Report No. DC-2643         ACTION IN DOCKET CASE            August 15, 1994

      ON ITS OWN MOTION, FCC AMENDS ITS AFFILIATION AND ATTRIBUTION
          RULES FOR "ENTREPRENEURS'" LICENSES IN BROADBAND PCS
                            (PP Docket 93-253)

     On its own motion, the FCC has amended its affiliation and
attribution rules for the competitive bidding rules for personal
communications services in the 2 GHz band (broadband PCS) in two
respects.  

     First, the FCC exempted from the affiliation rules, for
purposes of eligibility to apply for licenses in frequency blocks
C and F ("entrepreneurs' blocks"), entities owned and controlled
by Indian tribes or Alaska Regional or Village Corporations. 
This change will ensure that all classes of "designated entities"
are provided meaningful opportunities to participate in broadband
PCS spectrum auctions.  This affiliation exemption will also make
the auction rules more consistent with other Federal laws,
policies and regulations that recognize Indian tribes and Alaska
Native Corporations as unique aggregations of historically
disadvantaged people.  By adopting this affiliation exemption,
the Commission can ensure that these tribal organizations, which
Congress has recognized as economically disadvantaged, will be
eligible for entrepreneurs' block licenses and the benefits
accorded applicants owned by minority groups.

     Second, the FCC amended its rules governing the attribution
of gross revenues, total assets and personal net worth of
investors in corporate applicants in the entrepreneurs' blocks. 
Specifically, the FCC will not attribute revenues, assets and net
worth of investors in all corporate applicants unless the
investor owns more than 15 percent of the corporation's voting
stock.  This change applies the same attribution rules for
investors in publicly-traded corporate applicants to investors in
corporate applicants that are not publicly traded.  The FCC noted
that introducing the additional flexibility into its attribution
rules will attract investment to all types of corporations
controlled by entrepreneurs' block eligibles and increase the
level of participation by smaller corporate applicants that have
decided against making a public offering of their stock. 


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     The FCC's current rules limit eligibility for the
entrepreneurs' blocks to companies that have gross revenues of
less than $125 million in each of the last two years and total
assets of less than $500 million at the time of filing.  In
addition, no attributable investor or affiliate can have $100
million or more in personal net worth.  For purposes of
determining eligibility for entrepreneurs' blocks, the Commission
also attributes to the applicant the gross revenues, assets and
net worth of certain investors and affiliates. 

     The FCC pointed out that it adopted the attribution and
affiliation rules to prevent ineligible parties from exerting
undue control over firms eligible to apply for entrepreneurs'
block licenses and to ensure that only bona fide applicants
receive broadband PCS licenses.  At the same time, the FCC
recognized that passive investment in entrepreneurs' block
applicants would be critical to the successful development of
these smaller companies in broadband PCS.

     The FCC noted that investors that are prepared to devote
considerable funds to an entrepreneurs' block applicant should
reasonably expect to exercise some ability to protect their
investment through a modest level of voting stock ownership.  The
15 percent voting stock limit would, in this respect, not rise to
the level of a controlling interest, but, from the investor's
perspective, could diminish the substantial risks associated with
committing funds to a PCS applicant and enhance the potential
rewards for providing start-up capital to these new ventures.

     Action by the Commission August 15, 1994, by Order on
Reconsideration (FCC 94-217).   Chairman Hundt, Commissioners
Quello, Barrett, Ness and Chong. 

                                   -FCC-

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