•Си‚32.иС` ` ШСWith respect to cable television, the Small Cable Business Association reports that most small cable companies are familyЉowned businesses. The business structures range д Y а4дfrom sole proprietorships to small corporations and partnerships.ж`Oщ ъYд YЕа4дС•СSmall Cable Business Association Comments at 7.`ж Although most small cable operators provide only multiЉchannel video programming services, some are entering or seeking to gain entry into new lines of business such as Internet access, other data services, д Yе а4дdistance learning, and telephony.ж—Pве ›Yд Y! а4дС•СSmall Cable Business Association Comments at 7; National Cable Television Association Comments at 5Љ6.—ж The typical small cable company serves a rural, lowд"е 5P0*ћ$ћ$44В "д д Yа4дdensity area or a suburban or niche urban market.ж•QвYд Yyа4дС•СSmall Cable Business Association Comments at 7; National Cable Television Association Comments at 5.•ж Thus, as with other services, small cable operators also tend to serve portions of a market or certain niche markets. Because of this, small cable companies often have higher costs of doing business and face a higher cost д YЛа4дof capital than their large counterparts.ж–RвЛbYд YЮа4дС•СNational Cable Television Association Comments at 5; Small Cable Business Association Comments at 9.–ж In terms of capital, Small Cable Business Association notes that cable television requires large amounts of capital to expand its array of video programming. To fund this capital requirement, most small cable systems must rely д Yvа4дon venture capital firms and on banks, local and national.ж`SщvќYд Y# а4дС•СSmall Cable Business Association Comments at 9.`ж д YHУ4дС•Си‚ 33.иС` ` ШСWith respect to common carrier services, America's Carriers Telecommunications Association comments that traditional capital markets are not readily available to most entrepreneurial startЉup businesses seeking entry or expansion. It notes that small carriers generally offer traditional outbound and inbound common carrier telephone services, including calling or travel cards, which often incorporate enhanced features, such as facsimile, voice mail, and certain information services. According to America's Carriers Telecommunications Association, these small carriers find it difficult to obtain capital д YЇ а4дrequired to acquire their own network facilities.жrTщЇ ­Yд Yа4дС•СAmerica's Carriers Telecommunications Association Comments at 19.rж It also asserts that many resale carriers continue to operate on a localized basis defined by the location of their central office(s) and the calling area served thereby. However, it notes that "switchless resale" has made national д Ybа4дoperations possible for many more carriers.жAUыb^ Yд ’Yqа4дС•СУУId.ФФ at 18.Aж America's Carriers Telecommunications Association also observes that, while in theory no market segment is foreclosed to small carriers, in reality most small carriers are heavily dependent on small business customers, and service to residential and government customers remains mostly within the preserve of д Yа4дincumbent carriers.ж;Vы Yд ’YШ а4дС•СУУId.ФФ ;ж д YиУ4дС•Си‚!34.иС` ` ШСFinally, a survey of wireless resellers conducted by the National Wireless Resellers Association indicates that most wireless resellers fall under one of the definitions ofд"СФ V0*ћ$ћ$44mї"д small business used by the Commission or the Small Business Administration and that obtaining access to capital is a significant impediment to their operations. For example, using the Commission's $40 million average gross revenue threshold adopted for Personal Communications Services (PCS) and Multipoint Distribution Service (MDS), 69% of the respondents to the National Wireless Resellers Association survey reported annual gross revenues of less than $15 million, while another 16% reported annual gross revenues д Yvа4дbetween $15Љ50 million.жgWщvYд Yяа4дС•СNational Wireless Resellers Association Comments at 5.gж Using the Small Business Administration's size standard for radiotelephone companies (no more than 1,500 employees), National Wireless Resellers Association states that 75% of survey respondents reported employing between one and 100 people. Although the remaining respondents employed more than 100 people, National д Y а4дWireless Resellers Association states that most likely, these resellers employ less than 500.жFXы yYд ’YD а4дС•СУУIdФФ. УУФФat 6.Fж In terms of services, cellular, long distance and paging appeared to be the primary resale д Yь а4дservices provided.жIYыь ,Yд ’YЩа4дС•СУУId.ФФ at Appendix A.Iж SixtyЉfour percent of those responding indicated that they serve at least 5,000 subscribers. SixtyЉeight percent of the National Wireless Resellers Association respondents strongly believed that small businesses have less leverage for loans and, therefore, must contribute a larger percentage of their operating capital in order to secure a loan. д ‘XyУ4дУ У д ”UbУ4дФ ФУ УУУФ ФФФУ УФ ФУУУ УФ ФФФУУС•СФФУУУ УB.С` ` ШСFinancial ImpedimentsФ ФФФ д ”U4У4дС•СС` ` ШСУ УУУ1.СИ И њСThe RecordФФФ Ф д YУ4дС•Си‚"35.иС` ` ШСУУФФAs already suggested by the preceding discussion concerning the characteristics of small telecommunications businesses, many parties have identified access to capital as a д Yиа4дprimary market entry obstacle for small businesses.жjZHЄипYд Yhа4дС•СSmall Business Administration Comments at 3, 5; American Women in Radio and Television and Women of Wireless Comments at 6; CompTel Comments at 4; VoiceTel Comments at 16; Small Business in Telecommunications Comments at 65; Integrated Communications Group Comments at 1, 4; Integration Communications International Comments at 1; B.K. McIntrye Comments at 1Љ2; Center for Training and Careers Comments at 2; National Paging and Personal Communications Association Comments at 2; д Yо"У4дУУФФSouthwest Missouri Cable TV Comments at 3; TRA Communications Consultants Comments at 2Љ3; Integration Communications International et al. Comments at 1; Romar Comments atд"Ч#Y0*ћ$ћ$АА6$ї"д 8; Nevadacom Comments at 2; National Women's Law Center Comments at 1; National Cable Television Association Comments at 3; Moore Broadcasting Comments at 1; Small д YbУ4дCable Business Association Comments at 8Љ9, 14Љ15; У УФ Ф M.L.T. Comments at 1; Grossman Testimony at 2; Williams Testimony at 1Љ2; Shark Testimony at 1Љ2; Polka Testimony at 1. jж Given the importance of access toд"и4Z0*ћ$ћ$44O"д д ’YУ4дcapital, in the УУMarket Entry Barriers Notice of InquiryФФ, we inquired expressly about this issue. Commenters have forwarded much detailed information about financing issues affecting small businesses as well as specific recommendations for Commission action. д YІУ4дС•Си‚#36.иС` ` ШСУУФФа щщ аAs indicated earlier, commenters assert that by their nature, small telecommunications businesses tend to be startЉup companies or companies in relatively early stages of growth and expansion requiring a significant amount of equity capital or a combination of debt and equity, yet those traditional sources of capital for small businesses д YJа4дare insufficient for today's entry costs.жL[ІJ4Yд ’Y/а4дС•СWilliams Testimony at 3Љ4. УУSee also ФФGorman Testimony at 1 (chart shows that the "indicative" cost of capital for startЉup companies with zero revenue is 60% p.a.; while it is 35% for a company with $10 million per year revenues and 25% for those with $100 million in revenue).Lж Respondents to the Small Business in Telecommunications survey, for example, identified initial financing as the number one д Y а4дmarket entry barrier out of 37 possible barriers.жщ\ Ђ Yд Yoа4дС•СSmall Business in Telecommunications Comments at 65. У УФ ФThe ten principal issues the respondents identify as barriers are: (1) initial financing; (2) delays in application processing; (3) spectrum scarcity; (4) legal costs; (5) auctioning of spectrum; (6) speculator licensing/application mills; (7) engineering costs; (8) access to new technology; (9) д YУ4дborrowing terms; and (10) price competition.УУФФУУФФУУФФщж The majority of those respondents д Y У4дreported difficulty accessing capitalУУФФ because of their smaller asset base and inability to secure д Yю а4дterms and conditions comparable to those obtained by much larger competitors.ж–]ю їYд ’Y–а4дС•СAmerican Mobile Telecommunications Association Comments at 9. УУAccordФФ Haycock Testimony at 4 ("As a rule, bigger companies have better borrowing power. Because of their size, they are able to arrange financing from equipment manufacturers and financial institutions more easily, at better interest rates, and on more favorable terms and conditions").–ж One party explains that new businesses are not attractive to investors because their startЉup costs appear to be excessively high, their revenue streams are poorly defined and uncertain, and their д YЉ а4дprofit margins are unknown.жX^щЉ NYд YЈ#а4дС•СSouthwest Missouri Cable Comments at 4.Xж Another states that prospective strategic partners oftenд"Љ џ^0*ћ$ћ$44 "д overlook small businesses "because of the erroneous view that we bring nothing to the д Yща4дtable."жы_дщYд ’Ybа4дС•СHaycock Testimony at 5. УУSee also ФФKansas Star Comments at 1 (stating that attracting д YMУ4дstrategic partners is important for obtaining financing).УУФФУУУУФФФФыж д YЛУ4дС•Си‚$37.иС` ` ШСThe record also is replete with comments that small businesses must assume great risks and make personal capital contributions to finance their companies. One commenter states that to obtain startЉup financing for her company in 1982 she was required д Yvа4дto mortgage her family's home.жV`щvdYд Y‹ а4дС•СУУФФHaycock Testimony at 1. УУФФVж More generally, in the Small Business in Telecommunications survey, the most commonly reported source of initial capital was д YHа4дpersonal financing, e.g., savings and family gifts, and Small Business Administration loans.жna_HYд Yа4дС•СSmall Business in Telecommunications Comments at 4 & n.4. It also claims that small businesses must mortgage homes, that such loans are usually less than $100,000, and that such amount is insufficient to capitalize more than the smallest of telecommunications businesses. For example, the cost of constructing and operating a very small paging company using only three base stations, a terminal, telephone lines, inventory, and minimum administrative costs would consume that initial investment in less than a year. Small Business in Telecommunications Comments at 3. nж Likewise, more than 80% of the American Mobile Telecommunications Association survey respondents claimed that they had to personally contribute a large percentage of operating capital to their businesses. EightyЉfive percent of the respondents stated that they are restricted to cash flow, venture capital or "hardЉwon" loans to expand their businesses, while д Yе а4дlarger companies may make public offerings.жКbде < Yд ’YТа4дС•СShark Testimony at 2УУФФ. УУAccord ФФSmall Cable Business Association Comments at 8Љ10; Southwest Missouri Cable Comments at 3, 5. Кж SixtyЉeight percent of the National Wireless д ’YО У4дResellers Association survey respondents "strongly agree" that "small businesses haveУУ ФФfewer assets and less leverage for loans; and therefore must contribute a larger percentage of their operating capital in order to secure a loan;" and 53% of the respondents "strongly agree" that "small businesses cannot obtain financing through stock sales, and are restricted to cash, д Ydа4дbank loans or venture capital."жcщdиYд Yэ а4дС•СNational Wireless Resellers Association CommentsУУФФ at Appendix A, 2УУФФ.ж Small Business in Telecommunications also points out that because small business entrepreneurs are not able to spread financial risk over large pools ofд"M‰c0*ћ$ћ$44–ї"д д Yа4дinvestors as large companies do, if their businesses fail, they are subject to bankruptcy.жЛdYд ’Yyа4дС•СSmall Business in Telecommunications Comments at 24. УУAccordФФ Haycock Testimony at 5 (stating that small business owners often are forced to forego the protection of corporate status and waive personal liability limitations); CompTel Comments at 5 (asserting that it is not uncommon for small businesses to be required to waive personal liability limitations and sign personal guarantees).Лж д YщУ4дУУФФAnother commenter also points out that in purchasing equipment, small companies are д Yва4дsubject to high deposit requirements and installation charges.жHeщвYд YЂ а4дС•СHaycock Testimony at 5.Hж д YЄУ4дС•Си‚%38.иС` ` ШСSome parties suggest ways for the Commission to address financial impediments. One party suggests that the FCC should encourage lenders to provide nonЊpersonally guaranteed funds to small carriers under the same terms and conditions provided д Y_а4дto larger carriers.жIfщ_аYд Yра4дС•СNevadacom Comments at 2.Iж One commenter states that the Commission "must reinstate policies that will help level the playing field . . . [and] expand its financing policy to include the provision of capital needed by small businesses . . . if they are to compete with larger д Y а4дbetter capitalized companies with ready access to capital."жIgщ  Yд YLа4дС•СWilliams Testimony at 5.Iж Another contends that the FCC must recognize that gaining access to a spectrum license itself is not enough ЉЉ the д Yь а4дavailability and cost of financing is critical to the success of PCS entrepreneurs.жhІь 2 Yд YЯа4дС•СNextWave Comments at 4. NextWave further contends that while FCC auction rules have "opened the door for new entrants in the PCS industry and offer entrepreneurs better access to spectrum, these rules do nothing to address the problems faced by small businesses д ’YŠУ4дand entrepreneurs when seeking capital to build their networks." УУId.ФФУУФФж Still another argues that the Commission does not consider the financial realities that д YО а4дentrepreneurs encounter and that exclude small businesses.жџiЛО  Yд Yа4дС•СMobile Communications Holdings Comments at 3, 7Љ8. Some parties also identified specific financial impediments in certain telecommunications services. Many of these issues are addressed below in Part III.џж д YУ4дС•Си‚&39.иС` ` ШСMany parties address the Telecommunications Development Fund as a source д YyУ4дof financing. УУФФУУФФWilliams believes that because of its national and industryЉwide scope, УУФФTDFд"y#i0*ћ$ћ$44Еї"д д Yа4дwill be substantially undercapitalized.жIjщYд Yyа4дС•СWilliams Testimony at 6.Iж He claims that in contrast to TDF, existing д Yща4дminorityЉmanaged funds have greater capital even though they are more limited in focus.ж@kыщyYд ’Yа4дС•СУУIdФФ.УУФФ@ж Williams also projects that if the Fund could amass $50 million in capital over the next three years, it would be able to provide seed capital for only 10Љ15 businesses. United Church of д YЄУ4дChrist and Minority Media and Telecommunications Council УУФФsuggest that to improve TDF's capitalization, major competitors should be required to contribute to the TDF (like д Yvа4дcontributions are made to the Universal Service Fund).жŠlвv,Yд YS а4дС•СUnited Church of Christ and Minority Media and Telecommunications Council Comments at 13.Šж Likewise, Williams contends that д Y_а4дthe FCC should provide incentives for institutional investors to invest in the TDF.жImщ_ЦYд Yжа4дС•СWilliams Testimony at 6.Iж д Y1У4дС•Си‚'40.иС` ` ШСAs to TDF's policies, America's Carriers Telecommunication Association asserts that the Fund should not give priority to service proposals, e.g., to create a new technology, but rather, should assist small carriers, and as a result, TDF "will have a far better chance of actually advancing the public interests by creating the financial stability д Yе а4дneeded to do more venturesome projects."жonще wYд Y§а4дС•СAmerica's Carriers Telecommunications Comments at 19Љ20.УУФФoж National Association of Black Owned Broadcasters contends that the Fund should be used to provide equity investments, low interest loans and loan guarantees to minority businesses, to provide technical assistance and market research, and to augment the budget of the FCC's Office of Communications д Yyа4дBusiness Opportunities.жшoЛy( Yд YRа4дС•СNational Association of Black Owned Broadcasters Reply Comments at 19. National Association of Black Owned Broadcasters filed a motion to accept lateЉfiled comments, which we grant. шж McCarroll argues that anyone who applied for an SMR license before auctions were established and cannot afford to bid for one now in an auction should д YKа4дreceive priority in TDF funding.жKpщKЋ Yд YЇ а4дС•СMcCarroll Comments at 1Љ2.Kж УУФФУУУ УФ ФУ УФ ФФФУУФФAmerican Women in Radio and Television and Women of Wireless assert that TDF will be an important informational and financial resource forд"4\p0*ћ$ћ$44Її"д д Yа4дsmall womenЉowned businesses.ж(qНYд Yyа4дС•СAmerican Women in Radio and Television and Women of Wireless Comments at 42. д ’YbУ4дУУSee alsoФФ B.K. McIntyre Comments at 3 ("it is critical that the FCC use effectively" TDF for new start up companies to gain necessary capital).(ж They and Moore Broadcasting urge the FCC Chairman to appoint board members who understand the potential to create new businesses and who will д Yва4дensure that businesses owned by women or minorities obtain access to capital.жˆrвMYд Yаа4дС•СAmerican Women in Radio and Television and Women of Wireless Comments at 42; Moore Broadcasting Comments at 3. America's Carriers Telecommunications Association questions the wisdom of appointing as the interim chairman of TDF an officer of a Bell Operating Company (BOC). America's Carriers Telecommunications Association Comments at 14Љ15.ˆж Polka urges д YЛа4дthe Commission to use the TDF "in a positive way to encourage lending to small cable."жFsщЛЂ Yд Yа4дС•СPolka Testimony at 5.Fж д YУ4дС•Си‚(41.иС` ` ШСFinally, Integrated Communications Group argues that the FCC should augment its efforts beyond TDF, and take "extraordinary measures" to remove market entry barriers. Specifically, it claims that the FCC should work with the Small Business Administration, industry, investment firms, insurance companies, banks, and institutional д Y1а4дinvestors to create a larger pool of funds.ж_tщ1S Yд Y5а4дС•СIntegrated Communications Group Comments at 4._ж д ”U У4дС•СС` ` ШСУ УУУ2.ТИ И њТCommission Measures Ц(#И Ц д Yь У4дФФФ Ф д Yе У4дС•Си‚)42.иС` ` ШСThe record shows that financial obstacles create substantial impediments to small business entry in the telecommunications market. We recognize that the д YЇ а4дtelecommunications industry is generally capital intensiveжdu•Ї  Yд ’Y\а4дС•СSУУee, e.g.,ФФ УУImplementation of Section 309(j) of the Communications Act ЉЉ Competitive д ’YGУ4дBidding,ФФ Fifth Report and Order, 9 FCC Rcd 5532, 5571 (1994)УУФФ (УУCompetitive Bidding Fifth д ’Y2У4дReport and OrderФФ); УУФФMitchell & Vogelsang, УУTelecommunications Pricing: Theory and д ’YУ4дPracticeФФ, 7-19 (RAND, 1991); УУsee alsoФФ Small Business in Telecommunications Comments at д Y У4д2 (stating that wireless telecommunications services have large capital outlay requirements). УУФФdж and that substantial financial resources are necessary for successful participation in most telecommunications sectors. The Commission is limited, however, in its authority ЉЉ and concomitant ability ЉЉ to remove financial impediments and obstacles. The FCC has no statutory jurisdiction over the д"bau0*ћ$ћ$44Ÿї"д financial industry. Thus, we cannot directly require banks, lenders, investors, or any other entity to finance small businesses, or any sized business, in the telecommunications industry. д YЛУ4дС•Си‚*43.иС` ` ШСУ УФ ФThe Commission, however, has taken measures to enhance access to capital for small businesses in the auctions process. Pursuant to Section 309(j) of the Communications Act, the Commission has taken steps to promote capital access for small businesses, businesses owned by minorities or women, and rural telecommunications businesses in the provision of certain spectrumЉbased services. These mechanisms facilitate access to capital by making the license costs more affordable for small businesses. Specifically, in а щщ авŒ I. A. 1. a.(1)(a) i) a)+ I. A. 1. a.(1)(a) i) a)Œвййв ШX01УУФФ УУФФААШX01УУФФ УУФФАА вseveral auctions, we provided bidding credits for small businesses to enhance their participation in seeking spectrum licenses and allowed successful small business bidders д Y а4дto pay for their licenses in installments over time.ж'v• Yд ’Y| а4дС•СУУSee, e.g., D, E & F Block Competitive Bidding Report and OrderФФ, 11 FCC Rcd at д ’Yg У4д7875Љ7876; УУФФУУImplementation of Section 309(j) of the Communications Act ЉЉ Competitive д ’YRУ4дBiddingФФ, Sixth Report and Order, 11 FCC Rcd 136, 161 (1996) (УУCompetitive Bidding Sixth д ’Y=У4дReport and OrderФФ)УУФФ. УУSee alsoФФ УУCompetitive Bidding Part 1 Rules NPRMФФ, FCC 97Љ60, at РРРР 33 д Y(У4дand 36. УУФФУУФФУУФФУУФФ 'ж For example, the PCS "F" block auction offered installment payments to facilitate small business participation. Upcoming auctions such as the Local Multipoint Distribution Services (LMDS) auction also will offer small business installment payments. д YУ4двŒ I. A. 1. a.(1)(a) i) a) 1. a. i.(1)(a)(i) 1) a)+ŒвС•Си€+44.иС` ` ШСAdditionally, as described in further detail below, Congress created the Telecommunications Development Fund and provided the Commission with a statutory role in its operation. The Fund is an important resource that will facilitate small business participation in the telecommunications market, and thereby help reduce the effects of financial impediments small businesses encounter. In addition, we will strongly consider the role of financial impediments in our ongoing implementation of Section 257. д Yяа4дС•Си€,45.иС` ` ШСAs УУФФprovided in Section 707 of the Telecommunications Act,ж~wщя%Yд YХа4дС•СPub. L. No. 104Љ104, РР 707, 110 Stat. 56 (codified at 47 U.S.C. РР 614).~ж the Fund's mission is to promote access to capital for small businesses in the telecommunications industry, stimulate development of new technology, promote employment and training, and support universal service and the delivery of telecommunications services to underserved д Y“а4дareas.жœxНщ“жYд ’Y"а4дС•С УУSee, e.g., ФФMoore Broadcasting Comments at 3; National Cable Television Association Comments at 9; National Association of Black Owned Broadcasters Reply Comments at 9; United Church of Christ and Minority Media and Telecommunicationsд"ю#w0*ћ$ћ$АА$ї"д д YУ4дCouncil Comments at 13.б#єxў6X@ЩЙ`7ћлwX@#бœж TDF is funded primarily by the interest earned on certain deposits for spectrumд"“yx0*ћ$ћ$44'"д д Yа4дauctions,жxyЄyYд Y*а4дС•СThe Fund's account consists of interest on deposits made to qualify for competitive bidding under Section 309(j)(8)(C) of the Act, funds that may be appropriated to the Commission for advancement to the Fund, contributions or donations accepted by the Fund, and repayment of credit extended by the Fund. 47 U.S.C. РР 614(d).xж and is authorized to make loans and extend credit to small businesses.жGzщхYд Y–а4дС•С47 U.S.C. РР 614(e).Gж The FCC's Chairman is authorized to appoint a sevenЉmember board of directors to the TDF, consisting of four representatives from the private sector, and one each from the д YЛа4дCommission, Small Business Administration, and the Department of the Treasury.жp{щЛ–Yд Y а4дС•С47 U.S.C РР 614(c)(1).б#єxў6X@ЩЙ`7ћлwX@#бpж д YУ4дС•СУУФФУУФФУУФФУУФФУУФФи€-46.иС` ` ШСOn November 20, 1996, the FCC Chairman appointed the full TDF board of д Yvа4дdirectors.жF| vG Yд ’Ynа4дС•СУУФФFCC Public Notice, УУPublic Sector Board Members Appointed to the д ’YYУ4дTelecommunications Development BoardФФ (released Nov. 20, 1996). The TDF Board members are: Interim Chairperson, Solomon D. Trujillo, President and Chief Executive Officer, U.S. West Communications Group; Richard L. Fields, Managing Director of Allen & Company Incorporated; Thomas A. Hart, Jr., Partner, Ginsburg, Feldman & Bress; Debra L. Lee, President and Chief Operating Officer of BET Holdings, Inc. (Black Entertainment Television), Ginger Ehn Lew, Deputy Administrator, Small Business Administration; Kirsten S. Moy, Director, Community Development Financial Institutions (CDFI) Fund, Department of Treasury; and William E. Kennard, General Counsel, Federal Communications Commission.Fж As required by the Act, the board members have significant experience in finance, investment banking, government banking, communications law and administrative д YHа4дpractice, and public policy.жJ}щH-Yд Y&а4дС•С47 U.S.C. РР 614(c)(1).Jж We believe the combined expertise of the board will help provide funding for small communications businesses and promote technological innovation in the telecommunications industry. д"ь о}0*ћ$ћ$44Ш ї"д д YУ4дС•Си€.47.иС` ` ШСPursuant to the statute, the board is in the process of establishing general д Yща4дpolicies that will govern the overall structure and operation of the Fund.ж$~ЛщYд Ybа4дС•СУУФФ47 U.S.C РР 614(c)(3). The statute requires the board to meet at the call of the Chairman or at least quarterly. The first meeting of the board was held on December 3, д Y4У4д1996. б#єxў6X@ЩЙ`7ћлwX@#б$ж TDF, a nonЊд Yва4дprofit corporation,жижвKYд ’YЮа4дС•СThe Fund is to be administered as a notЉforЉprofit organization. УУJoint Explanatory д ’YЙУ4дStatementФФ at 211. б#єxў6X@ЩЙ`7ћлwX@#биж is authorized to make loans, investments, or other extensions of credit to small businesses; to provide financial advice to small businesses; and to prepare research д YЄа4дstudies, financial analyses, or other services consistent with the purposes of the Fund.жn€щЄщYд Y> а4дС•С47 U.S.C. РР 614(e).б#єxў6X@ЩЙ`7ћлwX@#бnж The Board is currently in the process of creating a sustainable source of capital for small communications businesses and is investigating means to leverage the more than $20.3 million in initial capitalization it has received to date from auction upfront payments in order to create a larger pool for small communications business loans and equity investments. д Y У4дС•Си€/48.иС` ` ШСSince authorization of TDF in February 1996, OCBO has served as the principal support for TDF, conducting research regarding structural models for the TDF and gaps in financial and technical assistance for small communications businesses, disseminating public information and fielding inquiries regarding TDF. OCBO sends monthly mailings to over 2,300 small enterprises that include upЉtoЉdate information on the Fund. In addition, OCBO is compiling information on the types of financial and technical assistance requested of the Fund. This analysis will help the TDF board identify structural impediments to small business financing from other capital sources, and design a structure that will fill unmet needs and complement existing resources. OCBO will provide this information, as well as the comments and proposals submitted in this proceeding which pertain to TDF, to the TDF board of directors so that the board may consider this information as it develops the Fund's organizational structure and policies. д Yяа4дС•Си€049.иС` ` ШСУ УФ ФThe full TDF board has met twice since December 1996жБвяšYд Y:а4дС•СBy statute, the TDF board is required to meet "at the call of its Chairman, but at least quarterly." 47 U.S.C. РР 614(c)(3). Бж and is finalizing its review of market opportunities where TDF could direct its resources. TDF is commencing a search for a fund manager. The board also is working to develop TDF's structure to provide loans, equity investments and technical assistance. д"“4 0*ћ$ћ$44Aї"дŒд YУ4дС•Си€150.иС` ` ШСWe are hopeful that TDF will be a significant source of funding for small telecommunications businesses and will thereby help to eliminate a major obstacle for small businesses. We shall continue to carefully monitor TDF's progress in this regard and, if necessary, make appropriate recommendations to the TDF board and to Congress. д YУ4дУ УС•СФ Фи€251.иС` ` ШСУ УФ ФУ УФ ФTo promote access to capital, and increase the FCC's understanding of how regulatory issues affect small communications business finance, OCBO has hosted two panel discussions on wireless finance. In March 1996, in coordination with the FCC's Wireless Telecommunications Bureau, OCBO held an "Auctions '96" conference and in February 1997, sponsored an "Auctions '97" conference. Both conferences featured panels on financing. The FCC will continue to hold such fora to learn more about the effect of our rules on small business finance, and to provide industry participants an opportunity to hear from capital sources about the factors they consider in deciding to invest in a small communications firm. д ”UЇ У4дУУФФУ УС•СУУC.С` ` ШСGeneral Regulatory Obstacles д YУ4дФФФ Ф д YyУ4дС•Си€352.иС` ` ШСMany of the market entry impediments identified by the commenting parties concerned general regulatory issues, and in particular, difficulties in obtaining access to the Commission itself, participating in Commission proceedings, and in obtaining information д Y4а4дabout new services.жe‚Є4Yд Y­а4дб#XwЯОІ PьE37ћ[hXP#бС•СCable Telecommunications Association Comments at 9Љ10; Small Business in Telecommunications Reply Comments at n.1; Southwest Missouri Cable Comments at 4; American Mobile Telecommunications Association Comments at 11; Community Broadcasters Association Comments at 8Љ9.eж As discussed below, the Commission already has taken several steps to eliminate many of these obstacles. С•СС` ` ШС д ”UяУ4дС•СС` ` ШСУУУ У1.СИ И њСAccess to Commission DecisionmakersФФФ Ф д YСУ4дС•СУУФФи€453.иС` ` ШСУУФФSeveral parties point out that, unlike large companies and associations, small businesses often do not have the time or resources to meet with Commission staff or д Y“а4дparticipate in Commission proceedings.жVƒg~“4Yд Yxа4дб#NuЯОІ PьE37ћƒlNP#б УУSee, e.g.,ФФ Cable Telecommunications Association Comments at 9Љ10 (small business representatives do not have time or money to walk the halls of FCC to attempt to influence final language of given rule; most rules are written regarding their impact on large business while effect of adopted rules on small business is unknown); American Mobile Telecommunications Association Comments at 11 (lack of available staff and resources to handle FCC regulatory compliance or participate in proceedings); Grossman Testimony at 2 д"љ#‚0*ћ$ћ$ААX$ї"д (need more access to Commission decisionmakers; takes dozen calls to get appointment); Small Business in Telecommunications Reply Comments at n.1 (problems communicating with FCC staff due to small businesses' funding obstacles); Zesiger Testimony at 12 (access to FCC's decisionmaking process acts as one of chief impediments to small business' ability to challenge д ŽX(У4дand eliminate market entry barriers).б#ьvў6X@ЩЙ`7ћлwN@#бVж Others note that many small businesses д"“ ƒ0*ћ$ћ$44"д historically have had little representation before the Commission and other federal or state bodies. As a consequence, these parties believe small businesses are frequently viewed as д Yва4дoutsiders in the telecommunications industry.жS„НвYд ’Y‘ а4дааб#XwЯОІ PьE37ћ[hXP#бС•СУУSee, e.g.,ФФ Southwest Missouri Cable Comments at 4 (historically poor representation); B.K. McIntyre Comments at 1 (lack of historical participation); VoiceЉTel Comments 16 (frequently viewed as outsider in telecommunications business).Sж УУФФOne commenter claims that inability to д YЛа4дparticipate in public meetings is a barrier.ж…дЛ“ Yд ’Yџ а4дС•СGrossman Testimony at 2Љ3. УУSee alsoФФ Community Broadcasters Association Comments at 8Љ9.ж Another party notes that because many small businesses lack representation and financial resources, they often are unaware of opportunities in the telecommunications industry and are unable to participate in the д Yvа4дCommission's rulemaking process.жg†щv/ Yд YVа4дС•СCable Telecommunications Association Comments at 9Љ10.gж д YHУ4дС•Си€554.иС` ` ШСIn a similar vein, the Small Business Administration states that lack of information and access to the Commission's decisionЉmaking process acts as the chief impediment to small business' ability to challenge and eliminate market entry barriers that д Y а4дdevelop as a result of Commission rule makings.жˆ‡щ р Yд Y”а4дб#XwЯОІ PьE37ћ[hXP#бС•СSmall Business Administration comments at 12. ˆж Similarly, the Community Broadcasters Association asserts that small businesses need more access to Commission decisionmakers, д Yе а4дkey policy personnel, and Commissioners.жƒˆще ‘Yд Yа4дС•Сб#XwЯОІ PьE37ћ[hXP#бCommunity Broadcasters Association at 8Љ9. ƒж Along the same lines, the Cable Telecommunications Association contends that many small business representatives do not have time or money to "walk the halls" of the Commission in an effort to influence the final д Yа4дlanguage of a given rule.жQ‰НBYд ’Yƒ!а4дС•Сб#XwЯОІ PьE37ћ[hXP#бCable Telecommunications Association at 9Љ10. УУSee alsoФФ Small Business in Telecommunications Reply Comments at n.1 (sympathizes with groups who have pointed out problems in communicating with Commission's staff due to their funding obstacles).Qжд"!Ч‰0*ћ$ћ$44Б"дŒд YУ4д™С•Си€655.иС` ` ШСAt the outset, we note that particular measures, both legislative and regulatory, have been created to ensure that the interests of small businesses are appropriately taken into account by federal agencies. At the legislative level are the Regulatory Flexibility Act д YЛа4д(RFA),жbŠщЛYд Y4а4дС•СPub.L. No. 96Љ354, 94 Stat. 1164 (1980).СССbж and, most recently, The Small Business Regulatory Enforcement Fairness Act д YЄа4д(SBREFA),ж‚‹щЄyYд YЮа4дС•СPub. L. No. 96Љ354, 94 Stat. 1164 (1996) (codified at 5 U.S.C. РРРР 601Љ612).‚ж which Congress enacted as part of the Contract with America Advancement д Yа4дAct of 1996 (CWAAA),ж[Œщ*Yд Yh а4дС•СPub. L. No. 104Љ121, 110 Stat. 847 (1996).[ж УУФФthat УУУУФФФФstrengthens and broadens the existing mandate under the RFA. д YHУ4дС•Си€756.иС` ` ШСУ УФ ФFor example, prior to the 1996 amendments to the RFA, the Small Business Administration had taken an active role in proceedings before federal agencies to insure that careful and meaningful consideration would be given to the impact on small business interests of an agency's proposed rules. However, neither that agency or any other person could directly challenge in court whether a federal agency had properly complied with the RFA requirements. The 1996 amendments to the RFA now provide for judicial review and include expanded authority for the Chief Counsel for Advocacy of the Small Business д ’YЇ У4дAdministration to file У УФ ФУУamicus curiae ФФbriefs in court proceedings on the question of whether an agency properly complied with the RFA. д YdУ4дС•Си€857.иС` ` ШСOther provisions of the new law expand on these efforts, e.g., Section 212 requires federal agencies to publish easily understood "small entity compliance guides" to assist businesses in complying with all regulations for which a final regulatory flexibility analysis is required. Section 213 requires federal agencies to establish within one year of enactment a program to answer inquiries of small entities seeking information on and advice about regulatory compliance, and Section 222 creates a Small Business and Agriculture Regulatory Enforcement Ombudsman within the Small Business Administration to give small businesses a confidential means to comment on agency enforcement activities. These requirements are intended to insure that small business interests are not locked out of the decisionmaking process of federal agencies, that administrative agencies give meaningful consideration to the impact of governmental regulation on small businesses, and that the interests of small businesses that might otherwise not be represented before an agency are properly weighed in the agency's decisionЉmaking process. С•С д Y"У4дС•Си€958.иС` ` ШСУ УФ ФIn response to these requirements, the Commission is developing compliance guides to assist small entities. Small entities can call the FCC for informal guidance onд" "лŒ0*ћ$ћ$44ўї"д д YУ4дcompliance questions. Small entities and other businesses may also call УУФФУУФФthe FCC's National д Yща4дCall CenterжыщYд ’Ybа4да ААXА аСААcСС•СУУSee also infraФФ РРУУФФ 200 (describes National Call Center).ж toll free at 1Љ888ЉCallЉFCC to receive fact sheets and answers to routine questions. The Call Center will direct callers to the appropriate Bureau or Office staff for more detailed questions. д YУ4дС•Си€:59.иС` ` ШСУ УФ ФУ УФ ФThe Commission's Office of Communications Business Opportunities д Yvа4дspecifically addresses small business concerns.ж<ŽЄv{Yд YЂ а4дС•СOCBO's address is Room 644, 1919 M Street, N.W., Washington, D.C. 20554; telephone number is: (202) 418Љ0990; and the eЉmail address of OCBO's Consumer and Industry Affairs is: kbeverly@fcc.gov. In addition, OCBO has a homepage on the FCC's World Wide Web site. <ж The Commission is mindful of the financial and other difficulties that many small businesses face and of the limited resources that are available to them. As such, OCBO's primary mission is to promote opportunities for small business participation in the communications industry in order to increase competition, encourage innovation, increase employment opportunities, improve services to all communities, and increase the diversity of voices and viewpoints over the public airwaves. OCBO serves as the principal small business policy advisor to the Commissioners and is the Commission's primary resource for implementing SBREFA. It oversees the regulatory flexibility analysis process to ensure that small business interests are fully considered in Commission notice and comment rulemakings on common carrier, cable, wireless, mass media, international communication services and other FCC matters, and may facilitate meetings with FCC staff. OCBO ensures coordination and compliance with CWAAA provisions to increase agency responsiveness to small businesses. д Y4У4дУ УФ ФС•Си€;60.иС` ` ШСOCBO also engages in extensive outreach and research. It provides information to the public, industry, trade organizations, and public interest organizations on the participation of small businesses, minorities, and women in various communications services. For example, OCBO has compiled and published various studies, including an overview of the communications market and the opportunities it provides for small businesses; sends monthly mailings to more than 2,300 small businesses and public interest д YЊа4дorganizations;жЁвЊчYд YB а4дС•СSmall, minorityЉowned, and womenЉowned businesses may request to receive monthly mailings by contacting OCBO. Ёж and responds to approximately УУФФ15,600 small business inquires a year. OCBO also is the primary resource for research material on small businesses, minority and female ownership and employment in the communications industry. Finally, OCBO organizes and participates in numerous conferences throughout the country designed toд"e# 0*ћ$ћ$44"ї"д increase small business participation in the telecommunications industry and the regulatory д Yща4дprocess.ж{ыщYд ’Ybа4дС•СУУSeeФФ УУinfraФФ РР 64 and Appendix B (describes OCBO conferences).{ж д YЛУ4дС•Си€<61.иС` ` ШСWe also wish to emphasize that any interested party may file or participate in Commission proceedings and file comments before the Commission. To assist them, the Commission has published several Fact Sheets describing how to participate in Commission д Yvа4дproceedings.жч‘жv{Yд ’YЂ а4дС•СFCC Fact Sheet, УУФФУУHow to Participate in the FCC ProcessФФ (May 1996). УУSee also ФФFCC д ’Y У4дFact Sheet, УУHow to File Comments with the FCCФФ (Apr. 1995).чж Moreover, as indicated above, and as a matter of general policy, we believe it is imperative to solicit the advice and perspectives of all interested parties, including small businesses. We have sought to do so by reaching out to groups who do not ordinarily visit the Commission or participate in its proceedings. For instance, prior to release of our NPRM implementing the local competition provisions of Section 251 of the 1996 Act, Commission staff held numerous discussions not only with BOCs and interexchange carriers, but with new and prospective entrants, state commission staff, cable operators, consumer advocates, and various public interest groups. The record in that proceeding included over 40,000 pages from 240 commenters, and included the views of such diverse groups as consumer advocates, state and local governments, small businesses, schoolteachers, libraries and medical associations. Similarly, in the Commission's Universal Service Proceeding, the Commission undertook an extensive outreach effort. The FederalЉState Joint Board has held seven open meetings and heard from over 50 leading experts on issues such as providing services to schools, libraries and health care providers; maintaining universal service in д Y4а4дrural, insular, and high cost areas; and competitive concerns raised by universal service.жї’Л4Yд Yўа4дС•СFederalЉState Joint Board on Universal Service held open meetings on April 12, 1996, June 5, 1996, June 19, 1996, September 13, 1996, October 17, 1996, and November 7, 1996, and January 14Љ15, 1997.їж д YУ4дС•Си€=62.иС` ` ШСIn addition, last year, the Commission adopted a Notice of Inquiry seeking suggestions from all interested parties on how best to streamline its processes and improve its д ’Yиа4дdelivery of services.ж “жиœYд ’Y% а4дС•Сб#XwЯОІ PьE37ћ[hXP#бУУIФФУУn the Matter of Improving Commission Processes, ФФNotice of Inquiry, 11 FCC Rcd д ’Y!У4д14006 (1996) (УУCommission Processes Notice of InquiryФФ).УУФФ ж The УУФФУУCommission Processes Notice of InquiryФФ УУУ УФ ФФФУУФФsought comment on ways the Commission could use computer technology, electronic filing, and the Internet to improve processing; how the Commission should expand its use of public meetings, fora, and roundtables; whether the Bureaus and Offices provide sufficient, meaningful, and usefulд"•$: “0*ћ$ћ$44Aї"д information, in a timely fashion; and how we can improve delivery of status information to the public. The Commission received nearly sixty formal comments, reply comments, д ’YвУ4дletters, petitions, and motions in response to the УУCommission Processes Notice of InquiryФФ. The responses ranged from proposals for major policy initiatives to suggestions for minor adjustments in the way we do business. The Commission has released a report summarizing д Yа4дits efforts to date to improve internal processes and to improve Commission operations.жŠ”бYд Yа4дааааXА` И hРpШ xа (#€%и'0*ˆ,р.813ш5@8˜:№63.иС` ` ШСAnother vehicle the Commission has used to assist small businesses in the Commission's processes is the use of seminars. One of the first seminars the Commission held following passage of the 1996 Act was designed to help individuals participate in the д Y а4дCommission process.жБ•m aYд Y.а4дааС•СУУб#NuЯОІ PьE37ћƒlNP#бSeeФФ FCC News Release, УУLearn Your NOIs: FCC Open Forum on How to Participate in д XУ4дthe FCC ProcessФФ (released May 2, 1996). The materials prepared for this forum are available from OPA and the FCC home page. To increase public access to the Commission's processes д XхУ4дthe session was broadcast live on CЉSPAN. УУSee ФФAppendix B for a listing of Commission д XЭУ4дpublic meetings, fora and УУen bancФФ hearings held to date, as well as conferences that Commission representatives have participated in as panelists and speakers. Бж This forum provided the general public with instruction on how to get information from the FCC, how to track specific issues, how to file comments, and how to understand FCC terminology. The Commission also has held two seminars about its World Wide Web site. These seminars included descriptions of the purpose and mission of the site, an overview of the site, presentations on new and future developments, detailed discussions of special topical and Bureau resources, and provided an opportunity for public д Y’а4дfeedback.жо–д’– Yд ’Yйа4дааб#XwЯОІ PьE37ћ[hXP#бС•СУУФФThese fora, titled УУHow to Find FCC Information on the InternetФФ, were held on June 24, 1996 and October 22, 1996.ож д Y{У4дУ УФ Ф д YdУ4дааXА` И hРpШ xа (#€%и'0*ˆ,р.813ш5@8˜:№У4дBoard Universal Service Recommended DecisionФФ).Мж д ’YbУ4дSpecifically, in the recently adopted УУUniversal Service Report and OrderФФ, the Commission has required that any telecommunications carrier providing any interstate telecommunications service for a fee to the public (or to such classes of eligible users as to be effectively available to the public), and certain other providers of telecommunications, must contributeд"5Че0*ћ$ћ$44jї"д д Yа4дto the funding of universal service.жlжыЕ#д ’Yyа4дС•СУУФФУУUniversal Service Report and OrderФФ, FCC 97Љ157.lж The Commission also has determined that the contributions likewise must be determined in a competitively neutral manner based on endЊд Yва4дuser telecommunications revenues.жAзыв{Е#д ’Yўа4дС•СУУIdФФ.УУФФ Aж We are thus confident that the concerns raised by America's Carriers Telecommunication Association about the currently existing funding mechanisms for Universal Service and Lifeline Assistance have been and are being fully explored and resolved in the universal service proceeding. д Y_У4дС•Си€`97.иС` ` ШСIn a related vein, some commenting parties suggest that the Commission streamline, or forbear from, its policy of requiring study area waiver petitions for companies seeking to acquire, and subsequently add, additional telephone exchanges to their existing д Y а4дstudy areas.жЭид .Е#д ’Yља4дС•СУУSeeФФ National Telephone Cooperative Association Comments at 4Љ6; United States Telephone Association Reply Comments at 4Љ5; Pederson Testimony at 1Љ2. Эж These parties claim that the procedure required for obtaining study area waivers serves as yet another hurdle for small telecommunications carriers venturing to д Yь а4дexpand service through the acquisition of exchanges.жmйщь ЪЕ#д Ygа4дС•СNational Cable Television Association Comments at 4Љ6.УУФФmж д YО У4дС•Си€a98.иС` ` ШСIn general, a carrier must apply to the Commission for a waiver of the frozen д YЇ а4дstudy areaжqкЪ Ї {Е#д Yга4дС•СA study area is a geographical segment of a carrier's telephone operation, which in general corresponds to a carrier's entire service territory within a state. See 47 C.F.R. Part 36, Appendix. For jurisdictional separations purposes, the Commission froze all service area boundaries effective November 15, 1984. The Commission took such action primarily to ensure that carriers do not set up high cost exchanges within their existing service territories д ’Y`У4дas separate study areas to maximize interstate cost allocations. УУSeeФФ УУU.S. West д ’YKУ4дCommunications, Inc. and Eagle Telecommunications, Inc.ФФ, Memorandum Opinion and Order on Reconsideration, FCC 97Љ136 (released Apr. 18, 1997) (providing clarification of issues д ’YУ4дrelating to application of oneЉpercent guideline);УУ MTS and WATS Market Structure: д ’Y У4дAmendment of Part 67 of the Commission's Rules and Establishment of a Joint BoardФФ, Decision and Order, 50 Fed. Reg. 939 (1985) (adopting with minor modifications the Joint д ’Yо!У4дBoard's recommendations issued in УУMTS and WATS Market Structure: Amendment of the д ’YЩ"У4дCommission's Rules and Establishment of a Joint BoardФФ, Recommended Decision and Order, д YД#У4д49 Fed. Reg. 48, 325 (1984)).УУУУФФФФqж if it desires to sell or purchase an exchange. In evaluating petitions seeking aд"Ї 6 к0*ћ$ћ$44­"д waiver of the rule freezing study areas, the Commission applies a threeЉprong test: (i) the change in the study area must not adversely affect the Universal Service Fund support program; (ii) the state commission having regulatory authority must not object to the change; д YЛа4дand (iii) the public interest supports the change.жЮлжЛЕ#д ’Y4а4дС•СУУSeeФФ УУU.S. West Communications, Inc.ФФ, Memorandum Opinion and Order, 10 FCC Rcd д ’YУ4д1771, 1772 (1995) (УУU.S. West OrderФФУУ).ФФЮж In evaluating whether a study area change would have an adverse impact on the distribution level of the Universal Service Fund, the Commission applies a "oneЉpercent guideline" to study area waiver requests filed after д Yvа4дJanuary 5, 1995.жbмыvfЕ#д ’Y а4дС•СУУSee generallyФФ УУU.S. West Order.ФФ У УФ Фbж Specifically, a study area waiver is unlikely to be granted if it would result in an annual aggregate shift in universal service assistance in an amount equal to or greater than one percent of the total Universal Service Fund, unless parties can demonstrate д Y1а4дan extraordinary public interest benefit.жCны1Е#д ’Yћа4дС•СУУIdФФ. at 1774.CжУ УФ Ф д Y У4дС•Си€b99.иС` ` ШСAs described in the preceding paragraph, the 1984 freeze of study area boundaries is tied directly to the rules and procedures for jurisdictional separations and Universal Service support. We just completed the first step in the process of effecting sweeping reform of the mechanisms for preserving and advancing universal service. We also will soon commence a proceeding to review our jurisdictional separations rules. Accordingly, we believe that it is premature to consider United States Telephone Association's streamlining proposal. Nevertheless, we shall carefully consider and evaluate the merits of any such proposals in future proceedings. д ”U4У4дС•СС` ` ШСУ УУУ6.ФФСИ И њСУУImpartial Administration of NXXsФФ д YУ4дФ Ф д YУ4дС•Си€c100.иС` ` ШСУУФФVoiceЉTel, which is a franchise under which individually owned and operated small business communications consultants provide voice messaging services, describes difficulties encountered as the result of allegedly improper administration of central office д YСа4дcodes (i.e., NXXs) by incumbent LECs.жОо|5СЬЕ#д ’Y>а4дС•СVoiceЉTel Comments at 7Љ9. УУSee alsoФФ Working Assets Funding Service Comments at 8 (numbering plans must be administered fairly and efficiently). Similarly, other commenting parties claim that many incumbent LECs offering subscriber list information д ’Yћ!У4дimpose unreasonable terms and refuse to offer updates. УУSeeФФ Association of Directory Publishers Comments at 7Љ8; America's Carriers Telecommunications Association Comments д ’YЯ#У4дat 14. УУBut see ФФYellow Pages Publishers Association Comments at 3 (examination ofд"Я#н0*ћ$ћ$АА$ї"д provision of subscriber list information under Section 257 is redundant); Pacific Bell Reply Comments at 5 (issues under consideration in other proceedings should not be considered in Section 257 proceeding). Regarding the provision of subscriber list information, the Commission intends to consider the impact on small businesses when implementing section д ’Y4У4д222(e) of the Communications Act, as amended. УУSee ФФУУImplementation of the Telecommunications Act of 1996: Telecommunications Carriers' Use of Customer Proprietary д ’YУ4дNetwork Information and Other Customer InformationФФ, Notice of Proposed Rulemaking, 11 д YѓУ4дFCC Rcd 12513 (1996). We УУУУФФФФУУФФanticipate adopting an order implementing section 222(e) sometime during the first half of 1997.Ож VoiceЉTel states that it has encountered multipleд"С7Х о0*ћ$ћ$44F"д instances of LEC service problems including, for example, LEC failure to update translation д Yща4дtables to assignment of numbers reserved for the LEC's own internal use.жHпыщХ Е#д ’Y_ а4дС•СУУIdФФ. at 7Љ9.УУФФHж As a consequence, VoiceЉTel's voiceЉmessaging customers often become disgruntled and blame д YЛа4дVoiceЉTel because they are unable to access their mailboxes.ж:рыЛx Е#д ’Yфа4дС•СУУId.ФФ:ж д YУ4дС•Си€d101.иС` ` ШСThe Commission agrees that access to numbering resources is essential to all entities, not just small businesses, desiring to participate in the telecommunications industry. The concerns raised over numbering plan administration have been, or are in the process of being, addressed by the Commission. For example, the newly added section 251(e)(1) of the Communications Act requires the Commission to create or designate one or more impartial д Y а4дentities to administer numbering and to make such numbers available on an equitable basis.жTсы + Е#д ’Yіа4дС•СУУSee ФФ47 U.S.C. РР 251(e)(1).Tж Even prior to the passage of the 1996 Act, the Commission announced the establishment of the North American Numbering Council (NANC) and directed that central office code administration be transferred from the LECs to a neutral entity selected to serve as the North д YО а4дAmerican Numbering Plan Administrator (NANP Administrator).жПт‘О оЕ#д ’YMа4дС•СУУSee Numbering Plan OrderФФ, 11 FCC Rcd at 2608. Prior to this transfer, central office code assignment has been, and will continue to be, handled by the following incumbent LECs: Alascom, Ameritech, Bell Atlantic, BellSouth, Cincinnati Bell, GTE, д ’Y У4дNYNEX, Pacific Bell, Southern New England Telephone, SBC, and U.S. West. УУId.ФФ at 2594 д Yѕ У4д& n.20.УУФФПж To ensure efficient and д"О 87т0*ћ$ћ$44Љ "д impartial number administration, the Commission has required that the new NANP д Yща4дAdministrator not be aligned with any particular telecommunications industry segment.жYуыщЕ#д ’Ybа4дС•СУУSee УУФФid.УУФФФФ at 2590, 2613.Yж д YЛУ4дС•Си€e102.иС` ` ШСWhile the new NANP Administrator has not yet been selected, the process of selection is progressing. NANC, through various working groups, is developing a plan for the transfer of central office code administration. NANC anticipates that it will be recommending a NANP Administrator meeting the criteria of Section 251(e)(1) by May 15, 1997, and the shifting of the numbering administration functions of the current NANP Administrator to the new impartial NANP Administrator is scheduled to occur three months after the Commission acts on that recommendation, with the shift of CO code administration to occur eighteen months after current NANP Administration functions have been transferred. д Yь У4д У УФ Ф д Yе У4дС•Си€f103.иС` ` ШСIn the interim period prior to the transfer, Bellcore and the incumbent LECs will continue their existing numbering administration functions. The Commission, however, has declared that any attempts to delay or deny central office code assignments, or to charge different "code opening" fees for different providers of telecommunications services, would violate sections 251(b)(3) and 202(a) of the Telecommunications Act, as well д Ybа4дas the Commission's numbering guidelines.жuфыb{Е#д ’YŽа4дС•СУУSeeФФ УУSecond Local Competition OrderФФ, 11 FCC Rcd at 19392.uж The Commission remains committed to closely monitoring actions by incumbent LECs as central office code administrators until д Y4а4дthose functions are transferred to the new NANP Administrator.жGхы4.Е#д ’Yа4дС•СУУIdФФ. at РР 335.Gж д YУ4дС•Си€g104.иС` ` ШСIn addition, the Commission has specifically declined to allow states to serve д Yяа4дas central office code administrators.жMцыясЕ#д ’Yа4дС•СУУIdФФ.УУФФ at РР 315.Mж Although states are authorized to handle matters involving implementation of new area codes, the Commission has expressly prohibited states д YСа4дfrom implementing service or technologyЉspecific area code overlays.жTчыС”Е#д ’Y а4дС•СУУIdФФ. at РРРР 285, 319Љ322.Tж Moreover, to ensure that small businesses do not suffer competitive disadvantages, we have mandated that state commissions choosing to implement an allЉservices area code overlay must include: (i) mandatory 10Љdigit dialing by all customers between and within area codes in the area covered by the overlay; and (ii) the availability of at least one NXX in the existing area codeд"e9G ч0*ћ$ћ$44<ї"д to every telecommunications carrier authorized to provide telephone exchange service, exchange access, or paging service in the affected area code at least 90 days before д Yва4дintroduction of the overlay.жKшывЕ#д ’YKа4дС•СУУSee id.ФФ at РР 286.Kж д YЄУ4дС•Си€h105.иС` ` ШС The Commission believes that these actions adequately address any entry barriers that small businesses may have previously faced due to incumbent LEC control of central office code assignment. In addition, as further evidence of an ongoing commitment to eliminating obstacles faced by small telecommunications businesses, the Commission has recently launched a home page for the NANC to facilitate open participation in, and wideЊд Y1а4дspread dissemination of information regarding, numbering plan administration.жщв1{Е#д Y] а4дС•СThe URL address for the NANC home page is http://www.fcc.gov/bureaus/ common_carrier/www/NANC.ж д ”U У4дС•СС` ` ШСУ УУУ7.ФФСИ И њСУУPreemption of Onerous State RequirementsФФФ Ф д Yе У4дС•Си€i106.иС` ` ШСУУФФSeveral commenting parties cite perceived onerous state regulatory requirements as one of the major obstacles to small business entry into, and expanded д YЇ а4дparticipation in, common carrier services.ж=ъxЇ Е#д ’Ymа4дС•СУУSee, e.g.,ФФ America's Carriers Telecommunications Association Comments at 15 (identifying overly demanding antiЉslamming regulations, specific billing requirements, unreasonable financial burdens); OpTel Reply Comments at 1 (identifying overly restrictive local requirements for the provision of telecommunications services by cable systems); Small Cable Business Association Reply Comments at 6 (identifying overly restrictive requirements imposed via "telecommunications permits" for entry by small cable businesses).=ж For example, National Cable Television Association and Small Cable Business Association request that the Commission provide strong leadership in preempting municipal attempts to impose burdensome and costly requirements and to extract concessions and revenues from cable operators seeking to expand into telecommunications under the guise of soЉcalled "telecommunications permits." These commenting parties claim that the cost of challenging the municipal requirements or meeting the demands of the municipalities will hinder significantly attempts by small cable operators д Yа4дto diversify into telecommunications services.жЈыдU Е#д ’Y !а4дС•СУУSeeФФ National Cable Television Association Comments at 4Љ12; Small Cable Business Association Reply Comments at 6.Јж In addition, these same commenting parties д":ё ы0*ћ$ћ$44a"д request that the Commission preempt municipal regulation of telecommunications services д Yща4дthat extends beyond legitimate and routine rightЉofЉway management.жхьжщЕ#д ’Ybа4дС•СУУSeeФФ National Cable Television Association Comments at 10; Small Cable Business д ’YMУ4дAssociation Reply Comments at 6. УУSee alsoФФ OpTel Reply Comments at 1.хж д YЛУ4д С•Си€j107.иС` ` ШСThe Commission stands ready to enforce the general prohibition set forth in section 253 of the Communications Act, as amended, as reflected in the decisions issued to date by the Commission preempting state and local legal requirements that violate section д Yvа4д253.жOэkvfЕ#д ’Y а4дС•СУУSeeФФ УУClassic Telephone, Inc. Petition for Preemption Declaratory Ruling and Injunctive д ’Yx У4дReliefФФ, Memorandum Opinion and Order, 11 FCC Rcd 13082 (1996)УУФФ, УУФФУУpetition for review д ’Yc У4дdocketed sub nom. City of Bogue, Kansas and City of Hill City, Kansas v. FCCФФ, No. 96Љ1432 д ’YN У4д(D.C. Cir. filed Nov. 22, 1996), УУФФУУpetition for review held in abeyance pending further д ’Y9У4дCommission actionФФ, No. 96Љ1432 (D.C. Cir. filed Jan. 14, 1997) (УУClassic Telephone OrderФФ)УУФФ; д ’W$У4дУУNew England Public Communications Council Petition for Preemption Pursuant to Section д ’Y У4д253ФФ, Memorandum Opinion and Order, 11 FCC Rcd 19713 (1996) УУФФ(УУФФУУConnecticut OrderФФ).Oж Specifically, section 253(a) prohibits any state or local requirement that prohibits or has the effect of prohibiting any entity from providing any interstate or intrastate д YHа4дtelecommunications service.жGющH™ Е#д Y’а4дС•С47 U.S.C. РР 253(a).Gж Indeed, the policy objectives set forth in the 1996 Telecommunications Act, in particular section 257(b), make clear that the Commission must endeavor to promote a marketplace in which decisions to diversify into various segments of the telecommunications marketplace are driven solely by sound business judgment, not regulatory constraints. As required by statute, however, the Commission will consider any preemption request pursuant to section 253 on a caseЉbyЉcase basis, after notice and д YО а4дopportunity for comment, depending on the facts presented.жQяыО J Е#д ’YЙа4дС•СУУSeeФФ 47 U.S.C. РР 253(d).Qж д ’YУ4дС•Си€k108.иС` ` ШСFor example, in both the УУClassic Telephone OrderФФ and the УУConnecticut OrderФФ, the Commission held that the state or local legal requirements at issue prohibited or had the effect of prohibiting any entity from providing interstate or intrastate telecommunications services. The Commission concluded that absolute prohibitions on the provision of service fall squarely within the scope of actions Congress intended to proscribe under Section 253(a). Moreover, the Commission found that the legal requirements were not otherwise permitted pursuant to Sections 253(b) or 253(c), which preserve certain authority of state and local governments to regulate universal service, protect consumers, manage the public rightsЉofд"ё;§ я0*ћ$ћ$44eї"дЋд Yа4дway, and impose compensation requirements for the use of the public rightsЉofЉway.жU№ыЕ#д ’Yyа4дС•СУУSee ФФ47 U.S.C. РР 253(b)Љ(c).Uж In both orders, the Commission preempted the state or local legal requirement at issue and required the state or local authority to act in a manner consistent with Sections 253 and the д YЛУ4дopinions expressed in the orders.УУФФУ УФ ФУ УУУФФФ Ф д ”YУ4да щщ аа АААА авŒ 1. a. i.(1)(a)(i) 1) a)l 1. a. i.(1)(a)(i) 1) a)j+ŒввŒ 1. a. i.(1)(a)(i) 1) a)j 1. a. i.(1)(a)(i) 1) a)ljŒв С•СУУУ УB.С` ` ШСWireless ServicesФ ФФФ д YcУ4дВС•Си€l109.иС` ` ШСSome commenters argue that many market entry barriers in the wireless telecommunications services relate to Commission rules, policies and practices that create disincentives for small businesses to participate in the wireless telecommunications services. These include: the Commission's spectrum assignment decisions and its construction requirements, application processing, and enforcement practices. As was the case with common carrier services, other obstacles identified by commenters relate to the control of vital inputs by incumbent facilitiesЉbased carriers, including the reluctance of facilitiesЉbased carriers to negotiate resale agreements. Many commenters also express views concerning д YЋ У4дУУФФour competitive bidding incentives for small businesses in spectrumЉbased wireless services. We address all of these issues below. д Y}У4дУУУУФФФФ д ”UfУ4дС•СУУС` ` ШСУ У1.СИ И њСSpectrum Assignment PoliciesФФ д YOУ4дФ Ф д Y8У4дС•Си€m110.иС` ` ШСУУУУФФФФCommenters indicate that our spectrum assignment decisions, and specifically the assignment of spectrum for large geographic service areas and in large spectrum blocks, create a barrier to entry for small businesses. Small Business in Telecommunications explains that wideЉarea geographic systems are more capital intensive to construct and operate than other types of systems. For example, Small Business in Telecommunications notes that such systems require more capital in order to construct numerous sites, employ a larger sales force, and build a larger distribution network, often including several telephone lines to route billing traffic. Moreover, Small Business in Telecommunications argues that larger systems lead to greater operational costs due to the competition that results from the presence of more carriers in the larger geographic area. Small Business in Telecommunications claims these larger systems may reduce price per unit, but increase the need to engage in expensive advertising and promotion. Thus, Small Business in Telecommunications contends that these costs are often too expensive for a small business д Y а4дand, thus, create a substantial market entry barrier for small businesses.жkёщ {Е#д Y9"а4дС•СSmall Business in Telecommunications Comments at УУФФ24.kж д"п<,ё0*ћ$ћ$44п!ї"д д YУ4дС•Си€n111.иС` ` ШСAmerican Mobile Telecommunications Association generally agrees with the contentions of Small Business in Telecommunications. It argues that entry barriers for small businesses are even higher in circumstances in which the Commission has decided to convert from siteЉspecific to geographic area licensing for services in which a substantial number of д YЄа4дsmall, incumbent licensees are already operating.жyђcЄЕ#д Yа4дС•СAmerican Mobile Telecommunications Association Comments at 10. The Commission has adopted or is considering wideЉarea geographic licensing in encumbered д ’YяУ4дservices in the following proceedings: УУAmendment of Part 90 of the Commission's Rules to д ’YкУ4дProvide For the Use of the 220Љ222 MHz Band by the Private Land Mobile ServicesФФ, Third Report and Order and Fifth Notice of Proposed Rulemaking, PR Docket No. 89Љ552, FCC д ’YЎ У4д97ЉУУФФ57 (released Mar. УУФФ12, 1997) (УУ220 MHz Third Report and OrderФФ); УУAmendment of the д ’Y™ У4дCommission's Rules Regarding Multiple Address Systems,ФФ Notice of Proposed Rulemaking, д ’Y„ У4дWT Docket No. 97Љ81, FCC 97Љ58 (released Feb. 27, 1997) (УУMAS NPRMФФ); УУФФУУPaging Second д ’Yo У4дReport and OrderФФ, 12 FCC Rcd 2732; УУAmendment of Part 90 of the Commission's Rules to д ’YZУ4дFacilitate Future Development of SMR Systems in the 800 MHz Frequency BandФФ, First Report and Order, Eighth Report and Order and Second Notice of Proposed Rulemaking, 11 FCC д ’Y.У4дRcd 1463 (1996) (УУ800 MHz SMR Order and NPRMФФ); УУAmendment 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 896Љ901 MHz and 935Љ940 MHz Bands Allotted to the Specialized Mobile Radio д ’YыУ4дPool,ФФ Second Order on Reconsideration and Seventh Report and Order, 11 FCC Rcd 2639 д ’YжУ4д(1996) (УУ900 MHz SMR OrderФФ); УУAmendment of Parts 21 and 74 of the Commission's Rules with Regard to Filing Procedures in the Multipoint Distribution Service and in the д ’YЊУ4дInstructional Television Fixed ServiceФФ, Report and Order, 10 FCC Rcd 9589 (1995) (УУMDS д ’Y•У4дReport and OrderФФ).УУФФyж In these circumstances, smaller incumbents often find their license areas encompassed within the larger geographic service area. Despite our provisions allowing these incumbents to participate in the auction for a license covering a larger, geographic area, the commenters argue that small business incumbents are often left with limited expansion opportunities because they lack the resources д Y1а4дto bid on more frequencies or territory.жЊѓв1ѓЕ#д Yеа4дС•СSmall Business in Telecommunications Comments at 26Љ27; American Mobile Telecommunications Association Comments at 10Љ11.Њж As an example, American Mobile Telecommunications Association states that many small businesses dropped out of the 900 MHz SMR auction due to the high costs of acquiring a MTA license. American Mobile Telecommunications Association explains, "[w]hen the entry costs exceed what the д Yе а4дprospective participant can justify economically, the entity must forego participating."жoєще Е#д Y#а4дС•СAmerican Mobile Telecommunications Association Comments at 11.oж Small Business in Telecommunications also raises concerns that the Commission's allocationд"О =>є0*ћ$ћ$44Љ ї"д of spectrum in larger blocks in some services reflects a bias in favor of larger commercial д Yща4дcarriers, while ignoring the needs of small businesses operating site specific systems.жeѕщщЕ#д Ybа4дС•СSmall Business in Telecommunications Comments at 12.eж д YЛУ4дС•Си€o112.иС` ` ШСУ УФ ФAs we have discussed in the serviceЉspecific rulemakings for those services where we have decided to or proposed to adopt geographic area licensing, we believe that using predefined geographic areas better serves the public interest than other types of д Yvа4дlicensing schemes, such as siteЉspecific licensing.ж›ідvyЕ#д ’Y  а4дС•СУУ800 MHz SMR Order and NPRMФФ, 11 FCC Rcd at 1503Љ1515; УУ900 MHz SMR OrderФФ, 11 FCC Rcd at 2653Љ56.›ж Under a geographic licensing approach, licensees can build and modify their systems in response to market demands without having to come to the Commission for additional authorizations. Thus, such an approach speeds the licensing process and reduces the need for multiple filings to serve a single geographic area (which are required under a site-specific licensing approach). In addition, geographic licensing is administratively more efficient and less burdensome because licensees are required to file fewer license applications and, thus, the Commission has fewer applications to process. д YЇ У4дС•Си€p113.иС` ` ШСУ УФ ФWith respect to the impact on incumbent licensees of geographic area licensing, we note that in the context of the serviceЉspecific rulemakings, the Commission has either proposed or adopted provisions designed to protect incumbent operations from д Ybа4дharmful interference as a result of future operations under the new licensing approach.ж’їдbЕ#д ’Y(а4дС•СУУ800 MHz SMRФФ, 11 FCC Rcd at 1515Љ1517; УУ900 MHz SMR OrderФФ, 11 FCC Rcd at 2653Љ56.’ж We believe that this approach represents a balancing of competing interests, including those of д Y4а4дincumbents, new entrants, small businesses, and large businesses.жˆјы4БЕ#д ’Y–а4дС•СУУSee, e.g., ФФУУ800 MHz SMR Order and NPRMФФУУ, ФФ11 FCC Rcd at УУФФ1503Љ1515.ˆж д YУ4дС•Си€q114.иС` ` ШСWhile we are mindful of the challenges that small businesses may face in their efforts to acquire geographic area licenses, we have taken steps to alleviate the perceived difficulties. First, our decisions defining the service areas and spectrum blocks by which licenses for wireless services are to be assigned have taken into account the needs of small businesses. For example, in some services, we have adopted band plans that included licenses for small geographic areas and spectrum blocks; thus, promoting economic opportunity for a wide variety of applicants, including small businesses, rural telephoneд"|>d ј0*ћ$ћ$448ї"д д Yа4дcompanies and businesses owned by minorities or women.ж_љzЕ#д Yyа4дС•СFor example, in broadband PCS, the Commission adopted a band plan consisting of two 30 MHz spectrum blocks licensed by Major Trading Areas (MTAs) and four smaller blocks each consisting of 10 MHz of spectrum licensed by Basic Trading Areas (BTAs), a д ’Y4У4дsmaller geographic service area. 47 C.F.R. РР 24.229. УУ800 MHz SMRФФ, 11 FCC Rcd at 1479Љ1480. We also note that the Commission has increasingly used EAs, which are smaller д ’YУ4дthan MTAs. УУSee, e.g.ФФ, УУ800 MHz SMR Order and NPRM, ФФ11 FCC Rcd at 1484Љ1485._ж УУФФMoreover, in many of our auctionable services, we have adopted special provisions, such as bidding credits and installment payment plans, to assist small businesses, minority and womenЉowned businesses and rural telephone companies in acquiring spectrum assigned in geographic service areas д YЄа4дand spectrum blocks.ж‚њыЄ Е#д ’Y_ а4дС•СУУSee, e.g., 220 MHz Third Report and OrderФФ, FCC 97Љ57, at РРРР 296, 301.‚ж У УФ Ф д Yvа4дС•Си€r115.иС` ` ШСУ УФ ФFinally, we believe, and many commenters in this proceeding agree,жБћvНЕ#д ’Yфа4дС•СУУSee, e.g.,ФФ American Mobile Telecommunications Association Comments at 11; Small Business in Telecommunications Comments at 22; Center for Training and Careers Comments, at 2; United States Hispanic Chamber of Commerce Comments at 1Љ2; National д YЁУ4дWireless Resellers Association Comments at УУФФiii, 13; Rural Telecommunications Group Comments at 5, 10, 20Љ22.Бж that д Y_а4дrules and policies that permit geographic partitioningжЛќв_Е#д Y$а4дС•СGeographic partitioning is the assignment of geographic portions of a license along geopolitical or other boundaries (e.g., county lines).Лж and spectrum disaggregationжл§в_ЎЕ#д YОа4дС•СSpectrum disaggregation is the assignment of discrete portions or "blocks" of a spectrum license from the existing licensee to a geographic licensee or qualifying entity.лж may also address the concerns raised regarding geographic area licensing. We recently adopted rules permitting all licensees in the broadband PCS service to partition their license areas or disaggregate their spectrum blocks to entities that meet certain minimum eligibility д Y а4дrequirements.жŽўЊ HЕ#д ’Yќа4дС•СУУGeographic Partitioning and Spectrum Disaggregation by Commercial Mobile Radio д ’YчУ4дServices Licensees,ФФ Report and Order and Further Notice of Proposed Rulemaking, WT Docket No. 96Љ148 and GN Docket No. 93Љ113, FCC 96Љ474 (released Dec. 20, 1996) д ’YЛ!У4д(УУCMRS Partitioning and Disaggregation Order and FNPRMФФ).Žж We note that this is a relatively new policy, and will be subject to review and refinement in specific proceedings if in practice it does not result in the intended benefits. We hope that such provisions will help to: (1) remove potential impediments toд"е ?Кў0*ћ$ћ$44Ь ї"д entry thereby increasing competition in the PCS marketplace; (2) encourage parties to use spectrum more efficiently; and (3) speed service to unserved and underserved areas. Parties that are unsuccessful bidders or that did not participate in the PCS auctions will be able to д YЛа4дuse partitioning and disaggregation as a method to acquire PCS licenses after the auctions.жPџыЛЕ#д ’Y4а4дС•СУУSeeФФ УУid.ФФ at РР 48.Pж Smaller or newlyЉformed entities, for example, may enter the PCS market for the first time д Yа4дthrough partitioning and disaggregation.жFы{Е#д ’YЙа4дС•СУУId. ФФat РР 13.Fж д Y_У4дУ УФ ФС•Си€s116.иС` ` ШСУ УФ ФIn addition, we currently permit or are considering similar partitioning and disaggregation rules in services other than broadband PCS, including the Multipoint д Y1а4дDistribution Service (MDS),ж‘д1.Е#д ’Yа4дС•СУУMDS Report and Order,ФФ 10 FCC Rcd at 9614Љ15 (allowing partitioning for all BTA licensees).‘ж 800 MHz SMR,жН1ЪЕ#д ’YЌа4дС•СУУ800 MHz SMR Order and NPRMФФ, 11 FCC Rcd at 1576, 1578Љ1580 (permitting partitioning for rural telephone companies and requesting comment on partitioning and disaggregation for EA licensees in the upper 10 MHz block).ж paging,жѓд1O Е#д ’Y1а4дС•СУУPaging Second Report and OrderФФ, УУФФУУФФУУФФ12 FCC Rcd at 2821Љ2826 (permitting geographic partitioning for paging licensees and seeking comment on disaggregation for all licensees).ѓж 220 MHz,жН1ы Е#д ’YЭа4дС•СУУФФУУ220 MHz Third Report and OrderФФ, FCC 97ЉУУФФ57УУФФ УУФФ(permitting partitioning for all Phase II 220 MHz licensees and seeking comment on partitioning for Phase I licensees and disaggregation for all licensees).ж 38 GHz fixed д Y а4дpointЉtoЉpoint microwave,жЦЊ pЕ#д ’Y;а4дС•СУУAmendment of the Commission's Rules Regarding the 37.0Љ38.6 GHz and 38.6Љ40.0 д ’Y&У4дGHz Bands,ФФ УУФФNotice of Proposed Rulemaking and Order, 11 FCC Rcd 4930, 4972Љ73, РРРР 89Њд ’YУ4д90 (1995) (УУ38 GHz NPRMФФ) (proposing partitioning for rural telephone companies and seeking comment on whether partitioning and disaggregation should be available to all licensees).Цж Wireless Communications Service (WCS),жІд тЕ#д ’Y­а4дС•СУУФФУУWCS Report and OrderФФ, FCC 97Љ50 УУФФ(permitting partitioning and disaggregation for all WCS licensees).Іж Local Multipointд" @~0*ћ$ћ$44Э "д д Yа4дDistribution Service (LMDS),ж…gЕ#д ’Yyа4дС•СУУRulemaking to Amend Parts 1, 2, 21, and 25 of the Commission's Rules to Redesignate the 27.5Љ29.5 GHz Frequency Band, to Reallocate the 29.5Љ30.0 GHz Frequency Band to Establish Rules and Policies for Local Multipoint Distribution Service and Fixed д ’Y6У4дSatellite Services,ФФ Second Report and Order, Order on Reconsideration, and Fifth Notice of д ’Y!У4дProposed Rulemaking, CC Docket No. 92Љ297, FCC 97Љ82 (released Mar. 13, 1997) (УУLMDS д ’Y У4дOrder and NPRMФФ) (permitting geographic partitioning and spectrum disaggregation for LMDS licensees).…ж cellular,ж„ыїЕ#д ’YЈ а4дС•СУУCMRS Partitioning and Disaggregation Order and FNPRMФФ, FCC 96Љ474, at РР 95.„ж and д Yща4дGeneral Wireless Communications Services (GWCS).жM ыщЊ Е#д ’YD а4дС•СУУId.ФФ at РРРР 96Љ97.Mж We also are exploring whether to д Yва4дallow partitioning and disaggregation for other Commercial Mobile Radio Services.жJ ыв] Е#д ’Yра4дС•СУУSee id.ФФ at РР 94.Jж We believe these efforts may enhance the ability of small businesses to compete in the wireless telecommunications industry. д YУ4дУУФФ д ”XvУ4дС•СС` ` ШСУУУ У2.СИ И њСSpectrum Warehousing and Construction RequirementsФФ Ф Ф д YKУ4дС•Си€t117.иС` ` ШСУУУУФФФФSmall Business in Telecommunications also argues that our policies relating to д Y4а4дconstruction requirements encourage spectrum warehousing.жh щ4 Е#д Yѕа4дС•СSmall Business in Telecommunications Comments at 28Љ34.hж As a consequence, it believes those policies create a barrier to market entry for small businesses due to the unavailability of sufficient amounts of spectrum for their use. д Yи У4дС•Си€u118.иС` ` ШСУ УФ ФIn particular, Small Business in Telecommunications points to our policy of granting extended implementation authority in the Specialized Mobile Radio (SMR) service д YЊ а4дto large companies which, it believes, encourages spectrum warehousing.жA ыЊ СЕ#д ’Yа4дС•СУУId. ФФat 28.Aж Moreover, Small Business in Telecommunications claims that the Commission has engaged in disparate treatment in enforcing construction requirements for large companies and small companies. Specifically, it claims that the Commission apparently has not cancelled any extended implementation authorizations for failure to construct and has not conducted an inventory to determine whether licensed facilities subject to extended implementation authority have been constructed. It believes small businesses that may be subject to much shorter constructionд" At 0*ћ$ћ$44„ї"д period requirements are subjected to relatively frequent inquiries regarding their efforts to construct their systems within the applicable construction period along with being the target д Yва4дof finder's preference requests.жM ывЕ#д ’YKа4дС•СУУIdФФ.УУФФ at УУФФ31.Mж Small Business in Telecommunications further asserts that the Commission's licensing policies for companies subject to extended implementation authority have led to mass filings of applications that were not contemplated in the originally granted application. Small Business in Telecommunications argues that this practice has allowed large companies to block competing entities from obtaining additional spectrum. д YHа4дС•Си€v119.иС` ` ШСУ УФ ФPursuant to either a waiver of our construction and loading rulesжƒcH{Е#д ’Yt а4дС•СУУSee, e.g., Fleet Call, Inc.ФФ, Memorandum Opinion and Order, 6 FCC Rcd 1533, д ’Y_ У4дУУrecon. dismissedФФ, 6 FCC Rcd 6989 (1991); Letter from Ralph A. Haller, Chief, Private Radio Bureau to David Weisman, DA 92Љ1734, 8 FCC Rcd 143 (1993). Loading requirements govern the number of mobile stations that must be placed on each channel of a trunked system. 47 C.F.R. РР 90.631(a). Under Section 90.631(c) of our rules, an SMR system seeking additional channels is required to demonstrate that it has achieved a loading level of 70 mobiles per channel on its existing system.ƒж or Section 90.629 of the Commission's rules, some existing SMR licensees have been granted extended д Y а4дimplementation periods of up to five years to construct their systems.ж1 І Е#д Yqа4дС•С47 C.F.R. РР 90.629. Section 90.629 of the Commission's rules provides that any such authority "is conditioned upon the licensee constructing and placing its system in operation within the authorized implementation period and in accordance with an approved implementation plan of up to five years." SMR licensees with extended implementation authority are required to submit annual certifications of compliance with their yearly station construction commitments. Moreover, if the Commission concludes, at any time, that the licensee has failed to meet such construction commitments, it may terminate extended implementation authority and give the licensee six months from the termination date to complete construction of the system. ж Extended implementation authority for SMRs was initially established to facilitate construction of wideЊд Yь а4дarea systems by all licensees, both large and small.жmыь ŸЕ#д ’Y<а4дС•СУУSee 800 MHz SMR Order and NPRMФФ, 11 FCC Rcd at 1524. mж We have previously stated that extended implementation authority may raise concerns about spectrum warehousing. As a result and partially in response to complaints from several small businesses that this type of extended construction period impeded their ability to acquire much needed spectrum, in 1995, we decided not to grant new extended implementation authority for SMRs in the 800д"BR0*ћ$ћ$44Єї"д д Yа4дMHz band.жпдЕ#д ’Yyа4дС•СУУIdФФ. УУФФ Although extended implementation authority was eliminated in the 800 MHz SMR commercial context, it remains an option for private land mobile radio services.пж In eliminating extended implementation authority in the 800 MHz SMR service, we noted that the geographic area licensing plan we adopted for the majority of the spectrum allocated to the service rendered extended implementation authority no longer д YЛа4дnecessary.ж:ыЛdЕ#д ’Yаа4дС•СУУId.ФФ:ж In addition, 800 MHz SMR licensees that were operating under extended implementation authority were required to demonstrate that continuing to allow them д Yа4дextended time to construct their facilities furthered the public interest.жIыЕ#д ’YU а4дС•СУУIdФФ.УУФФ at 1525.Iж These re-justifications are currently pending before the Wireless Telecommunications Bureau. д YHУ4дС•Си€w120.иС` ` ШСIn addition, we note that in recent years, we have adopted longer construction д Y1а4дperiods which benefit all licensees, both large and small.жš;1ЪЕ#д ’YЌа4дС•СУУSee, e.g., УУФФImplementation of Sections 3(n) and 332 of the Communications Act ЉЉ д ’Y—У4дRegulatory Treatment of Mobile ServicesФФ, Third Report and Order, 9УУФФ FCC Rcd 7988, 8074Њд ’Y‚У4д8077УУФФ (1994); УУ800 MHz SMRФФ, 11 FCC Rcd at 1520Љ1521. УУФФRecently we adopted construction requirements for EA and Regional 220 MHz licensees implementing land mobile or paging systems to construct based stations to provide coverage to at least oneЉthird of the population of their EA or Region within five years of initial authorization and at least twoЉthird of the population of their EA or Region within 10 years of initial authorization. Alternatively, д ’YУ4дthese licensees may meet a "substantial service" construction requirement. УУ220 MHz Third д ’YќУ4дReport and OrderФФ, FCC 97Љ57, at РР 163.šж We also have adopted and made д Y а4дproposals to adopt flexible construction requirements in other wireless services.жњж ЭЕ#д ’Y˜а4дС•СУУSee, e.g., ФФУУMAS NPRMФФ, FCC 95Љ58, at РРРР 36Љ39; УУWCS Report and OrderФФ, FCC 97Љ50, д ’YƒУ4дat РРРР 111Љ115; УУLMDS Order and NPRMФФ, FCC 97Љ82, at РРРР 266Љ267.њж With regard to the concerns raised regarding spectrum warehousing, we intend to initiate a proceeding relating to construction requirements generally. We anticipate that this proceeding will examine the relationship between longer and more flexible construction requirements and spectrum warehousing. д YЇ У4дУ УФ Ф д YУ4дС•Си€x121.иС` ` ШСAs noted above, Small Business in Telecommunications also suggests that the Commission's enforcement of its construction requirements has resulted in disparate treatment between large and small companies. It argues that while the Commission often grants extensions of time to large companies to construct their larger systems, theд"KCk0*ћ$ћ$44–ї"д Commission rarely grants extension requests to small companies and uses its finders д Yща4дpreference program to recover unconstructed spectrum.жeщщЕ#д Ybа4дС•СSmall Business in Telecommunications Comments at 32.eж It is unclear whether this argument is an extension of Small Business in Telecommunications' criticism of the extended implementation authority rules or whether Small Business in Telecommunications' claim is that the Commission has treated similarly situated companies differently in terms of considering requests for extensions of time to construct. Notably, Small Business in Telecommunications does not provide an example in which the Commission has granted an extension of time to construct to a large company while denying a similar request from a similarly situated small company. Moreover, it is not clear if Small Business in Telecommunications is suggesting that our finder's preference program somehow contributes д Y а4дto the problem of spectrum warehousing or itself creates a market entry barrier.жП yЕ#д ’YD а4дС•СWe already have eliminated finder's preference in certain services. УУSee, e.g., 800 д ’Y/У4дMHzФФ УУSMR Order and NPRMФФ, 11 FCC Rcd at 1501; УУ900 MHz SMR OrderФФ, 11 FCC Rcd at д YУ4д2658Љ59УУФФ. ж Nonetheless, we note that in a separate proceeding, we have sought comment on whether our д Yь а4дfinder's preference program should be eliminated.жОдь Е#д ’Yа4дС•СУУSee Amendment of Part 90 Concerning the Commission's Finder's Preference Rules,ФФ Notice of Proposed Rulemaking, 11 FCC Rcd 13016 (1996).Ож д Yе У4дУУФФ д ”XО У4дС•СС` ` ШСУУУ У3.ФФСИ И њСУУУУФФApplication Processing and FilingФФ Ф Ф д Y“У4дС•Си€y122.иС` ` ШСУ УФ ФSmall Business in Telecommunications also argues that some methods used by the Commission to process applications result in entry barriers for small businesses. For example, Small Business in Telecommunications claims that the Commission has failed to adequately oversee its frequency coordination process. It alleges that such failure has resulted in biased processing of applications as a result of the "extreme influence" large д Y а4дcompanies exert on frequency coordinators.жhщ œЕ#д Ymа4дС•СSmall Business in Telecommunications Comments at 49Љ50.hж Small Business in Telecommunications also claims that the failure of these coordinating entities to adequately process all applications equally has resulted in large numbers of applications being filed with the Commission through application mills. It states that this problem will be exacerbated if the Commission decides to privatize further the coordination process. Small Business in Telecommunications д"ФDM 0*ћ$ћ$44Sї"д argues that such privatization will increase costs associated with filing applications for д Yща4дfrequencies requiring frequency coordination.жDыщЕ#д ’Ybа4дС•СУУId.ФФ at 51Љ53.Dж д ’YЛа4дС•Си€z123.иС` ` ШСWe believe our recent УУRefarmingФФ decisionж\СЛ{Е#д ’Yча4дС•СУУReplacement of Part 90 by Part 88 to Revise the Private Land Mobile Radio Services д ’YвУ4дand Modify the Policies Governing ThemФФ, Second Report and Order, PR Docket No. 92Љ235, д ’YНУ4дFCC 97Љ61 (released Mar. УУФФ12, 1997) (УУRefarming Second Report and OrderФФ).\ж addresses some of the concerns raised by Small Business in Telecommunications. Specifically, we recently adopted rules д Yа4дthat will inject competition in the frequency coordination process.жFыЕ#д ’YD а4дС•СУУIdФФ. at РР 40.Fж УУФФУУФФPreviously, frequency coordinators had sole control over the frequencies within their pool. We expect that such competition will reduce prices, improve coordination services, and provide more flexibility to д YJа4дprivate land mobile radio licensees.ж:ыJЗЕ#д ’YВа4дС•СУУIdФФ.:ж д Y У4дС•Си€{124.иС` ` ШСУ УФ ФSmall Business in Telecommunications also argues that the Commission "needs to be more considerate of the needs of small business in its plans and provisions for д Yю а4дelectronic filing of applications and access to information."жeщю j Е#д Y а4дС•СSmall Business in Telecommunications Comments at 54.eж For example, it argues that the types of software programs used by the Wireless Telecommunications Bureau for electronic filing or reviewing applications onЉline do not adequately take into account the needs of small businesses because the expense of equipment needed to perform such tasks is often unaffordable by small businesses. To better meet the needs of small businesses, Small Business in Telecommunications suggests that the Commission design its programs so that they can be used on less sophisticated machines, and, in particular, can be used to prepare д YMа4дapplications on machines which are not interconnected.жDыM Е#д ’Yа4дС•СУУId. ФФat 54Љ56.Dж д YУ4дС•Си€|125.иС` ` ШСУ УФ ФWe agree that our processes for electronic filing and viewing should be readily accessible by small businesses. We are taking steps to alleviate difficulties experienced by small businesses and others in accessing application and other licensing information onЉline. For example, the Wireless Telecommunications Bureau is currently evaluating software that would make it easier for licensees to review and download only that information they needд"УEЮ 0*ћ$ћ$44mї"д from public notices listing commercial services applications and licensing information. This would reduce the amount of time and costs spent by small businesses to research the status of д YвУ4дcommercial applications. У УФ Ф д ”UЄУ4дС•СС` ` ШСУУУ У4.СИ И њСEnforcement PoliciesФФ д YУ4дФ Ф д YvУ4дУУФФС•Си€}126.иС` ` ШСУУУУФФФФУ УФ ФSmall Business in Telecommunications also argues that the Commission does not allocate sufficient resources to the enforcement of its rules. It claims that complaints filed by its members remain pending for long periods, that alleged violations of construction requirements by large companies go unaddressed and that the Commission staff has, at times, urged settlement of complaints despite apparent rule violations. Moreover, it asserts that many enforcement decisions rendered by the Commission do not comport with law. All of this, Small Business in Telecommunications argues, creates regulatory uncertainty which in д Yе а4дturn results in unnecessary and unreasonable risk for small business operators.жЅ ве Е#д YNа4дС•СSmall Business in Telecommunications Comments at 39Љ53; Small Business in Telecommunications Reply Comments at 6Љ10.Ѕж д YЇ У4дС•Си€~127.иС` ` ШСWe agree that speedy enforcement of the Communications Act and our rules is imperative if small businesses are to participate effectively in the telecommunications industry. Indeed, we have recently taken a number of steps to improve our enforcement program. For example, we recently issued a Notice of Proposed Rulemaking proposing changes to our formal complaint procedures for common carriers in an effort to improve the д Y4а4дspeed and effectiveness of our formal complaint process.жЂ!ы4bЕ#д ’YGа4дС•СУУSee supra ФФРР 88УУФФ & n.198УУФФ (discussion of УУФФУУFormal Complaint NPRMФФ).УУ ФФУУФФУУФФЂж The rules ultimately adopted would apply to commercial mobile radio service licensees and other wireless providers that are regulated as common carriers. д YиУ4дС•Си€128.иС` ` ШСIn addition, the Wireless Telecommunications Bureau's Enforcement Division has streamlined its informal complaint processes. While the time it takes to resolve such a complaint varies depending on the complexity of the issues involved, on average, the Bureau resolves such complaints within ninety days of its receipt of a complaint. Moreover, the streamlined procedures have resulted in faster resolution of written informal complaints. For example, the Enforcement Division's informal complaint resolution rate for the six month period from June 1996 to November 1996 was 87 informal complaints per month. This is an increase from its record of 45 informal complaints per month during fiscal year 1995. This represents a 93% resolution rate increase. д"ђF!0*ћ$ћ$44ш ї"д д YУ4дС•Си€€129.иС` ` ШСIn an effort to reduce the filing of unfounded complaints against carriers, the Enforcement Division has taken steps to assist consumers in dealing with wireless carriers. For example, the Division has published a consumer information bulletin describing how to file a complaint with the FCC. Because the bulletin urges the consumer to try to resolve the complaint with the company before filing with the Commission, the benefit to the carriers involved is a reduction in the number of frivolous complaints filed. Such efforts are beneficial to carriers, both large and small, in that our experience has shown that informal complaints often are filed by consumers who are unfamiliar with industry practices and applicable FCC rules. In addition, the Division has developed fact sheets addressing a range of topics that provide the consumer with needed information about industry practices and applicable FCC rules. д Yь У4дС•Си€130.иС` ` ШСThe Enforcement Division also has engaged in a number of programs to assist small businesses and consumers. For example, the Division has published a consumer alert to potential investors, such as small business operators and consumers about how to avoid wireless telecommunications investment scams. These scams often involve situations where promoters attempt to entice unwitting small businesses and consumers into making large investments in emerging technology licenses. Because such scams misrepresent the risk or obligations associated with FCC licenses, such fraudulent activities often result in the loss of д YKУ4дentire investments by the consumer or small business. У УФ ФIn an effort to provide information on this subject and to decrease its occurrence, representatives of the Enforcement Division have met with various consumer groups concerning licensing fraud issues. Moreover, the Division continues to provide information about consumer complaints to the National Fraud Information Center, a private organization maintaining a database of fraud information for use by federal and state enforcement agencies. In addition, the Division provides information on licensing fraud issues to consumer groups such as the American Association of Retired Persons and the Consumer Federation of America for distribution to their membership. The Enforcement Division also has provided technical support for the Federal Trade Commission and the Securities and Exchange Commission regarding wireless investment scams and has worked to support several investigations conducted by them on this front. Representatives of the FCC staff have prepared declarations and appeared as witnesses in fraud cases brought by the FTC and SEC. д ”U У4дУУУ У д ”U У4дС•СС` ` ШС5.СИ И њСOutreach EffortsФФ д YлУ4дС•СФ Ф舂131.иС` ` ШСУУУУФФФФSome commenters raise the issue of outreach efforts to small businesses. For example, VoiceЉTel suggests that the Commission establish a central office to address issuesд"Ф G!0*ћ$ћ$44М"ї"д д Yа4дof concern to small businesses.жW"ыЕ#д ’Yyа4дС•СУУSeeФФ VoiceЉTel Comments at 17Љ18.Wж As discussed above, the Office of Communications Business Opportunities was established to address issues relating to small communications businesses. Moreover, the Wireless Telecommunications Bureau has designated a small д YЛа4дbusiness contactжг#вЛ{Е#д Yча4дС•СD'wana Speight, Chief Counsel to the Chief of the Wireless Telecommunications Bureau, serves as the Bureau's designated contact person on small business concerns.гж person to coordinate issues of particular concern to small businesses in the wireless telecommunications industry. In addition, the Wireless Telecommunications Bureau (WTB) has sponsored a number of fora to discuss upcoming auctions and wireless telecommunications services. For example, WTB held an industry forum on February 28, д Y_а4д1997 on the Wireless Communications Service.жў$П_Е#д ’Y% а4дС•СУУSeeФФ FCC Public Notice, УУФФУУFCC Sponsors Forum on Wireless Communications Service д ’YУ4дEvent To Be Held February 28, 1997 at FCC Auction SiteФФ, DA 97Љ309 (released Feb. 7, 1997).ўж Attendance at these fora was free of charge. In addition, prior to the start of serviceЉspecific FCC auctions, WTB routinely holds seminars for bidders to provide additional information about auction procedures. After each auction, WTB also conducts a customer survey of auction participants regarding their experiences in the auction and the auction process generally. д Yе У4дС•Си€ƒ132.иС` ` ШСУ УФ ФMembers of our staff also spoke at the "Auctions '97 Conference" which was held on February 19, 1997. This conference, coЉsponsored by the Wireless Telecommunications Bureau and OCBO, addressed small business opportunities in the wireless industry and included discussions on auctions planned for 1997, opportunities in contracting, resale and unlicensed devices, and financing issues. The free conference was attended by approximately 400 people. OCBO is preparing a summary of the conference highlights which will be posted on the Commission's Web site and mailed to over 2,200 small businesses listed on OCBO's mailing list. Finally, members of the Commission and its staff have spoken at numerous industry, trade association, and public interest organization conferences on opportunities in wireless services licensed by the Commission, and will д Yяа4дcontinue to do so.жs%ыяœЕ#д ’Y<а4дС•СУУSee infraФФ Appendix B (list of FCC outreach and conferences).sж д ”UСУ4дС•СС` ` ШСУУУ У6.СИ И њСInterconnection and ResaleФ ФФФССС д ’Y“У4дС•С舄133.иС` ` ШСУУУУФФФФУ УФ ФIn the УУMarket Entry Barriers Notice of InquiryФФ, we expressly asked for comment on the obstacles small businesses face in their abilities to resell, interconnect, orд"~HO %0*ћ$ћ$448ї"д д Yа4дbenefit from economies of scale.жx&ыЕ#д ’Yyа4дС•СУУMarket Entry Barriers Notice of Inquiry,ФФ 11 FCC Rcd at 6299Љ6300.xж In response to these questions, National Wireless д Yща4дResellers AssociationжЋ'вщ{Е#д Yа4дС•СNational Wireless Resellers Association is a trade association representing the interests of the wireless resale industry.Ћж raised a number of concerns regarding market entry barriers for small businesses. First, it argues that some Commission policies erect significant market д YЛа4дbarriers to small wireless resellers.жg(щЛЕ#д Y а4дС•СNational Wireless Resellers Association Comments at 6.gж For example, it questions the Commission's decision д YЄа4дto sunset its longstanding rule prohibiting carriers from restricting resale of their services.ж9)СЄЦЕ#д ’Y а4дС•СУУIdФФ. at 7. УУSee Interconnection and Resale Obligations Pertaining to Commercial д ’Y У4дMobile Radio Services,ФФ First Report and Order, 11 FCC Rcd 18455 (1996) (УУCMRS Resale д ’Yё У4дOrderФФ), УУpetitions for recon. pendingФФ.9ж National Wireless Resellers Association also argues that the Commission's decision erects a market entry barrier because as facilitiesЉbased carriers will use the Commission's sunset provision as a basis for refusing to negotiate resale agreements, while financial institutions, sensing the carriers' reluctance to negotiate, will refuse to provide capital to resellers. д Y У4дС•Си€…134.иС` ` ШСNational Wireless Resellers Association further argues that the Commission's inaction in resolving disputes about Commercial Mobile Radio Service (CMRS) interconnection issues and the pending reseller complaints on the same subject have created a regulatory environment in which carriers, despite the requirements of Sections 201 and 202 of the Communications Act, feel no pressing obligation to negotiate in good faith with д YЇ а4дresellers regarding either resale or switchЉbased resale agreements.жk*щЇ O Е#д YЇа4дС•СNational Wireless Resellers Association Comments at 10Љ11.kж National Wireless Resellers Association contends that this has resulted in significant barriers to entry and expansion by delaying additional competition and the deployment of innovative services and by creating uncertainty in the industry impacting resellers' access to capital. д Y4У4дС•С舆135.иС` ` ШСIn addition, National Wireless Resellers Association argues that the Commission must endeavor to balance the unequal bargaining positions between facilitiesЊbased carriers and resellers. To accomplish this, it suggests that the Commission: (1) adopt a policy promoting unencumbered resale and interconnection; (2) actively enforce the requirements of Sections 201 and 202 of the Act and require carriers to interconnect with reseller switches; (3) adopt rules promoting geographic partitioning and spectrum д"СI *0*ћ$ћ$44`ї"д disaggregation of channels; and (4) immediately classify facilitiesЉbased carriers as incumbent д Yща4дlocal exchange carriers (LECs).жD+ыщЕ#д ’Ybа4дС•СУУId.ФФ at 12Љ18.Dж д ’YЛУ4дС•С與136.иС` ` ШСУ УФ ФIn our УУCMRS ResaleФФ decision, we extended the resale rule applying to cellular carriers to broadband PCS and covered SMR providers. We also provided that this rule will sunset five years after we award the last group of initial licenses for currently allocated д Yxа4дbroadband PCS spectrum.жe,ыx{Е#д ’YЄ а4дС•СУУSee ФФУУCMRS Resale OrderФФ, 11 FCC Rcd 18455.eж A petition for reconsideration is now pending regarding this issue and, therefore, we will address National Wireless Resellers Association's concerns about the resale sunset in the context of that proceeding. We note that we intend to actively enforce the requirements of Sections 201 and 202 of the Telecommunications Act, as well as other provisions of the Act and our rules. To date, the Wireless Telecommunications Bureau has received ten formal complaints regarding resale obligations. Of these ten complaints, six have been resolved and four are pending. The Wireless Telecommunications Bureau also has received four complaints regarding interconnection obligations (including reseller/switch interconnection issues), which are pending. We further note that we already have taken steps to implement National Wireless Resellers Association's suggestion that we "promote д Y’а4дgeographical partitioning of licenses and disaggregation of channels"жh-щ’.Е#д Yqа4дС•СNational Wireless Resellers Association Comments at 13.hж as a way to provide existing licensees and new entrants, including resellers, with a fair opportunity to compete and develop their businesses. Finally, with respect to National Wireless Resellers Association's suggestion that we recognize that facilitiesЉbased wireless carriers offering local exchange service should be treated as incumbent local exchange carriers, we note that we д ’Yа4дrejected a similar argument in our УУFirst Local Competition ФФУУOrderФФ.жu.ІпЕ#д ’YЏа4дС•СУУSee First Local Competition OrderФФ, 11 FCC Rcd at 15995Љ15996 (the Commission declined to treat CMRS providers as local exchange carriers for purposes of Section 251(c) of the Communications Act). The National Wireless Resellers Association states that it disagrees with the Commission's conclusion in that proceeding.uж In the УУFirst Local д ’Y У4дCompetition OrderФФ, we concluded that CMRS providers are not УУde factoФФ LECs simply д Yѕа4дbecause they provide telephone exchange and exchange access services.жD/ыѕM Е#д ’Yѓ а4дС•СУУIdФФ. at 15996.Dж In addition, we д"ѕJ /0*ћ$ћ$44e"д noted that Congress also concluded that CMRS providers' offering of such services, by itself, д Yща4дdid not require them to be classified as LECs.ж:0ыщЕ#д ’Ybа4дС•СУУIdФФ.:ж д YвУ4дС•СУУФФ д ”WЛУ4дС•СС` ` ШСУУУ У7.СИ И њСDefinition of "Covered SMRФ Ф" ФФ д ’YУ4дС•Си€ˆ137.иС` ` ШСУУУУФФФФIn the УУCMRSФФ proceeding, the Commission determined that an SMR licensee д Yzа4дoffering interconnected service falls within the statutory definition of an CMRS provider.ж 1Сz{Е#д ’YІ а4дС•СУУImplementation of Sections 3(n) and 332 of the Communications Act: Regulatory д ’Y‘ У4дTreatment of Mobile ServicesФФ, Second Report and Order, 9 FCC Rcd 1411 (1994) (УУCMRS д ’Y| У4дSecond Report and OrderФФ). ж American Mobile Telecommunications Association argues that this is an "overЉinclusive" д YLа4дdefinition which creates a market entry barrier.жn2щLЕ#д Yа4дС•СAmerican Mobile Telecommunications Association Comments at 2.nж It explains that, contrary to the Commission's intention, its definition of a "covered SMR" will include many licensees offering primarily local, dispatch service to specialized customers in a nonЉcellular system д Y а4дconfiguration.жA3ы ЕЕ#д ’Ymа4дС•СУУIdФФ. at 13.Aж American Mobile Telecommunications Association also argues that these entities, many of which are small businesses and which cannot compete against other CMRS providers, will be subject to a panoply of CMRSЉrelated regulations which will result in д YТ а4дincreased costs.жA4ыТ h Е#д ’Yла4дС•СУУId.ФФ at 14.Aж We note that the "covered SMR" definition issue is currently pending д YЋ а4дbefore the Commission in a number of proceedings.жы5Ћ  Е#д ’Ywа4дС•СУ УФ ФУУSee, e.g., CMRS Resale OrderФФ, УУФФ11 FCC Rcd 18455; УУTelephone Number PortabilityФФ, First Report and Order and Further Notice of Proposed Rulemaking, 11 FCC Rcd 8352 д YKУ4д(1996,)УУФФ First Memorandum Opinion and Order on Reconsideration, FCC 97Љ74 (released Mar. 11, 1997); American Mobile Telecommunications Association Petition for Declaratory д YУ4дRuling (filedУУФФУУФФ Dec. 16, 1996).ыж We will fully address American Mobile Telecommunications Association's concerns in the context of those proceedings. С•СС` ` ШС д ”WfУ4дУУФФС•СС` ` ШСУУУ У8.СИ И њСCompetitive Bidding IncentivesФ Ф ФФ д ’Y:У4дС•С舉138.иС` ` ШСУУУУФФФФAs we stated in the УУMarket Entry Barriers Notice of InquiryФФ, Section 309(j) of the Act, like Section 257, embodies Congress' intent to facilitate opportunities for smallд"%Kr50*ћ$ћ$44‘ї"д д Yа4дbusinesses in telecommunications.жs6ыЕ#д ’Yyа4дС•СУУMarket Entry Barriers Notice of InquiryФФ, 11 FCC Rcd at 6286.sж In enacting Section 309(j), Congress found that "unless the Commission is sensitive to the need to maintain opportunities for small businesses, competitive bidding could result in a significant increase in concentration in the д YЛа4дtelecommunications industries"жf7щЛ{Е#д Yча4дС•СH.R. Rep. No. 111, 103rd Cong., 1st Sess. 254 (1993).fж and that small businesses should "continue to have д YЄа4дopportunities to become Commission licensees."жB8ыЄ,Е#д ’Y а4дС•СУУId. ФФat 255.Bж To this end, Section 309(j) requires the Commission to establish competitive bidding rules and other provisions to ensure that small businesses, businesses owned by minorities and women, and rural telephone companies (collectively referred to as "designated entities") have an opportunity to participate in the wireless telecommunications industry. д Y У4дС•Си€Š139.иС` ` ШСSection 309(j) requires that in designing systems of competitive bidding, the Commission "promot[e] economic opportunity and competition . . . by disseminating licenses among a wide variety of applicants, including small businesses . . . and businesses д Yе а4дowned by members of minority groups and women."жM9ще пЕ#д Yeа4дС•С47 U.S.C. РР 309(j)(3)(B).Mж Section 309(j)(4)(D) requires that in prescribing regulations, the Commission "ensure that small business . . . and businesses owned by members of minority groups and women are given the opportunity to participate in the provision of spectrumЉbased services, and for such purposes, consider the use of tax д Yyа4дcertificates, bidding preferences, and other procedures."ж:ЛyЕ#д YКа4дС•С47 U.S.C. РР 309(j)(4)(D). Subsequent to Section 309(j)'s enactment, Congress eliminated the Commission's minority tax certificate program. SelfЉEmployed Health Insurance Act of 1995, Pub L. No. 104Љ7, РР 2, 109 Stat. 93 (1995).ж д YKУ4дС•С舋140.иС` ` ШСThe Commission has designed a number of incentives to encourage the participation of designated entities in the wireless spectrumЉbased services. For example, in the broadband PCS auctions, the Commission established entrepreneurs blocks in which participation was limited to applicants with $125 million or less in annual gross revenues for д Yяа4дthe previous two years and total assets of $500 million or less.жс;жя Е#д ’YГ!а4дС•СУУФФУУCompetitive Bidding Fifth Report and OrderФФ, 9 FCC Rcd at 5537. УУSee also д ’Yž"У4дФФУУCompetitive Bidding Sixth Report and OrderФФ, 11 FCC Rcd 136.сж Other incentives haveд"яLБ ;0*ћ$ћ$44r"д д Yа4дincluded reduced upfront payments,жЬ<дЕ#д ’Yyа4дС•СУУSee Competitive Bidding Fifth Report and OrdeФФУУr,ФФ 9 FCC Rcd at 5599Љ5600 (25% reduction for all broadband PCS C block small business applicants).Ьж bidding credits,ж.=|dЕ#д ’Yа4дС•СУУSee, e.g., ФФУУD, E & F Block Competitive Bidding Report and OrderФФ, 11 FCC Rcd at 7875Љ7876 (25% bidding credit for small businesses and 15% bidding credit for very small д ’YщУ4дbusinesses); УУCompetitive Bidding Sixth Report and OrderФФ, 11 FCC Rcd at 161 (25% bidding д ’YдУ4дcredit for small businesses in broadband PCS C block auctions); УУ900 MHz SMRФФ, 11 FCC Rcd at 1705Љ06 (15% bidding credit for very small businesses and 10% bidding credit for small businesses)..ж д Yща4дinstallment payment plans with favorable interest rates,жU>СщЈ Е#д ’YB а4дС•СУУSee. e.g., ФФУУ800 MHz SMR Order and NPRMФФ, 11 FCC Rcd at 1574; УУAllocation of д ’Y- У4дSpectrum Below 5 GHz Transferred from Federal Government UseФФ, УУФФSecond Report and д ’YУ4дOrder, 11 FCC Rcd 624, 662Љ663 (1996) (УУGWCS Second Report and OrderФФ).Uж and reduced down payments on д Yва4дwinning bids.жr?ыв1 Е#д ’YДа4дС•СУУSee, e.g., GWCS Second Report and OrderФФ, 11 FCC Rcd at 663.rж In establishing these competitive bidding rules, the Commission concluded that: ТX•ТТX` ` ШТ[t]he record clearly demonstrates that the primary impediment to participation by designated entities is lack of access to capital. This impediment arises for small businesses from the higher costs they face in raising capital and for businesses owned by minorities and women from lending discrimination as well. In this regard, it should be noted that although auctions have many beneficial aspects, they threaten to erect another barrier to participation by small businesses and businesses owned by minorities and women by raising the costs of entry into д YО а4дspectrumЉbased services.жu@ыО фЕ#д ’YSа4дС•СУУCompetitive Bidding Fifth Report and Order,ФФ 9 FCC Rcd at 5537.uжЦx` Ц д YУ4дС•Си€Œ141.иС` ` ШСУ УФ ФMany commenters noted that access to capital continues to be a primary д Yyа4дbarrier to small business participation in wireless services.ж–AНщy—Е#д ’YС!а4дС•СУУSee, e.g., ФФSmall Business in Telecommunications Comments at ii; Integrated Communications Comments at 1; Center for Training and Careers Comments at 2; National Paging and Personal Communications Association Comments at 2; American Mobileд"•#@0*ћ$ћ$ААМ#ї"д Telecommunications Association Comments at 9; Williams Testimony at 1Љ2.–ж However, many stated thatд"yMyA0*ћ$ћ$44›"д despite our incentives, the use of competitive bidding itself has become a barrier as it has д Yща4дresulted in higher costs for entry into wireless spectrumЉbased services.ж-BНщyЕ#д ’Yа4дС•СУУSee, e.g.,ФФ Small Business in Telecommunications Comments at 9Љ38; Small Business in Telecommunications Reply Comments at 4Љ5; American Mobile Telecommunications Association Comments at 8, 10; National Wireless Resellers Association Comments at 4.-ж For example, Small Business in Telecommunications argues that small companies paid more for spectrum д YЛа4дat auction than large publiclyЉtraded corporations.жЛCдЛўЕ#д ’Yj а4дС•СSmall Business in Telecommunications Comments at 25 & n.13. УУSee alsoФФ American Mobile Telecommunications Association Comments at 10.Лж Small Business in Telecommunications asserts that this dynamic was due to the likelihood that small licensees would draw competing bids from those entities that quickly recognize that in the "auction battle," the small business participant has limited resources, while large companies are scaring off competing bidders who presumed that the larger entity was both willing and able to continue the bidding process д YHа4дto high levels.жeDщHšЕ#д Y“а4дС•СSmall Business in Telecommunications Comments at 25.eж Small Business in Telecommunications further argues that the Commission should exercise a more judicious use of auctions, following a comprehensive examination of alternative licensing methods. It also contends that the Commission should closely evaluate the use of auctions in frequencies occupied with incumbents, especially where the incumbents д Yь а4дare small businesses.жAEыь K Е#д ’Yша4дС•СУУId.ФФ at 38.Aж д YО У4дС•Си€142.иС` ` ШСУ УФ ФAs noted above, we have recognized previously that competitive bidding, despite the public interest benefits associated with its use, has the potential to erect another barrier for small businesses and other designated entities by raising the costs of entry into д Yyа4дspectrumЉbased services.жuFыyў Е#д ’Y(а4дС•СУУCompetitive Bidding Fifth Report and OrderФФ, 9 FCC Rcd at 5537.uж However, we note that Section 309(j) provides mechanisms to address this potential problem, and the Commission has adopted special incentives for designated entities in various services. In addition, our policies regarding geographic partitioning and spectrum disaggregation should aid small businesses and other entrepreneurs through the creation of smaller, less capital intensive licenses that are more easily within the reach of smaller entities. Moreover, such policies may increase access to capital that can beд"NБ F0*ћ$ћ$44{ї"д д Yа4дused to construct and maintain wireless systems.жђGПЕ#д ’Yyа4дС•СУУSee Geographic Partitioning and Spectrum Disaggregation by Commercial Mobile д ’YdУ4дRadio Services LicenseesФФ, Notice of Proposed Rulemaking, 11 FCC Rcd at 10195Љ10196 (1996).ђж We further note that small businesses have both participated in and been successful bidders in the majority of spectrum auctions we have conducted to date. Specifically, in our simultaneous multipleЉround spectrum auctions, 79% of the auction bidders were small businesses (as defined for each respective service) and д YЄа4дsmall businesses acquired 54% of the total licenses offered in these auctions.жkHЄЄOЕ#д YЄ а4дС•СThese results include auctions for the narrowband PCS, broadband PCS, direct broadcast satellite, multipoint and/or multichannel distribution, 900 MHz SMR, and digital audio radio services. The Interactive Video and Data Service (IVDS) service auction was an oral outcry auction; thus, those results are excluded.kж д YvУ4дС•Си€Ž143.иС` ` ШСFinally, with respect to Small Business in Telecommunications' suggestion that the Commission examine alternatives to competitive bidding, we note that in granting the Commission authority to assign licenses through competitive bidding, Congress recognized the benefits of this assignment method in ensuring the efficient use of spectrum and faster deployment of new services and technologies to the public as opposed to other methods of licensing. Specifically, Congress found that other licensing methods such as lotteries and д Yь а4дcomparative hearings "in many respects . . . have not served the public interest."жILь ЛЕ#д YXа4дС•СH.R. Rep., No. 111, 103rd Cong., 1st Sess. 248. Congress noted that comparative hearings "frequently have been time consuming, causing technological progress and the д ’Y*У4дdelivery of services to suffer." УУIdФФ. Lotteries, moreover, "engendered rampant speculation; undermined the integrity of the FCC's licensing process and, more importantly, frequently resulted in unqualified persons winning an FCC license. Many lottery applicants had no intention to build or operate a system using the spectrum, but instead only sought to acquire a license at nominal cost and then sell it, making a large profit and at the same time delaying д ’YЙУ4дthe delivery of services to the public." УУId.ФФж Indeed, in authorizing the Commission's use of competitive bidding, Congress limited the д YО а4дCommission's authority to license spectrum using lotteries.ж:JxО ЯЕ#д ’Y>а4дС•СУУSeeФФ 47 U.S.C. РР 309(i)(1) (The Commission has the authority to use lotteries if "(A) there is more than one application for any initial license of construction permit which will involve a use of the electromagnetic spectrum; and (B) the Commission has determined that the use is not described in subsection [309](j)(2)(A)"). Section 309(j)(2)(A) authorizes the use of competitive bidding if, among other things, the principal use of the spectrum is for subscriptionЉbased services. 47 U.S.C. РР 309(j)(2)(A).:ж Consequently, we willд"О OJ0*ћ$ћ$44Љ "д continue to seek comment, where appropriate, on the use of competitive bidding to assign licenses for individual services in specific rulemaking proceedings, and we will continue to assign licenses for spectrumЉbased services through competitive bidding where permitted by the Communications Act and where we find that the public interest would be served. However, to the extent Small Business in Telecommunications suggests that we engage in a broad examination of our licensing alternatives, we note that Section 309(j)(12) requires the Commission, no later than September 30, 1997, to conduct a public inquiry and submit a report to Congress evaluating the use of competitive bidding, including the extent to which competitive bidding has improved the efficiency and effectiveness of the process for granting licenses and has facilitated the introduction of new spectrumЉbased technologies and the entry д Y а4дof new companies in the telecommunications market.жKKщ Е#д Y“ а4дС•С47 U.S.C. РР 309(j)(12).Kж We anticipate requesting information from the public to be included in this report shortly. д ’Yе У4дС•Си€144.иС` ` ШСIn the УУMarket Entry Barriers Notice of InquiryФФ, we asked for comment on whether our competitive bidding incentives have enhanced opportunities for small business participation. We also asked how existing incentives could be modified and invited suggestions for new mechanisms. In addition, we sought preliminary views on how Section 309(j) incentives have operated in the five completed auctions employing small business д Ydа4дincentives.жsLыdyЕ#д ’YŽа4дС•СУУMarket Entry Barriers Notice of Inquiry,ФФ 11 FCC Rcd at 6308.sж д Y6У4дС•Си€145.иС` ` ШСWe received several comments in response to these inquiries. NextWave has a positive view of the competitive bidding incentives used thus far, stating that "[d]espite many setbacks, the Commission crafted a set of rules for and conducted the recent C block auction in a manner that has met, in substantial part, the Congressional mandate of "disseminating д Yка4дlicenses among a wide variety of applicants."жHMщк,Е#д YЗа4дС•СNextWave Comments at 2.Hж д YЌУ4дС•С舑146.иС` ` ШСOther commenters, however, did not share this view. Thompson PCS states that very few small businesses won Basic Trading Area (BTA) licenses in the C block д Y~а4дauction.жLNщ~нЕ#д Y !а4дС•СThompson PCS Comments at 3.Lж It believes this was because the criteria used to qualify as an entrepreneur was д Ygа4д"far to [sic] lax."ж:OыgŽЕ#д ’YІ#а4дС•СУУId.ФФ:ж PCS Alliance apparently agrees, calling the Commission's definition ofд"gPA O0*ћ$ћ$44/"д д Yа4дan "entrepreneur" for purposes of the C block auction "mystifying."жLPщЕ#д Yyа4дС•СPCS Alliance Comments at 1.Lж American Mobile Telecommunications Association, noting that small business bidders won 26% of the 900 MHz licenses auctioned earlier this year, questions whether such a level of participation by д YЛа4дsmall businesses can be expected in future auctions.жrQщЛyЕ#д Yха4дС•СAmerican Mobile Telecommunications Association Comments at n. 18.rж It states that tiered bidding credits and installment payment plans are valuable, but have only a relatively limited impact on д Yа4дbreaching entry barriers in nonЉentrepreneur block auctions.ж:Rы*Е#д ’Yh а4дС•СУУId.ФФ:ж д Y_У4дС•Си€’147.иС` ` ШСOther commenters allege that the Commission has a practice of changing rules д YHа4дin midЉstream.ж“SдHнЕ#д ’Yжа4дС•СУУSee, e.g.,ФФ Integrated Communications Group et al. Comments at 2; PCS Alliance Comments at 1.“ж Along these lines, minority and women entrepreneurs, in particular, complain that they lost financing once the Commission eliminated its raceЉ and genderЊд ’Y а4дspecific competitive bidding provisions in light of УУAdarand v. PeР9РaФФ.жžTы yЕ#д ’YDа4дС•С115 S.Ct. 2097 (1995) (УУAdarand)ФФ. УУSee ФФУУinfra ФФРРУУФФУУФФ 210 (discusses УУAdarandФФ).žж They argue that with the elimination of these special provisions, the incentives for many companies to offer financing or enter into strategic alliances with these entrepreneurs disappeared. As a result, many found it more difficult or even impossible to participate in the broadband PCS C block д YР а4дauction.жйUдР , Е#д ’Yа4дС•СУУSee, e.g., ФФIntegrated Communications Group Comments et al. at 2; Thompson PCS Comments at 1; Kansas Star Communications Comments at 2; PCS Alliance Comments at 1.йж PCS Alliance states that these problems were exacerbated by the Commission's д YЉ а4дdecision to issue licenses in the broadband PCS A and B blocks first.жLVщЉ Ш Е#д Y"а4дС•СPCS Alliance Comments at 1.Lж Williams sums up his opinion of the success of the Commission's special incentives by stating that such incentives, where available, succeeded in generating substantial participation by small businesses and businesses owned by minorities or women in the auctioning process and a fair allocation of licenses was issued to the small and minority and womenЉowned businesses. However, where such incentives were not available, few, if any, small and minority and д Yа4дwomenЉowned businesses acquired licenses.ж†WыyЕ#д ’YI#а4дС•СWilliams Testimony at 3. УУSee also infraФФ РР 219 (discusses related comments).†жд"Q,W0*ћ$ћ$44ž"дŒд YУ4д™С•С舓148.иС` ` ШСУ УФ ФMany commenters provide suggestions for further enhancing opportunities for small businesses in the auction process. Williams states that the Commission should adopt д Yва4дentrepreneur blocks in other auctionable services and consider a tiered incentives process.жГXвЕ#д ’YKа4дС•СWilliams Testimony at 4, 5, 6. УУSee alsoФФ American Mobile Telecommunications Association Comments at 9 ("[E]ntrepreneur blocks that limit participation to genuinely small business defined on a serviceЉbyЉservice basis considering factors such as size of spectrum awards and expected capital requirements [are] a key to addressing what is otherwise a significant barrier to entry").Гж Several commenters suggest that the Commission adopt small business definitions that reflect true small businesses and take steps to avoid the possibility of large companies circumventing д Yа4дthese definitions.ж_YНЕ#д Y] а4дС•СTRA Communications Consultants Comments at 2; Thompson PCS Comments at 3. д ’YF У4дУУSee alsoФФ American Mobile Telecommunications Association Comments at n. 19 (most д Y1У4дrespondents to survey believe gross revenue test should be used to define small businesses).С(#(#эС_ж Thompson PCS states that the Commission should relax its PCS crossЊд Yvа4дownership rules.жLZщvЄ Е#д YЫа4дС•СThompson PCS Comments at 3.Lж American Mobile Telecommunications Association suggests that the Commission also must consider its auction procedures in looking for ways to assist small businesses. For example, it argues that the Commission's use of simultaneous multiple round auctions places a burden on small businesses which generally do not have the д Y а4дresources to oversee a bidding process which can span months.ж6[Є U Е#д Y а4дС•СAmerican Mobile Telecommunications Association Comments at 10. American Mobile Telecommunications Association notes that 70% of the respondents to its survey noted that they employ 15 or fewer employees, with more than half employing fewer than five employees.6ж д Yь У4дС•Си€”149.иС` ` ШСWe agree that we must continue to take steps to eliminate entry barriers and other burdens that discourage small businesses from participation in auctions for spectrumЊbased services. Some of the suggestions made by commenters already have been implemented. For example, the Commission continues to adopt special incentives to encourage the participation of small businesses in auctions. Indeed, the Commission has adopted or proposed tiered bidding credits and, in some cases, tiered installment payment plans as suggested in Williams' testimony in a number of services, such as: broadband PCS д YKа4дD, E & F block,ж‡\ыKСЕ#д ’YН"а4дС•СУУD, E, and F Block Competitive Bidding Report and OrderФФ, 11 FCC Rcd at 7842Љ7853.‡ж WCS,жm]ыKtЕ#д ’Yа4дС•СУУSeeФФ УУWCS Report and OrderФФ, FCC 97Љ50, РР 193.mж 900 MHz SMR,ж]^ыK{Е#д ’YCа4дС•СУУ900 MHz SMR OrderФФ, 11 FCC Rcd at 2645.]ж 800 MHz SMR,жf_ыK.Е#д ’Yіа4дС•СУУ800 MHz SMR Order and NPRMФФ, 11 FCC Rcd at 1574.fж Interactive Video and Dataд"KRс_0*ћ$ћ$44‰"д д Yа4дService (IVDS),ж`НсЕ#д ’Y’а4дС•СУУImplementation of Section 309(j) of the Communications Act Љ Competitive Bidding,ФФ Tenth Report and Order, PP Docket No. 93Љ253, FCC 96Љ447 (released Nov. 21, 1996), д Yf У4дРР 18.С•СУУФФж and paging.жWaыf Е#д ’Y а4дС•СУУPaging NPRMФФ, 11 FCC Rcd at 3134.Wж The Commission also has eliminated the PCS crossЊд Yща4дownership rule.жŠbыщ Е#д ’YГ а4дС•СУУФФУУD, E & F Block Competitive Bidding Report and OrderФФ, 11 FCC Rcd at 7875Љ7876.Šж In addition, the Commission is considering a number of changes to its competitive bidding procedures to increase the pace of auctions, and thereby, shorten the д YЛа4дduration of each auction,жrcыЛЬ Е#д ’Y8а4дС•СУУSee ФФУУCompetitive Bidding Part 1 Rules NPRMФФ, FCC 97Љ60.rж which would address, at least in part, the concerns of American д YЄУ4дMobile Telecommunications Association noted above.У УФ Ф У УФ Ф д ’YvУ4дС•С舕150.иС` ` ШСFinally, in the УУMarket Entry Barriers Notice of InquiryФФ, we sought comment on whether we needed to do more to make sure that small businesses have meaningful д YJа4дopportunities to participate in the provision of spectrumЉbased services.жsdыJЕ#д ’Yzа4дС•СУУMarket Entry Barriers Notice of Inquiry,ФФ 11 FCC Rcd at 6308.sж NextWave argues that the Commission should consider policies that support entrepreneurs in their efforts to build their systems, recognizing that these small businesses will need to build out quickly not only to comply with FCC rules, but also to reduce the lead time of licensees in the Broadband PCS "A" and "B" block. In furtherance of this objective, NextWave suggests that the Commission remain flexible in its approach to small businesses' and entrepreneurs' participation in the wireless industry. This could be accomplished by: (1) encouraging equipment vendor support by ensuring that Commission rules do not discourage vendor financing; (2) not requiring businesses that participate in the installment payment plan to sign a promissory note; (3) limiting the crossЉcollateralization of licenses; and (4) permitting a д Ydа4дoneЉtime deferral of interest payments.жJeщd2Е#д YG"а4дС•СNextWave Comments at 5Љ7.Jж д"MSуe0*ћ$ћ$44–ї"дŒд YУ4дС•Си€–151.иС` ` ШСWe are considering some steps to facilitate faster buildЉout of PCS systems by entrepreneurs. For example, we recently adopted rules that shorten the voluntary negotiation period for relocation of microwave incumbents by PCS licensees in the "C," "D," "E," and д YЛа4д"F" blocks from two years to one year.ж!fПЛЕ#д ’Y4а4дС•СУУAmendment to the Commission's Rules Regarding a Plan for Sharing the Costs of д ’YУ4дMicrowave RelocationФФ, Second Report and Order, WT Docket No. 95Љ157, FCC 97ЉУУФФ48 д Y У4д(released Feb. УУФФ27, 1997).!ж We believe this rule change will help to eliminate an obstacle to entry for "C" and "F" block licensees by encouraging faster relocation of microwave incumbents and, therefore, enabling these licensees to more quickly buildЉout their PCS systems and commence operation. With respect to the issues raised by NextWave, д ’Y_У4дwe are considering the issue of crossЉdefaults in the context of our УУPart 1 NPRMФФ д YJа4дproceeding.жXgПJOЕ#д ’YJ а4дС•СУУSee Competitive Bidding Part 1 Rules NPRMФФ, FCC 97Љ60, at РРРР 76, 78. A crossЊdefault provision would specify that if a licensee defaults on one installment payment loan, it д ’YУ4дwould also default on any other installment payment loans it holds. УУId.ФФ at РР 76.Xж In addition, we recently codified a procedure for requiring applicants eligible for the installment payment program to execute a promissory note and security agreement as a condition of participating in any installment payment plan that is offered by the д Y а4дCommission.жJhы жЕ#д ’YŒа4дС•СУУSee id.ФФ at РР 10.Jж Since this practice is consistent with normal commercial and government lending practices we do not see, and NextWave has not demonstrated, how such a requirement presents a market entry barrier or other undue burden on small businesses. д YР У4дУУФФFinally, with respect to NextWave's request for a oneЉtime deferral of interest payments, we note that our current rules already permit qualifying participants in the installment payment program to pay their installment payment within 90 days after its due date without any type of penalty. We also allow licensees to seek a threeЉ to sixЉmonth grace period during which д Ydа4дno installment payments need be made.жQiщd‰ Е#д Yžа4дС•С47 C.F.R. РР 1.2110(e)(4)(ii).Qж We believe these procedures give adequate latitude to businesses that request extra time to meet their obligations to the Commission and the government. д YУ4дС•Си€—152.иС` ` ШСThe Wireless Telecommunications Bureau is exploring using its current licensing databases to fashion specialized licensing databases which we anticipate will be of particular interest to small businesses. The objective is to provide small businesses with readily accessible information which will assist them in ascertaining additional opportunities for entry, expansion, or growth. The Bureau is exploring ways to provide interested parties with information concerning spectrum availability and types of services being provided byд"•T: i0*ћ$ћ$44Aї"д existing licensees. We believe that the availability of such databases will facilitate small д YщУ4дbusinesses' efforts to discover and realize partitioning and disaggregation opportunities. У УФ Ф д ”UЛУ4дС•Сб#Xwж*ф0 xь]п7ћщЗX˜#бC.С` ` ШСCable Services д YЄУ4дб#XwЯОІ PьE37ћ[hXP#б д YУ4дС•Си€˜153.иС` ` ШСBefore addressing the specific cableЉrelated market entry concerns raised by д YvУ4дcommenters, we note that even prior to the enactment of УУФФSection 257, the Commission already had taken significant steps to minimize the impact of our regulations on small cable businesses. In 1995, we established a new form of cable rate regulation designed to take into д ’Y1а4дaccount the unique circumstances of small cable systems and companies.жFjС1Е#д ’YЊ а4дС•СУУImplementation of Sections of the Cable Television Consumer Protection and д ’Y• У4дCompetition Act of 1992; Rate RegulationФФ, Sixth Report and Order and Eleventh Order on д ’Y€ У4дReconsideration, 10 FCC Rcd 7393 (1995) (УУSmall System OrderФФ). Fж The УУSmall д ’Y У4дSystem Order ФФextended rate relief to approximately 7,000 small cable systemsУУФФ and is the most important action the Commission has taken on behalf of small systems since the imposition of д Y№ а4дrate regulation under the 1992 Cable Act.ж5kx№ QЕ#д ’Yђа4дС•СIn the УУSmall System OrderФФ, we defined a small system as one serving 15,000 or fewer subscribers and a small cable company as one that serves no more than 400,000 subscribers across all of its systems. In addition, the Commission's Cable Services Bureau continues to entertain petitions for special relief from systems that slightly exceed the small system eligibility criteria but that can demonstrate sufficient similarities with eligible small systems so as to justify extending that relief to them as well.5ж УУФФBy tailoring rules specifically for small cable д ’Yй У4дsystems, the УУSmall System OrderФФУУФФ has had a significant impact in easing the burdens of regulation for smaller cable companies. д Y–У4дС•Си€™154.иС` ` ШСThe commenters in this proceeding have brought to our attention certain additional areas in which they believe market entry barriers exist for small cable operators and other small video programming providers. These areas include access to programming, access to capital, the franchise renewal process, certain practices of incumbent cable systems, and pole attachment rights, all of which are discussed below. д ”U У4дУ УС•СС` ` ШСУУ1.СИ И њСAccess to Programming and Related ObstaclesФФ д YѕУ4дФ Ф д YоУ4дУ УФ ФУ УФ ФУ УФ ФС•Си€š155.иС` ` ШСУУФФ Several commenters assert that, due to their size, small cable operators have difficulty in obtaining programming on terms and conditions comparable to their largerд"ЧU‘ k0*ћ$ћ$449ї"д д Yа4дcompetitors.ж l Е#д ’Yyа4дС•СSmall Cable Business Association Comments at 15. УУSee alsoФФ Southwest Missouri Cable Comments at 4; Press Broadcasting Reply Comments at 1Љ2. Describing itself as an independent broadcaster with only one television station, Press Broadcasting expresses support for the concerns voiced by Small Cable Business Association and Southwest Missouri Cable about the ability of small businesses to compete in a telecommunications marketplace dominated by verticallyЉ or horizontallyЉintegrated entities. According to Press Broadcasting, however, residual rates charged to cable operators for certain programming are significantly less than the rates charged to broadcasters for the same programming. It suggests that the Commission specifically inquire into the extent to which price differentials may distort the cost of programming. Press Broadcasting Reply Comments at 4.  ж According to the Small Cable Business Association, huge price differentials for programming continue to exist that cannot be costЉjustified. It also states that small cable operators have encountered difficulty due to the refusal of some independent programmers to deal with the National Cable Television Cooperative and thus are at a competitive disadvantage compared to large cable operators, DBS providers, and certain wireless д Yа4дproviders.жhmщЌ Е#д Yъа4дС•СSmall Cable Business Association Comments at 10Љ11, 18.hж Similarly, Watson Cable argues that exclusive agreements of larger cable companies with new programmers preclude access to such programming by small cable д Y_а4дoperators and asks the Commission to remove such barriers.жNnщ_] Е#д Ymа4дС•СWatson Cable Comments at 1Љ2.Nж In a similar vein, the Small Cable Business Association argues that the Commission should restrict the ability of broadcasters to engage in disparate pricing of broadcast retransmission consent fees between д Y а4дlarge and small video programming distributors.жgoщ Е#д Yйа4дС•СSmall Cable Business Association Comments at iii & 16.gж д Yь У4дС•Си€›156.иС` ` ШСThese concerns implicate the program access rules we adopted pursuant to д Yе а4дSection 628 of the Communications Act.жopые ПЕ#д ’YEа4дС•С47 U.S.C. РР 548. УУSeeФФ 47 C.F.R. РР 76.1000Љ76.1003.oж One of the purposes of Section 628 is to increase д YО а4д"competition and diversity in the multichannel video programming market . . . . "жGqщО rЕ#д Yса4дС•С47 U.S.C. РР 548(a).Gж In adopting program access rules, "the Commission sought to carry out Congress' preferenceд"Ї V#q0*ћ$ћ$44Чї"д д Yа4дthat program access disputes be resolved in the marketplace."жШrжЕ#д ’Yyа4дУУС•СApplications of Turner Broadcasting System, IncФФ., Memorandum Opinion and Order, д ’YdУ4д11 FCC Rcd 19595 УУФФ(1996) (УУTurnerФФ).Шж Based on this preference, we "specifically rejected a generally applicable approach to program access issues, such as requiring program vendors to offer their programming to all MVPDs [multichannel video д YЛа4дprogramming distributors] at the same rate on the same terms."жDsыЛfЕ#д ’Yва4дУУС•С Id. ФФat n.35.Dж Rather, Section 628 dictated that we narrowly tailor our rules to address conduct by vertically integrated д Yа4дprogrammers, i.e., programmers affiliated with cable operators.жGtщЕ#д YW а4дС•С47 U.S.C. РР 548(b).Gж Absent regulation, such programmers have the incentive and ability to favor their affiliated cable operators over competing MVPDs. Our rules thus "focus on discrimination between [MVPDs] that are in д YHа4дcompetition with each other."ж~uыHЪЕ#д ’YУа4дУУС•СApplications of Capital Cities/ABC, IncФФ., 11 FCC Rcd 5841, 5859 (1996).~ж Commenters in the instant proceeding urge us to expand the focus of the program access rules by more broadly regulating the disparity between programming rates paid by small cable operators and rates paid by larger MVPDs, even where that disparity does not involve competing MVPDs. д Yе У4дС•Си€œ157.иС` ` ШСWe do not deem it appropriate to seek to impose new regulations governing the relationship between programmers and distributors at the wholesale level. While higher programming rates obviously are not in the financial interest of smaller operators, this alone does not allow the Commission to step in with a new scheme of regulation. As discussed elsewhere in this item, our efforts to take account of the hardships faced by small cable systems have been aimed more at eliminating potentially burdensome regulatory requirements, rather than marketplace activity that does not appear to be intended to deter competition. The complaints articulated by commenters are consistent with the common practice of vendors offering discounts for bulk purchasers. Even our rules regulating vertically integrated programming vendors allow variations in rates, terms, and conditions when selling to a particular programming distributor based on "economies of scale, cost savings, or other direct and legitimate economic benefits reasonably attributable to the д YСа4дnumber of subscribers served by the distributor . . . ."жNvщС}Е#д Yя а4дС•С47 C.F.R. РР 76.1002(b)(3).Nж Likewise, Congress recently reЊaffirmed the right of a cable operator to engage in discriminatory pricing at the retail level byд"ЊW. v0*ћ$ћ$44Wї"д д Yа4дoffering bulk discounts to multiple dwelling units.жJwщЕ#д Yyа4дС•С1996 Act, РР 301(b)(2).Jж Although we found in 1992 that д Yща4дCongress sought to rely on the marketplace to the extent possible,жfxыщyЕ#д ’Yа4дУУС•СSee TurnerФФ, УУФФ11 FCC Rcd 19595, at РР 23.fж the Telecommunications д Yва4дAct of 1996 reflects an even more deregulatory intent on the part of Congress.жgyщв,Е#д YЏа4дС•СS. Conf. Rep. No. 230, 104th Cong., 2d Sess. 1 (1996).gж In this environment, we therefore do not believe it appropriate to seek to expand the scope of our program access rules to address the disparity in programming rates where competing MVPDs are not involved. д Y_У4дС•Си€158.иС` ` ШСWith respect to disparate pricing for programming acquired through д YHа4дbroadcaster retransmission consent, Section 325 of the Communications ActжDzщHнЕ#д Yжа4дС•С47 U.S.C. РР 325.Dж imposed upon the Commission the duty to ensure that its regulation of broadcaster retransmission consent д Y а4дdid not conflict with its obligation under Section 623жD{щ ŽЕ#д YYа4дС•С47 U.S.C. РР 543.Dж to ensure that basic service rates are д Y У4дreasonable. У УФ Ф Subject to this proviso, Congress expressly gave broadcasters flexibility to negotiate the terms of carriage and did not appear to exclude from the negotiating table such factors as the individual characteristics of the cable system requesting carriage. As the Senate Committee Report explaining Section 325 states, it "is the Committee's intention to establish a marketplace for the disposition of the rights to retransmit broadcast signals; it is not the Committee's intention in the bill to dictate the outcome of the ensuing marketplace д Yyа4дnegotiations."ж|вy? Е#д Yiа4дС•СSenate Committee on Energy and Commerce, S. Rep. No. 92, 102d Cong., 2nd Sess. at 36 (1991).ж We thus are reluctant to limit the scope of negotiations under the retransmission provisions of Section 325 absent clear and persuasive evidence that the present system is not meeting the objectives Congress had in mind. д ”UУ4дС•СС` ` ШСУ УУУ2.ТИ И њТCable Technical Standards Ф ФФФЦ(#И Ц д YяУ4дС•Си€ž159.иУУС` ` ШСФФSouthwest Missouri Cable asserts that the Commission's stringent proof of performance technical standards require considerable expense and expertise that many smallд"иXй |0*ћ$ћ$44vї"д д Yа4дcable operators cannot afford.жX}щЕ#д Yyа4дС•СSouthwest Missouri Cable Comments at 4.Xж д YвУ4дС•Си€Ÿ160.иС` ` ШСУ УФ Ф Our cable technical standards serve a number of important objectives, including ensuring broadcast signals retransmitted by cable systems are not subject to material degradation, promoting uniform and nationwide standards generally, and ensuring cable systems do not exceed our cable signal leakage standards by causing excessive radiation that might interfere with use of aeronautical radio services and thereby endanger life or д ’Y_а4дproperty. In УУCable Television Technical StandardsФФ,ж?~С_yЕ#д ’Y‰ а4дС•СУУCable Television Technical and Operational Requirements, Review of the Technical д ’Yt У4дand Operational Requirements of Part 76 Cable TelevisionФФ, Report and Order, 7 FCC Rcd д ’Y_ У4д2021 (1992) УУ(Cable Television Technical Standards)ФФ.?ж we revised our cable technical rules and required proof of performance testing to ensure compliance. We emphasized that the newly revised rules were intended "to define the basic technical quality of service cable д Y а4дsubscribers are entitled to receive."ж:ы Е#д ’YЯа4дС•СУУId.ФФ:ж In deciding to exempt small cable systems serving 1,000 or fewer subscribers from having to comply with the testing component of the new rules, we stated: ТX•ТТX` ` ШТ[A]lthough formal testing is often needed for the regulatory process to function, much less expensive subjective viewing tests may well be adequate in more limited subscriber situations where informal resolution of complaints will necessarily be the norm. Consequently, we will not impose any formal testing requirements on cable systems serving fewer than 1,000 subscribers. However, we believe that all subscribers are entitled to receive a signal consistent with our rules. . . . Should such systems not be in compliance, the Commission generally will not take enforcement action before giving such д Yка4дoperators a reasonable time to take remedial action.жC€ыкЕЕ#д ’Y@а4дС•СУУId.ФФ at 2034.CжЦx` Ц д YЌУ4дУУФФIn addition, we stated that we would allow local franchising authorities of small cable systems "to adopt less stringent standards" because they "are in the best position to evaluate the costs of compliance with technical standards and the impact that such costs will have onд"~Yh €0*ћ$ћ$448ї"д д Yа4дthe provision of cable service."ж;ыЕ#д ’Yyа4дС•СУУId.ФФ ;ж We continue to believe that this is a reasonable approach with respect to ensuring adequate signal quality and, absent a fuller reexamination, represents an appropriate balancing of the need for adequate technical standards and the interests of д YЛа4дsmall cable businesses.ж‚•Л{Е#д Yча4дС•СWe note that the 1996 Act amended certain rules regarding enforcement of technical д ’YаУ4дstandards. УУSee Implementation of Cable Act Reform Provisions of the Telecommunications д ’YЛУ4дAct of 1996ФФ, Order and Notice of Proposed Rulemaking, 11 FCC Rcd 5937, 5952 (1996) д ’YІ У4д(УУCable Act Reform OrderФФ). We have adopted interim rules, and soon will adopt final rules, д ’Y‘ У4дimplementing these provisions. УУIdФФ.ж д YУ4дС•Си€ 161.иС` ` ШСAdditional testing and reporting requirements apply when a cable operator д Yvа4дtransmits signals over aeronautical frequencies.жTƒщvиЕ#д Yџа4дС•С47 C.F.R. РРРР 76.610 Љ 76.614.Tж Although these rules further important safety considerations, it may be possible to eliminate certain reporting requirements to ease regulatory burdens on smaller entities, without jeopardizing public safety. After further examination, we will decide whether to propose relaxed reporting requirements in this context. д ”Uь У4дС•СС` ` ШСУУУ У3.ТИ И њТAccess to Capital and the Definition of "Affiliate" ФФФ ФЦ(#И Ц д YО У4дС•Си€Ё162.иС` ` ШСCommenters suggest the Commission could ease the difficulty small cable operators face in obtaining access to capital by narrowly defining the term "affiliate" as that д Yа4дterm is used in the small cable operator provisions of the Telecommunications Act.懄ы‰ Е#д ’YЪа4дС•С1996 Act, РР 302(c). УУФФУУSee Cable Act Reform OrderФФ, 11 FCC Rcd at 5947Љ48.‡ж As д Yyа4дenacted by the 1996 Act, Section 623(m) of the Communications Act,жG…щy< Е#д Yfа4дС•С47 U.S.C. РР 543(m).Gж grants partial and, in some cases, total rate deregulation to small cable operators in franchise areas where they д ’YKУ4дserve 50,000 or fewer subscribers. As set forth in the УУCable Act Reform OrderФФ, and pursuant to statutory definitions, a small cable operator is an operator that, directly and through its affiliates, serves fewer than 1% of all the subscribers in the United States and is not affiliated with entities having gross annual revenues exceeding $250 million in the aggregate. The Commission has requested comment on the manner in which the term "affiliate" should be defined for purposes of determining whether a particular cable operator qualifies as a "small cable operator" entitled to rate deregulation. д"УZэ …0*ћ$ћ$44`ї"дŒд YУ4д™С•Си€Ђ163.иС` ` ШСA number of commenters argue that in determining whether one entity is д Yща4дaffiliated with another, we should disregard purely passive investments.曆вщЕ#д Ybа4дС•СNational Cable Television Association Comments at 7Љ8; Small Cable Business Association Comments at 9, 14.›ж According to the Small Cable Business Association, if the Commission defines the relationships that constitute an "affiliation" too broadly, small cable operators will be forced to choose between foregoing deregulation or foregoing outside financing even though Congress intended deregulation to д Yа4дfoster access to capital.жe‡щbЕ#д Y  а4дС•СSmall Cable Business Association Comments at 14Љ15. eж This, it argues, would undercut Congress' effort in the Telecommunications Act to deregulate small cable businesses and might destabilize capital д Y_а4дmarkets.жQˆы_Е#д ’Y# а4дС•СУУIdФФ.УУ ФФat iii, 9, 14. Qж Commenters recommend that the Commission adopt an affiliation standard that excludes passive investments by establishing reasonable definitions and setting nonЉrestrictive д Y1а4дaffiliation rules that give small cable access to sources of capital funding.жs‰ы1ЦЕ#д ’YЈа4дС•СУУIdФФ.; National Cable Television Association Comments at 7Љ8. sж д Y У4дС•Си€Ѓ164.иС` ` ШСThe Commission intends to give full and careful consideration to the concerns д ’Yь У4дraised by small cable companies in the УУCable Act ReformФФ proceeding (Docket 96Љ85), including the extent to which it would be appropriate to define the term "affiliated" to exclude passive investments in small cable companies. The commenters have raised important issues concerning the benefits of permitting such passive investments, but we note that substantial countervailing arguments also have been made that merit our consideration. We expect to address and resolve these issues in the near future. д ”WMУ4дС•СС` ` ШСУ УУУ4.СИ И њСFranchise Renewal Process Ф Ф ФФ д Y!У4дС•Си€Є165.иС` ` ШСУУФФ The Small Cable Business Association maintains that many cable operators face significant abuse in the franchise renewal process because municipalities fail to follow the procedural protections of 47 U.S.C. РР 546, and, in other instances, demand system upgrades wholly unrelated to community needs and costs or seek compensation in excess of д YХа4дthe five percent franchise fee cap.жhŠщХyЕ#д Yя а4дС•СSmall Cable Business Association Reply Comments at 4Љ5.hж According to the Small Cable Business Association, because municipalities are shielded from liability for damages under 47 U.S.C. РР 555A, they maintain positions contrary to federal law and force cable operators to choose betweenд"—[* Š0*ћ$ћ$44Nї"д д Yа4дunreasonable franchise renewal terms, litigation, or shutting down the cable system.жG‹ыЕ#д ’Yyа4дС•СУУIdФФ.УУФФ at 5. Gж The Small Cable Business Association recommends that the Commission initiate an inquiry into the franchise renewal processes that exist at the municipal level and, from this investigation, recommend to Congress changes in federal law that will more affirmatively preempt д YЄа4дoverreaching by local franchise authorities.ж@ŒыЄ{Е#д ’Yаа4дС•СУУIdФФ.УУФФ@ж Along similar lines, Watson Cable states that д Yа4дCommission staff should draft a model franchise that is fair and equitable to all parties.жMщ.Е#д Yl а4дС•СWatson Cable Comments at 2. Mж д Y_У4дС•Си€Ѕ166.иС` ` ШСУ УФ ФAs the commenters recognize, Section 626(e)(1) expressly provides for a right of judicial appeal for cable operators who have been denied renewal or have been "adversely affected by a failure of the franchising authority to act in accordance with the procedural requirements" of Section 626. In view of Congress' enactment of a specific judicial remedy, and in the absence of specific information that abuses have occurred, we believe it would be premature at this juncture to move forward on the Small Cable Business Association's proposal. Nevertheless, commenters are free to bring to the Commission's attention documented instances of abuse and, if appropriate, we shall recommend legislative initiatives to address any such issues. д ”UyУ4дУ УФ ФС•СС` ` ШСУ УУУ5.СИ И њСLeased Access RequirementsФ ФФФ д YKУ4дС•Си€І167.иС` ` ШСSouthwest Missouri Cable argues that imposing leased access requirements is not practicable, is a severe economic burden imposed on small business, and is totally д Yа4дunnecessary.жXŽщпЕ#д Y­а4дС•СSouthwest Missouri Cable Comments at 4.Xж The Small Cable Business Association states the Commission should adopt leased access rules that adequately compensate small cable companies for their true costs in meeting leased access requests so that such requirements do not cripple small cable д Yиа4дfinancially or competitively.жZщиЕ#д Yа4дС•СSmall Cable Business Association at 20. Zж д YЊУ4дС•Си€Ї168.иС` ` ШСBlab Television, on the other hand, asserts that the present regulatory framework involves application of an extremely complex economic formula and, under it,д"“\A 0*ћ$ћ$44Nї"д д Yа4дprospective leased access programmers cannot create sensible business plans.ж ЛЕ#д Yyа4дС•СOn January 3, 1997, Blab Television filed a "Motion for Leave to File Late Comments" from Blab Television. We have granted its motion, and its comments have been included and considered in the record of this proceeding. ж It maintains that the complexity of Commission rules and the inaccessibility of underlying information from cable operators make it extremely difficult to determine if a given rate is "reasonable" under the statute and that, consequently, leased access programmers face artificially high д YЄа4дcarriage rates.жQ‘щЄKЕ#д Y  а4дС•СBlab Television Comments at 5Љ7.Qж Blab Television states that a low, acrossЉtheЉboard, fixed rate would eliminate market entry barriers and protect both programmers and cable operators. It also advocates a fixed rate should serve as a rebuttable presumption that can be overcome by д Y_а4дspecific evidence provided by a cable operator.жB’ы_ќЕ#д ’Y а4дС•СУУId.ФФ at 8Љ9.Bж д Y1а4дС•СУУФФУУФФи€Ј169.иС` ` ШСSection 612 imposes leased access requirements on cable systems generally.жD“щ1ЏЕ#д Y‘а4дС•С47 U.S.C. РР 532.Dж Pursuant to Section 612(b)(1)(D), the leased access rules do not apply to cable systems with fewer than 36 activated channels, except to the extent required by the terms of a franchise д Yь а4дagreement that predates enactment of the statute.жM”щь ` Е#д Y§а4дС•С47 U.S.C. РР 532(b)(1)(D).Mж This provision exempts many smaller cable operators from leased access requirements altogether. Although the statute imposes д YО а4дleased access requirements on small systems that have 36 or more activated channels,жQ•щО  Е#д Y€а4дС•С47 U.S.C. РР 532(b)(1)(A)Љ(C).Qж the Commission recently modified our leased access rules and included special provisions д Yа4дlessening the burden of leased access for qualifying small systems.жv–ЊТ Е#д ’Yа4дС•СУУФФУУImplementation of Sections of the Cable Television Consumer Protection and д ’YюУ4дCompetition Act of 1992; Leased Commercial AccessФФ, Second Report and Order and Second д ’YйУ4дOrder on Reconsideration, CS Docket No. 96Љ60, FCC 97Љ27 (released Feb. 4, 1997). УУSeeФФ 47 U.S.C. РР 532.vж The new rules excuse operators of eligible small systems from having to respond to requests for leased access unless the leased access programmer provides specified information designed to show that itsд"b]4–0*ћ$ћ$44Йї"д д Yа4дrequest is bona fide.жG—ыЕ#д ’Yyа4дС•СУУIdФФ. at РР 134.Gж The rules also give qualifying small system operators twice as much time as other cable operators to comply with certain procedural deadlines that are triggered д Yва4дwhen a programmer makes a valid request for leased access time.жP˜ыв{Е#д ’Yўа4дС•СУУIdФФ. at РРРР 104, 130.Pж In addition, the revised rules also should benefit small leased access programmers, such as Blab Television, because the rules should result in lower maximum rates for tiered services, permit resale, grant access to highly penetrated tiers, and require partЉtime rates to be prorated without a д Yvа4дsurcharge.жG™ыv.Е#д ’YU а4дС•СУУIdФФ. at РР 160.Gж While the new rules do not adopt the approach recommended by Blab Television, they include an "average implicit fee" formula for calculating the maximum reasonable rate, which should lead to reduced rates for users such as Blab Television. We believe the modified leased access rules strike the proper balance required to ensure that the congressional objectives underlying Section 612 are fully realized without imposing onerous burdens on small cable systems. С•С д ”Uе У4дС•СС` ` ШСУ УУУ6.ТИ И њТAccess Contracts to Multiple Dwelling Units ФФФ ФЦ(#И Ц д YЇ У4дС•Си€Љ170.иС` ` ШС OpTel maintains that cable operators often enter into service contracts with owners of multiple dwelling units (MDUs) that end up being "perpetual" and thus allow д Yyа4дfranchised cable operators to lockЉup whole blocks of subscribers.жGšщyсЕ#д Y а4дС•СOpTel Comments at 1Љ3.Gж According to OpTel, д Ybа4дthese perpetual contracts block market entry and slow the development of competition.ж;›ыb’Е#д ’YЅа4д УУId.ФФ at 4Љ5. ;ж It maintains that the Commission should apply a "fresh look" policy to perpetual or other longЊterm contracts and provide an opportunity for MDU owners or managers to escape such д Yа4дcontracts.ж@œыE Е#д ’Yа4д УУIdФФ.УУФФ at 5Љ8.@ж OpTel contends that the Commission has applied the "fresh look" approach in the common carrier area and has the authority to apply it in this context. Applying this policy would make it easier for an incumbent provider's established customers to consider taking service from new entrants and obtain the benefits of a new, more competitive д YСа4дenvironment, according to OpTel.жKыСј Е#д ’Yj#а4дС•СУУIdФФ.УУ ФФat 5Љ9. Kж In a similar vein, Watson Cable states that exclusiveд"С^Ћ 0*ћ$ћ$44m"д agreements of larger cable companies with apartment complexes deny access to smaller cable д Yща4дcompanies that serve the same area.жQžщщЕ#д Ybа4дС•СWatson Cable Comments at 1Љ2. Qж д YЛУ4дС•Си€Њ171.иС` ` ШСThe National Cable Television Association and TeleЉCommunications, Inc. argue in reply comments that OpTel's proposal proceeds from faulty factual and legal д Yа4дpremises and should not be considered in this proceeding.жœŸвyЕ#д YЗа4дС•СNational Cable Television Association Reply Comments at 2; TeleЉCommunications, Inc. Reply Comments at 3. œж They maintain that OpTel's proposal would seek abrogation of private contractual arrangements in order to allow it to obtain a competitive advantage over franchised cable operators even though no proof exists that the exclusive agreements cable operators have are the result of any different process than д Y1а4дother MVPD agreements in existence today.УУФФжž в1Е#д Yѕа4дС•СNational Cable Television Association Reply Comments at 3Љ4; TeleЉCommunications, Inc. Reply Comments at 3Љ4.žж Moreover, both the National Cable Television Association and TeleЉCommunications, Inc. state that the contracts about which OpTel is concerned are not the type of market entry barrier contemplated by Section 257 because they do not reflect legal or regulatory barriers nor result from disparities in the ability to raise capital. Instead, such contracts are the result of armsЉlength, privatelyЊnegotiated agreements which are equally available to franchised cable operators and other д YЇ а4дMVPDs.жЂЁвЇ ­Е#д Yа4дС•СNational Cable Television Association Reply CommУУФФents at 5; TeleЉCommunications, Inc. Reply Comments at 2Љ4.Ђж д YyУ4дС•Си€Ћ172.иС` ` ШСThese issues are related to matters that are the subject of a pending proceeding д Ybа4дknown as the "Inside Wiring" rulemaking,жЂПbG Е#д ’YZа4дС•СУУImplementation of the Cable Television Consumer Protection and Competition Act of д ’YEУ4д1992; Cable Home WiringФФ, Final Order on Reconsideration and Further Notice of Proposed Rulemaking, 11 FCC Rcd 4561 (1996).ж where УУФФthe Commission is addressing, among other things, the ability of a cable operator or other MVPDs to claim ownership or control over wiring installed within MDUs. The Commission is considering whether MDU owners and residents have sufficient flexibility to choose between competing MVPDs, or whether Commission action would be appropriate. We believe the Inside Wiring rulemaking is the better forum to address the MDU issues raised by commenters in the instant proceeding. д"я_Ю Ђ0*ћ$ћ$44rї"д The Commission intends to act in the Inside Wiring proceeding shortly, and will address issues related to MDUs in an appropriate manner. д YвУ4дУУФФ д ”UЛУ4дС•СС` ` ШСУ УУУ7.СИ И њСPole AttachmentЉRelated Impediments ФФ д YЄУ4дФ Ф д YУ4дС•Си€Ќ173.иС` ` ШСBoth the Small Cable Business Association and the National Cable Television Association maintain that cable systems that operate in rural areas face entry barriers and competitive barriers from electrical and telephone cooperatives because the rates and conditions which these entities charge for pole attachment usage are not subject to pole д Y1а4дattachment regulation.жЂЃв1Е#д YЊ а4дС•СSmall Cable Business Association Reply Comments at 1Љ3; National Cable Television Association Comments at 15Љ16. Ђж They recommend that the Commission inform Congress of entry barriers imposed by rural electric and telephone cooperatives that are currently exempt from д Y а4дfederal restrictions.ж.ЄЛ bЕ#д Yа4дС•СSmall Cable Business Association Comments at 2. On the subject of pole attachments, Watson Cable maintains that larger companies tie up valuable space that does not allow for placement of additional lines on existing poles. Watson Cable Comments at 1..ж д Yе У4дС•Си€­174.иС` ` ШСSpecifically, they ask that we propose to Congress a statutory amendment to д YО а4дSection 224 of the Communications Act,жEЅщО хЕ#д YTа4дС•С 47 U.S.C. РР 224.Eж that would apply the pole attachment/access to rightЉofЉway rules to telephone cooperatives and electric cooperatives. Those rules generally require a "utility" to grant cable operators and telecommunications providers (other than ILECs) access to any poles, ducts, conduits and rightsЉofЉway owned or controlled by a utility and used, in whole or in part, for wire communication. The rules also regulate the rates and terms a utility may impose on cable operators and telecommunications carriers seeking access to the utility's facilities. The current law excludes from the definition of utility "any railroad, any person who is cooperatively organized, or any person owned by the д Yа4дFederal Government or any State."жJІщ–Е#д YMа4дС•С47 U.S.C. РР 224(a)(1).Jж Telephone cooperatives and electric cooperatives thus are excluded from the definition of "utility." Small rural cable operators complain that cooperatives charge them exorbitant rates for pole attachments or deny access altogether. In their view, this problem is exacerbated by the fact that many cooperatives have become DBS retailers. They argue that the exemption under the pole attachment provisions of the Communications Act and our corresponding rules gives cooperatives the ability to raise their competitors' cost of doing business.д"|`G І0*ћ$ћ$448ї"дŒд YУ4д™С•Си€Ў175.иС` ` ШСWhen it created this exemption almost twenty years ago, Congress found that д Yща4д"cooperative utilities charge the lowest pole rates" to pole users.жdЇщщЕ#д Ybа4дС•СS. Rep. No. 580, 95th Cong., 2d Sess. at 18 (1978).dж Further, in the rural areas generally served by cooperatives, the technical quality of overЉtheЉair television was often poor, giving the customerЉowners of these utilities "an added incentive to foster the д YЄа4дgrowth of cable television in their areas."ж:ЈыЄyЕ#д ’YЮа4дУУС•СIdФФ.:ж The comments indicate that much has changed with respect to the conditions that gave rise to the exemption. Instead of charging the lowest rates, cooperative utilities now charge the highest rates, according to the comments. To the extent cooperatives offer DBS service, their incentive to foster the growth of cable television may have turned into a disincentive. While the comments thus suggest that some of the circumstances that gave rise to the exemption no longer exist, the record in this proceeding provides an inadequate basis to make a firm recommendation whether to retain or eliminate the exemption. We will continue to consider the matter. д ”Uе У4дС•СС` ` ШСУУУ У8.СИ И њСOther MattersФФФ Ф д YЇ У4дС•Си€Џ176.иС` ` ШСThe Commission is examining other areas not specifically raised in the Section 257 proceeding that have the potential for imposing barriers on small cable businesses. For example, the Commission is revisiting its current regulation that requires cable operators to д Ybа4дbe able to override normal programming to give viewers notice of a national emergency.жрЉ•b,Е#д ’Y?а4дС•СУУSee ФФУУAmendment of Part 73, Subpart G of the Commission's Rules Regarding the д ’Y*У4дEmergency Broadcast SystemФФ, Report and Order and Further Notice of Proposed Rulemaking, д ’YУ4д10 FCC Rcd 1786 (1994). УУSee also Amendment of Part 73, Subpart G of the Commission's д ’YУ4дRules Regarding the Emergency Broadcast SystemФФ, Memorandum Opinion and Order, 10 FCC Rcd 11494 (1995).рж Under current rules, cable systems must "provide a video interruption and an audio EAS д Y4а4д(Emergency Alert System) message on all channels,"жLЊщ4‰ Е#д Ynа4дС•С47 C.F.R. РР 11.51(g)(2).Lж which can require the purchase, installation, and maintenance of special equipment. The Commission is giving careful consideration to whether an extended implementation schedule for smaller cable systems can д Yяа4дbe developed that would satisfy Section 624,жDЋщя: Е#д Yк!а4дС•С47 U.S.C. РР 544.Dж without undermining the congressional intent underlying that section. д"Сaы Ћ0*ћ$ћ$44`ї"дŒд YУ4дС•Си€А177.иС` ` ШСIn a separate proceeding, we have sought comment on the implementation of Section 713 which requires the Commission to prescribe rules mandating that video д Yва4дprogramming be closed captioned for the benefit of persons with hearing disabilities.жЌСвЕ#д ’YKа4дС•С47 U.S.C. РР 613. УУSee In the Matter of Closed Captioning and Video Description of д ’Y6У4дVideo ProgrammingФФ, Notice of Proposed Rulemaking, 12 FCC Rcd 1044 (1997) (УУClosed д ’Y!У4дCaptioning NoticeФФ).ж Section 713(d) allows the Commission to exempt classes of video programmers and providers from our rules where the provision of closed captioning would be "economically д ’Yа4дburdensome."жJ­щQЕ#д Y а4дС•С47 U.S.C. РР 613(d)(1).Jж The УУClosed Captioning NoticeФФ recognizes the market entry objectives of д Yxа4дSection 257жtЎыxЕ#д ’Y+ а4дУУС•СClosed Captioning NoticeФФ, FCC 97Љ4, at УУФФРР 85 & n.165.tж and seeks comment on whether we should define economic burdens based on д Yaа4дthe size of the programmer or provider.жFЏыaЕЕ#д ’YЧа4дС•СУУIdФФ. at РР 71.Fж д ”U3У4да щщ айБйвŒ 1. a. i.(1)(a)(i) 1) a)l 1. a. i.(1)(a)(i) 1) a)БlŒвС•СУУУ УD.С` ` ШСMass Media ServicesФ ФФФ д Y У4дС•Си€Б178.иС` ` ШСУ УФ ФIn the mass media area, the Commission already has made considerable progress in reducing regulatory hurdles that may impact small businesses and impede entry. We have streamlined and improved our processes so that the average time for processing routine television station sales has been reduced from three months to two months and the average time for processing nonЉroutine radio station sales from twelve months to five months. The Mass Media Bureau also has begun publishing radio application status and station technical information on the Internet so that it is readily available to the public. It has commenced work on a project to provide for electronic filing of broadcast applications, which will scan for incomplete or inaccurate applications and provide for automatic computer analysis of interference issues. The Commission also plans to resolve the proceeding instituted to reform the comparative hearing process for the award of new broadcast licenses. All of these efforts should significantly assist small businesses by generally easing the burdens and delays associated with the regulatory process. д YУУ4д С•Си€В179.иС` ` ШСThe commenters have raised additional entry barrier issues and these are addressed below. д ”X~У4дС•СС` ` ШСУ УУУ1.СИ И њСФ ФФФУ УУУLow Power TelevisionФФ Ф Ф д"jbh Џ0*ћ$ћ$44/ї"дŒд YУ4дС•СУУФФУУФФУУФФи€Г180.иС` ` ШСУУФФCommunity Broadcasters Association argues that small businesses, particularly, low power television (LPTV), have not been given the amount of regulatory д Yва4дattention they deserve and that Section 257 requires.жZАщвЕ#д YKа4д Community Broadcasters Association Comments at 2.Zж More specifically, some commenters state that Section 257's goal of diversity will be rendered virtually meaningless under the Commission's proposed digital television (DTV) conversion proposal because low power television stands to lose approximately fortyЉfive percent of its stations, thereby decreasing д Yvа4дdiversified ownership which will result in significantly less diversified programming.жsБщvyЕ#д Y  а4дС•СMoore Broadcasting Comments at 1; Abacus Television Comments at 4.sж These commenters maintain that the Commission must realize that, regardless of financial and other nonЉregulatory hurdles that small businesses face, potential investors are less likely to invest in such services if regulatory hurdles accompany business risks and handicap an д Y а4дenterprise.жbВщ *Е#д Yѕа4дС•СCommunity Broadcasters Association Comments at 2.bж д Yь У4дС•СУУФФи€Д181.иС` ` ШСAccording to these interests, the Commission should change its "small business" focus from trying to facilitate multiЉbillion dollar bidding in spectrum auctions to assisting currentlyЉexisting businesses that are truly small so that these business are not eradicated. In particular, these commenters believe the Commission should propose multiple classes of DTV ЉЉ full power and small stations ЉЉ and open a second window for these д Yyа4дsmaller DTV allotments and designate only low power television station licensees as eligible. жQГщyлЕ#д Yа4дС•СAbacus Television Comments at 5.Qж They urge the Commission to use a wide range of solutions proposed by the low power television industry to protect as many existing low power television authorizations as possible and to accommodate as many of these businesses with DTV conversion channels as д Yа4дfeasible.ж@ДыŒЕ#д ’YZа4дУУС•СId.ФФ at 6.@ж For this purpose, one commenter recommends that substantial preferences be given to small business applicants and a higher preference to those who do not own any fullЊд Yяа4дtime radio or television stations.жkЕщя? Е#д Yпа4дС•СTRA Communications Consultants and Skinner Comments at 4. kж Another commenter states that the Commission should д Yиа4дstop blocking proposals to improve low power television facilities.жSЖщи№ Е#д Yy"а4дС•СMoore Broadcasting Comments at 5. Sж д"СcЁ Ж0*ћ$ћ$44zї"дŒд YУ4дС•Си€Е182.иС` ` ШСWith respect to concerns expressed by some commenters about the impact of the conversion of DTV on LPTV stations, on April 21, 1997, the Commission released the д ’Yва4дУУDTV Fifth Report and OrderФФ in MM Docket No. 87Љ268УУФФ,ж.ЗСвЕ#д ’YKа4д УУSee Advanced Television Systems and Their Impact Upon the Existing Television д ’Y6У4дBroadcast ServiceФФ, Fifth Report and Order, MM Docket No. 87Љ268, FCC 97Љ116 (released д ’Y!У4дApr. 21, 1997) (УУDTV Fifth Report and OrderФФ)..ж which issued initial licenses and д ’YНа4дestablished the service rules for DTV.жtИ|НQЕ#д ’YПа4д УУSee ФФУУDTV Sixth Further NoticeФФ, 11 FCC Rcd 10968. While this proceeding progressed further, allЉdigital advanced television systems were developed. Thereafter, the Commission began to refer to "advanced television" as "digital television" or "DTV" in recognition that, with the development of the technology, any advanced television system was д ’Ye У4дcertain to be digital. УУSee Advanced Television Systems and Their Impact upon the Existing д ’YP У4дTelevision Broadcast ServiceФФ, Fourth Report and Order, 11 FCC Rcd 17771, 17773 (1996).УУ ФФtж In the УУDTV Fifth Report and OrderФФ, following д YЈа4дCongress' direction in Section 336(a)(1) of the 1996 Act,жCЙщЈ• Е#д Yюа4д 47 U.S.C. РР 336(a)(1).Cж we determined that initial eligibility for DTV licenses should be limited to those fullЉpower broadcasters who, as of the date of issuance of the initial digital licenses, hold a license to operate a television broadcast station or a permit to construct such a station, or both. We reiterated our previous determination that there is insufficient spectrum to include LPTV stations and translators, which are secondary under our rules and policies, to be initially eligible for a DTV channel and that we had not been able to find a means of resolving this problem. However, we also pointed out that limiting initial eligibility to fullЉpower broadcasters does not necessarily exclude LPTV stations from the conversion to DTV. д ’YТ У4дС•Си€Ж183.иС` ` ШСOn the same day, in the УУDTV Sixth Report and OrderФФ in MM Docket No. 87Њд Y­ а4д268,жŒК~­ F Е#д ’YЄа4дС•СУУФФУУSee Advanced Television Systems and Their Impact Upon the Existing Television д ’YУ4дBroadcast ServiceФФ, УУФФSixth Report and Order, MM Docket No. 87Љ268, FCC 97Љ115, РРРР 6, д ’YzУ4д114Љ147 (released Apr. 21, 1997) (УУDTV Sixth Report and OrderФФУУФФ) (adopting a Table of Allotments for DTV, rules for initial DTV allotments, procedures for assigning DTV frequencies, and plans for spectrum recovery). Thus, LPTV stations will continue to have д ’Y7 У4дsecondary status to fullЉservice television stations. УУSeeФФ 47 C.F.R. РР 73.702(b).Œж we adopted a number of measures intended to minimize the impact of DTV д Y–а4дimplementation on existing LPTV service.жWЛы–ŒЕ#д ’Yг"а4д УУDTV Fifth Report and OrderФФ, at РР 18.Wж These measures include many of the changes to the technical rules requested by the LPTV and TV translator industries. The new rulesд"d?Л0*ћ$ћ$44Јї"д provide additional flexibility to accommodate low power operations during and after the transition to DTV and thus mitigate the impact of DTV implementation on LPTV. For example, we decided to allow low power stations that are displaced by new DTV stations to apply for a suitable replacement channel in the same area, on a firstЉcome, firstЉserved basis, д YЄа4дwithout being subject to competing applications.жGМыЄЕ#д ’Yа4дС•СУУId.ФФ at РР 144.Gж We also provided for additional operational flexibility for low power stations by removing or relaxing various restrictions imposed by the LPTV technical rules. That is, we deleted the restrictions on use of a channel either seven channels below or fourteen channels above the channel of another station in the low power TV service. In addition, we determined that LPTV and TV translator stations should be allowed to make use of terrain shielding, LongleyЉRice terrain dependent propagation prediction methods, and appropriate interference abatement techniques to show that the station will not cause interference to other full or low power stations. We also decided to allow LPTV and TV translator station operators and applicants to agree to accept interference from other LPTV and TV translator stations. д ’YЇ У4дС•Си€З184.иС` ` ШСIn the УУDTV Sixth Report and OrderФФ, we also noted that, as secondary operations, LPTV and TV translator stations would be able to continue to operate until a displacing DTV station or a new primary service provider is operational. Thus, low power operations may continue on all existing TV channels, including channels 60Љ69, provided they do not cause harmful interference to any primary operations. Licensees of those LPTV and TV translator stations that are displaced may request operation on these channels on a д Yа4дnonЉinterfering basis.жGНы{Е#д ’YKа4дС•СУУId.ФФ at РР 142.Gж We concluded that these various rule changes would preserve many existing low power operations, open many new channels for those low power operations subject to possible displacement by DTV, and allow hundreds of LPTV and TV translators to continue service to their viewers. We further recognized that most low power stations would д YУа4дbe able to continue to operate throughout the DTV transition.жGОыУ.Е#д ’YЂа4дС•СУУId.ФФ at РР 143.Gж д ’Y•У4дС•Си€И185.иС` ` ШСIn addition to the above considerations discussed in theУУ ФФУУDTV Sixth Report and д ’Y€У4дOrderФФ, we note that DTV may offer new opportunities for small businesses. For example, small businesses may have opportunities to apply for licenses to use much of the recovered spectrum. Also, new opportunities might arise for small businesses to participate in the manufacturing or sale of equipment for DTV, LPTV, and related services, or for wireless services that might possibly be provided over recovered spectrum from the transition by broadcasters to DTV.д"eсО0*ћ$ћ$44ўї"дŒд ”Xа4д™С•СС` ` ШСУ УУУ2.СИ И њСWireless CableФФжЏПHю>д Yyа4дС•С"Wireless cable" is a service permitting delivery of video programming to subscribers utilizing spectrum allocated to the Multipoint Distribution Service and the Multichannel Multipoint Distribution Service (collectively referred to as MDS), as well as leased channels from the Instructional Television Fixed Service (ITFS). Wireless cable resembles cable television, but instead of coaxial or fiber optic cable, wireless cable uses overЉtheЉair microwave radio channels to deliver programming to subscribers. Our use of the term "wireless cable" does not imply that it constitutes cable television for statutory or regulatory purposes.Џж Ф Ф д YеУ4дС•СУУФФУУФФи€Й186.иС` ` ШСУ УФ ФIntegration Communications International et al.УУФФ maintain that the biggest barrier to wireless cable's competition with wireline cable and DBS services and to the goal д YЇа4дof a level playing field is insufficient channel capacity.жpРщЇиЕ#д Y0а4д Integration Communications InternationalУУФФ et al. Comments at 1Љ2.pж They state that wireless cable operators must digitize and compress the signal to increase capacity but the high costs of д Yyа4дhardware to digitize and compress is prohibitive for small businesses.ж3Сыy‰ Е#д ’YГа4д УУId.ФФ3ж Wireless cable interests also contend that the Commission should allow wireless cable operators to receive digitalized, compressed signals from one source such as DBS service, in order to avoid the enormous capital investment that otherwise would be necessary for digital compression д Y а4дequipment at each system headend.жБТд < Е#д ’Y а4д Wireless Cable Association International Comments at 1. УУSee also ФФIntegration Communications International et al. Comments at 1. Бж д Yя У4дС•СУУФФУУФФи€К187.иС` ` ШСУ УФ ФThe Commission is sensitive to the commenters' complaint that existing technology for digital modulation in Multipoint Distribution Service station operation is too expensive for small businesses, and that the Commission should approve more cost effective methods of digitized signal reception by wireless cable operators. We already have taken д Y“У4дsome steps to address this issue. УУФФSpecifically, we authorized the use of digital modulation д Y|а4дtechniques in MDS and ITFS on an interim basis until final rules could be promulgated.ж4УП|иЕ#д ’Y а4дС•СУУRequest for Declaratory Ruling on the Use of Digital Modulation by Multipoint д ’Y№ У4дDistribution Service and Instructional Television Fixed Service Stations, ФФDeclaratory Ruling д Yл!У4дand Order,УУФФ 11 FCC Rcd 18839 (1996). 4ж That ruling was adopted to "provide a quick and easy framework for wireless cable operators and MDS or ITFS licensees to increase their channel capacity and service offerings throughд"Nf_У0*ћ$ћ$44–ї"д the use of digital compression techniques . . . [and to] enable the industry to gain experience with a broad array of digital technology and to perform further testing in order to д Yва4дfine tune performance measures for use of this technology in wireless cable systems." УУФФжKФывЕ#д ’YKа4дС•СУУУУФФId.ФФ at РР 2.Kж In addition, on March 14, 1997, a group of entities in the wireless cable industry filed a petition for rulemaking proposing to engage in fixed twoЉway digital transmissions, and we issued a д Yа4дpublic notice seeking comment on the petition.ж—ХЈ{Е#д ’YЙа4дС•СFCC Public Notice, УУPleading Cycle Established for Comments on Petition for Rulemaking to Amend Parts 21 and 74 of the Commission's Rules to Enhance the Ability of Multipoint Distribution Service and Instructional Television Fixed Service Licensees to д ’Yv У4дEngage in Fixed TwoЉWay TransmissionsФФ, DA 97Љ637 (released Mar. 31, 1997).УУ ФФ—ж The Commission will continue to take suitable steps to enhance the wireless cable operators' ability to provide competition in the video marketplace, including, as appropriate, authorization of new technological advancements for use by such operators. д Y У4дС•Си€Л188.иС` ` ШСУ УФ ФBroadcast Data et al. maintain that the Commission should repeal or modify Sections 21.44 and 21.912, which, in their view, unfairly impose a soЉcalled "death penalty" д Yь а4дon MDS licensees.ж_Цыь ыЕ#д ’Yˆа4дС•СBroadcast Data et al.УУ ФФComments at 7Љ10. _ж They УУФФapparently believe that, in order to operate, small MDS businesses must enter into channel leasing agreements whereby larger wireless cable entities provide programming or equipment in exchange for channel capacity as part of a channel д YЇ а4дaggregation strategy.жЧЇ žЕ#д ’Yіа4дб#XwЯОІ PьE37ћ[hXP#бС•СУУФФУУУУФФId. ФФ The commenters refer to РР 21.912(d) of the Commission's Rules for the proposition that licenses may be forfeited the day following the cessation of programming. That rule section, however, only pertains to channels held or leased by cable television companies for the purpose of providing otherwise unavailable locally produced programming, and represents an exception to the rule's Cable/MDS crossЉownership prohibition. ж Because the smaller entities are at a significant bargaining disadvantage the lease terms may permit the lessee to cease providing programming or remove previously provided equipment from the licensee. Consequently, the licensee may become subject to Rule 21.303(d), which requires a licensee that has not provided service for a consecutive period of 12 months to submit its license for cancellation within 30 days, and Section 21.44 (a)(3), which compels forfeiture of a station license upon "the voluntary removal or alteration of the facilities, so as to render the station not operational for a period of 30 days or more." According to the commenters, small incumbent MDS operators are thus at the mercy of larger operators with whom the incumbent has a channel lease agreement. Moreover, they believe auction winners may be motivated to discontinue serviceд"иgѕ Ч0*ћ$ћ$44\ї"д д Yа4дby the terms of Section 21.932ж€ШыЕ#д ’Yyа4дС•СУУSee ФФ47 C.F.R. РР 21.932 (forfeiture of incumbent MDS station licenses).€ж because the vacated frequency spectrum occasioned by a cancellation or forfeiture automatically becomes part of the protected service area of the entity that received the license as a result of the MDS auction. Thus, the commentators urge that the Commission eliminate the "death penalty" provisions of the rules or guarantee the licensee access to the larger operator's site, equipment, and, if necessary, channel capacity. д YvУ4дС•Си€М189.иС` ` ШСУ УФ ФThe wireless cable industry continues to make strides towards enhancing competition in the video marketplace. Because wireless cable's ability to compete effectively with other providers on a more equal footing is tied, with other factors, to MDS operators' ability to attract investment capital, we continue to believe that channel accumulation is an д Y а4дessential element in the accomplishment of that goal.ж˜ЩЈ {Е#д ’YF а4дС•СУУSeeФФ УУAmendment 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 309(j) of the Communications Act ЉЉ Competitive д ’YУ4дBidding, ФФNotice of Proposed Rulemaking, 9 FCC Rcd 7666, 7667 (1994).˜ж УУФФ Section 21.932 of our rules was д Y а4дspecifically adopted to enhance the auction winner's opportunity for success.У УФ ФжjЪы ыЕ#д ’YŸа4дС•СУУSee ФФУУMDS Report and OrderФФ, 10 FCC Rcd at 9612.jж Thus, we held that the "available MDS spectrum within a BTA authorization will increase if the unconstructed facilities or unused channels held by an MDS incumbent with transmitter locations within a particular BTA are forfeited or if previously proposed conditional licenses д YЇ а4дor modifications are not granted."ж:ЫыЇ žЕ#д ’Yіа4дС•СУУId.ФФ:ж УУФФ Moreover, we believe our rules provide sufficient safeguards to protect existing licensees in a manner consistent with the public interest. Where appropriate we will grant reinstatement pursuant to Section 21.44(b) and waivers pursuant to Section 21.303 of our rules. We caution all small business licensees, however, to scrutinize carefully any channel lease agreement before entering into such an arrangement. We believe it is the responsibility of the respective parties to negotiate the terms most suited to their needs. д ”UяУ4дС•СС` ` ШСУУУ У3.СИ И њСФФУУBroadcast Ownership ConsolidationФФФ Ф д YСУ4дС•СУУФФи€Н190.иС` ` ШСУ УФ ФУУФФУ УФ ФSome commenters maintain that У УФ Фownership consolidation in the broadcast д YЊУ4дindustry under relaxed ownership restrictions constitute market entry barriers. For example,УУФФ the United Church of Christ and Minority Media and Telecommunications Council assert that minorityЉowned businesses are effectively being squeezed out of local markets by betterд"|hQ Ы0*ћ$ћ$448ї"д financed group owners and that the Commission's definition of "local market," in combination with Section 202(b) of the 1996 Act, permits undue concentrations of ownership д Yва4дin local communities.жƒЬввЕ#д YKа4дС•СUnited Church of Christ and Minority and Telecommunications Council Comments at 3.ƒж It recommends that the Commission establish a minimum number of separatelyЉowned stations that must remain in existence in a community after a sale or transfer, that 50 percent of a community's radio and television ownership should be separately owned, and that the Commission should adopt a Grade A contour as the boundary д Yvа4дfor television station markets.ж…Эз vbЕ#д ’Y‰ а4дУУС•СId.ФФ at 3Љ4. УУSee alsoФФ Romar Comments at 5 (Commission should change rule that uses overlapping cityЉgrade contours of a potential coЉowned duopoly to establish market size and a duopoly's compliance). On March 25, 1997, the Minority Media and Telecommunications Council filed a supplemental reply comment in MM Docket No. 96Љ197 (newspaper/radio cross ownership), MM Docket Nos. 91Љ221 and 87Љ8 (TV multiple ownership), MM Docket Nos. 94Љ150, 92Љ51 and 87Љ154 (attribution). Letter from David Honig, Executive Director, Minority Media and Telecommunications Council to William Caton, Secretary, FCC (dated March 25, 1997) (MMTC Supplemental Request). Minority Media and Telecommunications Council suggests several incentives that could be provided in exchange for, or in recognition of, a company's efforts to promote minority ownership through incubation, financing, and sale initiatives. It requests the Commission issue a Further Notice of Proposed Rulemaking expressing its tentative views on the proposed incentives. MMTC Supplemental Request at д YwУ4д1Љ3.УУФФУУФФ …ж Integrated Communications Group contends that such FCC policies on consolidations, mergers, and acquisitions constitute market entry barriers for minorities because the resources of small businesses are limited and group owners greatly д Y1а4дinfluence major advertisers and media budgets and buys.ж ЮН1Е#д ’Yуа4д Integrated Communications Group Comments at 4. УУSeeФФ УУalso ФФCommunity Broadcasters Association Comments at 10Љ11 (consolidation in radio and television industries is driving small businesses out at a record pace). ж д Y У4дС•Си€О191.иС` ` ШСSimilarly, National Association of Black Owned Broadcasters maintains that the Commission, the courts, and Congress have fostered policies that have resulted in consolidation of ownership in the broadcast industry and a retreat from promotion of minority ownership and that these actions include: (1) repeal of the "seven station rule"; (2) adoption of rules permitting radio duopolies; (3) Congress' repeal of the tax certificate for д ’YУ4дsales to minorities and women; (4) the U.S. Supreme Court's УУAdarandФФ decision; and (5) theд"i†Ю0*ћ$ћ$44—ї"д д Yа4дTelecommunications Act of 1996.жpЯщЕ#д Yyа4д National Association of Black Owned Broadcasters Reply Comments at 11.pж It, as well as the United Church of Christ and Minority Media and Telecommunications Council, maintain that the Commission should recommend to д Yва4дCongress reinstatement of the minority tax certificate policy.жаа‘вyЕ#д Yќа4дС•СNational Association of Black Owned Broadcasters Reply Comments at 2; United д ’YхУ4дChurch of Christ and Minority Media and Telecommunications Council Comments at 4. УУSee д ’YаУ4дalsoФФ Integrated Communications Group Comments at 4 (Commission should offer incentives to sellers of media properties in major markets when sold to a consortium of minorities, women, and small businesses).аж д YЄУ4дУУФФС•Си€П192.иС` ` ШСУ УФ ФCommenters are correct in pointing out that there has been greater consolidation of radio ownership since the relaxation of the Commission's broadcast radio ownership rules. This, however, is consistent with congressional policy as reflected in the 1996 Act, which explicitly directed the FCC to eliminate the national radio ownership rule and to replace the local radio ownership rule with specific, significantly relaxed limits on д Y1а4дlocal radio ownership depending on the size of the local market.жvбщ1вЕ#д YДа4д Sec. 202(a) & (b) of the 1996 Act, Pub. L. No. 104Љ104, 110 Stat. 56 (1996).vж The Commission issued д Y а4дan order on March 8, 1996, revising the radio ownership rules accordingly.жФвж ƒ Е#д ’YNа4д УУSeeФФ УУImplementation of Sections 202(a) and 202(b)(1) of the Telecommunications Act д ’Y9У4дof 1996ФФ, Order, 11 FCC Rcd 12368 (1996).Фж In addition, we will consider the issues raised by the commenters regarding our former minority tax certificate program in our subsequent evaluation of unique obstacles for small businesses д Yе а4дowned by women and minorities.жIгые ! Е#д ’YЇа4дС•СУУSee infraФФ Part IV.Iж д YЇ У4дС•Си€Р193.иС` ` ШСAs to the commenters' proposals to redefine the local television market for purposes of enforcing the television duopoly rule, the Commission has recently released a Second Further Notice of Proposed Rule Making in its local television ownership д Ybа4дproceeding.жйддbд Е#д ’Yча4дС•СУУФФУУReview of the Commission's Regulations Governing Television Broadcasting, ФФSecond Further Notice of Proposed Rule Making, FCC 96Љ438 (released Nov. 7, 1996).йж This proceeding seeks comment on revising the television duopoly rule, including whether to modify the current Grade B signal contour test for measuring the local geographic market, as well as revising the radioЉtelevision crossЉownership rule. The Commission expressly sought "comment on what aggregate effect these proposed rules mayд"jpд0*ћ$ћ$44‘ї"д д Yа4дhave on small stations, or stations owned by minorities and women."жEеыЕ#д ’Yyа4дС•СУУId.ФФ at РР 9.Eж In addition, there is a pending rulemaking proceeding examining the Commission's broadcast attribution rules, the rules by which the we define what constitutes a "cognizable interest" in applying the д YЛа4дmultiple ownership rules."жМж‘Л{Е#д ’Yча4д УУФФУУReview of the Commission's Regulations Governing Attribution of Broadcast and Cable /MDS Interests, Review of the Commissions Regulations and Policies Affecting Investment in the Broadcast Industry, Reexamination of the Commission's CrossЉInterest д ’YЄ У4дPolicyФФ, Further Notice of Proposed Rule Making, MM Docket Nos. 94Љ150, 92Љ51 & 87Њ154, FCC 96Љ436 (released Nov. 7, 1996).Мж In this proceeding, the Commission sought comment on the potential impact on our attribution rules resulting from the relaxation of our multiple ownership rules as required by the 1996 Act. The Commission stated that "the attribution rules must function effectively and accurately to identify all interests that are relevant to the underlying purposes of the multiple ownership rules and that should therefore be counted in д YHа4дapplying those rules."ж>зыHдЕ#д ’YЭа4д УУId.ФФ at РР 7.>ж д Y У4дС•Си€С194.иС` ` ШСFinally, the 1996 Act directs the Commission to conduct a biennial review of д Y а4дall its ownership rules.жFищ ‡ Е#д Y;а4д Sec. 202(h) of the 1996 Act.Fж The first such review will be conducted in 1998. In this review, we expect to examine issues related to the changes and consolidation that have resulted in the market since the passage of the 1996 Act, including the impact on small businesses and small businesses owned by minorities or women, resulting from the industry and regulatory changes during the past several years. In addition, there is a pending proceeding in which the Commission proposed initiatives to increase minority and female ownership of mass д Yyа4дmedia facilities.ж й•y8 Е#д ’Ybа4дС•СУУSeeФФ УУPolicies and Rules Regarding Minority and Female Ownership of Mass Media д ’YMУ4дFacilitiesФФ, Notice of Proposed Rulemaking, 10 FCC Rcd 2788 (1995) (УУMinority and Female д ’Y8У4дOwnership NPRMФФ).УУФФ We also note that the Minority and Media Telecommunications Council filed a supplemental reply comment on March 25, 1997 in several pending ownership and д ’Y У4дattribution proceedings. УУSee supraФФ n.461.УУФФ ж д"Kk•й0*ћ$ћ$44–ї"д д ”UУ4дС•СС` ` ШСУУУ У4.СИ И њСFCC Policing of Abuse and Enforcement of RulesФ Ф д YвУ4дФФУУФФУУФФС•Си€Т195.иС` ` ШСBrownЉBlackwell states the Commission should be more active in investigating possible fraud and in monitoring licensees for abuse and enforcing its rules where ownership interests of minorities and women are affected because apathy in such areas can prevent entry into the marketplace. She recommends that the Commission be more sensitive to potential abuse by passive investors and strictly enforce its rules where a "passive investor" attempts д Y_а4дto wrest power or ownership from the majority equity shareholder.жVкщ_Е#д Yиа4дС•СBrownЉBlackwell Comments at 6, 10Љ11.Vж In a similar vein, Romar contends that the Commission should police against abuse of preferences, i.e., where after a construction permit is awarded, the interest of the minority or female is transferred to others. It believes the Commission should impose a minimum ownership period, perhaps three to five years, for any person who claims a female or minority preference during д Yь а4дcomparative review.жGлщь yЕ#д Yа4дС•СRomar Comments at 9. Gж д ’YО У4дС•Си€У196.иС` ` ШСУ УФ ФAs discussed in Part IV of this УУReportФФ, the Commission is continuing to explore issues relating to minorities and women in telecommunications services and expects to issue a more comprehensive report on those issues in the future. As part of that effort, we shall fully consider issues relating to the potential abuses described by these commenters and take appropriate action where warranted. д YMУ4дУ УФ ФУ УФ Ф д ”U6У4дС•СУ УУУE.С` ` ШСOther Services д ”UУ4дС•СС` ` ШС1.СИ И њСInternational Bureau д ’WёУ4дФ ФФФУ УФ ФУ УУУС•СФ Ф ФФ д YкУ4дС•Си€Ф197.иС` ` ШСУ УФ ФWith respect to international services, several commenters express concern about Commission actions that they believe may hinder small businesses' ability to enter the telecommunications market, such as the Commission's actions with respect to TelQuest's application to operate a fixed transmit/receive earth station to uplink and receive U.S. and д Y~а4дCanadian DBS programming.ж:мЄ~*Е#д YYа4дС•СIntegration Communications International et al. Comments at 2; TelQuest Comments at 16; Abalos et al. Comments at 1; National Association of Women Business Owners Comments at 2; National Association of Women Business Owners ЉЉ Greater Detroit Chapter Comments at 2.:ж On July 15, 1996, the International Bureau concluded that, because Canada had not yet authorized the satellites with which TelQuest proposed to communicate, TelQuest's earth station applications should be dismissed, without prejudice, asд"Pl–м0*ћ$ћ$44ї"д premature. In taking this action, the International Bureau reiterated that its policy is to dismiss earth station applications where the space station with which the earth station will д Yва4дcommunicate has not yet been authorized.жлн=вЕ#д ’YKа4дС•СУУФФб#XwЯОІ PьE37ћ[hXP#бУУSee Applications of TelQuest Ventures, L.L.C. and Western TeleЉCommunications, д ’Y6У4дIncФФ., 11 FCC Rcd 8151 (1996). The Commission noted that this policy prevents premature consideration of systems that may never operate and deters applicants from filing competing premature applications in the hope of obtaining earth station authorizations for the purpose of д ’YѓУ4дinfluencing space station licensing decisions. УУId.ФФ at 8154. On October 29, 1996, the International Bureau denied TelQuest's petition for reconsideration finding that TelQuest's д ’YЧ У4дearth station application was properly dismissed, without prejudice. УУФФУУ See Applications of д ’YВ У4дTelQuest Ventures, L.L.C and Western TeleЉCommunications, Inc.ФФ, Report and Order, 11 д ’Y У4дFCC Rcd 13943 (1996), УУapplications for review pendingФФ.лж д YЄУ4дС•Си€Х198.иС` ` ШСThe specific matter of TelQuest's application is pending separately in connection with TelQuest's application for review of two International Bureau Orders. We will address that matter in that proceeding. However, based on the comments received in this proceeding, we find nothing in the International Bureau policy reflected in that case that д YHа4дimposes burdens uniquely or predominantly on small businesses.жЎоЈHЭ Е#д ’YЦа4дС•СTelQuest has also sought reconsideration of our decision in УУStreamlining the д ’YБУ4дCommission's Rules and Regulations for Satellite Application and Licensing ProceduresФФ, Report and Order, FCC 96Љ425 (released Dec. 16, 1996), on a number of related grounds. д Y…У4дThe arguments raised in that proceeding will be addressed in that proceeding.УУФФЎж д Y У4дС•Си€Ц199.иС` ` ШСSeveral commenting parties object to the Commission's financial qualifications requirements for satellite applicants, on the ground that the Commission's standards are an entry barrier for small businesses. For example, Mobile Communications Holdings contends that Commission Rule 25.143(b)(3) imposes an overly stringent financial standard upon satellite applicants in the 1.6/2.4 GHz Mobile Satellite Service (Big LEO service). It argues that the rule fails to take into consideration the financial realities faced by entrepreneurs and that it adversely affects small businesses because it fails to take into account the unique ways д Yyа4дthat small businesses obtain capital.жLпx1y=Е#д ’Ygа4д  Mobile Communications Holdings Comments at 3. УУBut seeФФ L/Q Licensee Reply Comments at 1Љ3 (financial standard for MSS above 1 GHz applicants is not a barrier to entry into satellite services market even for small, entrepreneurial companies; strict financial standard is based on sound public policy and represents appropriate requirement to demonstrate that sufficient funds are available to proceed). The FCC's financial standard requires applicants to provide evidence of current assets, operating revenues, or irrevocablyд"і#о0*ћ$ћ$ААG$ї"д committed debt or equity financing sufficient to meet the estimated costs of constructing and launching all planned satellites, and operating costs of the system for the first year. This showing can be made in two ways. First, applicants relying on internal financing must submit a balance sheet demonstrating current assets and operating revenues in excess of system costs. These applicants also must submit evidence of a management commitment to expend the necessary funds for the project. Second, applicants relying on outside financing must submit evidence of these arrangements, including a demonstration that the financing has been approved and does not rest on contingencies that require action by either party to the transaction.Lж It claims that due to the Commission's rule, smallд"ymС п0*ћ$ћ$44"д companies must meet a far more rigorous evidentiary showing of "irrevocably committed" funds, in contrast to larger competitors who may qualify merely on the basis of a sizable д Yва4дbalance sheet even though they intend to rely only upon external sources of financing.жeрщвС Е#д YD а4д Mobile Communications Holdings Comments at i, 3Љ4, 6 and 8.eж д YЛа4дOther commenters assert that our decisionж—сЊЛr Е#д ’Yоа4дС•СУУAmendment to the Commission's Regulatory Policies Governing Domestic Fixed Satellites and Separate International Satellite Systems and DBSC Petition for Declaratory д ’YВУ4дRulemaking Regarding the Use of Transponders to Provide International DBS ServiceФФ, Report д ’YУ4дand Order, 11 FCC Rcd 2429 (1996) (УУDISCO I OrderФФ). —ж to impose a uniform financial standard on geostationary fixedЉsatellite service applicants is inequitable and a significant impediment to д Yа4дentry for international satellite systems.жqтщфЕ#д Y"а4д Columbia Communications Corporation Comments at i; Orion Comments at 2.qж УУФФAs a means of addressing these concerns, parties generally recommend that the Commission apply the financial standards more flexibly. However, one party disagrees with this proposal and asserts that a less rigorous standard is д YHа4дnot in the public interest.ж€уПH•Е#д ’YŽа4дС•СУУФФб#XwЯОІ PьE37ћ[hXP#бУУSee, e.g.,ФФ Motorola Satellite Reply Comments at 5 (more flexible standard or waiver д ’YyУ4дnot in public interest; small businesses may participate in Big LEO MSS services); УУidФФ.УУФФУУФФ at 3 (proceeding not proper forum for FCC to grant waiver or revise rules).€ж д Y У4дС•Си€Ч200.иС` ` ШСThe specific requests for action concerning financial standards as applied to satellite services generally relate to other ongoing proceedings pending before the Commission and the courts, and are more appropriately addressed in connection with those specific proceedings. In this regard, we note that Mobile Communications Holdings has pending an appeal of our decision adopting rules, including a rigorous financial standard, forд"О nу0*ћ$ћ$44Ж ї"д д Yа4дthe Big LEO service,ж:фСЕ#д ’Yyа4дС•СУУAmendment of Commission's Rules to Establish Rules and Policies Pertaining to a д ’YdУ4дMobile Satellite Service in the 1610Љ1626.6/2483.5Љ2500 MHz Frequency BandФФ, Report and д ’YOУ4дOrder, 9 FCC Rcd 5936 (1994) (УУBig LEOФФ).УУ ФФ:ж as well as an appeal of our decision finding it not financially д Yща4дqualified,жФхжщQЕ#д ’Yыа4дС•СУУApplication of Mobile Communications Holdings, Inc.ФФ, Order, 10 FCC Rcd 2274 д ’YжУ4д(1995), УУreconФФ., 11 FCC Rcd 7824 (1996).Фж and an amendment to its application in which it submits additional information concerning its financial qualifications. We also have pending petitions for reconsideration of д ’YЛУ4дour decision in the УУDISCO I OrderФФ to adopt a uniform financial standard for domestic and international fixed satellite service satellites. Furthermore, we have raised issues concerning the proper financial standard to be applied in the nonЉvoice nonЉgeostationary mobile satellite д Yxа4дservice (Little LEOs) in an outstanding Notice of Proposed Rulemaking.жyцЈxяЕ#д ’Yа4дС•СУУSee Amendment of Part 25 of the Commission's Rules to Establish Rules and Policies Pertaining to the Second Processing Round of the NonЉVoice, NonЉGeostationary Mobile д ’YьУ4дSatellite Service,ФФ Notice of Proposed Rulemaking, IB Docket No. 96Љ220, FCC 96Љ426 д YзУ4д(released Oct. 29, 1996).УУФФyж We believe these matters are most appropriately addressed in connection with the records developed in those proceedings. д ”U У4дС•СС` ` ШСУУУ У2.СИ И њСOffice of Engineering and TechnologyФ ФФФ С•С д Yю У4дС•Си€Ш201.иС` ` ШСУ УФ ФIn December 1996, the Commission adopted a Notice of Proposed Rulemaking to eliminate unnecessary and burdensome Experimental Radio Service (ERS) regulations for д ’YР а4дERS applicants and licensees, many of which are small entities.жDчСР _ Е#д ’Yаа4дС•СУУAmendment of Part 5 of the Commission's Rules to Revise the Experimental Radio д ’YЛУ4дService RegulationsФФ, Notice of Proposed Rulemaking, ET Docket No. 96Љ256, FCC 96Љ475 д ’YІУ4д(released Dec. 20, 1996) (УУExperimental Radio NoticeФФ). Dж In the УУExperimental Radio д ’YЋ У4дФФУУNoticeФФ, the FCC proposes to reorganize the ERS regulatory structure so as to promote greater technical innovation and new services and to encourage experiments, without compromising the Commission's processes or the public safety. If adopted, the proposals would provide an increased opportunity for manufacturers, inventors, entrepreneurs, and students to experiment with new radio technologies, equipment designs, characteristics of д Y:а4дradio wave propagation, and new service concepts using the radio spectrum.жfшы:шЕ#д ’Yг"а4дС•СУУId.ФФ at РРРР 1, 2, 5Љ12, 19Љ20 & Appendix B.fж Because the proposals would streamline the ERS regulations and would remove excessive regulatoryд"#o›ш0*ћ$ћ$44„ї"д burdens, they would be beneficial to small businesses. д YвУ4дУУФФС•Си€Щ202.иС` ` ШСУ УФ ФIn another recent proceeding, the Commission has provided licensees an alternative means of demonstrating compliance with the Commission's antenna performance д YЄа4дstandards.ж;щСЄЕ#д ’Yа4дС•СУУAmendment of Parts 74, 78, and 101 of the Commission's Rules to Adopt More д ’YУ4дFlexible Standards for Directional Microwave AntennasФФ, Report and Order, 12 FCC Rcd д ’YѓУ4д1016 (1997) (УУFlexible Antenna Report and OrderФФ)УУФФ. ;ж This measure removes an obstacle that had previously existed for manufacturers д Yа4дand licensees, a number of which are small businesses.ж[ъыQЕ#д ’Y а4дС•СУУФФУУId.ФФ at 1016, 1017Љ20, 1023Љ25.[ж УУФФУУФФInstead of satisfying these standards by complying with existing minimum antenna gain requirements, licensees will now be able to make a showing that directional antennas they use under Parts 74, 78, and д ’YHУ4д101 comply with maximum beamwidth requirements. The practical effect of the УУFlexible д ’Y3У4дAntenna Report and OrderФФ is to permit licensees to use technologically innovative directional microwave antennas (such as planarЉarray antennas), which our rules had unintentionally prohibited. д ’Yй У4дС•Си€Ъ203.иС` ` ШСOn January 9, 1997, the Commission adopted the УУUЉNIIФФ УУReport and OrderФФ, making available 300 megahertz of spectrum at 5.15Љ5.35 GHz and 5.725Љ5.825 GHz for a д Y­ а4дnew category of Unlicensed National Information Infrastructure (UЉNII) devices.жыС­ Е#д ’Ybа4дС•СУУAmendment of the Commission's Rules to Provide for Operation of Unlicensed NII д ’YMУ4дDevices in the 5 GHz Frequency RangeФФ, Report and Order, 12 FCC Rcd 1576 (1997) (УУUЉNII д ’Y8У4дReport and OrderФФ).ж These devices will provide shortЉrange, high speed wireless digital communications on an unlicensed basis. We anticipate that UЉNII devices will support the creation of new wireless local area networks and will facilitate access to the National Information Infrastructure (NII). In order to permit significant flexibility in the design and operation of UЉNII devices, we adopted the minimum technical rules necessary to prevent harmful interference to other д Y#а4дservices and to ensure that the spectrum is used efficiently.жJьы# Е#д ’Yaа4дС•СУУId.ФФ at 1577, 1592. Jж д YѕУ4дС•Си€Ы204.иС` ` ШСУ УФ ФBy УУФФfostering development of a broad range of new devices and service д ’YоУ4дofferings, the УУUЉNII Report and OrderФФ should stimulate economic development and the growth of new industries and, at the same time, further our Section 257 objectives. Specifically, allowing unlicensed devices access to the 5.15Љ5.35 GHz and 5.725Љ5.825 GHz bands will enable educational institutions to form inexpensive broadband wireless computerд"›p@ ь0*ћ$ћ$44Aї"д networks between classrooms, thereby providing costЉeffective access to an array of multimedia services on the Internet. Use of the new spectrum by unlicensed wireless networks also could help improve the quality and reduce the cost of services provided by д YЛа4дsmall business users (including medical providers) of the networks.жIэыЛЕ#д ’Y4а4дС•СУУУУФФId. ФФat 1585.Iж д ’YУ4дС•Си€Ь205.иС` ` ШСУ УФ ФOn March 13, 1997, the Commission adopted its УУSimplify and Streamline the д ’Yxа4дEquipment Authorization Process NoticeФФ.жЈюЊx{Е#д ’YЄ а4дС•СУУAmendment of Parts 2, 15, 18 and Other Parts of the Commission's Rules to Simplify д ’Y У4дand Streamline the Equipment Authorization Process for Radio Frequency EquipmentФФ, Notice of Proposed Rule Making, ET Docket No. 97Љ84, FCC 97Љ84 (released Mar. 27, 1997) д ’Yc У4д(УУSimplify and Streamline the Equipment Authorization Process NoticeФФ). Јж By this action, the Commission proposes to eliminate two of its five equipment authorization procedures, namely, the type acceptance procedure and the notification procedure. As a result, there will be only one procedure for equipment that must be authorized by the Commission: certification. The Commission would not change the two existing manufacturer selfЉauthorization programs: verification and declaration of conformity (DoC). These proposals would lead to a simpler and far less cumbersome set of equipment authorization requirements. Errors in applications that can lead to delays in obtaining equipment authorization should decline. Clearer, less burdensome regulations will promote compliance. In addition, the Commission proposes to relax the equipment authorization requirements for a broad array of equipment, including unintentional radiators, consumer ISM equipment and a variety of radio transmitters. Thus, adoption of these proposals would further advance our Section 257 objectives to enhance market opportunities for small businesses, such as manufacturers who supply parts and services to telecommunications service providers, to speed delivery of their products to the public, and would save manufacturers some $100 million by reducing the number of applications necessary for equipment authorization. С•С д ”UѓУ4дУ УУУС•СС` ` ШС3.СИ И њСCompliance and Information BureauФ Ф д YмУ4дФФ д YХУ4дС•Си€Э206.иС` ` ШСThe FCC's Compliance and Information Bureau is furthering the Commission's Section 257 mandate through information dissemination initiatives that are particularly valuable to small businesses, which, as discussed above, often lack resources and д Y€У4дinformation. First, б#XwЯОІ PьE37ћ[hXP#бas part of its ongoing commitment to make information available to the public expeditiously and inexpensively, in 1996, CIB established a new FCC National Call Center. The National Call Center provides consumers with free, oneЉstop shopping forд"Rqэю0*ћ$ћ$44 ї"д д Yа4дCommission information.жщяЕ#д Yyа4дС•СThe National Call Center can be accessed by dialing 1Љ888ЉCALL FCC (1Љ888Љ225Њд ’YbУ4д5322). УУSeeФФ FCC News Release, УУFCC's TollЉFree Information Service ExpandedФФ (September 30, 1996). The Call Center has received nearly 160,000 calls. Additional information about CIB resources and the National Call Center is available on the World Wide Web (http://www.fcc.gov/cib) (CIB homepage) and (http://www.fcc.gov/cib/ncc).щж The National Call Center responds to inquiries on telecommunications issues including, but not limited to, broadcasting, cable, wireless services, new technologies, telephone rates or charges, and longЉdistance carriers. The National Call Center also provides information on how to obtain a license or FCC form and how to file a complaint. When the Call Center receives a call that should be directed to an agency expert, the Call Center electronically transfers the call to the Commission's Washington Office at no additional cost to the caller. FullЉtime bilingual (English/Spanish) Call Center Specialists are also available to assist the public. The Call Center also provides д YHа4дTTY access.жз№вHЕ#д Yа4дС•СУУФФFull Call Center services for the hearing impaired can be accessed through the Telecommunications Device of the Deaf (TYY) by dialing 1Љ888ЉTELLЉFCC (835Љ5322).зж The tollЉfree Call Center services, now available in 26 states, are being phasedЉin geographically as budget constraints permit. д Y У4дС•Си€Ю207.иС` ` ШСAs part of its outreach efforts, CIB Public Affairs Specialists and Compliance Specialists in field offices throughout the country have identified and compiled lists of various small telecommunications businesses, including women and minority businesses, and provided those businesses with information regarding meetings and events on telecommunication issues and issues before the Commission and has sent them notices of services available to them through the National Call Center. In addition, CIB faxes a "Welcome Letter" to new telecommunications companies listed in local newspaper legal notices, advising that the FCC can assist and answer communications questions. CIB participated in the U.S. General Store for Small Business in Houston, Texas. An initiative by the National Performance Review and spearheaded by the Small Business Administration, with assistance by numerous other federal agencies, the U.S. General Store is a business center that provides at one location all the information necessary to operate a small business. The U.S. General Store also conducted workshops for small business minority entrepreneurs, and CIB provided telecommunications information at those events. д YЊУ4дС•Си€Я208.иС` ` ШСУ УФ ФCIB has also undertaken many initiatives to disseminate regulatory information and encourage participation in specific sectors of the telecommunications industry. For example, in the broadcasting area, CIB has specifically required state broadcast associations to include nonЉmember licensees, many of which are small businesses, in their Alternativeд"erЙ№0*ћ$ћ$44ї"д д Yа4дBroadcast Inspection Program (ABIP).жПёвЕ#д Yyа4дС•СCIB also has made presentations to various broadcast associations on current Commission rulemakings and Telecommunications Act implementation.Пж These programs provide comprehensive information on broadcast compliance and noЉrisk inspection option to facilitate compliance with the Commission's rules. On an continuing basis, CIB notifies radio stations about information regarding various communicationsЉrelated matters, e.g., spectrum auctions, new pay phone regulations, and cable complaint procedures, etc., for inclusion in stations' public service information programs (PSAs). CIB also made outreach efforts to manufacturers as well as participants to implement the new Emergency Alert System (EAS). AM, FM and TV broadcast stations, Low Power TV stations and cable systems, and other entities and industries will participate in the EAS, which replaced the Emergency Broadcast System (EBS) to provide emergency information to the public at the national, state, and local levels. The EAS requires participants to replace old EBS equipment with new, digital EAS equipment. CIB's outreach efforts resulted in several small businesses receiving certification to manufacture the new EAS equipment. Moreover, in the pending rulemaking concerning EAS participation by cable operators, CIB staff has worked with members of the Small Cable Association, National Cable Television Association, Cable Telecommunications Association and others in the cable industry to ensure that emergency messages will reach as many members of the public as possible without adverse financial impact on small cable operators. д YbУ4дС•Си€а209.иС` ` ШСУ УФ ФFurther, CIB has working relationships with various businessЉoriented entities throughout the country. For example, CIB works closely with local chambers of commerce, and that effort has been particularly effective in reaching small businesses. CIB also has д Yа4дregistered with various other entities,ж:ђvbЕ#д Y0а4дС•СOn an ongoing basis, CIB also maintains a faxЉalert list to advise chambers of commerce and telecommunications companies of upcoming spectrum auctions and results. CIB has registered as a contact with the Small Business Administration and various state representatives, as well as with the "Partners in Business" speakers bureau with local schools to present communications business opportunities to graduating students. CIB also maintains regular contact with media outlets to provide information about communications.:ж made presentations at several workshops, and continuously provides information about new services to the public through various fora д Yяа4дtargeted to small business ventures.ж%ѓЇ я  Е#д Y@ а4дС•СFor example, on March 19, 1996, the Assistant Bureau Chief for Information was the keynote speaker at the Minority Telecommunications Business Round Table Information Forum at Howard University. The CIB representative addressed PCS auctions, including how to participate in the auction process, how the process applies to small businesses, and what to expect from CIB after starting a business. Approximately 170 people attended theд"ф#ђ0*ћ$ћ$АА)$ї"д event. On July 12, 1996, the Assistant Bureau Chief for Information served as a panel member at "Operation Open Road," a small business information forum at George Washington University sponsored by the Capital Commitment Group Women's Business Development sector. On September 22, 1996, the Assistant Bureau Chief for Information served as a panelist on "Get On Line," a discussion on how to start a small business in the telecommunications industry sponsored by the Department of Commerce, Minority Business Development Agency. On November 7, 1996, the Assistant Bureau Chief for Information served as keynote speaker for the Small Business in Telecommunication Association's Annual convention in Dallas, Texas and discussed how the FCC and CIB can assist small businesses. On February 10, 1997, the Assistant Bureau Chief for Information participated in the Small Business Spectrum Alliance Conference, which was coЉsponsored by the U.S. Chamber of Commerce and the Department of Commerce, National Telecommunications and Information Administration. The Assistant Bureau Chief for Information also spoke at a March 1, 1997 conference hosted by the National Small Business Development Council and a March 10, 1997 conference sponsored by the National Paging Association. %ж All of these steps serve to promote opportunities forд"яs7ѓ0*ћ$ћ$44K"д small businesses by ensuring that, despite limited resources, small business have access to the most current information available about new telecommunication policies and services. д YвУ4дУ УФ ФУУУ УФ ФФФУ УУУФФФ Ф д ”UЛУ4дУУУ УФФФ ФУУУ УIV.ТX•ТUNIQUE OBSTACLES FOR SMALL BUSINESSES OWNED BY WOMEN OR MINORITIES Ц(#Ц д ’WУ4дФ Ф д ”UvУ4дС•СУ УУУФФA.ТА` ` ШТBackground ФФФ ФЦ(#` Ц д ’YHУ4дУ УФ ФС•Си€б210.иС` ` ШСУУФФУУФФУ УФ ФIn the УУMarket Entry Barriers Notice of InquiryФФ, УУФФwe inquired whether УУФФsmall д Y3а4дbusinesses owned by women or minoritiesж)єП37Е#д Yа4дС•СWe defined minority groups to include African Americans, Hispanics, American д ’YУ4дIndians, Alaskan Natives, Asians, and Pacific Islanders. УУMarket Entry Barriers Notice of д ’YяУ4дInquiryФФ, 11 FCC Rcd at 6299 n.88. )ж У УФ Фencounter unique obstacles in the д Y а4дtelecommunications market.жѕLд ОЕ#д ’Y‹а4дС•СAs explained УУФФin the УУУУФФФФУУMarket Entry Barriers Notice of InquiryФФУУФФ, we explored this area for several reasons: the legislative history of Section 257 suggests Congress was concerned about the underrepresentation of minority and womenЉowned small businesses in the telecommunications market and sought to increase competition by diversifying ownership, д ’Y1!У4дУУseeФФ 142 Cong. Rec. H1141 at H1176Љ77 (daily ed. Feb. 1, 1996) (statement of Rep. Collins); Section 309(j) requires the Commission to further opportunities for businesses owned by women and minorities in the provision of spectrumЉbased services; and FCC licensing and other statistical data show that a portion of small communications businesses are owned byд"ю#є0*ћ$ћ$ААY$ї"д women and minorities and there is evidence that these entities encounter unique market д ’YyУ4дbarriers. УУMarket Entry Barriers Notice of InquiryФФУУФФ, 11 FCC Rcd at 6301Љ6305.ж We asked parties to submit personal accounts of individualд" tdѕ0*ћ$ћ$44Г "д experiences, studies, reports, statistical data, or any other information. We recognized that a prospective barrier is discrimination ЉЉ in business, employment, or with respect to communicationsЉrelated licenses, contracts or other governmental benefits ЉЉ and requested д YЛа4дevidence of any past or current discrimination or unfavorable treatment.ж—і~ЛdЕ#д ’Yаа4дС•СУУId.ФФ at 6305Љ6307. УУФФУУФФWe suggested that evidence of discrimination could include academic research studies, adjudications, legislative findings, statistical data, and personal д YЄ У4дaccounts. УУФФWe noted that judicial findings of discrimination are not required, but that УУФФУУФФthe д ’Y У4дgovernment must have evidence demonstrating the need for remedial action. УУФФУУMarket Entry д ’Yx У4дBarriers Notice of InquiryФФ, 11 FCC Rcd at 6306 n.112 (citing УУCity of Richmond v. J.A. д ’Yc У4дCrosonФФ, 488 U.S. 469, 500 (1989)). УУФФ—ж УУФФBecause governmental action that takes а щщ аrace or gender into account is subject to heightened judicial scrutiny, we sought comment on whether as a legal matter, the obstacles that women and д Yvа4дminorities encounter are significant enough to justify special incentives for those groups.жЕїЊvЊ Е#д ’Yба4дС•С УУMarket Entry Barriers Notice of InquiryФФ, 11 FCC Rcd at 6308, 6315Љ6317. In д ’YМУ4дУУAdarandФФ, the Supreme Court held that government classifications based on race must satisfy strict scrutiny. 115 S.Ct. at 2113. For a full discussion of the constitutional standards, see д ’YУ4дУУMarket Entry Barriers Notice of InquiryФФ, 11 FCC Rcd at 6309Љ6315.Еж д Y_У4дWe УУФФspecifically asked whether there is sufficient evidence of discrimination in the communications industry against any particular minority group to support raceЉbased д ’Y1а4дincentives under the strict scrutiny standard.жOјы1Е#д ’Yўа4дС•СУУIdФФ. УУФФat 6308, 6315.Oж We УУФФnoted that since УУAdarandФФ, the Supreme Court had not yet ruled on the standard of review for federal genderЉbased programs, but that a case was pending before the court. Thus, we asked whether there is sufficient д Yю У4дevidence to warrant incentives for women under either strict scrutiny (in the event that УУФФУУФФthe д Yз У4дSupreme Court raised the gender standard to strict scrutiny) УУФФor intermediate scrutiny (in the д YР а4дevent that УУФФthe Court maintained the existing intermediate scrutiny standard).ж…љыР ЯЕ#д ’Y@а4дС•СУУMarket Entry Barriers Notice of InquiryФФ, УУФФ11 FCC Rcd at 6313Љ6317.УУ ФФ…ж д Y’У4дС•Си€в211.иС` ` ШСIn addition, we sought comment on any nonremedial objectives that wouldд"’u‚љ0*ћ$ћ$44Єї"д justify the use of race and genderЉbased incentives while furthering the Section 257 д Yща4дmandate.жжњп щЕ#д ’Yyа4дС•СУУIdФФ. As stated in the УУMarket Entry Barriers Notice of InquiryФФ, УУФФУУФФУУФФУ УФ ФУ УФ Фa government may adopt race or gender based programs for reasons other than to remedy discrimination. Such д ’YMУ4дobjectives are nonremedial. УУSeeФФ УУRegents of the University of California v. BakkeФФ, 438 U.S. д ’Y8У4д265 (1978) (УУpluralityФФ). WУУФФe explained for example that nonremedial objectives that could justify taking gender or race into account in Commission programs and also help eliminate market entry barriers might include favoring diversity of media voices as required by Section 257(b), promoting economic opportunity and competition as encouraged in the legislative history of Section 257 and Section 257(b) and as required by Section 309(j), or promoting д ’YЧ У4дthe public interest. УУMarket Entry Barriers Notice of InquiryФФ, 11 FCC Rcd at 6315Љ6316 and д YВ У4дУУФФУУФФУУФФУУФФn.161 (quoting legislative history of Section 257: "'[M]inority and womenЉowned small businesses continue to be extremely under represented in the telecommunications field. . . . Underlying [Section 257] is the obvious fact that diversity of ownership remains a key to the competitiveness of the U.S. communications marketplace.'" 142 Cong. Rec. д ’YVУ4дH1141 at H1176Љ77 (daily ed. Feb. 1, 1996) (statement of Rep. Collins)).УУФФУУ ФФ УУФФжж Finally, we asked parties to propose specific licensing incentives to redress any д Yва4дdiscrimination or to further any nonremedial objectives.ж ћІвo Е#д ’Yђа4дС•СУУIdФФ.УУФФ УУФФParties were invited to explain what objective any proposed women or minorityЊд YнУ4дoriented licensing incentive would be intended to achieve and explain how it would be eitherУ У д YЦУ4дФ Фnarrowly tailored (to meet strict scrutiny) or substantially related (to meet intermediate scrutiny) to achieve that objective. ж We encouraged parties to support their proposals with data and to identify specific provisions of the Act that would authorize д YЄа4дus to implement any such proposals.жxќыЄнЕ#д ’Y2а4дС•СУУMarket Entry Barriers Notice of InquiryФФ, 11 FCC Rcd at 6316Љ6317.xж УУФФУУФФ д ’YvУ4дС•Си€г212.иС` ` ШСAt the УУMarket Entry Barriers ForumФФУУФФ, which included a panel on "Unique Barriers for Minority or WomenЉOwned Businesses," several women and minority entrepreneurs described their personal experiences in trying to enter and participate in the д Y3а4дtelecommunications market,жс§д3Е#д Ytа4дС•СУУФФBorland Testimony, Erbe Testimony, Ofori Testimony, Perez Testimony, and д ’Y]У4дWinston Testimony. УУSee alsoФФ Arellano Testimony and Haycock Testimony. сж members of the financial industry described lending and д Y а4дadvertising practices,昢в ,Е#д Yљ а4дС•СУУФФCullers Testimony, Johnson Testimony, Gorman Testimony, Barker Testimony, and Williams Testimony.˜ж and a representative from the Department of Justice addressed theд" vЦў0*ћ$ћ$44к "д д Yа4дconstitutional standards for race and gender programs.жAџщЕ#д Yyа4дС•СSmall Testimony.Aж д ’YвУ4дС•Си€д213.иС` ` ШСAs explained above, the principal purpose of this УУReportФФ is to set forth the Commission's general policies with respect to implementing Section 257 of the Telecommunications Act, describe our progress to date and outline the steps we plan to take д ’Yа4дin the immediate future.жHыyЕ#д ’YЙа4дС•СУУSee supraФФ РР 1.Hж In that regard, most of the issues addressed in this УУReportФФ focus on impediments facing small businesses. Prior to taking any action specifically oriented to women or minorities, we must fully evaluate the Section 257 record according to the constitutional requirements that govern race or genderЉbased action by the federal government. As part of our effort to fully evaluate unique obstacles for women and minorityЉowned businesses, as well as our commitment to fulfill our Section 309(j) д Y а4дrequirement to issue spectrum licenses to an array of applicants,жПe ,Е#д ’Yфа4дС•СIn adopting the УУCompetitive Bidding Sixth Report and OrderФФ, we stated that we "emphasize that our action today does not indicate that raceЉ and genderЉbased provisions at issue here could not be sustained without further development of the record. Nor do we believe that such measures generally are inappropriate for future auction of spectrumЉbased services. We are considering the means we should take to develop a supplemental record д ’YsУ4дthat will support use of such provisions in other spectrum auctions held postЉУУAdarandФФ." д ’Y^У4дУУCompetitive Bidding Sixth Report and OrderФФ, 11 FCC Rcd at 137.УУФФПж we are fully engaged in that process and expect to issue a more extensive report on women and minority issues later this year. д YЋ У4дС•Си€е214.иУ УФ ФС` ` ШСAlthough we will address in more detail the comments regarding women and minorities in our subsequent report, we provide below a summary of the principal barriers and proposals raised in the record to date. д ”UOУ4дС•СУУУ УB.С` ` ШСPrincipal Obstacles and Proposals Identified in the Record ФФФ Ф д Y!У4дС•СУ УФ Фи€ж215.иС` ` ШСУ УФ ФУУФФParties to the Section 257 proceeding identify several obstacles that women or minorityЉowned businesses face based on race or gender. As was the case for small д Yѓа4дbusinesses, tУУФФhe predominant impediment to entry identified is access to and cost of capital.ж4НЛѓY Е#д ’Y§!а4дС•СУУSee, e.g.,ФФ Small Business Administration Comments at 5; National Women's Law д Yш"У4дCenter Comments at 1; УУФФУУФФAmerican Women in Radio and Television and Women of Wireless Comments at 14Љ21; National Paging and Personal Communications Association Commentsд"б#0*ћ$ћ$ААј#ї"д at 2; National Association of Black Owned Broadcasters ReplyComments at 4Љ5; B.K. McIntyre Comments at 1Љ2; Zesiger Testimony at 3; Borland Testimony, Erbe Testimony, Williams Testimony at 4. 4ж д"ѓwK0*ћ$ћ$44X"д Many parties cite difficulty in obtaining credit and timeЉdelayed payment options, as well as д Yща4дnegative attitudes toward women or minorityЉowned businesses.жZЄщKЕ#д Yха4дС•СNational Paging and Personal Communications Comments at 2; Kansas Star Comments at 3; Small Businesses in Telecommunications Comments at 65; American Women in Radio and Television and Women of Wireless Comments at 1Љ2, 17Љ21; National Association of Black Owned Broadcasters Reply Comments at 4Љ5.Zж Ofori, United Church of Christ and Minority Media and Telecommunications Council assert that minority entrepreneurs often must rely on financiers and venture capitalists that impose unfavorable terms, for example, requiring unreasonable performance goals for returns on investment or д Yа4дadvertising revenue.жQ3ЗЕ#д Yѕа4д Ofori Testimony at 4Љ5; United Church of Christ and Minority Media and Telecommunications Council Comments at 9Љ12. The parties cite several examples, д ’YЧУ4дincluding venture capital firms imposing "warrant" provisions and "success fees." УУId.ФФ Cullers and National Association of Black Owned Businesses maintain that advertisers do not provide the same opportunities to minorityЉowned businesses as they do to majorityЉowned businesses. Cullers Testimony at 1; National Association of Black Owned Businesses Comments at 6. Cullers also states that programs produced by women and minorities have a more difficult time getting advertisers' approval, "even when the programming meet the high quality standards demanded by broadcast outlets and advertisers." Cullers Testimony at 1. Qж Williams states that traditional sources of capital for minority businesses, such as small business investment companies (SBICs), are inadequate to cover д Y_а4дentry costs into telecommunications.жIщ_ВЕ#д YТа4дС•СWilliams Testimony at 4.Iж Borland, Erbe, Haycock, and Arellano describe д YHа4дaccounts of their own difficulty in accessing capital;жŽвHcЕ#д Y\а4дС•СBorland Testimony; Erbe Testimony; Haycock Testimony at 1, 4Љ5;УУФФ and Arellano Testimony.Žж У УФ Фwhile Williams and American Women in Radio and Television and Women of Wireless relate accounts of difficulty experienced by д Y а4дothers.жЄ_ §Е#д YШ а4дС•СWilliams Testimony at 4 (stating that in trying to expand, one minorityЉowned broadcasting company bid the highest price for the purchase of a major market radio station, but the seller accepted a lower bid from a nonminority company because of that entity's apparent ability to access capital more quickly; and in another case, a minorityЉownedд"ƒ#0*ћ$ћ$ААК#ї"д broadcast company tried unsuccessfully to purchase another station in its market when the station for sale refused to accept the direct offer of the minority company, and thereafter, when the minority station retained its nonminority law firm to make a blind offer for the station, that offer was accepted); American Women in Radio and Television and Women of д Y4У4дWireless at УУФФ8 (stating that a woman entrepreneur who had obtained an FM radio construction permit was "laughed out" of a banker's office because he did not believe that as a woman she was capable of winning a radio license).ж У УФ ФIn addition, some parties contend that historical treatment of minorities and womenд" xя0*ћ$ћ$44к "д has contributed to the difficulty those entities experience in financing small д Yща4дtelecommunications ventures.ж% щяЕ#д Y‰ а4дС•СУУФФNational Association of Black Owned Broadcasters Reply Comments at 4Љ5 д Yr У4д(УУФФcontending that bУУУ УУУФФФ ФФФecause African Americans have suffered historical discrimination, African American entrepreneurs have less capital, fewer family and friends with access to capital than nonЉminority counterparts and, thus, have a greater need for financing and that lenders have discriminated against AfricanЉAmericans); American Women in Radio and Television and Women of Wireless Comments at 20Љ24 (asserting that as a result of discrimination against women in employment, particularly in promotion to senior positions, as well as discrimination in technical fields of education, women have limited technical and managerial д YбУ4дexperience, which is an obstacle in securing bank financing); УУФФB.K. McIntyre Comments at 4Њ5 (claiming that "lack of historical presence" of womenЉ or minorityЉ controlled businesses is д YЃУ4дa market entry barrier). УУФФ%ж The Center for Training and Careers and Hispanic Chamber claim that women and minorities, especially Latinos, are "out of the picture" because they д YЛа4дown very few FCC licenses, especially PCS licenses.жž вЛКЕ#д Y&а4дС•СCenter for Training and Careers Comments at 1; Hispanic Chamber Comments at 1Њд YУ4д2.С•Сžж д YЄУ4дУУФФ д YУ4дС•Си€з216.иС` ` ШСУ УФ ФSome parties point to other possible barriers. For example, УУФФУ УФ ФУ УФ ФУУФФУУФФsome commenters д Yvа4дidentify barriers in licensing of specific telecommunications services;жq 5vTЕ#д ’Y{а4дС•СУУSee, e.g.,ФФ Williams Testimony at 2 (stating that mУУФФost cellular licenses were granted to nonminorities, consequently, the only means for minorities to obtain a cellular license is to purchase one from an existing licensee); American Women in Radio and Television and Women of Wireless Comments at 20 (claiming that women owners seeking financing to purchase spectrum licenses reported that the inability to use an FCC license as collateral was д Y !У4дa funding obstacle); УУФФJames Testimony (stating that minority ownership of commercial broadcast entities declined substantially after enactment of new broadcast ownership д ’Yм"У4дprovisions of Telecommunications Act). УУBut seeФФ American Mobile Telecommunications Association Comments at 3Љ4 (stating that although it "recognizes that women and minoritiesд"Ч# 0*ћ$ћ$АА@$ї"д are underrepresented in terms of the specialized wireless communications community, and in telecommunications services generally, it believes the cause to be broadly societal, rather than specifically discriminatory in this marketplace" and contending that regulatory measures crafted to enhance small business participation in the telecommunications industry can also д Y4У4дpromote increased ownership by women and minorities). УУФФqж numerous partiesд"vy 0*ћ$ћ$44ф"д assert that employment and management experience is valuable for ownership in telecommunications and that lack of employment opportunity or employment discrimination is д Yва4дa barrier;жў вЕ#д ’Y  а4дС•СУУSee, e.g.,ФФ Small Business in Telecommunications Comments at 3 n.3 (stating that it "agrees with the Commission's conclusion that the existing lack of minority participation in the industry arises out of a lack of equal employment of women and minorities in positions of responsibility throughout the telecommunications industry. . . . and that much effort will be necessary to attain status which demonstrates parity with men. . . . [and that the] problem of equality of opportunity is even more pronounced for minorities"); American Women in Radio and Television and Women of Wireless Comments at 24Љ26, 37Љ38 and д YУ4дУУФФУУФФExhibits 1Љ5 (claiming that women have been discriminated against in employment, such discrimination effects ownership opportunities in telecommunications, and that FCC policies to promote women ownership of communications companies are appropriate to redress discrimination against women in employment and quoting study cited by the Department of Justice that employment discrimination "still reduces the pay and prospects of workers who are not white or male"); National Association of Black Owned Broadcasters Reply Comments at 5 (asserting that African Americans have been discriminated against in all aspects of the telecommunications industry, are rarely employed in senior management positions, and have few opportunities to obtain senior management experience which financial institutions seek when making investment and lending decisions); B.K. McIntyre Comments at 4 (claiming that lack of employment opportunities has impacted small business participation in the communications market because women and minorities have had less opportunity for training д ’YэУ4дand networking). УУУУФФФФУУSee alsoФФ Gorman Testimony (stating that lenders consider management experience in assessing loan risks); American Women in Radio and Television and Women of Wireless Comments at 6 & n.6 (contending that women are excluded from important business networks and citing Congressional hearings and Department of Justice finding of discrimination by business networks as one form of discrimination that has impeded minority д ’Y|У4дparticipation in federal contracting, United States Department of Justice, УУProposed Reforms to д ’Yg У4дAffirmative Action in Federal ProcurementФФ, 61 Fed. Reg. 26042, 26062 (May 23, 1996) д ’YR!У4дУУФФУУ(Department of Justice Federal Procurement ProposalФФ)). ў ж several commenters advocate stronger enforcement of the Commission's EEOд"вz‚ 0*ћ$ћ$44ю"д д Yа4дrulesж Е#д ’Yyа4дС•СУУSee, e.g.,ФФ United Church of Christ and Minority Media and Telecommunications Council Comments at 3Љ7 (arguing that with respect to common carrier EEO rules, the Commission has failed "to deliver on its promise to maintain an upЉtoЉdate computerized database," and to undertake an aggressive EEO program, and that thus, the Commission has become "a partner in the establishment of barriers to ownership by minorities and women;" that streamlining broadcast EEO regulation will create another barrier to market entry because jobs in larger markets are routinely made available to applicants that have developed д ’YкУ4дskills at smaller market stations; and УУФФУУФФrecommending, УУinter aliaФФ, revising job categories on Form 395; developing a computerized database for information contained on Form 395; and д YЎ У4дpromoting and monitoring executive level training for minorities and women); УУФФУУФФAmerican Women in Radio and Television and Women of Wireless Comments at 26 and 41 (claiming that the FCC's EEO policies have increased female participation in the communications industry and asserting that the FCC should stringently enforce its EEO rules (even if streamlined) to ensure women are permitted nondiscriminatory access to senior management д ’Y;У4дpositions). УУSee alsoФФ BrownЉBlackwell Comments at 8 (claiming that the FCC has "taken measures in the opposite direction" of Section 257 in part by "revamping" its EEO rules). д YУ4дУУФФ С•СThe comments regarding the Commission's EEO rules for broadcasters relate to a д ’YсУ4дpending proceeding and will be addressed in that proceeding. УУSeeФФ УУStreamlining Broadcast д ’YЬУ4дEEO Rules and PoliciesФФ, УУVacating the EEO Forfeiture Policy Statement and Amending Section д ’YЗУ4д1.80 of the Commission's Rules to Include Forfeiture GuidelinesФФ, Order and Notice of д ’YЂУ4дProposed RulemakingУУ, ФФ11 FCC Rcd 5154 (1996). ж or preference policies;жЅ  ЄЕ#д ’YUа4дС•СУУSee, e.g.,ФФ BrownЉBlackwell Comments at 1Љ6, 10Љ11 (contending that the Commission should investigate possible "shams" that take advantage of the Commission's broadcast preference policies for minorities or women); Romar Comments at 9 (claiming that the Commission should police against abuse of preferences, i.e., where, the interest of a minority or female is transferred after issuance of a construction permit, and recommends that the Commission impose a minimum ownership period for any entity that claims a female д YЭУ4дor minority preference during comparative review). У УФ ФWe note that the Commission investigates whether our rules are being followed. For example, the Compliance and Information Bureau audited the narrowband PCS winners that claimed minority and women preferences to determine compliance with our auction rules for those groups. Ѕж some parties contend that women and minorities are excluded from government procurement, which impedes participation in theд"щ{ˆ 0*ћ$ћ$44ї"д д Yа4дtelecommunications market,ждLЕ#д ’Yyа4дС•СУУSee, e.g.,ФФ УУФФAmerican Women in Radio and Television and Women of Wireless д YdУ4дComments at 5 and 27Љ31УУФФ; Integrated Communications Group Comments at 2Љ3 (contending that a General Services Administration contract for wireless telecommunications devices for federal agencies and state governments contains no incentives for small businesses); National д ’YУ4дWomen's Law Center Comments at 1. УУ But seeФФ Pacific Bell Reply Comments at 4Љ5 (rebutting other commenters' claims of low representation of women in procurement in California and asserting that its record of 8% procurement from womenЉowned firms exceeds state figures).дж and one party cites political changes as barring entry.ж&НмЕ#д ’Y а4дС•СBrownЉBlackwell Comments at 8 (citing УУAdarandФФ, party asserts that the "changing political mood of our legislative, executive and judicial branches is a "much more formidable barrier" than "Commission apathy" or lack of access to capital). &ж д YщУ4дУУФФУУУУФФФФУУФФAmerican Women in Radio and Television and Women of Wireless also claim that market д Yва4дentry barriers for women are not limited to small businesses.ж‚ввa Е#д Yфа4дС•СAmerican Women in Radio and Television and Women of Wireless Comments at 19Њ20. ‚ж In contrast, B.K. McIntyre contends that the Commission should distinguish between small startЉup firms that face barriers and established small firms (regardless of race or gender ownership) that may not д Yа4дneed assistance.жOщћЕ#д Y9а4дС•СB.K. McIntyre Comments at 5Љ6.Oж Finally, the Small Business Administration maintains that beyond all the general barriers that small businesses encounter, "women and minorities also face an entirely different set of market entry barriers that result in a disproportionately low rate of ownership д YHа4дand participation in virtually every telecommunications field."ж‹ыHЌЕ#д ’YЅа4дС•СSmall Business Administration Comments at 4Љ5. УУAccordФФ Zesiger Testimony at 3.УУФФ‹ж д Y У4дС•Си€и217.иС` ` ШСУ УФ ФTo address these possible barriers, numerous parties advocate adoption of д Y а4дlicensing incentives for women and minorities.ж І _Е#д ’Yа4дС•СУУSee, e.g.,ФФУУ ФФAmerican Women in Radio and Television and Women of Wireless Comments at 32Љ41; PCS Alliance Comments at 1Љ2; Thompson PCS Systems Comments at д YчУ4д2; Williams Testimony at 3Љ4; Kansas Star Comments at 3; УУФФУУФФУУФФCenter for Training and Careers д Yа У4дComments at 1; B.K. McIntyre Comments at 5Љ6. УУФФ ж УУФФThe Small Business Administration "strongly encourages the Commission to take concrete steps" to improve opportunities forд"ь |Э0*ћ$ћ$44е ї"д д Yа4дwomen and minorities.ж]щЕ#д Yyа4дС•СSmall Business Administration Comments at 5.]ж Williams states that without specific measures designed to level the д Yща4дplaying field, small and minority businesses are at a significant disadvantage.жIщщyЕ#д Yа4дС•СWilliams Testimony at 4.Iж УУФФ American Women in Radio and Television and Women of Wireless recommend that the Commission adopt genderЉbased policies for both remedial and nonremedial purposes ЉЉ to redress prior and ongoing discrimination against women; to foster diversity in media voices under Section д Yа4д257(b); and to widely disseminate spectrum licenses under Section 309(j).жPІ*Е#д Yh а4д American Women in Radio and Television and Women of Wireless Comments at 1Љ2 д ’YQ У4дand 32Љ41. УУSee alsoФФ Small Business Administration Comments at 4Љ5 and Zesiger Testimony at 3 (based on Congress' mandate, it is "essential" that the FCC address diversity of media voices). Pж The National Women's Law Center and others assert that the appropriate constitutional standard for д ’Y_а4дgenderЉbased incentives is intermediate scrutiny,ж‡z_˜Е#д YЈа4дС•СNational Women's Law Center Comments at 2; УУФФAmerican Women in Radio and Television and Women of Wireless Comments at 32Љ33. American Women in Radio and Television and Women of Wireless also assert that genderЉoriented programs would be д ’YcУ4дsupported under the higher strict scrutiny standard. УУIdФФ.УУФФ at 34Љ35 (citing finding in д ’YNУ4дУУФФУУDepartment of Justice Federal Procurement ProposalФФ УУФФthat there is a compelling governmental д Y9У4дinterest in remedying discrimination against minorities in federal procurement). УУФФ ‡ж claiming that after УУUnited States v. д ’YJУ4дVirginiaФФУУФФ, "it is clear that federal programs that are carefully crafted to remedy past or present discrimination against women are constitutional. In light of the extensive evidence that women in business generally, and in communications specifically, have suffered and continue to suffer discrimination based on their sex," it urges the FCC to retain ЉЉ and indeed to д Y№ а4дstrengthen where necessary ЉЉ its efforts to eliminate such discrimination."ж[щ№ кЕ#д Y{а4дС•СNational Women's Law Center Comments at 2.[ж д ’YТ У4дС•Си€й218.иС` ` ШСNational Black Caucus of State Legislators argues that the УУAdarandФФ decision, coupled with Congressional repeal of the tax certificate program, and the FCC's response to д ’Y–У4дУУAdarandФФ demonstrates that the federal government fails to address УУФФthe "growing erosion of д Yа4дeconomic opportunity on the part of AfricanЉAmericans."жП‹Е#д ’YН!а4дС•СNational Black Caucus of State Legislators Comments at 3Љ4. УУSee alsoФФ MMTC д YЈ"У4дSupplemental Request at 1Љ3 (УУФФ"Commission action to stimulate minority ownership can wait д ’Y‘#У4дno longer").УУ ФФж BrownЉBlackwell contends thatд"}0*ћ$ћ$44Ј"д rather than "attempting to justify raceЉbased programs," we should "simply reactivate some of the provisions the Commission itself already has determined are effective at increasing д Yва4дparticipation," and that will give women and minorities "a fighting chance to compete."ж.ЛвЕ#д YKа4дС•СBrownЉBlackwell Comments at 9 (claiming that without distress sales, tax certificates and comparative hearings, "the broadcast ownership statistics are destined to look much as they did before the incentives were employed ЉЉ predominantly white male")..ж Some commenters suggest that the Commission encourage industry to establish partnerships with women or minorityЉowned companies, and to provide training programs, business opportunities, or mentoring programs to assist such groups in developing skills and becoming д Yvа4дsuccessful telecommunications entrepreneurs.жšвvKЕ#д Yr а4дС•СAmerican Women in Radio and Television and Women of Wireless Comments at 41; B.K. McIntyre Comments at 5.šж д YHа4дС•Си€к219.иС` ` ШСSome parties recommend specific auctionЉrelated provisions.жЉ№ HхЕ#д ’Yоа4дС•СУУSee, e.g.,ФФ American Women in Radio and Television and Women of Wireless Comments at 41Љ42 (favoring financing incentives and relaxed attribution thresholds for д YВУ4дwomenЉowned businesses in spectrum auctions); УУФФУУФФУУФФThompson PCS Systems Comments at 4 д Y›У4д(arguing that the У УФ ФУ УФ ФУ УФ ФУ УФ ФУУФФУУФФFCC should not modify provisions for designated entities); Williams Testimony at 5 (stating that the FCC must preclude strategic alliances between large companies before auctions commence and expand its financing policy to include provision of capital needed by small businesses); Integrated Communications Group Comments at 2 (suggesting that the FCC develop incentives to motivate PCS licensees to sell spectrum or partition licenses with first priority given to minorities, women, and very small businesses). д ’YУ4дУУSee also ФФУУФФAmerican Women in Radio and Television and Women of Wireless Comments at 41УУ д YќУ4дФФ(recommending that broadcast spectrum (digital or analog) should be licensed through a process other than comparative hearings).Љж American Women in Radio and Television, Women of Wireless, Thompson PCS Systems and Williams contend that the FCC's licensing incentives for women and minorityЉowned businesses д ’Y а4дincreased participation by those groups in FCC spectrum auctions.жОв Е#д YQа4дС•СAmerican Women in Radio and Television and Women of Wireless Comments at 3Љ6; PCS Systems Comments at 1Љ2 & 4; Williams Testimony at 3 & 5. Ож After УУAdarandФФ, д Yю У4дhowever, based on consideration of the legal requirements imposed by УУФФУУФФthat decisionУУФФ, the д Yз У4дrecord at that time, УУФФthe risk of protracted litigation, and its concomitant effect on investment decisions and potential delay in issuing licenses, the Commission suspended its Section 309(j)д"Р ~70*ћ$ћ$44Ж ї"д д Yа4дpreference provisions for women and minorities.жoыЕ#д ’Yyа4дС•СУУC Block Sixth Report and OrderФФ, 11 FCC Rcd at 136Љ137. oж УУФФУУФФУУФФSome parties argue that the FCC should д ’Yща4дreinstate its preЉУУAdarandФФ PCS incentive policies for women and minorities,УУФФжSxщ{Е#д Yа4дС•СThompson PCS Systems Comments at 2; Williams Testimony at 5. In addition, д YўУ4дseveral commenters claim that some auction applicants lost investors when УУФФthe Commission д ’YчУ4дamended its rules to comply with УУУУФФAdarandФФ because investors were unwilling to enter д YвУ4дpartnerships subject to potential litigation. Kansas Star Comments at 1Љ3;УУФФ УУФФAmerican Women in Radio and Television and Women of Wireless Comments at 6Љ8; PCS Alliance Comments at 1; Thompson PCS Comments at 1.Sж while others д Yда4дraise Section 309(j) issues.жn aдЛЕ#д ’Y@ а4дС•СУУSee, e.g.,ФФ Small Business in Telecommunications Reply Comments at 11 (claiming д Y+ У4дthat the УУФФFCC has ignored its Section 309(j) mandate regarding small businesses and rural telcos); Hispanic Chamber Comments at 1 (alleging that the FCC has not provided sufficient opportunities for Hispanics, other minorities and women in implementing its Section 309(j) authority); Williams Testimony at 7 (stating that FCC must advise the administration, Congress and the Supreme Court on policies and legal procedures to implement its Section 309(j) mandate).nж д YІУ4дУУФФУУФФУУФФУУФФУУФФ УУФФУУФФУУФФУУФФУУФФУУФФУУФФУУФФУУФФУУФФУУФФУУФФУУФФУУФФС•Си€л220.иС` ` ШСУ УФ ФMany parties urge the FCC to conduct a study of the participation of women д Yа4дand minorities in the telecommunications industry and market entry barriers.жƒ!˜xфЕ#д ’Y$а4дС•СУУSee, e.g.,ФФ Kansas Star Comments at 3; National Association of Black Owned Broadcasters Reply Comments at 1; B.K. McIntyre Comments at 2, 5Љ6; American Women in Radio and Television and Women in Wireless Comments at 11Љ14 (noting that it first д YсУ4дrequested that the FCC conduct such a study in 1991 and has done so continuously since);УУ д YЪУ4дФФLetter from Shelley Spencer, Director, УУФФAmerican Women in Radio and Television to William д ’YГУ4дCaton, Secretary, FCC (November 20, 1996) (American Women in Radio and Television УУEx д ’YžУ4дParteФФ Filing)УУ ФФ(submitting October 1996 report by the National Foundation of Women д Y‰У4дBusiness Owners on financing for women business owners); УУФФMMTC Supplemental Request at д YrУ4д1Љ3 (УУФФexpressing regret that a disparity study regarding minority ownership in broadcast has д ’Y[У4дnot yet begun). УУCf. ФФBrownЉBlackwell Comments at 8Љ9 (contending that "record evidence" of discrimination is "not always available" and asking how studies can be more convincing "than the Commission's own recognition that participation in the marketplace is greater by д Y!У4дminorities and women when incentives are in place than when they are not"). УУФФУУФФ С•СIn addition, parties to some Section 309(j) proceedings have recommended that the FCC commence a study to further examine the participation of women and minorities inд"г# 0*ћ$ћ$ААЊ$ї"д д ’YУ4дtelecommunications. УУSee, e.g., ФФУУФФУУCompetitive Bidding Sixth Report and OrderФФ, 11 FCC Rcd at д Y{У4д137 n.6 УУФФ(УУФФciting Allied Communications Group, Inc. Comments, which recommended comprehensive formal study; Minority Business Enterprise Comments, which suggested disparity study; General Wireless Comments, which identified hearings, studies or other methods to develop a supplemental record; Chase Telecommunications Comments, which recommended examination of how past discrimination denies minorities access to capital).ƒж Americanд"!0*ћ$ћ$44њ"д д ’YУ4дWomen in Radio and Television asserts thatУУФФУУФФУУ ФФthe results of a new October 1996 report by the National Foundation of Women Business Owners, which shows some improvement for financing of women businesses in general "demonstrate the continued need for a study of womenЉowned companies in communications . . . to determine whether the dramatic growth of womenЉowned businesses in general is mirrored in the communications д Yа4дindustry."жѕ"й Е#д YH а4дС•СAmerican Women in Radio and Television Ex Parte Filing at 1. National Association д Y1У4дof Black Owned Broadcasters claims that the results of a study by the УУФФUnited States Department of Commerce, National Telecommunications and Information Administration, д YУ4дУУФФprovide additional evidence of the need for governmental action to promote minority business opportunities in the telecommunications industry. National Association of Black Owned д YеУ4дBroadcasters Reply Comments at 9Љ10 (citing УУФФU.S. Department of Commerce, National Telecommunications and Information Administration, Office of Policy Analysis and д ’YЇУ4дDevelopment study,УУФФ УУCapital Formation and Investment in Minority Business Enterprises in the д ’Y’У4дTelecommunications IndustryФФ (Apr. 1995), and specific findings, including: Banks provide White borrowers with $1.83 in debt for each dollar of equity capital they invest in their businesses, but provide African American borrowers only $1.16 for each dollar of equity capital invested; and that African Americans own only 193 (1.7%) of the total commercial broadcast stations in the United States). ѕж For example, B.K. McIntyre states that she is an African American woman with ten years experience as a state public utility regulator and over twenty years of management experience, yet claims that she has had difficulty obtaining sufficient capital to become an active provider of other communications services or to participate in spectrum auction. She asserts that other minorities and women with comparable expertise experience similar impediments. B.K. McIntyre acknowledges that to prove whether this fact is related to race or gender is difficult, but claims that a study and comparison of minorities and women to their majority counterparts "may offer further evidence of the subtle barriers that exist to creating the level of wealth and expertise that is necessary to fully participate in the д YР а4дcommunications industry."жM#щР ЉЕ#д Y"а4дС•СB.K. McIntyre Comments at 2.Mж Two parties assert that, as the licensing agency, the FCC, more than any other agency or independent organization, has the data required to completeд"Љ €Z#0*ћ$ћ$44“ї"д д Yа4дan academically rigorous review of women ownership of communications companies.ж§$4Е#д Yyа4дС•СAmerican Women in Radio and Television and Women of Wireless Comments at 11. American Women in Radio and Television and Women of Wireless propose that the study include: (1) definition of the communications industry; (2) historical growth of the communications industry in relation to the growth of industry generally; (3) historical employment growth by gender in the communications industry versus industry as a whole; (4) historical employment growth of women in the communications industry (by review of licensing by the FCC and survey of current licensees) versus industry as a whole; (5) detailed analysis of the communications industry with special emphasis on the role of women in the industry using historical data and other contemporary factors; (6) general requirements for entry into the industry, i.e., capital requirements, ownership experience, technical or sales experience; (7) analysis of the participation by womenЉowned companies in spectrum auctions, including the number of applicants, amount of upfront payments submitted, roundЊbyЉround bidding activity (when did women leave the auction or win licenses), licenses acquired and downpayments submitted; (8) barriers to capital and other institutional factors that negatively affect women's participation in the industry, e.g., financing terms, equity investments, capital intensive nature of the industry, discrimination against women); (9) empirical study on the nexus between women's ownership of mass media facilities and content diversity (e.g., news, editorial content) and diversity of workforce (hiring and advancement), communications access and products targeted towards women. American Women in Radio and Television and Women of Wireless Comments at 12.§ж They also recommend that the FCC amend the Annual Ownership Report Form 323 and require all licensed communications companies to submit a current Form 323 as soon as д YЛа4дpossible.ж%ПЛФЕ#д ’Y0а4дС•С УУId.ФФ at 13. The parties state that although the Form change would require approval from the Office of Management and Budget (OMB), OMB could do so on an expedited basis д ’YУ4дunder 5 C.F.R. РР 1320.18. УУId.ФФж д ”YУ4д УУФФУ УФ ФТX•ТС` ` ШСб#Xwж*ф0 xь]п7ћщЗX˜#бC.СИ И њСOngoing Commission Evaluation Ц(#Ц д YzУ4дб#XwЯОІ PьE37ћ[hXP#б д YcУ4дС•Си€м221.иС` ` ШСThere is a long history of recognition by this agency, as well as by courts, Congress, and the public, that minorities and women have experienced serious obstacles in attempting to participate in the telecommunications industry and that their greater д Y а4дparticipation would enhance the public interest.жЩ&д KЕ#д ’Y"а4дС•СУУSee Market Entry Barriers Notice of InquiryФФ, 11 FCC Rcd at 6293Љ6298 (describes various findings and initiatives regarding women and minorities). Щж Since the late 1960's, the Commission has addressed women and minority access to employment and ownership opportunities in theд" ч&0*ћ$ћ$44Ф ї"д telecommunications area. Almost thirty years ago, in 1969, the Commission first established д ’Yща4дequal employment opportunity (EEO) policies. In 1973, in УУTV 9, Inc. v. FCCФФ,ж 'НщЕ#д ’Ybа4дС•С495 F.2d 929 (D.C. Cir. 1973), УУcert. deniedФФ, 418 U.S. 986 (1974) (rejecting view that mutually exclusive applicants for broadcast construction permits should not receive comparative credit for minority ownership). ж the United States Court of Appeals for the District of Columbia Circuit noted the low rate of minority ownership of radio and television stations and stated that minority ownership and д YІа4дparticipation in station management is in the public interest.жG(ыІMЕ#д ’YЄ а4дС•СУУId.ФФ at 937 n.28.Gж Thereafter, we instituted д Yа4дvarious FCC broadcast ownership preference policies for women and minorities,жЛ)=Е#д ’Y@ а4дС•СУУSee, e.g., Statement of Policy on Minority Ownership of Broadcast FacilitiesФФ, 68 FCC д ’Y+ У4д2d 979, 983 (1978) (adopting minority distress sales and tax certificate policies); УУAmendment of Section 73.3555 of the Commission's Rules Relating to Multiple Ownership of AM, FM and д ’YџУ4дTelevision Broadcast StationsФФ, Memorandum Opinion and Order, 100 FCC 2d 74, 94 (1985) д ’YъУ4д(adopting minority multiple ownership rules). УУSee alsoФФ УУPolicies and Rules Regarding д ’YеУ4дMinority and Female Ownership NPRMФФ, 10 FCC Rcd at 2789Љ2790 (stating that "women and minorities face economic disadvantages when they attempt to enter the mass media industry" and seeking comment on whether women and minorities encounter greater cost of capital and д ’Y’У4дother types of disadvantages in acquiring mass media facilities). УУ ФФЛж and the д Yxа4дSupreme Court subsequently upheld our minority ownership policies.жk*ыxЕ#д ’Y.а4дС•СУУMetro Broadcasting Inc. v. FCCФФ, 497 U.S. 547 (1990).kж In 1982, Congress observed that "the effects of past inequities stemming from racial and ethnic discrimination have resulted in a severe underrepresentation of minorities in the media of mass communications" and enacted Section 309(i)(3)(A) of the Communications Act, authorizing д Y а4дthe Commission to provide minority preferences in awarding spectrum licenses by lottery.ж}+5 ИЕ#д ’Y…а4дС•СH.R. Conf. Rep. No. 97Љ765, 97th Cong., 2d Sess. 43 (1982). УУSee alsoФФ 47 C.F.R. РР 1.1622 (codification of rules regarding minority preferences in mass media lottery д YYУ4дproceedings). IУУФФn addition, in the 1984 Cable Act, Congress affirmed the Commission's equal employment opportunity rules for cable and stated that a "strong EEO policy is necessary to assure that there are sufficient numbers of minorities and women with professional and management level experience" who will be able to take advantage of ownership opportunities. H.R. Rep. No. 934, 98th Cong., 2d Sess. 4723 (1984). In 1988, Congress enjoined the Commission from narrowing or eliminating our broadcast ownership policies. д ’YЯ"У4дУУContinuing Appropriations Act for Fiscal Year 1988ФФ, Pub. L. 100Љ202, 101 Stat. 1329Љ31.УУФФ}ж More recently, in 1993, Congress reached beyond broadcast services to wireless spectrumд" ‚Е+0*ћ$ћ$44о ї"дЋbased services and enacted Section 309(j), which requires the Commission to adopt competitive bidding procedures that promote economic opportunity to a wide variety of д Yва4дapplicants, including minorities and women.жG,щвЕ#д YKа4дС•С47 U.S.C. РР 309(j).Gж In implementing Section 309(j), the Commission designed rules to assist small, rural, women, and minorityЉowned businesses "to overcome barriers that have impeded these groups' participation in the telecommunications д Yа4дarena, including barriers related to access to capital."жП-дyЕ#д ’YЗа4дС•СУУImplementation of Section 309(j) of the Communications Act ЉЉ Competitive BiddingФФ, Second Report and Order, 9 FCC Rcd 2348, 2388 (1994).Пж У УФ ФУ УФ ФAlthough the specific auction rules we adopted for businesses owned by women and minorities were held in abeyance after д ’Y_а4дУУAdarandФФ,жr.ы_Е#д ’Y% а4дС•СУУCompetitive Bidding Sixth Report and OrderФФ, 11 FCC Rcd 136.rж since then, we have continued to request comment on the effect of УУAdarandФФ on our policies and to seek evidence of discrimination against women or minorities in д Y3а4дtelecommunications services.жш/Ќ3ШЕ#д ’YЌа4дС•СУУSee, e.g.,ФФ УУAmendment of Part 20 and Part 24 of the Commission's Rules ЉЉ Broadband д ’Y—У4дPCS Competitive Bidding and the Commercial Radio Service Spectrum CapФФ, Notice of д ’Y‚У4дProposed Rulemaking,УУФФ 11 FCC Rcd 15052 (1996) (УУCompetitive Bidding D, E & F NoticeФФ)УУФФ; д ’YmУ4дУУФФУУD, E & F Block Competitive Bidding Report and Order,ФФУУФФ 11 FCC Rcd 7824УУФФУУФФ. шж У УФ ФLater, in enacting Section 257 of the 1996 Act, one member of Congress noted that women and minorities are "extremely under represented" in the д Y а4дtelecommunications industry.ж0в < Е#д Yђа4дС•С142 Cong. Rec. H1141 at H1176Љ77 (daily ed. Feb. 1, 1996) (statement of Rep. Cardiss Collins).ж д Yз У4дС•Си€н222.иС` ` ШСThus, our Section 257 mandate continues a succession of measures over several decades to enhance opportunities for women and minorities. The goal in this aspect of the Section 257 proceeding is to identify the specific obstacles that women and minorities face and to determine whether they are of the nature that will satisfy heightened judicial scrutiny. As a federal government agency, our ability to adopt race or gender based д ’Ydа4дincentives is limited by constitutional requirements.жЙ1вdж Е#д Yыа4дС•СIn addition to considering legal constraints, we also desire to maximize the utility of any incentives by minimizing litigation risks. Йж б#XwЯОІ PьE37ћ[hXP#бUnder УУAdarandФФ, any governmental classification based on race must satisfy strict scrutiny: it must be narrowly tailored toд"Oƒp10*ћ$ћ$44Ѓї"д д Yа4дfurther compelling governmental interests.жЉ2ЊЕ#д ’Yyа4дС•СУУФФУУФФIn УУAdarandФФ, 115 S.Ct. at 2113, the Supreme Court held that the federal government's use of race-based criteria for decisionmaking must satisfy the requirements of strict scrutiny. д ’YMУ4дУУФФFor a full discussion of the constitutional standards, see УУMarket Entry Barriers Notice of д ’Y8У4дInquiryФФ, 11 FCC Rcd at 6309Љ6315.Љж Remedying discrimination against a particular д Yща4дracial group in a specific field has been recognized as a compelling government interest.жs3Ш щ:Е#д ’Yда4дС•СУУMetro BroadcastingФФ, 497 U.S. at 612 (O'Connor , J. dissenting); УУRichmond v. J.A. д ’YПУ4дCroson Co.ФФ, 488 U.S. 469, 491Љ500 (1989). У УФ ФIn its procurement reform proposals, which cover contracts for the entire federal government, including the Department of Defense, the Department of Justice found that "there is today a compelling interest to take remedial action д ’Y| У4дin federal procurement." УУDOJ Procurement Reform ProposalsФФ, 61 FR 26042, 26050. Noting that its collection of evidence of discrimination is onЉgoing, DOJ found that "evidence indicates that racially discriminatory barriers hamper the ability of minorityЉowned businesses д ’Y9У4дto compete with other firms on an equal footing in our nation's contracting markets." УУId. д Y$У4дФФDOJ explained that its finding was based on: УУФФ(1) Congressional hearings and reports relating to the effect of discrimination on minority opportunities; (2) studies documenting the effects of racial discrimination on the procurement opportunities at the state and local level; and (3) works by social scientists, economists, and other academic researchers regarding the manner д ’YШУ4дin which various forms of discrimination restrict business opportunities for minorities. УУId.ФФ at 26050Љ26051.sж Thus, for us to adopt raceЉbased incentives, there must be an appropriate record of д ’YЛУ4дdiscrimination against minorities in telecommunicationsУ УФ Ф. After we released the УУMarket Entry д ’YІУ4дBarriers Notice of InquiryФФ, УУФФthe Supreme Court clarified the applicable constitutional standard д ’Y‘У4дfor classifications regarding gender. In УУUnited States v. Commonwealth of VirginiaФФ, УУФФУУФФthe Court affirmed and applied its preЉexisting standard for reviewing gender classifications ЉЉ intermediate scrutiny ЉЉ to hold that a state maleЉonly military college violated the Equal д YNа4дProtection Clause. жS4СNЪЕ#д ’YЩа4дС•СУУUnited States v. VirginiaФФ, 116 S.Ct. 2264, 2274Љ2276 (citing УУJ.E.B. v. Alabama ex д ’YДУ4дrel. T.B.ФФ, 511 U.S. 127, 136Љ137 & n.6 (1994) and УУФФУУMississippi University for Women v. д ’YŸУ4дHoganФФ, 458 U.S. 718, 724 (19УУФФ82)). УУФФУУФФУУФФSж Under УУФФintermediate scrutiny, a government's justification for genderЊbased classifications must be "exceedingly persuasive" and specifically, the government must д Y У4дshow at least that the УУФФУУФФclassification serves important governmental objectives and is д Y а4дsubstantially related to those objectives.ж:5ы SЕ#д ’Y "а4дС•СУУId.ФФ:ж д ’Yл У4д С•Си€о223.иС` ` ШСУ УФ ФThe record in this proceeding, including comments on the УУMarket Entryд"л „50*ћ$ћ$44П ї"д д ’YУ4дBarriers Notice of InquiryФФ and the testimony at the УУMarket Entry Barriers ForumФФ, supplemented by the record in various other proceedings, strongly indicates that minorities and women have experienced tremendous obstacles in participating in the telecommunications д YНУ4дindustry. У УФ ФTo satisfy our statutory obligations under both Section 257 and Section 309(j), we are commencing a comprehensive study to further examine the role of small businesses and businesses owned by minorities or women in the telecommunications industry and the impact of our policies on access to the industry for such businesses. In addition to furthering the requirements of Section 257, the study will assist us in fulfilling our Section 309(j) mandates and in determining whether there are constitutionallyЉsound bases for adopting licensing incentives for women or minorities. д Y У4дС•Си€п224.иС` ` ШСAs to Section 257, the study will provide data and information to help us identify and eliminate market entry barriers for small businesses in the telecommunications market as the statute requires. In addition, the study will assist the Commission in reporting д YР а4дto Congress on our implementation of Section 257, as the statute also requires.ж\6ЄР Е#д Y9а4дС•С47 U.S.C. РР 257(c). Section 257(c) requires the Commission to report to Congress every three years following completion of the proceeding on regulations that have been issued to eliminate barriers and any statutory barriers that the Commission recommends be д YєУ4дeliminated.УУФФ\ж As to д YЉ У4дSection 309(j), the study will be useful У УФ Фin comparing the effectiveness of auction and nonЊauction methodologies, and in assessing entry of new companies into the market, prompt д Y{У4дdelivery of service to rural areasУ УФ Ф, and the participation and success of small businesses and д Ydа4дbusinesses owned by minorities or women in the competitive bidding process,жa7ыd4Е#д ’YIа4дС•СУУSeeФФ 47 U.S.C. РР 309(j)(12)(D)(ii)Љ(iv).aж as well as д YMа4дreporting to Congress on the auction process as required.ж`8ыMчЕ#д ’Yха4дС•СУУSeeФФ 47 U.S.C. РР 309(j)(12)(D)(iv)Љ(E).`ж д YУ4дС•Си€р225.иС` ` ШСУ УФ ФThe study will be conducted by an external contractor. It will focus on two д Yа4дtypes of communications services, the oldest and the newest ЉЉ broadcast and wireless.ж…9ЄšЕ#д YSа4дС•СAn analysis of broadcast licensing also will assist the Commission's analysis of auction participation. Many auction participants and investors are broadcast licensees. For example, the study will examine the impact of incumbency and the regulatory structure the FCC established for the licensing of broadcast spectrum on auction bidding.…ж Specifically, the study will develop a profile of applicants and participants in broadcast licensing and the licensing of certain wireless services, both by auction and other previouslyд"к… 90*ћ$ћ$44\ї"д д Yа4дд Ў"xj дд"Ў"xj еМе"дд Ў"xj дused methods.жŸ:вЕ#д Yyа4дС•СFor example, the study will analyze licensing of PCS, Specialized Mobile Radio, cellular, and paging services.Ÿж It will analyze participation rates of small businesses, minorityЉowned businesses, womenЉowned businesses, and the difference between participants and potential participants. The study will identify and evaluate the effect of any market entry barriers and other impediments on participation and attainment of licenses, the impact of incumbency in the telecommunications industry, the effect of previous FCC licensing proceedings, the effect of the presence, absence and removal of race and genderЉbased provisions, and the effect of past employment or management experience in the communications industry on auction д Y_У4дparticipation and success. У УФ Ф д ”U1У4дУУУ УV.С•СCONCLUSIONФФФ Ф д ’Y У4д С•Си€с226.иС` ` ШСThis УУReportФФ, we believe, demonstrates our implementation of Section 257. As described above, the Commission has taken numerous steps to eliminate regulatory and other impediments to entry for small businesses in the telecommunications market and will continue to do so. д ”U’У4дУ УУУФФФ ФУ УУУVI.С•СORDERING CLAUSES д YdУ4дФФФ ФС•Си€т227.иС` ` ШСThe motion of Blab Television to accept lateЉfiled comments in this proceeding is GRANTED. д YУ4дС•С и€у228.иС` ` ШСThe motion of National Association of Black Owned Broadcasters to accept lateЉfiled comments in this proceeding is GRANTED. д"ё†b:0*ћ$ћ$44>ї"д д ‘XУ4да щщ аг@A-@гаад Ў"xj дг ‡ гд Ў"xj дд Ў"xj деМед Ў"xj дУ УаадRдAPPENDIX Aдˆьдаад\Адд Ў"xj дг:гд Ў"xj д Parties Filing Comments д YУ4дФ ФAbacus Television (Abacus Television) д YvУ4дSandra Abalos, filing jointly with УУФФPatsy BakuninУУФФ, Joan Frentz, Whitney Johns, ТXŠТJaymie McMullin, Vivian Shimoyama, Carolyn Stephens, Sandy Adams, Janet HarrisЊд YHУ4дLange, Carol Johnson, УУФФBren Norris, Barbara Solomon, Terry Neese (Abalos et al.)Ц(#Ц American Mobile Telecommunications Association, Inc. (American Mobile СŠСTelecommunications Association) American Women in Radio and Television, Inc. and Women of Wireless (American Women СŠСin Radio and Television and Women of Wireless) America's Carriers Telecommunication Association Association of Directory Publishers AT&T Corp. (AT&T) Big Sky Teleconferencing, Ltd./SaMComm, Inc. (Big Sky Teleconferencing) Broadcast Data Corp. filing jointly with Chicago MDS Co., DCT Communications, Inc., ТXŠТIndianapolis MDS Co., Lakeland BDCЉMMDS Co., Milwaukee MDS Co., Minneapolis MDS Co., Multipoint Information Systems, Inc., Orlando BDCЉMMDS, Co., Phoenix MDS, Co., and Private Networks, Inc. (Broadcast Data Corp. et al.)Ц(#Ц Faye BrownЉBlackwell (BrownЉBlackwell) Cable Telecommunications Association Celltech Information Systems, Inc. (Celltech) Center for Training and Careers Gwendolyn A. Christopher (Moore Broadcasting) Columbia Communications Corp. (Columbia Communications) Community Broadcasters Association Competitive Telecommunications Association (CompTel) Independent Telephone and Telecommunications Alliance Integrated Communications Group Corporation (Integrated Communications Group) Integration Communications International, Inc. filing jointly with Digital and Wireless ТXŠТTelevision, L.L.C. and Golden Bear Communications, Inc. (Integration Communications International et al.) Ц(#Ц Kansas Star Communications (Kansas Star) Henry Mayfield B.K. McIntyre & Associates, Inc. (B.K. McIntyre) Metricom, Inc. (Metricom) Mike McCarroll (McCarroll) M.L.T. Productions Mobile Communications Holdings, Inc. (Mobile Communications Holdings) National Association of Women Business Owners National Association of Women Business Owners ЉЉ Greater Detroit Chapter National Black Caucus of State Legislators ЉЉ Telecommunications & Energy Committee СŠС(National Black Caucus of State Legislators) National Black Chamber of Commerceд"ѕ(‡0*0*0*ААk+ї"дŒNational Cable Television Association, Inc. (National Cable Television Association) National Paging and Personal Communications Association National Telephone Cooperative Association National Wireless Resellers Association National Women's Law Center Nevadacom NextWave Telecom, Inc. (NextWave) Optel, Inc. (OpTel) Orion Network Systems, Inc. (Orion) PCS Alliance Group, Inc. (PCS Alliance) Romar Communications, Inc. (Romar) Rural Telecommunications Group Small Business in Telecommunications Small Cable Business Association Southwest Missouri Cable TV, Inc. (Southwest Missouri Cable) Telecommunications Resellers Association TelQuest Ventures, L.L.C. (TelQuest) TRA Communications Consultants, Inc. and J. Rodger Skinner, Jr. СŠС(TRA Communications Consultants) Thompson PCS Systems, Inc. (Thompson PCS) д Y4У4дТXŠТС€АА\СUnited Church of Christ Office of Communications/Minority MediaС  *ССxxXСTelecommunications Council (United Church of Christ and Minority Media Telecommunications Council)Ц(#Ц United States Hispanic Chamber of Commerce (Hispanic Chamber) United States Small Business Administration, Chief Counsel for Advocacy (Small Business Administration) VoiceЉTel, Inc. (VoiceЉTel) Watson Cable Co. (Watson Cable) Wireless Cable Association International, Inc. (Wireless Cable Association International) Working Assets Funding Service, Inc. (Working Assets Funding) Yellow Pages Publishers Association (Yellow Pages Publishers) ТXŠТС€АА\ССŠСЦ(#Ц д ‘X У4дУ УParties Filing Reply Comments д YђУ4дФ ФAT&T L/Q Licensee, Inc. (L/Q Licensee) Motorola Satellite Communications National Association of Black Owned Broadcasters National Cable Television Association Optel Pacific Bell Press Broadcasting Company Small Business in Telecommunications Small Cable Business Associationд"#'ˆ0*((АА})ї"дŒTeleЉCommunications, Inc. United States Telephone Association д ‘XЛУ4дУ УPanelists at Public Forum (September 24, 1996) д YУ4дФ ФDavid W. Zesiger Assistant Chief Counsel Office of Advocacy, U.S. Small Business Administration (Zesiger Testimony) LaVern D. James Telecommunications Policy Analyst National Telecommunications and Information Administration U.S. Department of Commerce (James Testimony) Sherwin Grossman President Sherjan Broadcasting Co., Inc. (Grossman Testimony) Matthew M. Polka Vice President & General Counsel Star Cable Associates (Polka Testimony) Kathryn L. Haycock President & CEO CallЉAmerica (Haycock Testimony) Lonnie Pederson President & Manager Telephone Service Company (Pederson Testimony) Cliff Arellano CPI Communications Products, Inc. (Arellano Testimony) Alan R. Shark President & CEO American Mobile Telecommunications Association (Shark Testimony)д"#'‰0*((АА})ї"дŒ™Michael C. Small Deputy Associate Attorney General U.S. Department of Justice (Small Testimony) Gloria Borland Chairman & CEO Gloria Borland Hawaii PCS (Borland Testimony) Kofi A. Ofori Counsel Office of Communication, United Church of Christ д Yе У4д(Ofori Testimony)СИ И чС Bonnie Erbe Chief Executive Officer Peresphone Productions, Inc. (Erbe Testimony) Benjamin Perez Managing Partner and Senior Consultant Abacus Communications Company (Perez Testimony) James L. Winston Executive Director National Association of BlackЉOwned Broadcasters (Winston Testimony) Gregg E. Johnson President BIA Capital Corporation (Johnson Testimony) Gerald Gorman Managing Director Donaldson, Lufkin & Jenrette (Gorman Testimony) Anthony L. Williams President Broadcast Capital Fund, Inc. (Williams Testimony)д"#'Š0*((АА})ї"дŒ™William E. Barker President GE Capital Communications Services, Inc., Unit of General Electric Capital Corporation (Barker Testimony) Jeffrey B. Cullers President & Group Account Manager Vince Cullers Advertising Inc. (Cullers Testimony) СŠС д"ь ‹0*((АА” ї"д а щщ аг@A-B-@гаад Ў"xj дг  гд Ў"xj дСŠСС` ` ЙССИ И чССССhhCССРРqССŸССppЮССШШќС д ‘XщУ4дУ УФ ФаадˆьдУ Уб#XwЯОІ PьE37ћ[hXP#баад\Ад д ‘XвУ4дСр‡ьSСAPPENDIX BФ Фƒ аа д YУ4д1.ТXŠТOn February 13, 1996, the Wireless Telecommunications Bureau held a public forum to discuss FCC Telecommunications Act of 1996 Implementation Schedule, Public Notice (February 12, 1996).Ц(#Ц д Y1У4д2.ТXŠТOn February 23, 1996, the Common Carrier Bureau held a public forum to discuss FCC Telecommunications Act of 1996 Implementation Schedule, Public Notice (February 20, 1996).Ц(#Ц д Yе У4д3.ТXŠТOn February 27, 1996, the Cable Services Bureau held a public forum to discuss FCC Telecommunications Act of 1996 Implementation Schedule, Public Notice (February 23, 1996).Ц(#Ц д YyУ4д4.ТXŠТOn March 6, 1996, the Office of Engineering and Technology presented tutorial on Smart Antennas, Public Notice (February 27, 1996).Ц(#Ц д Y4У4д5.ТXŠТOn March 11, 1996, the Office of Communications Business Opportunities hosted the Auction 1996 Conference, a oneЉday seminar to discuss emerging technologies, spectrum licensing and auctions proposed for 1996. Officials form the Commission's Office of Engineering and Technology, as well as the Wireless Telecommunications Bureau, and industry representatives shared their views on technological developments and market opportunities.Ц(#Ц д Y“У4д6.ТXŠТOn March 13, 1996, the Cable Services Bureau staff participated in Federal Communications Bar Association cable practice committee luncheon to discuss FCC implementation of the Telecommunications Act of 1996.Ц(#Ц д Y7У4д7.ТXŠТOn March 13, 1996, Cable Services Bureau conducted public briefing to discuss Open Video Systems.Ц(#Ц д YђУ4д8.ТXŠТOn March 15, 1996, the Office of General Counsel held a public forum to discuss legal issues relating to Sections 251 and 252 of the Telecommunications Act of 1996, Public Notice (March 11, 1996).Ц(#Ц д Y–"У4д9.ТXŠТOn March 19, 1996, the Assistant Bureau Chief for Information was the key note speaker at the Minority Telecommunications Business Round Table Information Forum at Howard University. The CIB representative addressed PCS auctions, including how to participate in the auction process, how the process applies to small businesses, and what to expect from CIB after starting a business. Approximately 170 people attended the event. Ц(#Ц д"ѕ(Œ0*0*0*ААk+ї"дŒд YУ4д10.ТXŠТOn March 24, 1996, the Director of the Office of Communications Business Opportunities was a panelist at the CTIA Wireless '96 Conference in Dallas, Texas.Ц(#Ц д YЛУ4д11.ТXŠТOn April l1, 1996, the Director of the Office of Communications Business Opportunities was a panelist at America's Carrier Telecommunications Association (ACTA), which discussed the "1996 Telecommunications Reform Act and Expansion Capital," Phoenix, Arizona.Ц(#Ц д YHУ4д12.ТXŠТOn April 12, 1996, the Initial Meeting of the FederalЉState Joint Board on Universal Service was held, Public Notice 96Љ564 (CC Docket No. 96Љ45) (April 10, 1996).Ц(#Ц ТXŠТЦ(#Ц д Y У4д13.ТXŠТOn April 23, 1996, the Wireless Telecommunications Bureau held consumer outreach forum to discuss consumer issues raised by the Telecommunications Act of 1996. Ц(#Ц д YО У4д14.ТXŠТOn May 16, 1996, the Office of Legislative and Intergovernmental Affairs conducted round table discussion with representatives of local and state government representatives to facilitate their participation in proceedings under the Telecommunications Act of 1996.Ц(#Ц ТXŠТЦ(#Ц д YKУ4д15.ТXŠТOn May 20, 1996, the Office of Public Affairs held economics forum to discuss on interconnection with top economists and FCC Chief Economist.Ц(#Ц д YУ4д16.ТXŠТOn May 31, 1996, the FCC held public forum, "Learn Your NOI's: FCC Open Forum on How to Participate in the FCC Process," News Release (May 2, 1996).Ц(#Ц д YСУ4д17.ТXŠТOn June 5, 1996, the FederalЉState Joint Board on Universal Service convened an open meeting, Public Notice 96Љ886 (June 3, 1996).Ц(#Ц д Y|У4д18.ТXŠТOn June 19, 1996, the FederalЉState Joint Board on Universal Service convened an open meeting, Public Notice 96Љ926 (June 12, 1996).Ц(#Ц д Y7У4д19.ТXŠТOn June 24, 1996, the Office of Public Affairs conducted an open forum on how to find FCC information on the Internet, News Release (June 13, 1996).Ц(#Ц д YђУ4д20.ТXŠТOn June 25, 1996, the Director of the Office of Communications Business Opportunities was a speaker at the NPPCA Conference in Chicago, Illinois and discussed the D, E, & F Block Rules and Market Entry Barriers Notice of Inquiry.Ц(#Ц д Y–"У4д21.ТXŠТOn July 9, 1996, the Common Carrier Bureau and the Office of General Counsel held a public forum to discuss the implementation of Section 271 of the Telecommunications Act of 1996, Public Notice 96Љ1032 (June 26, 1996).Ц(#Ц д Y:&У4д22.ТXŠТOn July 17, 1996, the FCC held economic speaker series featuring Dr. Jeffrey MackieЉMason, "Layering and Vertical Integration: Applications to Telecomд"#'0*((АА})ї"д Microsoft,"Ц(#Ц ТXŠТNews Release (July 8, 1996).Ц(#Ц д YЛУ4д23.СŠСOn July 12, 1996, the Assistant Bureau Chief for Information served as a panel ТXŠТmember at "Operation Open Road," a small business information forum at George Washington University sponsored by the Capital Commitment Group Women's Business Development sector. Ц(#Ц д YHУ4д24.ТXŠТOn July 23, 1996, the FCC held a public forum to discuss Antitrust and Economics Issues involved in Bell Operating Company InterLATA Entry, News Release (July 15, 1996).Ц(#Ц д Yь У4д25.СŠСOn August 6, 1996, a representative from the Office of Communications Business ТXŠТOpportunities served as a panelist at the National Black Chamber of Commerce in Chicago, Illinois.Ц(#Ц д YУ4д26.ТXŠТOn August 27, 1996, the FCC held Brown Bag briefing on Fee Filing Procedures, News Release (August 19, 1996).Ц(#Ц д YKУ4д27.ТXŠТOn August 27, 1996, the Director of the Office of Communications Business Opportunities served as a panelist at the Telegresso '96 Conference in Rio De Janeiro, Brazil and discussed, "Preparing for PCS: How it will reЉshape Telecommunications."Ц(#Ц д YяУ4д28.ТXŠТOn September 4, 1996, the FCC held economic speaker series featuring, Dr. Steven Wildman, "Media Competition," News Release (August 29, 1996). Ц(#Ц д YЊУ4д29.ТXŠТOn September 9, 1996, the Director of the Office of Communications Business Opportunities served as a panelist at America's Carriers Telecommunications Association (ACTA) in Hilton Head, South Carolina.Ц(#Ц д YNУ4д30.ТXŠТOn September 12, 1996, the Common Carrier Bureau held public forum to discuss access charge reform and universal service issues raised by the Telecommunications Act of 1996, Public Notice 96Љ1504 (September 9, 1996).Ц(#Ц д YђУ4д31.ТXŠТOn September 12, 1996, the Director of the Office of Communications Business Opportunities served as a panelist at the First Latin Communications Conference in New York City, New York.Ц(#Ц д Y–"У4д32.ТXŠТOn September 13, 1996, the FederalЉState Joint Board on Universal Service convened an open meeting, Public Notice 96Љ1432, (August 27, 1996); Public Notice 96Љ1505 (September 9, 1996).Ц(#Ц д Y:&У4д33.ТXŠТOn September 17, 1996, the Common Carrier Bureau and Office of General Counsel held a public forum to discuss enforcement issues raised by the Telecommunicationsд"#'Ž0*((АА})ї"д Act of 1996, Public Notice 96Љ1503 (September 9, 1996).Ц(#Ц д YУ4д34.СŠСOn September 22, 1996, the Assistant Bureau Chief for Information served as a ТXŠТpanelist on "Get On Line," a discussion on how to start a small business in the telecommunications industry sponsored by U.S. Department of Commerce, Minority Business Development Agency. Ц(#Ц д Y У4д35.ТXŠТOn September 23, 1996, a representative from the Office of Communications Business Opportunities served as a speaker at CATA in Atlanta, Georgia.Ц(#Ц д Yе У4д36.ТXŠТOn September 24, 1996, the Office of General Counsel and Office of Communications Business Opportunities held public forum on small business market entry barriers, Public Notice (September 5, 1996).Ц(#Ц д YyУ4д37.ТXŠТOn September 25, 1996, the Deputy Director of the Office of Communications Business Opportunities served as a speaker at the Commercialization of Defense Technology Conference in Austin, Texas and discussed opportunities for small businesses.Ц(#Ц д YУ4д38.ТXŠТOn October 2, 1996, the Office of General Counsel held public forum/brown bag lunch to discuss key issues stemming from implementation of Section 103 of the д YиУ4дTelecommunications Act of 1996, Public Notice 96Љ1581 (September 19, 1996).С(#(#ДСЦ(#Ц д YЊУ4д39.ТXŠТOn October 7, 1996, the Deputy Director of the Office of Communications Business Opportunities served as a speaker at the Competitive Telecommunications Association (COMPTEL) convention in Ft. Lauderdale, Florida.Ц(#Ц д YNУ4д40.ТXŠТOn October 8, 1996, the Director of the Office of Communications Business Opportunities served as a speaker at the Minority Ownership Conference in Los Angeles, California.Ц(#Ц д YђУ4д41.ТXŠТOn October 17, 1996, the FederalЉState Joint Board held open meeting, Public Notice 96Љ1679 (October 10, 1996).Ц(#Ц д Y­!У4д42.ТXŠТOn October 22, 1996, the Office of Public Affairs conducted open forum on how to find FCC information online on the Internet.Ц(#Ц д Yh$У4д43.ТXŠТOn November 1, 1996, the Mass Media Bureau and the Office of Engineering and Technology convened public forum on the Economics of Mandated Standards for Digital Television, News Release (October 25, 1996).Ц(#Ц д"#'0*((АА})ї"дŒд YУ4д44.ТXŠТOn November 1, 1996, the Mass Media Bureau and the Office of Engineering and Technology convened a public forum on the economics of mandated standards for digital television, News Release (October 25, 1996).Ц(#Ц д Y_У4д45.ТXŠТOn November 7, 1996, the Assistant Bureau Chief for Information served as keynote speaker for the Small Business in Telecommunication Association's Annual convention in Dallas, Texas and discussed how the FCC and CIB can assist small businesses. Ц(#Ц д Yь У4д46.ТXŠТOn November 7, 1996, the FederalЉState Joint Board held an open meeting Ц(#Ц ТXŠТ(CC Docket 96Љ45).Ц(#Ц д YЇ У4д47.ТXŠТOn November 12, 1996, the Office of Engineering and Technology conducted a tutorial, "Progress in Optical Communications," Public Notice (September 27, 1996).Ц(#Ц д YbУ4д48.ТXŠТOn November 19, 1996, the Office of Engineering and Technology and Computer Based Systems Incorporated held an open forum on Electronic Data Exchange, Public Notice (November 8, 1996).Ц(#Ц д YУ4д49.ТXŠТOn December 6, 1996, the FCC held economic speakers series featuring, Dr. Michael Salinger, "Leveling the Playing Field of Local Competition," News Release (November 27, 1996).Ц(#Ц д YЊУ4д50.ТXŠТOn December 16, 1996, the Cable Services Bureau, Common Carrier Bureau, Wireless Bureau and the Office of General Counsel held a public forum on issues concerning the use and management of public rightsЉofЉways, Public Notice (November 26, 1996).Ц(#Ц д Y7У4д51.ТXŠТOffice of General Counsel released a Public Notice requesting nominations for membership on the Local and State Government Advisory Committee, Public Notice, (January 13, 1997).Ц(#Ц д YлУ4д52.ТXŠТOn January 14 and 15, 1997, staff of the FederalЉState Joint Board on Universal Service conducted workshops relating to the selection of a proxy cost model for determining the cost of providing the service supported by the universal service support mechanism, Public Notice (December 12, 1996; January 9, 1997; January 15, 1997).Ц(#Ц д YQ%У4д53.ТXŠТOn January 23, 1997, the Wireless Telecommunications Bureau held a forum on financing issues affecting the wireless industry.Ц(#Ц д"#'0*((АА})ї"дŒд YУ4д54.ТXŠТThe FCC released a Public Notice identifying frequently asked questions on Universal Service and the SnoweЉRockefeller Amendment, Public Notice (February 3, 1997) Ц(#Ц д YЛУ4д55.ТXŠТOn February 10, 1997, the Wireless Telecommunications Bureau, Office of General Counsel, Compliance and Information Bureau and the Office of Engineering and Technology coЉhosted a Public Forum on zoning and land use issues as they relate to siting of antenna facilities for providing wireless services, Public Notice (January 21, 1997; February 6, 1997).Ц(#Ц д Y У4д56.ТXŠТOn February 10, 1997, the Assistant Bureau Chief for Information, Compliance and Information Bureau, participated in the "Small Business Alliance Conference" at the U.S. Chamber of Commerce, which was cosponsored by the National Telecommunications and Information Administration, "Networking the Spectrum, Contracts for Connection."Ц(#Ц д YУ4д57.ТXŠТOn February 19, 1997, the Office of Communications Business Opportunities, together with the Wireless Telecommunications Bureau held a oneЉday seminar to discuss spectrum licensing and auctions proposed for 1997. Industry representatives FCC officials, entrepreneurs and financial experts shared their views on technological developments and market opportunities.Ц(#Ц д YУ4д58.ТXŠТOn February 27, 1997, the Wireless Telecommunications Bureau held a small business financing forum focusing on issues associated with small wireless business.Ц(#Ц д YСУ4д59.ТXŠТOffice of General Counsel released a Public Notice announcing the appointment of 13 members to the Local and State Government Advisory Committee, Public Notice (February 28, 1997). Ц(#Ц д YeУ4д60.ТXŠТOn March 1, 1997, the Assistant Bureau Chief for Management, Compliance and Information Bureau participated in the National Small Business Development Council for Women's Organization of Resource Training (ORT), which discussed, "Access to the Internet of Business Opportunities," Washington D.C. Ц(#Ц д YђУ4д61.ТXŠТOn March 10, 1997, the Assistant Bureau Chief for Management, Compliance and Information Bureau participated in the National Paging Association, which discussed, "The FCC, a New Information Resource," Highlighting the National Call Center and the new CIB, Washington D.C.Ц(#Ц д Y#У4д62.ТXŠТOn March 20Љ21, 1997, the Deputy Director of the Office of Communications Ц(#Ц ТXŠТBusiness Opportunities served as a panel member at "Telecommunications 1997: Diversity, Economic Empowerment and Opportunities" Conference at Fayatteville State University. The OCBO representative discussed business opportunities for minorities.Ц(#Цд"#'‘0*((АА})ї"дŒд YУ4д™63.ТXŠТOn May 15, 1997, the Office of Communications Business Opportunities, together with Bowie State University will coЉsponsor a oneЉday conference to discuss universal service and access reform.Ца Ц д YЄУ4д64.ТXŠТOn June 24, 1997, the Enforcement Division of the Common Carrier Bureau will sponsor a public forum to discuss Local Exchange Carrier billing issues.Ца Ц СŠСд"H’0*((ААИї"д аааад`љдMay 8, 1997 дД(#д д ‘XвУ4ддД(#дУ УаадšдSEPARATE STATEMENT OF дˆьд д ‘XЄУ4ддуI дCOMMISSIONER RACHELLE B. CHONGФ Ф дˆьд д ’WvУ4ддˆьдаад\АдУУRe: ТXŠТФФУУSection 257 Proceeding to Identify and Eliminate Market Entry Barriers for Small д ’W_У4дBusinesses: GN Docket 96Љ113, ReportФФЦ(#Ц СŠС СŠСIn our Report today, we reaffirm our commitment to identifying and removing impediments experienced by women or minorities in the telecommunications market. In addition, we announce that we plan to conduct a comprehensive study of the participation of women and minorityЉowned businesses in the telecommunications market. Such a study is д ’Yе У4дnecessitated by the У УФ ФSupreme Court's decision in УУAdarand Constructors, Inc. v. Pena, ФФin which the Court held that the federal government's use of raceЉbased criteria for decisionЊд YЉ а4дmaking must satisfy the requirements of strict scrutiny.жКgЉ =Dд Y"а4д 115 S. Ct. 2097. As we recognized in the Notice in this proceeding, because a federal д ’Y У4дminority program has not been subject to strict scrutiny pursuant to УУAdarandФФ, judicial д ’YіУ4дguidance regarding the strict scrutiny standard thus far is limited to the decision in УУRichmond д ’YсУ4дv. J.A. Croson Co.ФФ, in which a state program was evaluated under strict scrutiny. 488 U.S. д ’YЬУ4д469 (1989). Under УУCrosonФФ remedial relief is permitted on the basis of "evidence of a pattern of individual discriminatory acts . . . supported by appropriate statistical proof." 488 U.S. at 499.КжУ УУУ д Y’У4дФФФ Ф СŠСAlthough I am pleased to see that we are once again pledging to proceed with this д ’YdУ4дУУAdarandФФ study, I am concerned about the length of time that it has taken to get the study underway. In July 1995, when we eliminated our race and genderЉbased bidding preference for the PCS C Block auctions, we said that we were considering the means that we should take to develop a supplemental record that would support the use of race or gender based д ‘Y а4дpreferences.жбж ї=Dд ’YВа4дСŠСУУImplementation of Section 309(j) of the Communications Act ЉЉ Competitive Bidding, д ’YУ4дSixth Report and Order,ФФ 11 FCC Rcd 136, 137 (1995).бж У У Ф ФSince then, we have stated in a number of decisions that we were working to д Yєа4дdevelop this record.жПє• =Dд ’Y:!а4д УУSee, e.g., Amendment of Parts 20 and 24 of the Commissions Rules ЉЉ Broadband PCS д ’Y%"У4дCompetitive Bidding and the Commercial Mobile Radio Service Cap, Report and Order, ФФ 11 FCC Rcd 7824, 7834 (1996).ж СŠСIn this Report, we have committed to complete the auction related portion of this study in time for our September 1997 section 309(j) report on auctions to Congress and to release the study findings later this year. I urge my colleagues to join with me in making efforts to get this important study underway and completed without further delay.