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A. 1. a.(1)(a) i) a)#)a [ PRQ)P# ## b, oT9 !#)^ `> XiSQ)X#   Copyright  Portola Systems, Inc. 1987, 1988`e%APage  w#)a [ PTQ)P# ## b, oT9 !#)^ `> XiUQ)X#   Page ``e%)Copyright  Portola Systems, Inc. 1987, 1988 2s NStyle 37=@6FDutch Roman 11.5 with Margins/Tabs*'Ç.7=.E9:#)a [ PVQ)P# n  ## b, oT9 !Style 47=@6FSwiss 8 Point with Margins=F*'Ç.7=.EG;<#Co> PWQP# dd  #  Style 17=@6FDutch Roman 11.5 Font87=F*'Ç.7=.E7=>#)a [ PXQ)P# dn Style 27=@6FDutch Italic 11.5'87=F*'Ç.7=.E'?@#)^ `> XiYQ)X#2K Style 57=@6FDutch Bold 18 Point87=F*'Ç.7=.E'A'B#T~> pZQTp##)a [ P[Q)P#Style 77=@6FSwiss 11.5>_' =('87=F*'Ç.7=.E'C'D#)ao> P\Q)P##)a [ P]Q)P#Style 67=@6FDutch Roman 14 Point87=F*'Ç.7=.E'E'F#w [ P^QP##)a [ P_Q)P#Style 10=@6FInitial Codes for Advanced=F*'Ç.7=.EV GH#)a [ P`Q)P# dn   #  [ b, oT9 ! I. A. 1. a.(1)(a) i) a)#)a [ PaQ)P# ## b, oT9 !#)^ `> XibQ)X#`e%)Advanced Legal WordPerfect Learning Guide   u I. A. 1. a.(1)(a) i) a)#)a [ PcQ)P# ## b, oT9 !#)^ `> XidQ)X#Advanced Legal WordPerfect Learning Guide   u I. A. 1. a.(1)(a) i) a)#)a [ PeQ)P# ## b, oT9 !#)^ `> XifQ)X#   Copyright  Portola Systems, Inc. 1987, 1988`e%APage   I. A. 1. a.(1)(a) i) a)#)a [ PgQ)P# ## b, oT9 !#)^ `> XihQ)X#   Page ``e%)Copyright  Portola Systems, Inc. 1987, 1988 2   + Style 87=@6FInitial Codes for BeginningF*'Ç.7=.EV IJ#)a [ PiQ)P# dn  ## b, oT9  [  I. A. 1. a.(1)(a) i) a)#)a [ PjQ)P# ## b, oT9 #)^ `> XikQ)X#`^e%)Beginning Legal WordPerfect Learning Guide   v I. A. 1. a.(1)(a) i) a)#)a [ PlQ)P# ## b, oT9 #)^ `> XimQ)X#Beginning Legal WordPerfect Learning Guide   v I. A. 1. a.(1)(a) i) a)#)a [ PnQ)P# ## b, oT9 #)^ `> XioQ)X#   Copyright  Portola Systems, Inc. 1987, 1988`e%APage   I. A. 1. a.(1)(a) i) a)#)a [ PpQ)P# ## b, oT9 #)^ `> XiqQ)X#   Page ``e%)Copyright  Portola Systems, Inc. 1987, 1988 Style 97=@6FInitial Codes for Intermediate*'Ç.7=.ET KL#)a [ PrQ)P# dn  ## b, oT9 Њ [  I. A. 1. a.(1)(a) i) a)#)a [ PsQ)P# ## b, oT9 #)^ `> XitQ)X#`e%'Intermediate Legal WordPerfect Learning Guide   z I. A. 1. a.(1)(a) i) a)#)a [ PuQ)P# ## b, oT9 #)^ `> XivQ)X#Intermediate Legal WordPerfect Learning Guide   z I. A. 1. a.(1)(a) i) a)#)a [ PwQ)P# ## b, oT9 #)^ `> XixQ)X#   Copyright  Portola Systems, Inc.`e%APage   I. A. 1. a.(1)(a) i) a)#)a [ PyQ)P# ## b, oT9 Update7=@6FInitial Codes for Update Module*'Ç.7=.Ee MN#)a [ P{Q)P# dn  ##  [ b, oT9 ! I. A. 1. a.(1)(a) i) a)#)a [ P|Q)P# ## b, oT9 !#)^ `> Xi}Q)X#`Ye%%Legal WordPerfect 5.0 Update Class Learning Guide   } I. A. 1. a.(1)(a) i) a)#)a [ P~Q)P# ## b, oT9 !#)^ `> XiQ)X#Legal WordPerfect 5.0 Update Class Learning Guide   } I. A. 1. a.(1)(a) i) a)#)a [ PQ)P# ## b, oT9 !#)^ `> XiQ)X#   Copyright  Portola Systems, Inc. 1987, 1988`e%APage   I. 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T4 #&J\  P6Qz&P#Federal Communications Commission`(#kFCC 9998 ă   yx}dddy .  T4Od Before the Federal Communications Commission  Sg43Washington, D.C. 20554 ă In the Matter of) )  T4Revision of Part 22 and Part 90)WT Docket No. 9618 of the Commission's Rules to Facilitate) Future Development of Paging Systems) )  T4Implementation of Section 309(j))PR Docket No. 93253 of the Communications Act ) Competitive Bidding)   S 4 MEMORANDUM OPINION AND ORDER ON RECONSIDERATION  S 4 AND THIRD REPORT AND ORDER   T74\ Adopted: May 13, 1999hhCqpp Released: May 24, 1999 By the Commission:  Tk41 TABLE OF CONTENTS ă `(#cParagraph No. X\I. INTRODUCTION(#pR"(# 1 X\II. EXECUTIVE SUMMARY(#pR"(# 2 X\III. BACKGROUND(#pR"(# 3 X\IV. ORDER ON RECONSIDERATION(# XX` ` A. Dismissal of Pending Applications(#` p"(# 7 XX` ` B. Geographic Area Licensing(#` p3"(# 14 XX` ` ` ` X ` ` 1. 929931 MHz Bands(# p3"(# 14 XX` ` X ` ` 2. 3536 MHz, 4344 MHz, 152159 MHz, and 454460 MHz Bands(# p!(# 19 XX` ` ` ` 3. Highly Encumbered Areas(#` p3"(# 22 XX` ` 4. Basic Exchange Telecommunications Radio Systems (BETRS) Licensees(#` p3"(# 28 XX` ` 5. Spectrum Reversion(#` p!(# 34 XX` ` ` ` 6. Systemwide Licensing(#` p3"(# 36 XX` ` C. Interference(#` p3"(# 42 XX` ` X ` ` 1. CoChannel Interference Protection for Incumbent Licensees(# p3"(# 42 XX` ` X ` ` 2. Adjacent Geographic Area Licensees(# p3"(# 45 XX` ` X ` ` 3. Channel Exclusivity(# p3"(# 47 X` ` 4. Mobile Telephone Providers and Control Links(#p3"(# 49 D. Shared Channels pp"(#52 XE. Coordination with Canada (#pp"(#58 X\F. Power Requirements(#p3"(# 61 XX` ` G. Coverage Requirements(#` p3"(# 63"(, * *,,p)"ԌXH. Geographic Licensing for Nationwide Channels(#p3"(# 73 XX` ` X ` ` 1. In General(# p3"(# 73 XX` ` 2. MTel's Request for a Nationwide Geographic Area License(#` p3"(# 78 XX` ` I. Competitive Bidding Procedures(#` pp"(#81 XX` ` ` ` X ` ` 1. Auction Sequence(# p3"(# 81 XX` ` X ` ` 2. Stopping Rule(# p3"(# 83 XX` ` 3. Limiting Information Available to Bidders During the Auctions(#` p3"(# 85 XX` ` 4. Shortform Applications and Upfront Payments(#` p3"(# 88 XX` ` X ` ` 5. Bid Withdrawal(# p3"(# 92 XX` ` 6. The AntiCollusion Rule(#` pp"(#95 XX` ` 7. Small Business Definition(#` pp"(#98 XX` ` 8. Bidding Credits and Installment Payment Plans for Designated Entities(#` p"(#108 V. THIRD REPORT AND ORDER XX` ` A. Introduction and Background(#` p"(#118 XX` ` B. Discussion(#` p"(#120 XX` ` X ` ` 1. Coverage Requirements for Nationwide Geographic Area Licenses(# p"(#120 XX` ` 2. Partitioning(#` p"(#131 XX` ` X a. Nationwide Geographic Area Licensees(# p"(#131 XX` ` X b. Buildout Requirements(# p!(# 134 XX` ` X X c. License Term(#p!(# 141 XX` ` X ` ` 3. Disaggregation p"(#144 X` `  a. In General(#p"(#144 XX` ` X b. Buildout Requirements(# p!(# 148 XX` ` X X c. License Term(#p!(# 154 XX` ` X ` ` 4. Combination of Partitioning and Disaggregation(# p!(# 156 XX` ` X ` ` 5. Unjust Enrichment Provisions Regarding Partitioning and Disaggregation(# p!(# 158 XX` ` 6. Application Fraud(#` p!(# 161 VI. CONCLUSIONp"(#168  S' X\VII. PROCEDURAL MATTERS AND ORDERING CLAUSES(#p"(#171 APPENDIX A: List of Parties APPENDIX B: Final Rules  S'APPENDIX C: Supplemental Final Regulatory Flexibility Analysis (Memorandum Opinion and Order  S'on Reconsideration)  S'APPENDIX D: Final Regulatory Flexibility Analysis (Third Report and Order)",l(l(,,"  S'|? I. INTRODUCTION ă  S' e '1.` ` On February 24, 1997, the Commission released the Second Report and Order and Further  Sh' x*Notice of Proposed Rulemaking in this proceeding, adopting rules governing geographic area licensing of  xDCommon Carrier Paging (CCP) and exclusive 929 MHz Private Carrier Paging (PCP), and procedures for  S' xauctioning mutually exclusive applications for these licenses.Є yOk' x8 ԍRevision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of Paging  {O3' ! Systems, Second Report and Order and Further Notice of Proposed Rulemaking, 12 FCC Rcd 2732 (1997) (Second  {O' ! Report and Order and Further Notice). We use the designation "PCP" for 929 MHz licenses in this Order because  ! we have done so throughout this proceeding. We have historically designated 929 MHz frequencies as PCP because  ! they were originally licensed under Part 90 of our rules, but 929 MHz frequencies are now licensed under Part 22 of our rules. This Memorandum Opinion and Order on  S' xReconsideration and Third Report and Order makes certain modifications to the rules adopted in the  S' xSecond Report and Order and Further Notice and adopts rules that permit partitioning of nationwide  Sm' xlicenses and disaggregation of paging spectrum. Consistent with the conclusions reached in the Part 1  S;' xThird Report and Order and Second Further Notice,C$;DЄ yO' " ԍAmendment of Part 1 of the Commission's Rules"Competitive Bidding Procedures, WT Docket No. 9782,  x Allocation of Spectrum Below 5 GHz Transferred from Federal Government Use, 46604685 MHz, ET Docket No.  {O' x 9432, Third Report and Order and Second Further Notice of Proposed Rulemaking, 13 FCC Rcd 374 (1998) (Part  {Oy'1 Third Report and Order and Second Further Notice) (modified by Erratum, DA 98419 (Mar. 2, 1998) ).C it also eliminates installment payment plans for  x eligible small businesses participating in paging auctions, and increases the level of bidding credits for  S' xsuch entities. Additionally, this Memorandum Opinion and Order on Reconsideration and Third Report  S ' xpand Order amends our rules to permit auction winners to make their final payments within ten (10)  x3business days after the applicable deadline, provided that they also pay a late fee of five (5) percent of  S? ' x7the amount due. This Memorandum Opinion and Order on Reconsideration and Third Report and Order  x*advances the Commission's policy goals of facilitating competition in the wireless market by encouraging  x^a more diverse array of entities, including small businesses and rural telephone companies, to offer paging  xservices to the public. We believe that the actions we take today further our commonsense objectives  x3of streamlining regulations, promoting technical and regulatory parity among commercial mobile radio services (CMRS), and fostering competition in the provision of paging services to the public.  S' .%II. EXECUTIVE SUMMARY ă  Su' e 2.` ` In response to our Second Report and Order, twentynine parties filed petitions for  xreconsideration, partial reconsideration, or clarification; twenty parties filed oppositions to or comments  xon the petitions; and thirteen parties filed reply comments. Ten parties filed comments and eight filed  S' xreply comments in response to the Further Notice. 0 Є yO ' " #X\  P6G;ɒP#эAppendix A provides the full and abbreviated names of the parties filing petitions, oppositions, comments,  x and reply comments. In addition to these filings, AirTouch filed a Motion for Leave to Respond and Response to  xQ Reply to Opposition, and American Paging, Inc. filed an Opposition to AirTouch's Motion for Leave to Respond and Response to Reply Opposition. After considering the record in this proceeding, we make certain clarifications and adopt new rules, as follows:  Sx' "x,l(l(,,"Ԍ S'Order on Reconsideration  S' "lXWe affirm our decision in the Second Report and Order to dismiss all mutually exclusive paging  "applications and all paging applications filed after July 31, 1996. We also deny an application  "for review and a number of petitions for reconsideration of the Wireless Telecommunications Bureau's Order dismissing these applications.(#   S' "XWe will replace the Rand McNally Major Trading Areas (MTAs) with Major Economic Areas  "(MEAs) for geographic area licensing of the 929 and 931 MHz bands. Because MEAs are  "composed of Economic Areas (EAs) and EAs will be used to license the lower paging bands (35 "[36 MHz, 4344 MHz, 152159 MHz, and 454460 MHz), this will enable licensees operating  "Npaging systems in both the 929931 MHz bands and the lower paging bands to operate both  "systems more efficiently. We affirm our decision to award licenses for EAs, as opposed to Basic  Sj ' "Trading Areas (BTAs), for paging systems operating in the lower paging bands. We also add  "three EAlike service areas for Guam and the Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands, and American Samoa.(#  S ' "hXWe decline to limit eligibility for paging auctions to incumbent paging licensees or to exempt  Sk'incumbents from having to participate in the auction to secure spectrum. xxX(#  S' "lXIn the Second Report and Order, we decided that spectrum recovered by the Commission from  "[a nongeographic area incumbent licensee would automatically revert to the geographic area  "licensee to prevent the warehousing of spectrum and to encourage geographic area licensees'  "systems buildout. In this Order, we clarify that spectrum will automatically revert to the  "~geographic area licensee in all instances where a nongeographic area incumbent licensee permanently discontinues service.(#  S' "8XWe clarify our rules to state that when a systemwide licensee allows an area within its system  "<to revert to the geographic area licensee, the systemwide license shall remain intact; however, the  "parameters of the systemwide license shall be amended to the demarcation of the remaining  S' "contiguous interference contours. We will also allow systemwide licensees to maintain separate  "Vlicenses for any remote, standalone transmitters, or to include remote, standalone sites within the systemwide license.(#  S<' "XWe clarify that nonexclusive incumbent licensees on the thirtyfive exclusive 929 MHz channels  "will continue operating under the same arrangements established with the exclusive incumbent  S' "licensees and other nonexclusive incumbent licensees prior to the adoption of the Second Report  S' "and Order and Further Notice. Additionally, MEA, EA, and nationwide geographic area licensees  ""are afforded the right to share with nonexclusive incumbent licensees on a noninterfering shared basis. (#  S ' "NXProviding interference protection from geographic area licensees to fixed stations, including  "control link operations in the lower bands, is outside the scope of this proceeding, and incumbent  "mobile telephone service providers will not be permitted to obtain site licenses on a secondary basis.(#  S$' "XWe affirm our decision in the Second Report and Order to not impose a limit or "cap" on the number of licensees for each of the shared channels.(# "B',l(l(,,'"  S' "XWe clarify the procedures for authorization on certain frequencies requiring coordination with Canada.(#  Sg' "RXIn the Second Report and Order, we eliminated the Part 90 height and power limitations on 929  "MHz stations and increased the maximum permitted effective radiated power (ERP) for 929 MHz  "lstations to 3500 watts. We clarify that we will not require incumbent 929 MHz licensees to file  "a modification application to increase the ERP for their base stations as long as these licensees do not increase their current composite interference contours.(#  S6' "XWe provide guidance on the factors we will consider in assessing whether licensees have met the  "4"substantial service" construction option. We also amend Section 22.503(k) of our rules to  "provide that MEA and EA licensees that fail to meet their coverage requirements will be permitted  "to retain licenses only for those facilities authorized, constructed, and operating at the time the geographic area license was granted.(#  S 'XWith respect to the competitive bidding rules and policies adopted previously, we decline to:(#  S '` ` modify our hybrid simultaneous/licensebylicense stopping rule;(#`  S8' e  ` ` limit the Bureau's discretion to announce precise information, such as bidder identities, that will be provided to bidders during the auction; (#`  S' e 0` ` require that bidders specify each individual license on which they will bid and submit an upfront payment for each license;(#`  S' ` ` permit bid withdrawal without monetary liability; or (#`  S' e ` ` modify our anticollusion rule to provide safe harbors for certain business discussions during the auction.(#`  S' "EXWe modify or clarify other aspects of our competitive bidding rules. Specifically, we eliminate  S' "8installment payment plans for the paging service; increase the levels of bidding credits available  "to eligible small businesses; and also permit applicants to make their final payments within ten  "h(10) business days after the payment deadline, subject to a late fee of five (5) percent of the  "amount due. We also clarify the controlling interest standard used to determine eligibility for small business status by providing a definition of "controlling interest."(#  S' Third Report and Order  So'  S<' "XWe conclude that it is best to defer any decision on whether to impose minimum coverage  "requirements on paging licensees holding nationwide geographic area licenses until we resolve  S ' "similar issues raised in the Narrowband PCS Further Notice. Nationwide geographic area paging  "licensees will be permitted to partition their service areas to any eligible party along any  "boundaries the parties choose and disaggregate their spectrum by any method they choose. We  "will also defer any decision on whether to impose minimum coverage requirements on the parties  "lto a partitioning or disaggregation agreement involving nationwide geographic area licenses until we decide whether to impose such requirements on nationwide licensees generally. (#  Sr&' "8XPartitioners and partitionees of MEA and EA geographic area paging licenses may choose from  "Atwo options to meet coverage requirements. Under the first option, both the partitioner and"?',l(l(,,'"  "partitionee must provide coverage to onethird of the population within their area within three  "Ayears of the initial license grant, and to twothirds of the population within their license area  "within five years of the license grant. In the alternative, either party may provide "substantial  "service" within five years of the license grant. Failure by either party to meet its coverage  "+requirements will result in the automatic cancellation of its license without further Commission  "Raction. Under the second option, the original licensee may certify at the time of the partitioning  "Wtransaction that it has already met, or will meet, the coverage requirements for the entire  "Egeographic area. In the event that the original licensee fails to meet the coverage requirements,  "Rits license will be cancelled. Under the second option, the partitionee is not subject to coverage requirements except for those necessary to obtain renewal. (#  S' "XMEA and EA paging licensees will be permitted to disaggregate their spectrum by any method  "they choose. Disaggregators and disaggregatees may choose from two options to meet coverage  "Erequirements. Under the first option, either the disaggregator or the disaggregatee certifies that  "it will be responsible for meeting the coverage requirements for the geographic service area. If  "the certifying party fails to meet the coverage requirements for the entire geographic area, that  "party's license will be subject to cancellation, but the noncertifying party's license will not be  "affected. Under the second option, the disaggregator and disaggregatee may certify that they will  "share the responsibility for meeting the coverage requirements for the entire geographic area. If  "the parties jointly fail to satisfy the coverage requirements for the entire geographic area, both parties' licenses will be subject to cancellation.(#  S' "XPartitionees and disaggregatees of nationwide geographic area, MEA, and EA paging licenses will  "be authorized to hold their licenses for the remainder of the partitioner's or disaggregator's original tenyear term and will receive the same renewal expectancy as the original licensee.(#  S' "XWe will also permit combinations of partitioning and disaggregation of nationwide geographic  "area, MEA, and EA paging licenses, subject to the Commission's rules on partitioning and disaggregation. (#  S' "hXThe unjust enrichment provisions adopted in the Part 1 Third Report and Order and Second  S' "Further Notice will apply to any MEA or EA paging licensee that receives a bidding credit and later elects to partition or disaggregate its license.(#  S<' "XTo deter fraud by application mills on the shared channels, we will add language to the longform  "Rapplication regarding construction and coverage requirements. In addition, we will disseminate  "information regarding our licensing rules and the potential for fraud through public notices and the Commission's website.(#  S='q= III. BACKGROUND ă  S ' e  3.` ` In this proceeding, we examine our paging regulations in light of the statutory objective of regulatory symmetry for all CMRS as set forth in the Omnibus Budget Reconciliation Act of 1993"!,l(l(,,-""  S' x(1993 Budget Act).  yOh' " ԍOmnibus Budget Reconciliation Act of 1993, Pub. L. No. 10366, Title VI  6002(b)(2)(a), (b), 107 Stat.  {O0'312 (largely codified at 47 U.S.C.  332 et seq.) (1993 Budget Act).  The 1993 Budget Act mandated that substantially similar mobile service receive  S' xMcomparable regulatory treatment.(&" {O' " ԍSee 47 U.S.C.  337(c); see also Implementation of Sections 3(n) and 332 of the Communications Act,  {OY' xk Second Report and Order and Further Notice, 9 FCC Rcd 1411 (1994) (CMRS Second Report and Order). In the  {O#' x CMRS Second Report and Order, the Commission began implementing its congressional mandate to establish regulatory symmetry among similar mobile services as provided in the 1993 Budget Act.( In the CMRS Second Report and Order, we noted that there are no  xlonger any real differences between private carrier and common carrier paging systems and concluded that  x@private carrier paging services offered for a profit should be subject to reclassification as CMRS as of  S5' xAugust 10, 1996.$5 {O ' "8 ԍCMRS Second Report and Order, 9 FCC Rcd at 145253,  97. The Commission noted that the CMRS  x classification would not be extended to notforprofit, noninterconnected paging systems, which would be  {Ow ' x presumptively classified as private mobile radio services (PMRS). Id. We are not revising the rules governing the nonreclassified PMRS systems in this proceeding. We deferred modifying our rules governing service areas and channel assignments in  xthe common carrier and private carrier paging services to a future proceeding until we could determine  S'whether further conforming of our rules would be feasible._  {Ok'ԍId. at 8053,  122._   Si' e [4.` ` In the Notice of Proposed Rulemaking (Notice) in this proceeding, we proposed a transition  xtfrom sitebysite licensing to geographic area licensing for all paging services licensed on an exclusive,  S' xnonnationwide basis.  yO2' "8 ԍRevision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of Paging  {O'Systems, Notice of Proposed Rulemaking, 11 FCC Rcd 3108, 3113,  21 (1996) (Notice). Our goals were to establish a comprehensive and consistent regulatory scheme that  xtwould simplify and streamline licensing procedures and provide a flexible operating environment for all  x^paging services. We also proposed to adopt competitive bidding rules for mutually exclusive applications,  x}so that available channels could be assigned rapidly to applicants who would expedite service to the  S8 ' xpublic.L 8  {O'ԍ Id. at 3109,  1.L We sought to ensure that our paging rules would be consistent with the rules for competing  x^services, such as narrowband Personal Communications Services (narrowband PCS), so that competitive  S ' xsuccess would be dictated by the marketplace, rather than by regulation.K z {O'ԍId. at 3109,  2.K Because of the fundamental  S ' xkchanges we were proposing, the Notice suspended acceptance of new applications for paging channels as  Sm' xof February 8, 1996.h m  {O"' " ԍ Id. at 3136,  139. We did, however, allow applications for additional sites without restrictions for CCP  x and PCP licensees who had obtained nationwide exclusivity on a paging channel. Further, we allowed incumbent  x licensees to add sites to existing systems or modify existing sites, provided that such additions or modifications would  {Os$' x not expand the interference contour of the incumbent's existing system. Id. at 313637,  140142; see also  yO=%' x Wireless Telecommunications Bureau Announces 929930 MHz Paging Licensees That Have Met Construction  {O&'Requirements for Nationwide Exclusivity, Public Notice, 11 FCC Rcd 12124 (1996).h The First Report and Order adopted interim rules governing the licensing of  xpaging systems during the pendency of the rulemaking proceeding. The interim rules allowed incumbent"; ,l(l(,,"  S' xlicensees to file applications for additional sites within 65 kilometers (40 miles) of operating sites.  yOh' "8 ԍRevision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of Paging  {O0' x Systems, First Report and Order, 11 FCC Rcd 16570,  25 (First Report and Order), affirmed on reconsideration,  xk 11 FCC Rcd 7409 (1996). Additionally, Basic Exchange Telecommunications Radio Service, Rural Radiotelephone  {O' x Service, and Special Emergency Radio Service were exempted from the interim paging application freeze. First  {O'Report and Order, 11 FCC Rcd at 1658788,  38.  We  x&also stated that we would process all paging applications for additional sites received through July 31,  S'1996, under the interim rules. ~ {O' " ԍFCC Clarifies Processing of Licensing Applications Under Interim Paging Rules, Public Notice, 11 FCC  {O 'Rcd 7032 (1996) (Interim Paging Rules Public Notice).  S4' e O5.` ` In our Second Report and Order and Further Notice, we adopted rules governing  xgeographic area licensing for exclusive channels in the 3536 MHz, 4344 MHz, 152159 MHz, 454460  xMHz, 929930 MHz, and 931932 MHz bands allocated for paging, and competitive bidding procedures  S' xkfor granting mutually exclusive applications for nonnationwide geographic area licenses.~ {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2739,  6.~ We concluded  x3that geographic area licensing would provide flexibility for licensees and ease of administration for the  xCommission, facilitate further buildout of widearea systems, and enable paging operators to act quickly  x*to meet the needs of their customers. We found that geographic area licensing would further our goal of  xproviding carriers that offer substantially similar services more flexibility to compete, and would enhance  S ' x*regulatory symmetry between paging and narrowband PCS.k l  {O'ԍId. at 2744,  15, 2745,  17, & 2748, 23.k We stated in the Second Report and Order  xthat all pending mutually exclusive paging applications would be dismissed; all nonmutually exclusive  xpaging applications filed on or before July 31, 1996, would be processed; all applications filed after July  xk31, 1996, would be dismissed (other than applications for nationwide or shared channels); and, other than  xfor shared channels, no additional sitebysite applications would be accepted (with the exception of  x*applications filed pursuant to sections 22.369 and 90.177, applications filed for coordination with Mexico  Sl'and Canada, and applications required under section 1.1301 et seq.).Kl  {O 'ԍId. at 2739,  6.K  S' e 6.` ` With respect to shared channels, we retained our interim licensing rules that allowed only  xQincumbents to file applications to add new sites to their systems, but eliminated the requirement that these  xapplications be for sites located within 40 miles of an existing site operated by the licensee on the same  Sn' xchannel.Xn  {O 'ԍId. at 2757,  43.X Thus, following the adoption of the Second Report and Order, incumbent licensees were  S<' xtpermitted to file for new sites at any location.:<" {O"'ԍId.: We also allowed new applicants to file applications for  xprivate, internaluse systems because such systems cannot be operated on a commercial basis, and thus  S' xwould not be subject to speculative applications.: {O*&'ԍId.: Additionally, in our Further Notice, we sought  x7comment on coverage requirements for nationwide licenses, partitioning of paging licenses, the feasibility"F,l(l(,,X"  xof disaggregating paging spectrum, and modifying the application process for shared channels to reduce  S'paging license application fraud.W {O5'ԍId. at 282026,  20220.W  Sg'  IV. ORDER ON RECONSIDERATION ă  S' A.` ` Dismissal of Pending Applications  1. 1. 1. a.(1)(a) i) a) 1 A. 1. a.(1)(a) i) a)  S' e 7.` ` Background . In the Notice, we suspended acceptance of new applications for both  xexclusive and nonexclusive paging channels as of February 8, 1996, in connection with the fundamental  S6' xrule changes we proposed. In the Second Report and Order and Further Notice, we stated that, in light  xof our decision to adopt geographic area licensing, we would dismiss all pending mutually exclusive  S' xpaging applications, including those filed under the interim rules adopted in the First Report and Order,  S ' xQand all applications filed after July 31, 1996. Z {O '#C\  P6QɒP#эId. at 2739,  6; see also supra note 17 and accompanying text. On December 14, 1998, the Commercial Wireless Division  Sl 'dismissed these applications pursuant to the Second Report and Order and Further Notice.l  {O' "V ԍSee Revision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of Paging  {O'Systems, Order, WT Docket No. 9618, DA 982543 (Dec. 14, 1998) (CWD Order).  S ' e 8.` ` Discussion . Metrocall argues that the Commission should process the pending mutually  xexclusive applications and those filed after July 31, 1996, because the Commission did not notify the  S ' xpublic prior to release of the Second Report and Order of its intent to dismiss those applications. H yO'#C\  P6QɒP#эMetrocall, Inc. Motion to Stay Pending Reconsideration and Clarification (Metrocall Motion) at 3.  xgBlooston, Metrocall, Morris, Nationwide, PCIA, and Robert Kester also contend that by dismissing the  S<' xpending applications, the Commission is unlawfully applying new rules retroactively.P< yO' " #C\  P6QɒP#эBlooston, Mordkofsky, Jackson & Dickens Petition for Reconsideration (Blooston Petition) at 1114;  x Metrocall Inc. Petition for Partial Reconsideration and Clarification (Metrocall Petition) at 1116; Morris  yOD' x Communications, Inc. Petition for Partial Reconsideration and Clarification (Morris Petition) at 610; Nationwide  yO ' x Paging, Inc. Petition for Partial Reconsideration and Clarification (Nationwide Petition) at 610; Personal  yO' x Communications Industry Association Petition for Reconsideration (PCIA Petition) at 1718; Robert Kester Consolidated Petition for Reconsideration (Robert Kester Petition) at 79.P We disagree.  xCourts have consistently recognized that the filing of an application creates no vested right to continued  xtapplication of licensing rules that were in effect when the application was filed, and an application may  S' xbe dismissed if substantive standards subsequently change.P  {O ' " #C\  P6QɒP#эSee United States v. Storer Broadcasting Co., 351 U.S. 192, 20203 (1956) (upholding the dismissal without  {O]!' x& a comparative hearing of an application based on a rule adopted after the application was filed); Chadmoore  {O'"' x Communications Inc. v. FCC, 113 F.3d 235, 24041 (D.C.Cir. 1997) (permittee had no vested right in a particular  x outcome of its extension request that was abridged when the Commission dismissed that request pursuant to a  {O#' x subsequent, more restrictive rule); Hispanic Information & Telecommunications Network v. FCC, 865 F.2d 1289,  {O$' x@ 129495 (D.C. Cir. 1989); see also Implementation of Section 309(j) of the Communications Act Competitive  xQ Bidding for Commercial Broadcast and Instructional Television Fixed Service Licenses, 13 FCC Rcd 15920, 15937,  {O&' xM  44 (1998); Revision of Part 22 of the Commission's Rules Governing the Public Mobile Services, Report and  {O&'Order, 9 FCC Rcd 6513, 6534,  100 (1994). In this proceeding, we dismissed pending" .,l(l(,,U"  xapplications based on our substantive rule changes establishing geographic area licensing for paging. In  xMproposing these rule changes, we stated our intention to process pending applications filed prior to the  S' xadoption of the Notice provided that the applications were not mutually exclusive with other applications,  xand provided that the relevant period for filing competing applications had expired as of the adoption date  S5' xof the Notice.5 {O'#d6X@DQN@##C\  P6QɒP#эNotice, 11 FCC Rcd at 3137,  144. We stated that following adoption of final rules, we would process or dismiss all  S' xremaining pending applications in accordance with the new rules.aZ {O'#C\  P6QɒP#эId.a Following the adoption of interim  S' xlicensing rules in the First Report and Order, we gave notice that we would process paging applications  S'received through July 31, 1996, under our interim rules. {O* '#C\  P6QɒP#эInterim Paging Rules Public Notice, 11 FCC Rcd at 7032.  S8' e 9.` ` Metrocall, PCIA, and Western Maryland Wireless further contend that carriers with  xpending applications that the Commission decided to dismiss will be harmed because these applicants  S' xpreasonably relied on the Commission's prior procedures for processing applications.~ yO' " #C\  P6QɒP#эMetrocall Petition at 13; PCIA Petition at 18; Western Maryland Wireless Company Petition for Reconsideration (Western Maryland Petition) at 25. Additionally,  xpMetrocall argues that the Commission has failed to explain why the processing of pending mutually  xexclusive applications would in any way undermine geographic area licensing, and that the order is silent  x&as to why dismissal of these applications is necessary to serve either the public interest or some other  S ' xpolicy objective.  yO|'#C\  P6QɒP#эMetrocall Motion at 4. Blooston also argues that because the Commission continued to accept expansion  S ' xMapplications after July 31, 1996, dismissal would be grossly unfair.L f  yO'ԍBlooston Petition at 1516.L Priority and Robert Kester argue  xthat the only discernible reason for licensing paging spectrum through competitive bidding is to raise  Sm' x_money for the Federal government. m  yO' " ԍPriority Communications, Inc. Petition for Reconsideration (Priority Petition) at 710; Robert Kester Petition at 910. In light of the notice we gave of our interest in instituting  xgeographic area licensing, and of our intent not to process applications filed after July 31, 1996, we do  xnot believe that any applicants could have reasonably relied on our processing applications filed after that  S' xdate.F!ZN  {O' "y ԍInterim Paging Rules Public Notice, 11 FCC Rcd at 7032 (stating that the extent to which postJuly 31  x^ applications are processable may be affected by the timing of a final order in the proceeding and the transition to new licensing rules).F In addition, once we had decided that it was in the public interest to employ geographic area  xlicensing and competitive bidding in the paging services, it would not have served the industry or the  xpublic well to have continued the process of sitebysite licensing. Such licensing has the potential to  x7create significant uncertainty regarding the spectrum available to bidders in the auctions and thus to delay  xthe implementation of geographic area licensing. Moreover, we do not think that carriers that had  xpreviously pending applications will be irreparably harmed by a decision to proceed to the auction of  xpaging licenses without any further processing of sitespecific applications because such applications were  xpdismissed without prejudice and these applicants may therefore file applications to participate in the"o p!,l(l(,,("  xgauctions. Our reasons for adopting competitive bidding procedures for paging licenses are set forth at  S' xlength in the Notice and Second Report and Order and Further Notice, and these reasons do not include  S' xrevenueraising considerations." {O' "3 ԍSee infra at  32 (setting forth the reasons for adopting competitive bidding, none of which include revenueenhancing considerations). Finally, we note that we concluded in the Competitive Bidding Second  Si' xZReport and Order that mutually exclusive initial paging applications were auctionable under the auction  S7' xauthority provided the Commission by the 1993 Budget Act.#^7" {O' " ԍ#X\  P6G;ɒP#See Implementation of Section 309(j) of the Communications Act Competitive Bidding, Second Report  {O' x and Order, 9 FCC Rcd 2348, 2359  61, 63, on reconsideration, Second Memorandum Opinion and Order, 9 FCC  {O 'Rcd 7245 (1994) (Competitive Bidding Second Report and Order). This conclusion is unchanged by the  x"Balanced Budget Act of 1997, which amended Section 309(j) to expand the Commission's auction  S' xauthority.H$H yO ' " ԍ#X\  P6G;ɒP#Balanced Budget Act of 1997, Pub. L. No. 10533,  3002, 111 Stat. 251 (1997) (amending 47 U.S.C.   {O '309(j)); see also Fresno Mobile Radio, Inc. v. FCC, No. 9781459 (D.C. Cir. Feb. 5, 1999).H The Commission is now required to assign initial licenses by competitive bidding whenever  S' xmutually exclusive applications are accepted for filing, with certain limited exceptions.%^ {O' " ԍ#X\  P6G;ɒP#See 47 U.S.C.  309(j); see also Implementation of Sections 309(j) and 337 of the Communications Act of  {O' x& 1934 as Amended, Notice of Proposed Rule Making, WT Docket No. 9987, FCC 9952 (Mar. 25 , 1999) (BBA  {Ot'NPRM).ğ We have  xconcluded in other proceedings that the revised statute does not require us to reexamine our  xdeterminations that specific services or frequency bands were auctionable under the more restrictive  S'definition of the 1993 Budget Act.&H  {Om' " ԍ#X\  P6G;ɒP#See BBA NPRM, WT Docket No. 9987, FCC 9952, at  24 (stating that consistent with previous  {O7' x proceedings, the NPRM will not reexamine the Commission's previous determinations that specific services or  x! frequency bands were auctionable under the 1993 Budget Act); Amendment of the Commission's Rules Concerning  {O' x Maritime Communications, Third Report and Order and Memorandum Opinion and Order, 13 FCC Rcd 19853,  x 1988283 at  6061 (1998) (earlier finding that public coast service is subject to competitive bidding is unchanged  x by Balanced Budget Act); Amendment of the Commission's Rules to Adopt Regulations for Automatic Vehicle  {O#' x Monitoring Systems, Second Report and Order, 13 FCC Rcd 15182, 1518788  9 (1998), on reconsideration, PR  yO'Docket No. 9361, FCC 993 at  34 (Jan. 21, 1999).#Xj\  P6G; ynXP#щ  S'  S ' e z10.` ` Metrocall asserts that although the Commission has promoted auctions as a means of  xexpediting the licensing of paging spectrum, the dismissal of pending applications undermines that policy  S9 ' xgoal because dismissal will undoubtedly delay the initiation of paging service in many market areas.G'9  yO'ԍMetrocall Motion at 4.G  S ' xMetrocall further argues that delay will cause irreparable injury to them because it will prevent the  xexpansion of its networks, encourage customers to seek other services, and cause uncertainty in its  S ' xbusiness planning (e.g., purchasing equipment or making financial commitments for new transmitter  Sn' xsites).(nh {Ov$'#C\  P6QɒP#эId. at 56; Metrocall Petition at 1415. Metrocall suggests that mutually exclusive applications could be granted more quickly if, prior  xto the auction of geographic area licenses, an auction were scheduled for the pending mutually exclusive  S' x7sitebysite applications, and bidding were limited to those applicants that filed within the cutoff period.) yO''#C\  P6QɒP#эMetrocall Motion at 45; Metrocall Petition at 15. " ),l(l(,,"  x^Blooston and Robert Kester argue that only applicants with existing mutually exclusive applications should  S' xbe permitted to participate in competitive bidding for these licenses.* yO5'#C\  P6QɒP#эBlooston Petition at 1112; Robert Kester Petition at 1214. We find, however, that it was the  xMformidable administrative burden of processing sitebysite applications, and the substantial number of  xmutually exclusive applications that were filed, which created a backlog of pending applications and  xcaused their processing to be delayed. We further find that holding an additional auction for the purpose  xof resolving mutually exclusive sitebysite licenses, prior to conducting an auction for geographic areas  xcontaining these same sites, would be grossly inefficient. Limiting bidding for each site to the mutually  xexclusive applicants for that site would require the Commission to undertake an onerous engineering  xanalysis of each site and examine relationships among many applications to determine eligible bidders.  S5' xIt is this type of inefficient processing that the Commission seeks to eliminate.+5X {O- ' "} #C\  P6QɒP#эSee Notice, 11 FCC Rcd at 3113,  21. Inefficiencies in our former rules created a vast web of relationships  x between applications for individual transmitter sites at various locations. For example, Applicant A seeks a license  x for proposed operations that overlap the service area created by Applicant B's proposed operations, which in turn  x overlap the service area created by Applicant C's proposed operations, with overlapping service areas continuing  {OO'indefinitely Id. at 3113,  21 & n.53. Moreover, as noted  xpabove, applicants whose mutually exclusive applications were dismissed without prejudice have the opportunity to participate in the geographic area auction.  Si ' e 11.` ` Citing section 309(j)(6)(E) of the Communications Act of 1934, Blooston, Priority,  S6 ' xProNet, Schuylkill, and Western Paging, 6  yO' " ԍBlooston Petition at 13; Priority Petition at 57; ProNet Inc. Comments on Petitions for Reconsideration  x (ProNet Comments on Petitions for Reconsideration) at 45; Schuylkill Petition for Reconsideration and Clarification  x/ (Schuylkill Petition) at 13; Western Paging I Corporation and Western Paging II Corporation Petition for Reconsideration and Clarification (Western Paging Petition) at 13. contend that the Commission may not proceed to geographic  xarea licensing without first attempting to avoid mutual exclusivity through "engineering solutions,  S ' xnegotiation, threshold qualifications, service regulations, and other means."-   yOd' "} #X\  P6G;ɒP#э47 U.S.C.  309(j)(6)(E) provides: "Nothing in this subsection, or in the use of competitive bidding, shall...  xg be construed to relieve the Commission of the obligation in the public interest to continue to use engineering  xt solutions, negotiation, threshold qualifications, service regulations, and other means in order to avoid mutual exclusivity in application and licensing proceedings."  Metrocall, Morris, and  xNationwide argue that by dismissing pending applications and accepting new applications for an auction,  Sj' xDthe Commission is creating mutual exclusivity in violation of section 309(j)(6)(E)..j yO'ԍMetrocall Petition at 15; Morris Petition at 910; Nationwide Petition at 910. The Commission has  x previously construed Section 309(j)(6)(E) to mean that it has an obligation to attempt to avoid mutual  xexclusivity by the methods prescribed therein only when it would further the public interest goals of  S' xSection 309(j)(3).V/$l {O"' " ԍSee DIRECTV, Inc. v. FCC, 110 F.3d 816, 828 (D.C. Cir. 1997) ("Nothing in  309(j)(6)(E) requires the  x  FCC to adhere to a policy that it deems outmoded 'to avoid mutual exclusivity in ... licensing proceedings'");  x Amendment of Part 90 of the Commission's Rules to Facilitate Future Development of SMR systems in the 800 MHz  {O7%' x* Frequency Band, Second Report and Order, 12 FCC Rcd 19079, 19104, 19154  62, 230 (1997) (800 MHz Second  {O&' x Report and Order); Amendment of Part 90 of the Commission's Rules to Facilitate Future Development of SMR  {O&' x. systems in the 800 MHz Frequency Band, Memorandum Opinion and Order on Reconsideration, 12 FCC Rcd 9972,  {O'' x 1000910  115 (1997) (800 MHz Memorandum Opinion & Order) (Section 309(j)(6)(E) does not prohibit"'.,l(l('"  x Commission from conducting an auction without first attempting alternative licensing mechanisms to avoid mutual  {OX' x exclusivity); see also Amendment of the Commission's Rules Regarding the 37.038.6 GHz and 38.640.0 GHz  {O"' x@ Bands, Report and Order and Second Notice of Further Rule Making, 12 FCC Rcd 18600, 18647  101 (1997)  yO'(previous rules that arguably avoided mutual exclusivity were no longer adequate for other reasons). V In the Second Report and Order, the Commission adopted geographic area licensing" /,l(l(,,Q"  xfor the paging services, concluding that the public interest would be better served by licensing all  xremaining paging spectrum through a geographic licensing scheme than by processing additional site S' x}specific licenses.0 {O'ЍSecond Report and Order and Further Notice, 12 FCC Rcd at 2744,  15 & 2748,  23. The Commission reasoned that geographic area licensing provides flexibility for  xlicensees and ease of administration for the Commission, facilitates buildout of widearea systems, and  S4' xenables paging operators to act quickly to meet the needs of their customers.L14F {O 'ԍId. at 2744,  15.L The Commission thereby  xeffectively determined that it would not be in the public interest to implement other licensing schemes or  S' xtother processes that avoid mutual exclusivity, thus fulfilling the Commission's obligation under Section  xt309(j)(6)(E). As noted above, we have concluded in other proceedings that the Balanced Budget Act's  xZrevision of our auction authority does not require us to reexamine determinations regarding the use of  xgeographic licensing and competitive bidding that were made under the auction authority provided by the  S'1993 Budget Act.m2 {Oz'ЍSee supra at note 39 and accompanying text. m Accordingly, we affirm our previous decision to dismiss all pending applications.  S ' e W12.` ` Several petitions for reconsideration and an application for review were filed in response  Si ' xto the CWD Order.I3Bi j  yOs' " #X\  P6G;ɒP#э#C\  P6QɒP#Robert J. and Laurie F. Keller d/b/a Western Maryland Wireless Company filed an application for review  x on December 28, 1998. Petitions for reconsideration were filed on January 13, 1999, by the following parties:  x& AirTouch Paging, AirTouch Paging of California, AirTouch Paging of Kentucky, AirTouch Paging of Texas,  yO' x* AirTouch Paging of Virginia, Allcom Communications, Inc., Arch Capitol District, Inc., Arch Connecticut Valley,  x Inc., Arch Southeast Communications, Inc., Becker Beeper, Inc., Blasiar, Inc., Electronic Engineering Company,  {O[' x* Hello Pager Company, Paging Systems Management, Inc., PowerPage Inc., Robert Kester et al., Satellite Paging,  xV Inc., South Texas Paging, Inc. (Arthur Flemmer), USA Mobile Communications, Inc. II, Westlink Licensee Corporation, and Westlink of New Mexico Licensee.I Contending that their pending applications should not have been dismissed, the  xparties generally reiterate the same arguments against dismissing their applications that were set forth in  S ' x"the petitions for reconsideration filed in response to the Second Report and Order. Having already  xconsidered these arguments, we deny the petitions for reconsideration and application for review of the  S 'CWD Order that are listed in footnote 52.a4" t {O' "< ԍ#&a\  P6G;u&P##X\  P6G;ɒP#Petitions for reconsideration of the CWD Order were also filed on January 13, 1999, by Ameritech Mobile  x Services, Inc., Capitol Radiotelephone Company Inc. dba Capitol Paging, Clear Paging, Inc., and Express Message  xb Corporation. Because these petitioners raise arguments specific to whether their applications were actually mutually exclusive with other applications, we will resolve their petitions in a separate order. a  S:' e 13.` ` Metrocall argues that nonmutually exclusive applications filed after July 31, 1996, and  S' xprior to adoption of the Second Report and Order and Further Notice could be granted immediately,  S' xresulting in immediate benefits to consumers who cannot currently receive service.5^ yO&'#C\  P6QɒP#эMetrocall Petition at 1516. We believe, however,  xIfor the reasons stated above, that a grant of paging applications filed after July 31, 1996, would be" 5,l(l(,,."  xinconsistent with the goals of this proceeding. The Commission has given consideration to applicants who  xfiled applications prior to the Commission's proposed licensing changes, after which parties were on notice  S'of the possibility that their applications might be dismissed because of the decision to conduct auctions.6 yO' " #C\  P6QɒP#эWe note that the Commission has granted over 3,500 applications that were filed between May 10, 1996, and July 31, 1996.  S4' B. Geographic Area Licensing  S' ` ` 1. 929931 MHz Bands  Sh' e 14.` ` Background . In adopting geographic area licensing for the 929 MHz and 931 MHz  xpaging channels, we concluded that Major Trading Areas (MTAs) are an appropriate geographic area for  x7paging systems on these channels because they are economically defined regions that best reflect the size  S' xand development of existing paging systems.7  {O 'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 274445,  16. In the Second Report and Order and Further Notice, we  xalso eliminated section 90.496 of our rules, which provided for extended implementation of construction  xMand operations deadlines for proposed systems on the 929930 MHz band that qualified for regional or  S7 ' xnationwide channel exclusivity.C87  {O'ԍId. at 2856.C As explained in the Notice, we found that extended implementation  x*would be unnecessary under our geographic area licensing scheme and, in fact, would hinder geographic  x7area licensing because construction extensions for incumbents could effectively allow them to occupy an  S 'entire geographic area.[9 D {O'ԍNotice, 11 FCC Rcd at 3118,  42.[  S9' e 15.` ` Discussion . Metrocall and PCIA request that the Commission replace MTAs with Major  S' xEconomic Areas (MEAs) for geographic licensing for the 929 and 931 MHz bands.b: yO|'ԍMetrocall Petition at 24; PCIA Petition at 1921.b AirTouch also  S' xsupports this proposal.;f  yO' " ԍComments of AirTouch Paging on Petitions for Reconsideration (AirTouch Comments on Petitions for Reconsideration) at 1314. Metrocall states that MEAs are similar to MTAs but are less extensive and  S' xunwieldy.J<  yO'ԍMetrocall Petition at 24.J PCIA contends that MEAs correspond to the service areas that have developed in the  xmarketplace. PCIA further contends that MEAs will be more advantageous than MTAs to geographic area  xlicensees on the 929 and 931 MHz bands because MEAs are made up of the Economic Areas (EAs) that  S' xkwill be used for the lower bands.E=N  yO"'ԍPCIA Petition at 20.E PCIA and AirTouch contend that 929 and 931 MHz licensees that also  xthave systems on the lower bands would be able to operate more efficiently if they were licensed based  S' xMon MEAs because EAs are entirely encompassed within MEAs.> yO&'ԍAirTouch Comments on Petitions for Reconsideration at 14; PCIA Petition at 20. Metrocall, PCIA, and AirTouch also  xobserve that the use of MEAs would not subject geographic area licensees to royalty payments to Rand"nn>,l(l(,,i"  S' xMcNally as would the use of MTAs.? yOh' "< ԍAirTouch Comments on Petitions for Reconsideration at 14; Metrocall Petition at 24; PCIA Petition at 2021. Finally, no parties to this proceeding opposed the petitioners' proposal.  Sg' e 16.` ` We agree with Metrocall, PCIA, and AirTouch that MEAs should be used instead of  S4' xDMTAs. In the Second Report and Order and Further Notice, we determined that MTAs are economically  xgdefined regions that best reflect the size and development of existing paging systems. However, at the  xtime of our initial determination, the Commission had not established MEAs, which were first developed  S' x^by the Commission to define geographic license areas for the Wireless Communications Service (WCS).@  {O\ ' " ԍSee Amendment of the Commission's Rules to Establish Part 27, the Wireless Communications Service  {O& ' x* ("WCS"), Report and Order, 12 FCC Rcd 10785, 10814,  54 (1997) (WCS Report and Order). In the WCS Report  {O ' xQ and Order, we aggregated EAs into 52 MEAs, including 46 in the continental United States and an additional six  x areas covering Alaska (MEA #47), Hawaii (MEA #48), Guam and the Northern Mariana Islands (MEA # 49); Puerto  x Rico and the U.S. Virgin Islands (MEA #50); American Samoa (MEA #51); and the Gulf of Mexico (MEA #52).  x. The Commission has sought comment on licensing commercial mobile radio services generally in the Gulf of Mexico  {O' x in a separate proceeding.  See Cellular Service and Other Commercial Mobile Radio Services in the Gulf of Mexico,  {O' xQ Second Further Notice of Proposed Rulemaking, 12 FCC Rcd 4576 (1997). We therefore adopt only 51 MEAs at  {O'this time for paging services. Ķ  Si' x In the WCS Report and Order, the Commission determined that MEAs would enable a large number of  xentities to participate in the provision of services and result in increased competition, encourage a more  xZdiverse group of service providers to participate in competitive bidding, and result in broader flexibility  S'in service offerings by licensees.jA  {Om'ԍWCS Report and Order, 12 FCC Rcd at 10815,  57.j  Sk ' e B17.` ` Although MTAs and MEAs are substantially similar, we find that geographic area  x3licensing based on MEAs will provide geographic area licensees with additional benefits that could not  x3be obtained if we maintained MTAs as the geographic area for the 929931 MHz band. We recognize  xthat licensees with paging systems in both the 929931 MHz band and the lower bands will benefit from  xour using MEAs for the 929931 MHz band because MEAs are composed of EAs. The fact that the  xgeographic borders of MEAs coincide with those of the EAs contained within the MEAs will enable  xVlicensees with both upper and lower band systems to operate more efficiently. We also agree with  xAirTouch that adopting MEAs on the 929 and 931 MHz channels will enhance competition between the  xQpaging systems on the lower channels and the paging systems on the 929 and 931 MHz channels because  xthe paging systems on the lower channels will be able to combine their EAs to form MEAs. We also  xgacknowledge that licensees will benefit economically from licensing based on a geographic designation  xcthat is in the public domain. Therefore, based on the foregoing, we adopt MEAs as the geographic  S'licensing area for the 929931 MHz band.B  yO5"'ԍA list of the MEAs is set forth in Appendix B, revised rule section 22.503(b).  S' e 18.` ` Finally, we reject PSWF's contention that the decision to eliminate section 90.496 was  xZarbitrary and capricious and an unlawful retroactive rulemaking without the opportunity for notice and  S;' x*comment.nC; yO&'ԍPSWF Corporation Petition for Partial Reconsideration at 58.n We sought comment in the Notice on our proposal to eliminate extended implementation and";C,l(l(,,"  S' x7to dismiss all "slow growth" applications pending at the time an order pursuant to the Notice was adopted  S' x_without prejudice to refile under our geographic area licensing scheme.[D {O6'ԍNotice, 11 FCC Rcd at 3118,  42.[ Neither PSWF nor its  x*predecessorininterest American Mobilphone, Inc. submitted comments on these proposals. We clarify,  xhowever, that removal of section 90.496 of our rules does not affect the rights associated with extended  S5' x implementation authority granted under that rule as of May 12, 1997, the effective date of the Second  S' xReport and Order and Further Notice. In addition, any requests pending as of May 12, 1997, are  S'dismissed without prejudice to obtain licenses under our geographic area licensing rules.EZ yO' " #C\  P6QɒP#эP SWF also argued in its petition that elimination of section 90.496 was a violation of its due process rights.  x PSWF Petition at 15. PSWF's petition requests that the Commission process its pending extended implementation  xQ request filed in January 1997, for paging authorizations granted on 929.8125 MHz between May and July of 1996.  {O# ' xt Id. However, on November 5, 1998, the Commercial Wireless Division, Wireless Telecommunications Bureau,  x clarified that PSWF was entitled to regional exclusivity with regard to authorizations granted on 929.8125 MHz  {O ' x between August 1993, and February 1994. PSWF Corporation and Communications Innovations Corporation, Order,  {O ' x 13 FCC Rcd 22451 (1998) (PSWF Order). In the PSWF Order, PSWF's extended implementation request was  x dismissed as moot because the transmitter sites that were the subject of its extended implementation request were  {O' x7 identical to those for which it was granted regional exclusivity. Id. at 22457,  12. For the same reasons, PSWF's due process argument in its petition for reconsideration is also moot.   Sk' ` ` 2. 3536 MHz, 4344 MHz, 152159 MHz, and 454460 MHz Bands  S' e q19.` ` Background . In the Second Report and Order and Further Notice, we concluded that  xBasic Trading Areas (BTAs) would be too small as a service area for the majority of existing paging  S ' xsystems on the lower channels.F  yO:'ԍThere are 487 BTAs in the United States, some of which are smaller than counties. We indicated that EAs, which consist of a metropolitan area or similar  xQcenter of economic activity and the surrounding economically related counties, would provide geographic  xarea licensees with the flexibility to construct transmitters at any location within their EA, as well as  xprovide more opportunities for the entry of new applicants into the paging market, such as small  S ' xbusinesses and rural telephone companies.G  {O'ԍSecond Report and Order and Further Notice,12 FCC Rcd at 274849,  2324. Thus, we determined that EAs, which are smaller than MTAs  x7but larger than BTAs, would be appropriate for geographic area licensing on the 3536 MHz, 4344 MHz,  Sn'152159 MHz, and 454460 MHz bands.LHn {O*'ԍId. at 2746,  20.L  S' e 20.` ` Discussion . Consolidated recommends using BTAs for geographic area licensing.I yOV!' " ԍPetition for Partial Reconsideration and Request for Clarification of Consolidated Communications Telecom Services, Inc. (Consolidated Petition) at 89.  x+Consolidated contends that the size of EAs will prevent small and rural paging companies from  S' xparticipating in the geographic area licensing auction.@J {OH%'ԍId. at 5.@ Consolidated states that EAs contain major urban  xareas as well as rural and suburban areas, and that small and rural companies, such as Consolidated, are"oJ,l(l(,,%"  S' xkonly interested in the rural and suburban areas of the EA.BK {Oh'ԍId. at 78.B Consolidated also argues that partitioning does  xDnot address the concerns of small and rural companies, which will "be at the mercy" of larger geographic  S' xparea licensees for expansion.@LZ {O'ԍId. at 6.@ Contrary to Consolidated's argument, we believe that the size of EA  xtgeographic areas will not prevent paging operators of smaller systems from participating in geographic  xarea licensing auctions. In the 220 MHz auction, we adopted EAs and 39 small entities successfully  S' xacquired 358 EA licenses.M {O ' " ԍSee Phase II 220 MHz Service Auction Closes, Winning Bidders in the Auction of 908 Phase II 220 MHz  {OW 'Service Licenses, DA 982143, Public Notice (Oct. 23, 1998). We also believe bidding credits will allow small businesses to compete  xagainst larger bidders. Further, small and rural paging companies will not be prevented from expanding  xtheir systems even if they choose not to participate in the geographic area licensing auction, because we  xwill allow geographic area licensees to partition their service areas and we have no reason to believe that  xVgeographic area licensees will be unwilling to enter into partitioning agreements. Conversely, small  xcompanies may choose to acquire a geographic area license and partition any areas they do not wish to  xDserve themselves. We continue to conclude that EAs, which the majority of commenters supported, best  xreflect the geographic area that the paging licensees on the lower channels seek to serve. We therefore  xreject Consolidated's proposal to use a BTA licensing scheme, and affirm our decision to employ EAs as the geographic area for the lower paging bands.  S ' e m21.` ` PRTC states that we did not adopt EAlike areas for Guam and the Northern Mariana  S ' xIslands, Puerto Rico and the U.S. Virgin Islands, and American Samoa.N H yO'ԍPuerto Rico Telephone Company Petition for Reconsideration and Clarification (PRTC Petition) at 12. Consequently, PRTC requests  xtthat section 22.503(b)(3) of the Commission's rules be revised to include three additional EAlike areas  S7' xfor the U.S. territories.@O7 {O'ԍId. at 2.@ We inadvertently omitted these three EAlike service areas from the Second  S' xReport and Order and Further Notice. We therefore adopt PRTC's recommendation and add the  xDfollowing three EAlike service areas: Guam and the Northern Mariana Islands (EA 173); Puerto Rico and  S'the United States Virgin Islands (EA 174); and American Samoa (EA 175).`Pj  yO'ԍThe revised Section 22.503(b) is in Appendix B.`  S:'5` ` 3. Highly Encumbered Areas  S' e q22.` ` Background . In the Second Report and Order and Further Notice, we concluded that  xwe would grant mutually exclusive applications for geographic area licenses through competitive 5bidding  So' xeven in areas extensively built out by an incumbent licensee.Qo  {O #'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 275859,  45. We also rejected a proposal by  xcommenters to restrict competitive bidding to incumbent licensees. We determined that all qualified  S ' xypaging applicants should be eligible to bid for any geographic area license.:R   {O5&'ԍId.: We noted that if an  xincumbent already has a significant presence in a geographic area, other potential applicants may choose"R,l(l(,,"  xnot to bid for that geographic area. Thus, market forces, not regulation, would determine participation  S'in competitive bidding for geographic area licenses.:S {O5'ԍId.:  Sg' e 23.` ` Discussion . Petitioners argue that those incumbent licensees that have previously satisfied  S4' xcertain coverage requirements should receive a geographic area license without competitive bidding.T4Z yO.' "V ԍAdvanced Paging, Inc. Petition for Reconsideration (Advanced Petition) at 413; AirTouch Comments on  x Petitions for Reconsideration at 67; Arch Communications Group, Inc. Petition for Partial Reconsideration and  x. Request for Clarification (Arch Petition) at 7; Opposition and Comments of Arch Communications Group, Inc. (Arch  x  Opposition) at 3; Reply of Arch Communications Group, Inc. (Arch Reply) at 23; MetroCall Petition at 611;  x Metrocall, Inc. Response to Petitions for Reconsideration (Metrocall Response to Petitions for Reconsideration) at  x 1112; Paging Network Petition for Partial Reconsideration and Clarification (PageNet Petition) at 46; PageNet  {O ' x October 27, 1998 Ex Parte at 12; Priority Petition at 7; Puerto Rico Telephone Company Reply (PRTC Reply) at  {O ' xM 14; PCIA Petition at 47; PCIA October 26, 1998 Ex Parte; PCIA October 13, 1998 Ex Parte; PCIA September  {Or '21, 1998 Ex Parte; PCIA September 18, 1998 Ex Parte; PCIA September 3, 1998 Ex Parte.   xPCIA advocates granting a market area license to an incumbent providing coverage to at least 70 percent  S' xof its market.1U0  {O' "" ԍPCIA Petition at 57; PCIA October 26, 1998 Ex Parte; PCIA October 13, 1998 Ex Parte; PCIA September  {Oh'21, 1998 Ex Parte; PCIA September 18, 1998 Ex Parte; PCIA September 3, 1998 Ex Parte. 1 Advanced, Arch, and Metrocall similarly argue for granting market area licenses to  S' xincumbents providing coverage to twothirds or a similar percentage of the market.V"  yO' " ԍAdvanced Petition at 8; Arch Petition at 7; Metrocall Petition at 8. Both proposals are based on the  x Commission's fiveyear construction benchmark requiring a geographic licensee to provide coverage to twothirds  {OW' x^ of the population within five years of the license grant; see Arch Petition at 7; PCIA October 26, 1998 Ex Parte at 7. PageNet suggests  Sh' xdifferent possible thresholds.W\hv yO~' " ԍIn its petition, PageNet advocated awarding geographic area licenses to any incumbent that demonstrated  {OF' x it covers twothirds or more of the market's population, PageNet Petition at 46, while in its October 27, 1998 ex  {O'parte, PageNet cited a threshold amount of 70 percent, PageNet October 27, 1998 Ex Parte at 12.  PageNet and PCIA propose a twostep process for granting market area  S5' xplicenses."X5 {Oo' " ԍPageNet October 27, 1998 Ex Parte at 1; PCIA October 26, 1998 Ex Parte at 48; PCIA September 21,  {O9'1998 Ex Parte; PCIA September 18, 1998 Ex Parte; PCIA September 3, 1998 Ex Parte." First, where an incumbent operator certifies that it covers 70 percent of a market area's  S' xMpopulation or geographic area, the Commission should grant a market area license to that incumbent.Y {O'ԍPageNet October 27, 1998 Ex Parte at 1; PCIA October 26, 1998 Ex Parte at 6.  xPCIA further suggests that if multiple incumbents serving a market on a single frequency together cover  x70 percent of the population or geographic area, those licensees should be permitted jointly to file an  Si ' xMapplication that demonstrates their joint coverage, and receive a market area license on that basis.aZi  {O#'ԍPCIA October 26, 1998 Ex Parte at 7.a In  xMthe second step, interested parties could file applications for all remaining available frequencies in each  S ' xmarket.[  {O&'ԍPageNet October 27, 1998 Ex Parte at 1; PCIA October 26, 1998 Ex Parte at 6. According to PCIA, mutually exclusive applications would then be subject to the Commission's" [,l(l(,, "  S' x^auction rules.[\ {Oh'ԍPCIA October 26, 1998 Ex Parte at 7.[ Arch and PageNet alternatively propose to limit eligible bidders to the samechannel incumbents  S'operating within the geographic area or in an area adjacent to the geographic area license.a]Z yO'ԍArch Petition at 7; PageNet Petition at 6.a  Sg' e 24.` ` Petitioners present a number of arguments in support of their proposals. They argue, for  S4' xQexample, that, under the Commission's rules adopted in the Second Report and Order and Further Notice,  S' xMnew opportunities for greenmail and speculative applications will result in inflated auction prices,D^  {O ' " ԍSee Advanced Petition at 69; Arch Petition at 7; Blooston Petition at 1011; Metrocall Petition at 8;  {OV ' xZ PageNet Petition at 2 & 5; PCIA Petition at 47; PCIA October 26, 1998 Ex Parte at 78; PRTC Reply at 34. In  x its Petition, PageNet argues that "greenmailers" might "do no more than place a single transmitter in the remaining  x white space for five years," forcing paging carriers "to bid, not at the legitimate value of the few remaining  x transmitter locations, but to keep those locations from falling into the hands of someone else who seeks only to  x extract exorbitant rates from them for the future right to expand." PageNet Petition at 2. In its Petition, PCIA  x argues that the Commission's auction rules "create an environment that is highly conducive to the filing of  yO' x@ fraudulently induced and speculative applications." PCIA Petition at 4. Specifically, PCIA is concerned that  xH "insincere applicants" participating in the auction will drive up the price of geographic area licenses, and the history  x of the paging market and IVDS suggests that adoption of a competitive bidding process is not a complete solution  {O`' x to the filing of speculative applications. Id. at 67. In addition, Advanced argues that bidders that "park" their bids  x in lowpriced markets, for which they have little or no genuine interest, to comply with the activity rules will  x artificially inflate the bidding for markets in which an incumbent has already met the coverage requirements. Advanced Petition at 89.D and  xreliable service will decline because auctions introduce additional parties for coordination and negotiation  xxand customers will be unable to receive or obtain services if multiple providers are using the same channel  Si' xwithin a market area._i {O'ԍPCIA October 26, 1998 Ex Parte at 45; see PageNet October 27, 1998 Ex Parte at 2. Petitioners further argue that new entrants will increase the potential for co S6' x channel interference;`6: {O' " ԍSee Advanced Petition at 56 & 910; Metrocall Petition at 910; PageNet October 27, 1998 Ex Parte at 2;  {O'PCIA October 26, 1998 Ex Parte at 45. "dead zones" will occur between the incumbent and geographic area licensee's  S' xZservice areas;a {O9'ԍSee PageNet October 27, 1998 Ex Parte at 2; PCIA October 26, 1998 Ex Parte at 45. the incumbent's ability to expand to provide the "widest area coverage" will be blocked  S' xif a new entrant wins at auction;b( {O' " ԍSee Advanced Petition at 5; Blooston Petition at 11; Metrocall Petition at 7; PageNet Petition at 45;  {Ob 'PageNet October 27, 1998 Ex Parte at 1; PCIA Petition at 67. new entrants will be encouraged to enter markets where it would not  S ' xbe economically viable to do so;c  {O"'ԍSee Metrocall Petition at 78; PCIA October 26, 1998 Ex Parte at 4. and customers will not reap the benefits of competition.d  {OS$' " ԍSee Advanced Petition at 78; Metrocall Petition at 7; PageNet October 27, 1998 Ex Parte at 2. Metrocall  x asserts that the Commission's decision not to adopt automatic licensing for incumbents "guarantees inefficient use  x of the spectrum" and the public will bear the ultimate burden "in the form of less competitive rates and less efficient  x service options." Metrocall Petition at 7. PageNet argues that customers can only reap the benefits of competition  {Ou'' x if carriers operate on different frequencies in the same or overlapping territory. PageNet October 27, 1998 Ex Parte"u'c,l(l(y'" at 2.  In addition," Xd,l(l(,, "  xxAdvanced, Metrocall, and PageNet state that an applicant is not qualified if it cannot meet the construction  xxbenchmark of covering twothirds of the population of an MTA where operating incumbents already meet  S' xthe coverage requirements.eX yO'ԍAdvanced Petition at 1011; Metrocall Petition at 8; PageNet Petition at 5; PRTC Reply at 4. Metrocall and PageNet further assert that the Commission's current rules  x*do not meet its statutory obligation to avoid mutual exclusivity, while mutual exclusivity could be avoided  S4' xthrough "threshold qualifications," identified in their percentofcoverage proposals.f4 {O'ԍMetrocall Petition at 7; PageNet October 27, 1998 Ex Parte at 1; PRTC Reply at 3. Finally, Metrocall  xasserts that despite the "overwhelming support for granting geographic [area] licenses to incumbents," and  xbecause the Commission has "failed to provide any factual basis" for its decision not to adopt automatic  xlicensing for incumbents, that decision is contrary to the record in this proceeding and, therefore, arbitrary  Sh'and capricious.oghz {O 'ԍMetrocall Petition at 1011; see Advanced Petition at 4.o  S' e 25.` ` While we recognize that some geographic areas are significantly served by incumbent  x*licensees, we believe that the market should decide whether an economically viable paging system can be  xestablished in the unserved area of a geographic market. For instance, an incumbent licensee might  xconsider the unserved area within its "home" geographic market to be beyond the scope of its business  x plans. In contrast, a paging provider that primarily serves an adjacent geographic market may have a  xgstrong desire to serve the unserved area in its neighbor's "home" market. In addition, even where only  x30 percent of a geographic area is available to a potential new entrant, we do not believe that it has been  xshown that the new entrant cannot establish a viable system that serves the public as well as the  xincumbent. Thus, we cannot conclude that an incumbent licensee is entitled to a geographic area license  xwithout competitive bidding simply because its paging system may cover a substantial portion of the  xMgeographic area. We therefore continue to believe that all otherwise qualified paging applicants should  xbe eligible to bid for any geographic area license. Open eligibility promotes prompt service to the public by allocating spectrum to the entity that values it most.  S8' e m26.` ` We also believe the benefits of open eligibility outweigh the risks that speculators and  xmisguided applicants pose to the competitive bidding process. Although under our prior rules, which did  x3not allow for competitive bidding, fraudulent application preparers duped a number of consumers into  xsubmitting unwarranted sitespecific applications for Specialized Mobile Radio (SMR) service licenses with  Sl' xkpromises of a quick resale profit,Kh\l  {O' "_ ԍSee, e.g., Daniel R. Goodman, Receiver, Dr. Robert Chan, Petition for Waiver of Sections 90.633(c) and  {O' x 1.1102 of the Commission's Rules, Memorandum Opinion and Order and Order on Reconsideration, 13 FCC Rcd 21944 (1998).K we do not believe that this problem has arisen in connection with any  xof our auctions of communications licenses. Nor do we have any evidence that this is likely to become  xta significant problem as we auction paging licenses. Indeed, while speculation can be a problem when  xlicenses are awarded through such systems as lotteries, we believe that auctions deter speculation. Parties  xgmust make an upfront payment on each desired market and make minimum opening bids, and they are  xgsubject to bid withdrawal payments. They must also make full payment at the close of the auction for  xany licenses on which they are the high bidder, or pay default payments. Thus, the opportunity cost of  x&speculating can be high, and engaging in speculative bidding is highly risky. We have auctioned other  x&highly encumbered services, such 800 MHz and 900 MHz SMR and 220 MHz, and have not seen any"0 h,l(l(,,t"  xevidence that speculative applications have raised bidding prices. Petitioners also have not provided any evidence that speculative applications have raised bidding prices in prior auctions.  Sg' e  27.` ` Issues related to coverage requirements and cochannel interference are addressed in other  xsections of this Order. A new entrant will be able to meet its coverage requirements by providing  S' xsubstantial service within the geographic areaQi {Oi'ԍSee infra  6670. Q and geographic area licensees must provide cochannel  S' xprotection to all incumbents.IjZ {O'ԍSee infra  50.I Moreover, petitioners have not provided any evidence that the "border"  x issues raised here, including problems related to "dead zones," are any different from issues that arise  xgunder other circumstances where one licensee is adjacent to another. Finally, turning to our obligation  xZto attempt to avoid mutual exclusivity when it is in the public interest, we do not believe that Congress  xgintended us to interpret the term "threshold qualifications" in Section 309(j)(6)(E) to mean that carriers  xshould receive licenses for unserved areas without competitive bidding simply because they already hold  xcertain licenses for other areas in the vicinity, particularly because the result of such an approach would be to preclude the dissemination of licenses to new entrants.  S '4 ` ` 4. Basic Exchange Telecommunications Radio Systems (BETRS) Licensees  S ' e 28.` ` Background . Basic Exchange Telecommunications Radio Systems (BETRS) are licensed  xDunder the Rural Radiotelephone Service. BETRS use twoway paired channels to provide 4basic exchange  S7' xgtelephone service to remote rural areas of the country.kZ7 {O' " #X\  P6G;ɒP#эBasic Exchange Telecommunications Radio Service, Report and Order, 3 FCC Rcd 214, 217,  27 (1988).  xD We note that under section 22.757 of the Commission's rules, 47 C.F.R.  22.757, certain channels in the 800 MHz band are available on a coprimary basis to BETRS.  Only local exchange carriers (LECs) that are  xstate certified to provide basic exchange telephone service, or others having state approval to provide such  S' xservice, are eligible to hold authorizations for BETRS.nl yO'#X\  P6G;ɒP#э47 C.F.R.  22.702.n The Second Report and Order and Further  S' xNotice directs that BETRS and Rural Radiotelephone Service licensees be subject to geographic area  Sm' x@licensing, and also allows providers in these services to obtain site licenses on a secondary basis.mj m {O' "+ #X\  P6G;ɒP#эSecond Report and Order and Further Notice, 12 FCC Rcd at 275254,  3236. We initially decided  x| against using auctions to resolve mutual exclusivity between initial BETRS or Rural Radiotelephone applications and  x common carrier mobile service applications because it would not serve the public interest to establish BETRS as a  xo potentially lowcost alternative to wireline service, and then require BETRS applicants to bid against a radio common  {O' xx carrier applicant for the same channels. Competitive Bidding Second Report and Order, 9 FCC Rcd at 2356,  46.  {O ' xD Following the release of the Competitive Bidding Second Report and Order, however, we expanded our rules to  xQ permit CMRS licensees the flexibility to provide fixed or mobile services, or a combination, over CMRS spectrum.  x Amendment of the Commission's Rules to Permit Flexible Service Offerings in the Commercial Mobile Radio  {O"' x Services, First Report and Order and Further Notice of Proposed Rulemaking, 11 FCC Rcd 8965, 8977,  24 (1996).  x In light of this new flexibility, we noted that the local exchange service offered by BETRS would one day be offered  xD by wireless and wireline providers, and that "it may not be logical to continue to exempt BETRS from geographic  {OK%'area licensing and auctions." Second Report and Order and Further Notice, 12 FCC Rcd at 2752,  32.  It  xfurther provides that all existing BETRS operating on a coprimary basis remain in place and receive full":m,l(l(,,"  S' x<protection from interference by geographic area licensees.sn {Oh'#X\  P6G;ɒP#эId. at 2753,  34.s BETRS licensees may also enter into  xMpartitioning agreements with auction participants and auction winners both before and after the paging  S' xauction.soZ {O'#X\  P6G;ɒP#эId. at 2753,  35.s In the Second Report and Order, the Commission stated that "[i]f a geographic area licensee  xQis concerned that a BETRS facility operating on secondary sites may cause interference to the geographic  xarea licensee's existing or planned facilities, the BETRS provider must discontinue use of the interfering  x3channel no later than six months after the geographic area licensee notifies the BETRS provider of the  S'actual or potential interference."vp {O[ '#X\  P6G;ɒP#эId. at 275354,  35.v This policy is codified at section 22.723 of our rules.Gq~ yO 'ԍ47 C.F.R.  22.723.G  Si' e S29.` ` Discussion . Several petitioners argue that BETRS is essential to the Commission's  xuniversal service goal of delivering local exchange service to remote, rural areas and should be licensed  xon a sitebysite, coprimary basis with geographic area licensees, and exempt from competitive bidding  S' xprocedures.rx yO~' "_ #X\  P6G;ɒP#эBig Bend Telephone Company, Inc. Petition for Reconsideration (Big Bend Petition) at 2, 57; Century  x Telephone Enterprises, Inc. Petition for Reconsideration (Century Petition) at 2, 57; Lincoln County Telephone  xM System, Inc. Petition for Reconsideration (Lincoln Petition) at 2, 57; MidRivers Telephone Cooperative, Inc.  x Petition for Reconsideration (MidRivers Petition) at 2, 57; Petition for Reconsideration of the National Telephone  x Cooperative Association (NTCA Petition) at 56; Reply to Oppositions to Petition for Reconsideration of the National  x< Telephone Cooperative Association (NTCA Reply) at 2; NuclaNaturita Telephone Company Petition for Reconsiderations (NuclaNaturita Petition) at 2 & 57. These petitioners contend that participation in auctions will impair the financial ability of  xDrural telephone companies to respond to their customers' needs for local exchange service in remote rural  xareas and that it is impracticable for a rural telephone company or a consortium of rural telephone  S7 ' x&companies to bid on BETRS spectrum in a market the size of an EA.Vsb 7 N  yO%' "I ԍBig Bend Petition at 2, 4 & 7 n.8; Big Bend Telephone Company, Inc. Reply to Opposition and Comments  x on Petitions for Reconsideration (Big Bend Reply) at 2; Century Petition at 2, 4 & 7 n.8; Century Telephone  x Enterprises, Inc. Reply to Opposition and Comments on Petitions for Reconsideration (Century Reply) at 2; Lincoln  xM Petition at 2, 4 & 7 n.8; MidRivers Petition at 2, 4 & 7 n.8; MidRivers Telephone Cooperative, Inc. Reply to  x Opposition and Comments on Petitions for Reconsideration (MidRivers Reply) at 2; NTCA Petition at 3, 6; Nucla x; Naturita Petition at 2, 4 & 7 n.8; NuclaNaturita Reply to Opposition and Comments on Petitions for Reconsideration  x (NuclaNaturita Reply) at 2. Big Bend states that "[u]nlike paging carriers, who will generally be interested in only  xb a single channel at the auction, BETRS licensees would be required to bid on many frequencies in a particular market  x to acquire sufficient spectrum to meet present and future demands for local exchange telephone service, even though  x* at least some of these frequencies may not be put to use immediately, if at all." Big Bend Reply at 34. Big Bend  x further explains that EAs are impracticable service areas because they "include both urbanized and rural areas, and  {O"'thus, large areas which would not require construction of BETRS facilities." Id. at 4.V Petitioners also cast doubt on  xZthe ability of potential competitors like broadband PCS and cellular to provide viable and costeffective  S 'alternatives to BETRS for the provision of telephone service to rural areas.t x yO%' "c #X\  P6G;ɒP#эBig Bend Petition at 24; Century Petition at 24; Lincoln Petition at 24; MidRivers Petition at 24; NTCA  yO&'Petition at 3; NuclaNaturita Petition at 24. " t,l(l(,,+"Ԍ S' e 30.` ` After a thorough review of the record in this proceeding, we decline to adopt rules that  S' xpermit sitebysite licensing of BETRS on a coprimary basis with geographic area paging licensees. We  xagree that BETRS provide an important service, and none of the actions we take today have the effect of  Sg' xabolishing BETRS. In the Second Report and Order, we directed that all existing BETRS remain in place  S5' x&and receive full interference protection from geographic area licensees.u5 {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2753,  34. However, we also find that  xBETRS licensees should be allowed to compete at auction with other BETRS licensees and wireless  xproviders. The Commission has determined that BETRS do not require exemption from competition to  xkensure continued BETRS service and lower costs to subscribers. In fact, the rules that we adopted in the  Si' xSecond Report and Order provide competitive bidding benefits to small businesses that will enable them  S7' xMto compete more effectively with larger auction participants.v7Z {O1 ' "  ԍId. at 280420,  163201; see infra at  114 (explaining that BETRS licensees also may qualify for financial benefits from the Rural Electrification Administration and universal service support). We also believe that BETRS operators  xwill be able to obtain interests in paging licenses or actual paging licenses through entering into  S' xpartitioning arrangements both before and after the paging auction.@w {O%' " ԍSee Second Report and Order and Further Notice, 12 FCC Rcd at 2753,  35 (the Commission's partitioning  x rules are tailored to accommodate future expansion of BETRS by "allow[ing] BETRS licensees to enter into  xH partitioning agreements with geographic area licensees both before and after geographic licensing occurs"). Paging  x providers may obtain partitioned licenses by: (1) forming bidding consortia to participate in auctions, and then  x partitioning licenses won among consortium members; or (2) acquiring partitioned licenses from other licensees  {O'through private negotiation and agreement either before or after the auction. Id. at 2817,  194.@ We emphasize that we are  x committed to promoting service in rural areas and we believe that the rules adopted for BETRS in the  Sk ' xSecond Report and Order will further that goal. If a BETRS operator demonstrates that it cannot serve  xa particular need in a rural area under these rules, we will consider appropriate action to address specific  S 'concerns.TxX 0  yO' " ԍWe note that there has not been much recent activity in licensing Rural Radiotelephone Services, which  xM includes BETRS. We have received only 16 new or major modification applications for Rural Radiotelephone licenses between January 1, 1998, and May 1, 1999.T  S ' e 31.` ` Petitioners further contend that, contrary to the Commission's universal service goals,  xsection 22.723 of our rules will allow geographic area licensees to terminate BETRS upon any allegation  xof harmful cochannel interference, resulting in a loss of communications services essential to the public  xin rural areas. Petitioners argue that the Commission must either retain existing rules or establish  S' xsafeguards against allowing geographic area licensees to "shut down BETRS operations."yXP  yO' "p #X\  P6G;ɒP#эBig Bend Petition at 5; Big Bend Reply at 68; Century Petition at 5; Century Reply at 68; Lincoln Petition  yO ' xD at 5; MidRivers Petition at 5; MidRivers Reply at 68; NTCA Petition at 57; NuclaNaturita Petition at 5; NuclaNaturita Reply at 68. ProNet,  xVhowever, seeks clarification that section 22.723 confers no right on rural radio service licensees to  xcontinue operations that cause actual interference to geographic area licenses for six months after receiving  S;' x}notice of the interference.z;p yOK%' " ԍProNet Inc. Petition for Reconsideration and Clarification (ProNet Petition) at 20; ProNet Comments on Petitions for Reconsideration at 15. We have no reason to believe that geographic area licensees will make  xunsupported allegations of potential or actual interference by BETRS, as petitioners suggest. We therefore"z,l(l(,,"  xaffirm our earlier decision to allow BETRS licensees to obtain site licenses and operate facilities on a  xsecondary basis. We clarify, however, that under section 22.723 of our rules, the geographic area licensee  x&must provide notification to the BETRS provider that the relevant BETRS facility causes or will cause  Sg'interference with the geographic area licensee's service contour in violation of our interference rules.f{ g yO' " ԍWhere the BETRS facility would create interference with a facility the geographic area licensee is proposing  x to build, the geographic area licensee may not provide notification of impermissible interference to the BETRS  x provider earlier than six months prior to the date it intends to initiate operation of the proposed facility. Thus, the  x geographic area licensee may not force the BETRS provider to discontinue service before the geographic area  x licensee initiates service. Where the BETRS facility is constructed after the geographic area licensee's facility is  x already constructed and the BETRS facility causes interference with that existing facility, the BETRS operator must  x discontinue use of the interfering channel in accordance with our interference rules. Where a geographic area  x licensee plans construction and initially determines that the BETRS facility would not cause interference, but after  x construction determines the BETRS facility is causing interference, the BETRS operator must discontinue use of its  x facility within six months of receiving notification. If a dispute arises, either party may submit the interference  x information to the Commission to resolve the dispute. If the geographic area licensee provides proper notification  xk to the BETRS provider, no adjustments will be made to the initial six month period. If the Commission determines  xb that the notification was improper or inaccurate, the geographic area licensee, where appropriate, must submit a new, corrected notification to the BETRS provider. In the latter case, the six month period would restart.f  S' e 32.` ` Petitioners argue that the Commission has exceeded its statutory authority by using  xcompetitive bidding procedures to issue geographic area paging licenses because the use of auctions to  S' xassign paging spectrum is motivated purely by the Commission's desire to raise federal revenues.|  {O' "c #X\  P6G;ɒP#эBig Bend Petition at 45; Century Petition at 45; Lincoln Petition at 45; MidRivers Petition at 45; NuclaNaturita Petition at 45. We  xhave not exceeded our statutory authority by employing competitive bidding procedures to issue  xgeographic area paging licenses. Section 309(j) of the Communications Act, as amended, gives the  S' x^Commission authority to issue geographic area paging licenses through competitive bidding.Z}( {O|' "h ԍSee 47 U.S.C.  309(j)(2)(A), (B) & (C). As previously noted, the Commission's mandate to employ  {OF' x competitive bidding was broadened by the Balanced Budget Act of 1997. See supra at  9 (citing the Balanced  {O' x Budget Act of 1997, Pub. L. No. 10533,  3002, 111 Stat. 251 (1997) (amending 47 U.S.C.  309(j))); see also  {O'Fresno Mobile Radio, Inc. v. FCC, No. 9781459 (D.C. Cir. Feb. 5, 1999); and BBA NPRM.Z Petitioners  xkhave offered no evidence to support their assertion that revenue for the federal treasury "appears to be the  S ' xreal reason for the Commission's proposal."~  yO' " ԍBig Bend Petition at 4; Century Petition at 4; Lincoln Petition at 4; MidRivers Petition at 4; NuclaNaturita Petition at 4. Our reasons for adopting competitive bidding procedures  Si ' x*for paging licenses are set forth at length in the Notice and Second Report and Order and Further Notice,  xand these reasons do not include revenueenhancing considerations. We stated that geographic area  x7licensing would enhance regulatory symmetry between oneway paging and narrowband PCS, streamline  x/the regulatory procedures and application processing rules, and result in a broader array of entities  S ' xEproviding paging services to the public. " {O`$' " ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2776,  85; Notice, 11 FCC Rcd at 3113,  21. Moreover, Congress has charged us to promote: (1)  xdevelopment and rapid deployment of new technologies, products, and services; (2) economic opportunity  xand competition; (3) recovery of a portion of the value of the public spectrum; and (4) efficient and"8|,l(l(,,"  S' x&intensive use of the electromagnetic spectrum.o {Oh'ԍSee 47 U.S.C.  309 (j)(3)(A), (B), (C) & (D) (1998).o The recovery of a portion of the value of the public  xtspectrum made available through competitive bidding does not amount to maximizing revenue, nor is it  xxour sole objective. Petitioners have not articulated any persuasive reason for us to reconsider our findings on this point.  S' e 33.` ` Petitioners also argue that the Commission did not adequately consider adopting  x3"mandatory partitioning" of rural areas of the geographic area license, at no cost to the rural telephone  x"company, to offset the unwillingness of geographic area licensees to enter into agreements for the  Sh' xprovision of BETRS service.bXhZ yOb ' "8 #X\  P6G;ɒP#эBig Bend Petition at 79; Big Bend Reply at 45; Century Petition at 79; Century Reply at 45; Lincoln  x7 Petition at 79; MidRivers Petition at 79; MidRivers Reply at 45; NuclaNaturita Petition at 79; NuclaNaturita Reply at 45.b PCIA and ProNet maintain, however, that mandatory partitioning is  xunnecessary because BETRS providers are permitted to enter into voluntary arrangements with winning  S' xxgeographic area licensees.*z yO' " #X\  P6G;ɒP#эReply Comments of the Personal Communications Industry Association (PCIA Reply Comments) at 78; ProNet, Inc. Reply Comments on Further Notice of Proposed Rulemaking (ProNet Reply Comments) at 910.* AirTouch and PCIA contend that no cost, mandatory partitioning is contrary  S' xto the public interest and would come at the expense of geographic area licensees.iZ yOA' " #X\  P6G;ɒP#эAirTouch Comments on Petitions for Reconsideration at 2122; The Personal Communications Industry  {O ' x. Association Opposition to and Comments on Petitions for Reconsideration (PCIA Opposition) at 4; see PCIA Reply Comments at 7.i We affirm our  S ' x"conclusion in the Second Report and Order and Further Notice that BETRS licensees may acquire  xIpartitioned licenses from other licensees by: (1) participating in bidding consortia; or (2) acquiring  xpartitioned licenses from other licensees through private negotiation and agreement either before or after  S ' xthe auction.  {O'#X\  P6G;ɒP#эSecond Report and Order and Further Notice, 12 FCC Rcd at 281718,  194. We have no reason to believe that auction winners will not be willing to enter into  x*partitioning arrangements. Petitioners themselves argue that winning geographic area licensees may have  S ' xno desire or intention to build in rural areas.  yO' " ԍBig Bend Petition at 3, 9; Century Petition at 3, 9; Lincoln Petition at 3, 9; MidRivers Petition at 3, 9; NuclaNaturita Petition at 3, 9. If this is true, there appears to be little incentive for these  xlicensees to demand unreasonable amounts of money for the rural portion of a license prior to or  x7subsequent to the auction, especially if the choice is between selling to a willing buyer or leaving the rural  S' xarea unserved. yO ' "& ԍBig Bend, for example, asserts that in the absence of mandatory partitioning rules, geographic area licensees will likely demand excessive amounts of money for partitioned licenses in rural areas. Big Bend Petition at 9 n.11. Where possible, the Commission encourages market forces and the business judgment  x&of companies to dictate the formation of business relationships. For example, we have expressed our  xppreference for allowing market forces to encourage voluntary agreements between broadband PCS  Sl' xlicensees and rural telephone companies to accomplish partitioning.&l6 {OB%' "y ԍSee, e.g., Geographic Partitioning and Spectrum Disaggregation by Commercial Mobile Radio Services  {O &' xk Licensees, Report and Order and Further Notice of Proposed Rulemaking, 11 FCC Rcd 21831, 21844,  16 (1996)  {O&' x* (Partitioning and Disaggregation Report and Order and Further Notice) (rejecting rural telephone companies'  x argument that they will not be able to compete for partitioned PCS licenses unless the Commission restricts"',l(l('" partitioning solely to rural telephone companies as contrary to Commission policy of encouraging competition).  We believe such voluntary"lX,l(l(,, "  xagreements will be an adequate means of accommodating BETRS licensees seeking modifications to existing BETRS or wishing to establish new systems, and that mandatory partitioning is unnecessary.  Sg' ` ` 5. Spectrum Reversion   S' e ~34.` ` Background. In the Second Report and Order and Further Notice, we concluded that  xMspectrum within a geographic area recovered by the Commission from a nongeographic area licensee  S' xshould automatically revert to the geographic area licensee.X {O 'ЍSecond Report and Order and Further Notice, 12 FCC Rcd at 2745,  18. We found that granting this right to  xDgeographic area licensees would give them greater flexibility in managing their spectrum, establish greater  x*consistency with our cellular and PCS rules, and reduce the regulatory burdens on both licensees and the  S'Commission with respect to future management of the spectrum.V {O 'ЍId.V  S ' e 35.` ` Discussion. ProNet suggests that the Commission should clarify that under the spectrum  Sj ' xyreversion rule adopted in the Second Report and Order and Further Notice, recovered spectrum  xautomatically reverts to the geographic area licensee in all instances except where an incumbent licensee  xMdiscontinues operations in a location wholly encompassed by the incumbent licensee's valid composite  S ' xQinterference contours. |" {O' "V "ЍProNet Petition at 8; ProNet Comments on Petitions for Reconsideration at 8; see AirTouch Comments on Petitions for Reconsideration at 1617 (supporting ProNet's arguments). ProNet argues that the geographic area licensee would not be able to serve such  xan area, and that reversion would be contrary to the Commission's policy of allowing fillin transmitters  Sl' xanywhere within the incumbent's outer perimeter interference contour.:l {O'ԍId.: We disagree. As an initial  xmatter, we note that an incumbent's valid composite interference contour does not include areas  xsurrounded by the composite interior contour that is not part of the interference contours of the  xincumbent's individual sites. ProNet has not demonstrated that a geographic area licensee would be  xunable to serve areas wholly surrounded by an incumbent; such service by the geographic area licensee  xwould be subject to our interference rules. Moreover, where an incumbent discontinues service to an area,  xwe do not believe it serves the public interest to withhold that area from the geographic area licensee in  xthe hope that the incumbent may wish to resume service sometime in the future. Should an incumbent  xgdesire to serve the reverted area in the future, it is free to reach an agreement with the geographic area  xlicensee for the partitioning of this area. This approach is consistent with our treatment of reverted  Sn' xspectrum in the 800 MHz SMR service,nh  {Ov!'ԍSee 800 MHz Memorandum Opinion and Order on Reconsideration, 12 FCC Rcd at 998283,  2729. and it is in the public interest, as it promotes use of the  xspectrum. Therefore, we reaffirm that where an incumbent permanently discontinues operations at a given  S'site, as defined by our rules,Q  {O$'ԍSee 47 C.F.R.  22.317.Q the spectrum automatically reverts to the geographic area licensee.  S' " ,l(l(,,"Ԍ S'` ` 6. Systemwide Licensing   S' e S36.` ` Background. In the Second Report and Order and Further Notice, we allowed all  xDincumbent paging licensees to either continue operating under existing authorizations or trade in their site xspecific licenses for a single systemwide license. We stated that such a systemwide license would be  x"demarcated by the aggregate of the interference contours around each of the incumbent licensee's  S' xcontiguous sites operating on the same channel. {O7'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2764,  58. We also concluded that incumbent licensees may add  xxor modify sites within their existing interference contours without filing sitespecific applications, but may  Si'not expand their existing interference contours without the consent of the geographic area licensee."iZ {Oc ' "" ԍId.; see Wireless Telecommunications Bureau clarifies Interim Licensing Rules Applicable to Addition of  {O- 'Internal Sites by 929 MHz Nationwide Licensees, Public Notice, 11 FCC Rcd 11632 (1996)."  S' e 37.` ` Discussion . Although systemwide licenses and sitespecific licenses are identical in terms  xof operational and technical flexibility, some licensees may realize administrative benefits from  xconsolidating sitespecific licenses. Petitioners seek clarification of the procedures for converting site Sj ' xspecific licenses to a systemwide license.j  yO'ԍMetrocall Petition at 2223; Morris Petition at 11; Nationwide Petition at 11. In the ULS Order, the Commission stated that conversions  xfrom sitespecific to systemwide licenses are minor modifications subject to the Commission's prior  S ' xMapproval. F yO' " ԍAmendment of Parts 0, 1, 13, 22, 24, 26, 27, 80, 87, 90, 95, 97 and 101 of the Commission's Rules to  x; Facilitate the Development and Use of the Universal Licensing System in the Wireless Telecommunications Service,  {O{' x Report and Order, 13 FCC Rcd 21027, 21060,  72 (1998) (ULS Report and Order); see also 47 C.F.R.  1.929  x (k)(7). We note that we inadvertently omitted codifying the requirement that conversions to systemwide licenses  xD are subject to Commission approval. We will amend section 1.947 of our rules accordingly upon reconsideration  {O'of the ULS Report and Order. Applicants requesting a systemwide license will be notified by public notice of the action  xtaken on their request and public notices granting such requests will indicate the new call sign associated  xwith the systemwide license. The expiration date of the systemwide license will be determined by the  xearliest expiration date of the sitespecific licenses that are consolidated into the systemwide license.  x@Once a systemwide license is approved, the licensee must submit a timely renewal application for the  x@systemwide license based on that expiration date. We emphasize, however, that the licensee is solely  xresponsible for filing timely renewal applications for sitespecific licenses included in a systemwide  xlicense request until the request is approved. If the situation arises where a sitespecific renewal  xapplication for a site included in a systemwide license request and the systemwide license request itself  xDare pending at the same time before the Bureau, the Bureau may elect to complete the sitespecific license  xrenewal proceeding prior to making a determination on the systemwide license request. Renewal  xapplications will be placed on public notice as accepted for filing pursuant to our rules. To minimize  xVadministrative burdens on licensees and conserve government resources, the Bureau intends to use  Sn'electronic filing to the greatest extent possible in accepting and processing these applications..n  {O#' "E ԍSee, e.g., Wireless Telecommunications Bureau Announces New Procedures for Filing Part 22 Paging  {O$'Applications in Universal Licensing System (ULS) Starting July 1, 1998, Public Notice, DA 98989 (May 22, 1998).. ";,l(l(,,"Ԍ S' e 38.` ` Several petitioners seek clarification of the definition of "contiguous sites" for the purpose  S' xof determining an incumbent's "aggregate interference contour." yO5' " ԍBlooston Petition at 89; Metrocall Petition at 2223; Morris Petition at 11; Nationwide Petition at 11; ProNet Petition at 3 & 18; AirTouch Comments on Petitions for Reconsideration at 1516; Arch Reply at 89. Blooston asks whether service contours  S' xQor interference contours must overlap to meet the definition of "contiguous sites."H  yOZ'ԍBlooston Petition at 9.H PageNet asserts that  Sg' xcontiguous sites are defined by overlapping service area contours.g yO' " ԍPaging Network, Inc. Reply to Oppositions and Comments Regarding Certain Petitions for Reconsideration and Clarification (PageNet Reply) at 67. Petitioners also urge the Commission  xtto modify section 503(i) to define nongeographic area incumbent systems according to the composite  S' x^interference contours of all authorized transmitters, including valid construction permits, regardless of the  S' xgrant date. yOv ' "" ԍAirTouch Comments on Petitions for Reconsideration at 16; ProNet Petition at 36; ProNet Comments on Petitions for Reconsideration at 78; ProNet Reply at 4; Schuylkill Petition at 34; Western Paging Petition at 34. PageNet and Arch oppose the inclusion of expired construction permits in determining  S' xQcomposite interference contours.`  yO' " ԍArch Reply at 7; Paging Network, Inc. Comments in Opposition of Certain Petitions for Reconsideration and Clarification (PageNet Opposition) at 8; PageNet Reply at 9. We have consistently stated that systemwide licenses are defined by  Sh' xinterference contoursh  {O' " ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2764,  58; Notice, 11 FCC Rcd at 3116,   {O' x7 37; 800 MHz Second Report and Order, 12 FCC Rcd at 19106,  72; 800 MHz Memorandum Opinion and Order,  yOT' x 12 FCC Rcd at 9992,  63; Wireless Telecommunications Bureau Clarifies Definition of Interference Contour for  {O' x7 Interim Paging Rules, Public Notice, 11 FCC Rcd 11509 (1996); Amendment of Part 90 of the Commission's Rules  {O' x. to Facilitate Future Development of SMR Systems in the 800 MHz Frequency Band, First Report and Order, Eighth  {O' x Report and Order, and Second Further Notice of Proposed Rulemaking, 11 FCC Rcd 1463, 1514,  88 (1995) (800  {Oz'MHz Report and Order). and we now clarify that contiguous sites are defined by overlapping interference  xtcontours, not service contours. We further clarify that all authorized sitespecific paging licenses and  xxconstruction permits are included in a composite interference contour. We are continuing to process site xspecific applications that were not mutually exclusive and were filed prior to July 31, 1996, and we will  xnot revoke authorized construction permits before the construction deadline. In addition, we are  Si ' x&continuing to resolve pending petitions that might result in grants of applications.i  yO ' " ԍFor example, the resolution of pending petitions for reconsideration of grants of sitebysite paging  x^ applications might result in new grants of sitespecific licenses. In addition, as previously stated, we will resolve  {O' x in separate orders a number of petitions for reconsideration of the CWD Order dismissing pending mutually exclusive  x applications that have raised arguments as to whether the subject applications were in fact mutually exclusive with  {O/!' x other applications. Again, these petitions could result in grants of sitespecific licenses. See supra at note 53 and accompanying text. We also note that  xfor purposes of due diligence we intend to release, prior to auction, a list of sitespecific applications and  xpetitions pending at that time. Accordingly, we amend section 503(i) to clarify that geographic area  x*licensees must provide cochannel interference protection in accordance with sections 22.537 or 22.567,  xQas appropriate for the channel involved, to all authorized cochannel facilities of exclusive licensees within  Sj'the paging geographic area.j {O''ԍSee infra at  48 (further clarification of section 22.503(i)). "j,l(l(,,"Ԍ S' e 5ԙ39.` ` Petitioners also contend that systemwide licenses should include areas where an  xincumbent's interference contours do not overlap, but where no other licensee could place a transmitter  S' xbecause of interference rules. yO' " ԍBlooston Petition at 89; Metrocall Petition at 2223; Morris Petition at 11; Nationwide Petition at 11; ProNet Petition at 3 & 18; AirTouch Comments on Petitions for Reconsideration at 1516; Arch Reply at 89. We conclude that a systemwide license is merely a consolidation of a  x*system's call signs such that one call sign will be associated with the systemwide license. The contours  xof the systemwide license remain as the aggregate of the contours of the individual sites. We find that  xinclusion of areas that are outside of an incumbent's interference contours within a systemwide license  xwould be contrary to our objective of prohibiting encroachment on the geographic area licensee's  S' xMoperations. As we explained for our 900 MHz SMR service"  yO[ ' " ԍAmendment of Parts 2 and 90 of the Commission's Rules to Provide for the Use of 200 Channels Outside  x the Designated Filing Areas in the 896901 MHz and the 935940 MHz Bands Allotted to the Specialized Mobile  {O ' xo Radio Pool, Second Report and Order and Second Further Notice of Proposed Rulemaking, 10 FCC Rcd 6884, 6901,  47 (1995). and reiterated in the Second Report and  Si' xOrder and Further Notice,i  {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2764,  57. our objective is to allow incumbents to continue existing operations without  xharmful interference and to give them the flexibility to modify or augment their systems so long as they  xDdo not encroach upon the geographic area licensee's operations. At the same time, a systemwide license  xis not intended to expand an incumbent's system beyond the contours of its individual sites. Incumbent  xlicensees seeking to expand their contours may participate in the auction of geographic area licenses, or may seek partitioning agreements with the geographic area licensee.  S ' e  40.` ` Blooston seeks clarification as to whether the discontinuance of operation of an interior  S ' xsite would jeopardize a systemwide license.N  yO'ԍBlooston Petition at 9.N Where a systemwide licensee allows an area within its  xxsystem to revert to the geographic area licensee, the systemwide license shall remain intact; however, the  xparameters of the systemwide license shall be amended to the demarcation of the remaining contiguous interference contours.  S' e ~41.` ` ProNet asserts that incumbents should be permitted to include remote transmitters linked  xto contiguous systems via control/repeater facilities or by satellites within their systemwide licenses, or  xuin the alternative should be allowed to maintain separate licenses for any remote, standalone  S:' xktransmitters.:,  yO'ԍProNet Petition at 89; ProNet Comments on Petitions for Reconsideration at 9. We agree. We will allow licensees to include in systemwide licenses remote, standalone  x*transmitters that are linked to contiguous systems via control/repeater facilities or by satellites. Including  x3these remote, standalone sites in the systemwide license, however, in no way expands the licensee's  x*composite interference contours. We will also permit licensees to maintain separate sitespecific licenses  xfor remote, standalone transmitters. We believe that this will reduce unnecessary regulatory burdens on  xlicensees, reduce administrative costs on the industry, and thereby benefit consumers. We further find that an incumbent licensee should be permitted to obtain multiple systemwide licenses where applicable. " ,l(l(,,q"Ԍ S' C. Interference  S'` ` 1. CoChannel Interference Protection for Incumbent Licensees  S4' e m42.` ` Background . Cochannel interference rules are designed to protect licensees from  xQinterference caused by other licensees operating facilities on the same channel. Exclusive paging systems  xkare protected from cochannel interference by a variety of rules that govern transmitter height and power,  xdistance between transmission stations, the licensee's protected service area, and the field strength of the  Sh' xlicensee's service and interfering signals.h {O' "_ ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2768,  66 (citing Notice, 11 FCC Rcd at 3119,  46). For the CCP channels below 931 MHz, we use mathematical  x@formulas to determine the distance from each transmitting site to its service and interference contours  S' xalong the eight cardinal radials from the transmitter site." {O ' "y ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2768,  67; 47 C.F.R.  22.537 & 22.567. The lower band CCP channels are located at 3536 MHz, 4344 MHz, 152159 MHz, and 454460 MHz. To determine service and interference contours  S' xfor the 931 MHz channels, we use two tables of fixed radii, Tables E1 and E2.| {O' " ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2768,  67 (citing 47 C.F.R.  22.537(e) & (f)). Prior to adoption of  S ' xthe Second Report and Order and Further Notice, for the 929 MHz exclusive channels, we used  xgeographic separation rules that agreed with the separations that result from the application of the fixed  S7 ' xradii tables for 931 MHz.f7  {O'ԍId. (citing 47 C.F.R.  90.495(b)(2)(1996)).f Unlike our CCP rules, at that time, our PCP rules did not formally define  S 'a protected service or interference contour for each station._ h  {O 'ԍSee Notice, 11 FCC Rcd at 3120,  54._  S ' e ' 43.` ` In the Notice, we proposed to adopt the eightradial contour method and new mathematical  xformulas, rather than fixed tables, to determine the service and interference contours for the exclusive 929  S9' xMHz and 931 MHz channels.\9  {O'ԍId. at 311920,  4955.\ We found that using these formulas would more reasonably predict  xppotential interference to incumbents and provide geographic area licensees with greater flexibility in  S' xplacing their facilities.L  {O'ԍId. at 3119,  50.L The commenters addressing this issue strenuously objected to our proposal,  xstating that our proposed method could require incumbents to reduce coverage or be required to accept  Sm' xinterference from geographic area licensees.m {O+"'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 276869,  68. Consequently, we decided not to adopt the proposed  S:' xIformulas.L: {O$'ԍId. at 2769,  69.L We did, however, adopt Tables E1 and E2 for the exclusive 929 MHz and 931 MHz":B,l(l(,,"  S' xgchannels, thus maintaining the status quo for 931 MHz channels and conforming 929 MHz channels to  S'the current procedures for 931 MHz channels.: {O6'ԍId.:  Sh' e 44.` ` Discussion. Several petitioners now request that instead of using Tables E1 and E2, we  xcpermit incumbents to employ alternative formulas to determine the interference contours of "fillin"  S' xtransmitters.cxZ yO' "I ԍAirTouch Comments on Petitions for Reconsideration at 17; Arch Petition at 25; Arch Opposition at 13;  x Blooston Petition at 910; Blooston, Mordkofsky, Jackson & Dickens Reply to Oppositions and Comments on  x7 Petitions for Reconsideration (Blooston Reply) at 78; ProNet Petition at 918; ProNet Comments on Petitions for  xx Reconsideration at 1012; Reply of ProNet Inc. (ProNet Reply) at 78. Fillin transmitters are "[t]ransmitters added  xZ to a station, in the same area and transmitting on the same channel or channel block as previously authorized  x; transmitters, that do not expand the existing service area, but are established for the purpose of improving reception in dead spots." 47 C.F.R.  22.99.c PageNet suggests using signal strength criteria, rather than alternative formulas, for  S' xEdetermining the interference contours of "fillin" transmitters. yO ' " ԍPageNet Reply at 36. PageNet initially opposed petitioners' proposals of alternative formula, arguing that they would only lead to litigation between incumbents and geographic area licensees. PageNet Opposition at 1112. We do not find that permitting  xincumbents to use different formulas for "fillin" transmitters will serve the public interest. The record  xin this proceeding supports our decision to use Tables E1 and E2 to determine interference and service  S6' xtcontours for all 929 MHz and 931 MHz transmitters.6  {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2769,  69. We find that to permit incumbents to add sites  xunder alternative formulas depending on the location and power of each of their transmitters significantly  S' xraises the risk of encroachment on a geographic area licensee's territory.  yO' " ԍTables E1 and E2 provide both the geographic area licensee and incumbent licensee with an objective  x standard for determining where they can place their transmitters without causing interference. As we stated in the  {O' x Second Report and Order, formulas would, in most cases, reduce the service area and composite interference contour  {ON' xU that incumbent licensees have relied on in developing their systems to date. Second Report and Order and Further  {O' x@ Notice, 12 FCC Rcd at 2769,  69. Further, formulas may underestimate the actual reliable coverage of paging  {O'systems.  Id.  In addition, the incumbent will  xhave the opportunity to cover any existing gaps in coverage by either competing for the geographic area  xlicense or by partitioning from the geographic area licensee. Thus, we affirm our earlier decision to use Tables E1 and E2 to determine interference contours for both perimeter and "fillin" transmitters.  S '5 ` ` 2. Adjacent Geographic Area Licensees  Sk'  45.` ` Background. In the Notice, we sought comment on a geographic area licensee's  S9' xobligations to resolve possible interference concerns of adjacent geographic area licensees by: (1) 5reducing  xthe signal level at the service area boundary; or (2) negotiating a mutually acceptable agreement with the  S' xneighboring geographic area licensee.[ {Ow$'ԍNotice, 11 FCC Rcd at 3121,  62.[ In the Second Report and Order and Further Notice, we  x7concluded that geographic area licensees should be able to negotiate mutually acceptable agreements with",l(l(,,U"  S' xtall adjacent geographic area licensees if their interfering contours extend into other geographic areas. {Oh'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2771,  73.  xQWe also indicated that adjacent licensees have a duty to negotiate in good faith with one another regarding  xcochannel interference protection. We noted that lack of adequate service to the public because of failure  x}to negotiate reasonable solutions with adjacent geographic area licensees could reflect negatively on  S4'licensees seeking renewal.:4Z {O.'ԍId.:  S'` `  S' e v46.` ` Discussion. Certain parties now seek clarification of the good faith negotiation  S' xrequirement, arguing the standard is vague and invites litigation. yO' 'ԍAirtouch Comments on Petitions for Reconsideration at 18; Blooston Petition at 17; ProNet Petition at 23. Blooston further notes that while the  xcellular industry has negotiated agreements, paging coordination will be more difficult because paging  xcarriers operate on only one frequency, while cellular carriers have many channels with which to  S' xknegotiate.I| yO'ԍBlooston Petition at 17.I The Second Report and Order and Further Notice adopted the good faith standard to provide  xflexibility for licensees to negotiate mutually acceptable agreements. Thus, adjacent geographic area  xlicensees have a duty to negotiate with each other in good faith regarding cochannel interference  xprotection when an interfering contour extends into an adjacent geographic area or areas. Providing for  x7adjacent geographic area licensees to negotiate mutually acceptable agreements should reduce the amount  xpof unserved area that could result from specifying a minimum distance a geographic area licensee's  S ' xtransmitter must be from a geographic border.  {O}'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2771,  73. In other services, such as the Multipoint Distribution  xkService (MDS), we have expected licensees to cooperate among themselves to resolve interference issues  Sk' xbefore bringing them to the attention of the Commission.Zk {O'ԍSee 47 C.F.R.  21.902(a) & (b).Z Based on the limited number of interference  xcomplaints that the Commission has been called upon to resolve, we believe this policy has worked well  xin the MDS service. Moreover, none of the parties have proposed a better way to achieve flexibility and the reduction of unserved areas. We therefore affirm our previous conclusion.  Sl' ` ` 3. Channel Exclusivityq   S' e 47. ` ` Background . Prior to 1993, all PCP channels were assigned on a nonexclusive basis.  xIn 1993, the Commission established rules allowing PCP carriers in the 929930 MHz band to obtain  xchannel exclusivity as local, regional, and nationwide paging systems on thirtyfive of the forty 929 MHz  Sm' xPCP channels.\m0  yO="' " ԍAmendment of the Commission's Rules to Provide Channel Exclusivity to Qualified Private Paging Systems  {O#' x at 929930 MHz, Report and Order, 8 FCC Rcd 8318 (1993) (PCP Exclusivity Order). The five remaining channels  {O#'continued to be licensed on a shared basis. Id. Those licensees that qualified for exclusivity as a local, regional, or nationwide system  xat that time were grandfathered as exclusive licensees, and required to maintain their existing sharing  xarrangements with other licensees, but were protected from the addition of other licensees on these" T ,l(l(,,"  S' x channels.L {Oh'ԍId. at 8329,  31.L Thus, no application for a new paging site would be granted on a channel assigned to an  x&incumbent who qualified for exclusivity if the applicant proposed a paging facility that did not comply  S' xQwith the separation standards based on antenna height and transmitter power of the respective systems.Z {O' "} ԍId. at 8330,  32; see 47 C.F.R.  22.537. We note that no application would be granted on a channel where a licensee qualified for nationwide exclusivity.  xAll other incumbent licensees were grandfathered with respect to their existing systems as shared licensees,  S4' xand required to continue to share channels with each other.i4 {O 'ԍPCP Exclusivity Order, 8 FCC Rcd at 8329,  31.i We note that grandfathered licensees could  x8not add stations to their existing systems in areas where a cochannel licensee had qualified for  S' xexclusivity.x^F {O ' "I ԍId. at 8330, n.66. Even where expansion was not allowed, however, we allowed grandfathered licensees to  {O~ ' x* make minor modifications needed to maintain an existing system (e.g., relocation of a transmitter upon expiration  {OH'of site lease). Id.x Therefore, on these thirtyfive 929 MHz channels, we have: (1) exclusive incumbents:  xggrandfathered exclusive systems that are exclusive with respect to new licensees, but share with other  xDgrandfathered licensees; (2) nonexclusive incumbents: grandfathered shared licensees; (3) licensees who  S5' xtfailed to construct enough sites to qualify for exclusivity under the PCP Exclusivity Order (considered  x"secondary" with respect to licensees with earned exclusivity); and (4) licensees with earned exclusivity.  S' xIn the Second Report and Order and Further Notice, we concluded that geographic area licensees must  S 'provide cochannel protection to all incumbent licensees. l  {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2769,  69.  S8 ' e 48.` ` Discussion . PCIA, PageNet, and ProNet seek clarification as to whether nonexclusive  S ' xt929 MHz licensees operating on the thirtyfive exclusive channels (i.e., categories 2 and 3 in the above  S ' xparagraph) will receive the same interference protection as an exclusive licensee.  yOq' " ԍPageNet Petition at 18; PageNet Opposition at 14; PageNet Reply at 13; PCIA Petition at 16; ProNet Petition at 24. AirTouch and Arch  xseek clarification that the Commission did not elevate incumbent licensees operating on shared channels  Sm' xto exclusive status.mV  yOc'ԍArch Petition at 89; Arch Reply at 57; AirTouch Comments on Petitions for Reconsideration at 2021. PageNet specifically argues that section 22.503(i) will require that nationwide  xgeographic area licensees terminate sharing arrangements they have with nonexclusive licensees and  S' xprovide interference protection to them.K yO 'ԍPageNet Petition at 1718.K API, however, contends that section 22.503(i) does not require  xthe termination of existing channel sharing arrangements involving exclusive incumbent licensees and non S' xexclusive incumbent licensees.v yO#'ԍComments of American Paging, Inc. (API Comments on Petitions for Reconsideration) at 4. Nonexclusive incumbent licensees on the thirtyfive exclusive 929 MHz  xchannels will continue to operate under the same arrangements established with the exclusive incumbent  S;' xlicensees and other nonexclusive incumbent licensees prior to the adoption of the Second Report and  S ' xOrder and Further Notice. We further clarify that MEA, EA, and nationwide geographic area licensees  xwill be able to share with nonexclusive incumbent licensees on a noninterfering shared basis. The non"!,l(l(,,"ԫ xgexclusive incumbent licensees must cooperate with the nationwide and geographic area licensees' right  x}to share on a noninterfering shared basis. Accordingly, we amend section 22.503(i) to clarify that  xgnationwide and geographic area licensees are afforded the right to share with nonexclusive incumbent  Sg' x@licensees on a noninterfering shared basis. As for shared PCP channels, we concluded in the Second  S5' xReport and Order and Further Notice that licensees on these channels will not be converted to exclusive  S' xstatus and that these channels will not be subject to competitive bidding. {Ok'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 275658,  40. Therefore, licensees on these shared channels will continue to share with any future licensees.  Sj'` ` 4. Mobile Telephone Providers and Control Links  S' e 49.` ` Background . Blooston requests that we grant full interference protection to existing  S' xgcontrol link Z yO ' " ԍA control link or "control transmitter" is a fixed transmitter in the Public Mobile Services that transmits  x! control signals to one or more base or fixed stations for the purpose of controlling the operation of the base or fixed  x stations, and/or transmits subscriber communications to one or more base or fixed stations that retransmit them to subscribers. 47 C.F.R.  22.99. operations on the UHF and VHF paired channels originally allocated for mobile telephone  S ' xservice once the "auction for the UHF and VHF common carrier channels" is completed.I B yO'ԍBlooston Petition at 22.I Blooston  Sk ' xcontends that in reliance on the Commission's proceeding in CC Docket 87120, which permitted paging  xcarriers to use these twoway channels as control links, "numerous carriers have configured their paging  S ' xtsystems on [the] basis of their protected use of a VHF or UHF frequency to link their base stations.":  {Ow'ԍId.:  xD Consolidated requests clarification as to whether incumbent mobile telephone service providers operating  S ' xMon the lower paging frequencies will be protected from interference from geographic area licensees.O d  yO'ԍConsolidated Petition at 10. O  xZFurthermore, Consolidated requests that incumbent mobile telephone service providers be permitted to  S9'obtain additional site licenses on a secondary basis.:9  {O'ԍId.:  S'  S' e  50.` ` Discussion . We conclude that Blooston's request to protect control link operations is  xunclear and outside the scope of this proceeding. Our rules do not generally provide protection from  Sm' x7interference to fixed stations\m  {O ' " ԍSee 47 C.F.R.  22.351(c)(4) (providing that "[e]xcept as provided elsewhere in this part, no protection from  {O]!' x interference is afforded in the following situations: . . . (4) Interference to fixed stations. Licensees should attempt to resolve such interference by technical means or operating arrangements"). and Blooston's request would require a rulemaking to develop interference  xMcriteria, which is beyond the scope of this proceeding. In addition, Blooston's request is unclear. For  xexample, Blooston does not specify whether any protection provided should apply to the mobile channel  xused as a control link or the base channel used as a control link. We therefore deny Blooston's request.  xWith respect to Consolidated's request for clarification, we reiterate that geographic area licensees must"",l(l(,,r"  xprovide cochannel protection to all incumbent licensees, including incumbent mobile telephone service  S'providers operating on the 150 MHz and 450 MHz bands. {O5'ԍSee Second Report and Order and Further Notice, 12 FCC Rcd at 2769,  69.  Sg' e 51.` ` We will not, however, grant Consolidated's request that incumbent mobile telephone  S4' xservice providers be permitted to obtain additional site licenses on a secondary basis. In the Second  S' x&Report and Order, we permitted BETRS operators to obtain site licenses on a secondary basis.LZ {O'ԍId. at 2753,  34.L We  xnoted that BETRS primarily serves rural, mountainous, and sparsely populated areas where it would be  S' xtimpractical to provide wireline telephone service.\ {O) 'ԍId. at 2749 & 2753,  26 & 34.\ We also stated that if any geographic area licensee  xsubsequently notifies the BETRS licensee that a secondary facility must be shut down because it may  xcause interference to the paging licensee's existing or planned facilities, the BETRS licensee must  S' xdiscontinue use of the particular channel at that site no later than six months after such notice.O~ {O"'ԍId. at 275354,  35.O While  xwe are generally aware that twoway incumbent mobile telephone service providers serve rural areas in  S ' xgthe western part of the country,L  {ON'ԍId. at 2754,  36.L Consolidated provides no information at all for determining whether  x@to permit incumbent mobile telephone service providers to operate facilities on a secondary basis. We therefore deny Consolidated's request.  S ' D.` ` Shared Channels  Sl' e 52.` ` Background . In the Notice, we sought comment on whether to use geographic area  S:' xlicensing for the shared PCP channels in the 152158 MHz, 462 MHz, and 465 MHz bands.[: {O|'ԍNotice, 11 FCC Rcd at 3115,  31.[  x7Specifically, we sought comment on whether we should: (1) convert lower band shared PCP channels to  xMexclusive use and implement geographic area licensing; (2) issue only a certain number of licenses per  x@shared channel and use competitive bidding to choose among mutually exclusive applications once the  Sn'limit is reached; or (3) retain the status quo.Mn4  {OB'ԍId. at 3115,  32. M  S ' e 53.` ` Most commenters who responded to this issue in the Notice were opposed to geographic  S' xZarea licensing for the shared channels and sought to retain the status quo.  {O="'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 275455,  38. In the Second Report and  S' xOrder and Further Notice, we found that the cost and disruption caused by converting shared channels  Ss' x*to exclusive channels and subjecting them to competitive bidding would outweigh the benefits.LsX  {Ok%'ԍId. at 2756,  40.L We did  xnot impose a limit or "cap" on the number of licensees for each of the shared channels, as we found that  x capacity limits of paging channels are based primarily on use and not the number of licensees. Thus," #,l(l(,,"  S' xc"capping" the number of licensees would not necessarily ensure efficient spectrum use.L {Oh'ԍId. at 2757,  42.L We also  S' xdetermined in the Second Report and Order that pending the resolution of issues related to consumer fraud  S' xaddressed in the Further Notice, we would retain our interim licensing rules, which limited applications  xto incumbents seeking to expand their systems. We did, however, eliminate the 40mile requirement for  S6' xnew sites, allowing incumbents to file for new sites at any location.L6Z {O0'ԍId. at 2757,  43.L Finally, noting that we would not  xgrant applications proposing operations on a commercial basis, we allowed new applicants to file  S' xapplications for private, internaluse systems,: {O\ 'ԍId.: and we reiterated that Special Emergency Radio Service  xkproviders would remain exempt from the licensing freeze and could continue to file applications on shared  Sj'channels.Oj~ {O 'ԍId. at 275758,  43.O  S' 54.` ` Discussion . Preferred Networks and Teletouch oppose granting new applicants licenses  S' xfor private, internaluse systems.Z yO' " ԍPreferred Networks, Inc. Petition for Reconsideration (Preferred Networks Petition) at 35; Teletouch  {OI' x7 Licenses, Inc. Petition for Reconsideration (Teletouch Petition) at 710; see AirTouch Comments on Petitions for Reconsideration at 2021; and Metrocall Response to Petitions for Reconsideration at 1718. Preferred Networks alleges that allowing new applications would  S ' xMencourage speculative applications.U 2  yOp'ԍPreferred Networks Petition at 3, 5.U Teletouch argues that allowing new applications would result in  Sk ' xxharmful congestion on the shared PCP channels.Kk  yO'ԍTeletouch Petition at 89.K As a remedy, Preferred Networks and Teletouch urge  S8 ' x us to retain our interim rules, which limit the filing of new applications primarily to incumbents.38 R  {O*' " ԍPreferred Networks Petition at 3; Teletouch Petition at 7; see AirTouch Petition at 20 (generally supporting  {O'the request of Preferred Network and Teletouch "to limit the further sharing of all shared frequencies").3 In  xxthe alternative, Preferred Networks and Teletouch suggest that we: (1) require new applicants to perform  xgchannel loading analyses; (2) restrict their emission to digital pages; and (3) adopt and enforce channel  x8sharing arrangements requiring new applicants to accept reasonable sharing arrangements with  Sl' x3incumbents.zl {O'ԍPreferred Networks Petition at 4; see Teletouch Petition at 9, n.6.z TSR Paging also requests that the Commission limit applications filed on the 929 MHz  S9' xshared channels to incumbent licensees.C9@ yO"'ԍTSR Paging at 25.C Preferred Networks and Teletouch further urge the Commission  xto limit incumbents' expansion applications to sites that are within 75 miles of an existing facility, in lieu  x8of the 40mile requirement that we have eliminated, to deter incumbents from filing speculative  S' xapplications.o yO&'ԍPreferred Networks Petition at 56; Teletouch Petition at 37.o Finally, Preferred Networks and Teletouch ask that the Commission permit applications"$`,l(l(,,o"  xfrom public safety and medical services providers for shared channels only upon certification that no  S'public safety channels are available to meet those providers' needs. {O5' "u ԍPreferred Network Petition at 4; Teletouch Petition at 910; see Metrocall Response to Petitions for Reconsideration at 18.  Sg' e 55.` ` We do not believe that eliminating the opportunity for new licensees to establish service  xon shared channels serves the public interest because it does not promote efficient use of spectrum. As  S' xwe stated in the Second Report and Order and Further Notice, the capacity limits on paging channels are  S' xbased primarily on use and not the number of licensees." {O 'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2757,  42. We do not believe that concerns about  xspeculation or congestion on shared channels are sufficient at this time to warrant additional burdens on  xQnew applicants. We have no evidence, and Preferred Network has provided no evidence, that speculative  xapplications have created problems in connection with private, internaluse systems. Moreover, Teletouch  S' xbases its arguments about congestion on hypothetical situations.K yOW'ԍTeletouch Petition at 89.K Our goal is to increase the use of these  xshared channels, not to unduly restrict access to them. After reviewing the record, therefore, we affirm  xcour previous decision and decline to impose limits on the number of licensees for each channel in a  xparticular area. We will take further action if we find that the transition of the exclusive channels to  xQgeographic area licensing results in congestion and interference problems on the shared channels, causing  xQoverall service to the public to be reduced. We also decline to adopt a certification requirement for public  x*safety providers. Because petitioners once again base their arguments on hypothetical situations, we find  xit inappropriate to impose additional requirements on public safety providers at this time. Finally, we will  Sk' xbe removing our interim licensing rules on all the shared paging channels.MkD {OO'ԍSee infra at  167.M Accordingly, we decline to impose any mileage limitations on expansion applications to provide service on shared paging channels.  S' e  56.` ` AirStar contends that the Commission should reconsider its decision not to subject the five  S' x929 MHz nonexclusive channels to competitive bidding. yO'ԍAirStar Paging Inc. Petition for Clarification and Reconsideration (AirStar Petition) at 8. AirStar argues that a geographic area license  xon a shared 929 MHz channel would be more valuable than a geographic area license for an exclusive  x&channel because the geographic area licensee on a shared channel would receive the right to serve the  xentire geographic area, whereas geographic area licensees on exclusive channels only receive the right to  S' xbuild out in unserved area.f  {O' " ԍId. at 9. AirStar states that a geographic area licensee of a nonexclusive channel would receive the last  {O 'right to timeshare throughout the entire region covered by the license. Id. AirStar further explains that the geographic area licensee would have a  xgreater incentive to make the investment in equipment necessary to support efficient time sharing if it does  Sm' xnot have to plan against the possibility of an unlimited number of additional entrants in the market.Am  {O#'ԍId. at 10.A We  x/decline to reconsider our decision not to subject shared channels to competitive bidding. AirStar's  xarguments to include shared channels in competitive bidding are effectively a request to limit the number"%T ,l(l(,,"  xof licensees authorized to operate on shared channels. As previously stated, we decline to impose limits  S'on the number of licensees for each channel in a particular area. {O5' " ԍIn addition, in the Second Report and Order and Further Notice, we eliminated finders' preferences  xD immediately for paging services, dismissed all pending finder's preference requests, and stated that we would no  {O' x longer accept finders' preference requests upon adoption of the Second Report and Order. Second Report and Order  {O' x and Further Notice, 12 FCC Rcd at 2745,  18. AirStar's petition requests that the Commission process its finder's  {O[' x| preference request pending at the time the Second Report and Order was adopted. AirStar Petition at 48. However,  x AirStar and Nationwide Paging Inc. subsequently sought withdrawal of AirStar's finder's preference request pursuant  xI to a settlement agreement. Letter from Frederick M. Joyce, Attorney for Nationwide Paging, Inc. to Steve  xk Weingarten, Acting Chief, Commercial Wireless Division of 3/20/98. The withdrawal request and issues raised in AirStar's petition regarding its finder's preference request will be disposed of in a separate order.  Sg' e ~57.` ` Metrocall requests that we adopt specific interference rules for shared frequencies, and  S4' xprovide shared frequency licensees with some form of exclusivity protection.M4 yOt 'ԍMetrocall Petition at 1922.M In the Second Report and  S' xOrder and Further Notice, we found that shared channels are heavily used by incumbent systems, many  x&of whom have entered into timesharing or interconnection agreements to avoid interference with one  S' xanother.0  {Om'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2756,  40. We believe the imposition of specific interference requirements at this time could jeopardize  xthe viability of some of these existing relationships. Each licensee who chooses to operate on these shared  x^channels is aware that these channels are, by definition, not for exclusive use and should expect that such  S' x@private agreements may be necessary. In fact, we noted in the Second Report and Order and Further  S' xNotice that several commenters had pointed out in response to the Notice that incumbents would not  xbenefit from receiving interference protection for their existing service areas, because systems on shared  Sm ' xchannels have not developed based on a protected service area model.Nm  {O'ԍId. at 2756,  41. N Metrocall has not provided any  xpinformation that indicates otherwise. We therefore decline to adopt interference rules, as Metrocall requests.  S ' E. Coordination with Canada  S;' e   58.` ` Background . In the Second Report and Order and Further Notice, we indicated that  xZgeographic area licensees will have to file sitespecific applications with the Commission, if such filing  S' xtis necessary for coordination with Canada.mZT  {O' "8 ԍId. at 2745 n.52, 2748 n.70 & 2749 n.73. As we also indicated, licensees must file applications with the  x Commission when coordination with Mexico is required. No comments were submitted seeking clarification of the filing procedures for sites in the U.S./Mexico border area. m Currently, certain paging facilities north of line A or east"&v,l(l(,,^"  S' xof Line C on certain channels are coordinated on a sitebysite basis with Industry Canada." {Oh' " ԍSee 47 C.F.R.  1.923, 22.531(e). Industry Canada is the Canadian agency that regulates  x telecommunications services and their providers in Canada. The Commission uses Line A and Line C as a  yO' x coordination point with Canadian authorities in the assignment of paging channels. Line A and Line C are defined in section 2.1 of our rules, 47 C.F.R.  2.1.  The licensee  S' xQfiles an application with the Commission and the Commission obtains clearance from Industry Canada.W {O'ԍSee 47 U.S.C.  90.175(c). W   S'  Sg' e '59.` ` Discussion . Blooston requests clarification regarding whether a geographic area licensee  xmust submit a Form 600 to install a transmitter north of Line A on those channels that require Canadian  S' xcoordination.ID yO 'ԍBlooston Petition at 18.I Blooston also requests clarification regarding whether an incumbent licensee must file  xa Form 600 before it can implement fillin transmitters and permissive relocations north of Line A on  xthose channels that require Canadian coordination. Blooston requests that the Commission establish an  Sh'expedited procedure for coordination with Canada.:h {O'ԍId.:  S' e 60.` ` The Commission is bound by international agreement to coordinate with the Canadian  xpgovernment (Industry Canada) stations using certain frequencies north of Line A or east of Line C.  xIncumbent and geographic area licensees on the lower paging channels must submit a Form 600 (or Form  xk601) to obtain authorization to operate stations north of Line A or east of Line C because the lower paging  S6 ' xgchannels are subject to the Above 30 Megacycles per Second Agreement with Industry Canada.6 f  yO<' "Z ԍCanada Telecommunication: Coordination and Use of Radio Frequencies Above 30 Megacycles per Second, October 24, 1962, as amended, June 24, 1965, U.S.Canada. The  S ' xU.S.Canada Interim Coordination Considerations for the Band 929932 MHz, as amended, assigns  xtspecific 929 and 931 MHz frequencies to the United States for licensing along certain longitudes above  x3Line A, and assigns other specific 929 and 931 MHz frequencies to Canada for licensing along certain  x^longitudes along the U.S.Canada border. As a result, frequency coordination with Canada is not required  xtfor the 929 and 931 MHz frequencies that U.S. licensees are permitted to use north of Line A pursuant  S' xgto that agreement. "  yOd' " ԍInterim Coordination Considerations for the Band 929931 MHz, Sept. 14, 1983, as amended, Further  x Interim Coordination for the Shared 931931 MHz, Feb. 10, 1987, as amended, Letter from Robert W. McCaughern,  x* Deputy Director General, Engineering Programs Branch, DOC, to Bruce Franca, Deputy Chief Engineer, Office of  {O'Engineering and Technology, FCC of July 22, 1992; see 47 C.F.R.  22.531(e).  In addition, the 929 and 931 MHz frequencies assigned to Canada are unavailable  S' xfor use by U.S. licensees above Line A as set out in the agreement.: {O"'ԍId.: Finally, we agree with Bloostons  xsuggestion that the Commission take steps to expedite the coordination of applications with Industry  xDCanada. To this end, we are implementing electronic filing and automated coordination procedures to the  S:'extent practical and allowable under our agreements with Canada.o:: {O&'ԍSee ULS Report and Order, 13 FCC Rcd 21027 (1998).o "',l(l(,,"Ԍ S'4 F. Power Requirements  S' e q61.` ` Background. To establish technical parity between 929 MHz and 931 MHz licensees,  Sg' x&in the Second Report and Order and Further Notice the Commission eliminated the Part 90 height 4and  xZpower limitations on 929 MHz stations and increased the maximum permitted effective radiated power  S' xk(ERP) for 929 MHz stations to 3500 watts. {Oj'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 277374,  78. The Commission determined that paging systems operating  x3on the 929 MHz band are virtually identical to the paging systems operating on the 931 MHz band and  S' xshould be subject to the same height and power rules.:Z {O 'ԍId.: In addition, the Commission noted that  xconforming these rules allows paging licensees to design their systems in the most efficient manner,  xespecially when integrating two systems where one operates in the 931 MHz band and the other operates  S'in the 929 MHz band.: {O 'ԍId.:  S ' e '62.` `  Discussion . Petitioners request clarification as to whether incumbent 929 MHz licensees  xQmust file a modification application to increase the current ERP for their base stations up to the maximum  S7 ' xpermissible, 3500 watts.7 ~ yOU'ԍMetrocall Petition at 23; Morris Petition at 1112; Nationwide Petition at 1112. In the First Report and Order, we allowed 929 MHz and 931 MHz licensees  xZto make internal system changes without filing an application with the Commission so long as they did  S ' xZnot expand the composite interference contour of their existing stations as determined by Table E2.t  {O'ԍFirst Report and Order, 11 FCC Rcd at 16587,  35.  t  x Similarly, we will not require 929 MHz licensees to file a modification application to increase the ERP  xfor base stations at any location, including exterior base stations, as long as they do not expand their  xIcurrent composite interference contour. Thus, licensees may modify power levels without filing a  x3modification application only to the extent that their composite interference contour, as determined by  S' x Table E2, remains constant or decreases. {O' " ԍThe Second Report and Order and Further Notice adopted the fixed distances in Tables E1 and E2 in  {O' x^ section 22.537 for the exclusive 929 MHz and 931 MHz channels. Second Report and Order and Further Notice,  x 12 FCC Rcd at 276970,  69. Therefore, a base station that is less than 177 meters can increase its ERP to 3500  x; watts without increasing its interference contour as defined by Table E2. However, a base station above 177 meters  {O7'that increases its ERP may increase its interfering contour, as well, as defined by Table E2; see 47 U.S.C.  22.537. Again, we restate that, pursuant to the First Report and  S'Order, an incumbent licensee is not permitted to increase its composite interference contour.nV  {O 'ԍFirst Report and Order, 11 FCC Rcd at 16587,  35. n  So'  S<' G. Co verage Requirements   S' e S  63.` `  Background. In the Second Report and Order and Further Notice, we stated that  x3coverage requirements are needed as performance requirements to deter speculation, promote prompt  xservice to the public, prevent warehousing, promote rapid deployment of new technologies and services,"q(,l(l(,,i"  S' xcand promote service to rural areas. {Oh'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 276667,  63. We concluded that for each MTA or EA the geographic area  xlicensee must provide coverage to onethird of the population of the entire area within three years of the  xlicense grant, and to twothirds of the population of the entire area within five years of the license grant;  xMor in the alternative, the MTA or EA licensee may provide substantial service to the geographic license  S4' xarea within five years of license grant.4Z {O.' "/ ԍId. "Substantial service" is defined as service that is sound, favorable, and substantially above a level of  {O'mediocre service, which would barely warrant renewal. Id. at 276667,  63. In addition, we concluded that failure to meet our coverage  S' xrequirements would result in automatic termination of the geographic area license.L {OW 'ԍId. at 2767,  64.L We stated that we  xwould reinstate any licenses that were authorized, constructed, and operating at the time of termination  S'of the geographic area license.:H {O 'ԍId.:  S5' e 64.` ` Discussion . PageNet advocates requiring the geographic area licensee to provide coverage  S' xto onethird of the market area within one year, and twothirds within three years.H yO|'ԍPageNet Petition at 10.H PageNet states that  S' x@paging carriers have been able to construct substantial systems in under twelve months.:j  {O'ԍId.: ComNav,  xVentures in Paging, and OTC argue, however, that small companies will have difficulty meeting PageNet's  xsuggested coverage requirements, especially if they must construct in rugged areas with low population  S6 ' xdensity to cover twothirds of the population. 6  yO' "c ԍLetter from ComNav, Inc. d/b/a Radio Telephone of Maine to William F. Caton, Acting Secretary, Federal  x Communications Commission of 5/8/97; Letter from Ventures in Paging, L.C., to William F. Caton, Acting  xD Secretary, Federal Communications Commission of 5/8/97; Letter from Oregon Telephone Corporation to William F. Caton, Acting Secretary, Federal Communications Commission of 5/9/97, at 2. Ventures in Paging suggests that if the Commission  xchooses to follow PageNet's suggestion, it should permit an exemption for small businesses or create an  S 'exception for EAs that contain a significant number of rural communities.  yOT' " ԍLetter from Ventures in Paging, L.C. to William F. Caton, Acting Secretary, Federal Communications Commission of 5/8/97.  Sj' e 65.` ` We decline to adopt PageNet's proposal. We believe that our previously adopted coverage  xrequirements adequately promote prompt service to the public without being unduly burdensome on  xtlicensees that require a reasonable amount of time to complete construction. We find that areas which  xare currently unserved have remained so in spite of the fact that paging service has existed for many years  xtand is extremely competitive in some markets. This finding suggests that providers of service in these  xareas may face unusual difficulties. Moreover, we find that overly stringent coverage requirements would unfairly favor incumbents by erecting a formidable barrier to entry. ")<,l(l(,,"Ԍ S' e 066.` ` Petitioners argue that the "substantial service" alternative should be eliminated because it  S' xwill encourage speculation, greenmail and anticompetitive conduct.OZ {O5' "8 ԍSee AirTouch Comments on Petitions for Reconsideration at 911; Blooston Petition at 68; Metrocall  x Petition at 16; Metrocall Response to Petitions for Reconsideration at 16; PageNet Petition at 79; PCIA Petition at 710; ProNet Petition at 2122.O However, in some MEAs or EAs,  xtan incumbent licensee may already serve more than onethird of the population. The elimination of the  Sg' xsubstantial service alternative would prevent a potential cochannel licensee other than the incumbent (e.g.,  x+a licensee in an adjacent market) from bidding in these markets because the fiveyear coverage  xrequirement could only be satisfied by the incumbent. The option of providing a showing of substantial  xservice allows those MEA and EA licensees who cannot meet the threeyear and fiveyear coverage  x/requirements because of the existence of incumbent cochannel licensees to satisfy a construction  xrequirement. Moreover, we recognize that the unserved areas of many MEAs and EAs are rural areas that  xmay be more difficult to serve than urban areas. We think it is in the public interest to encourage build xZout in rural areas by allowing licensees to make a substantial service showing. Further, the substantial  xservice option enables licensees to use spectrum flexibly to provide new services without being concerned  xQthat they must meet a specific percentage of coverage benchmark or lose their license. Elimination of the  xsubstantial service alternative would be inconsistent with promoting competition and opportunities for new  S7 ' xkentrants. 7  yO' "p ԍSection 309(j) of the Communications Act requires the Commission to promote economic opportunity and  x competition and ensure that new and innovative technologies are readily accessible to the public by avoiding  x excessive concentration of licenses and by disseminating licenses among a wide variety of applicants. 47 U.S.C.  309(j)(3)(B).  We also note that our approach here is consistent with the coverage requirements imposed on  S ' xMgeographic area licensees in the 220 MHz service.\j   {Ov' " ԍSee Amendment of Part 90 of the Commission's Rules to Provide for the Use of the 22022 MHz Band by  {O@' x the Private Land Mobile Service, Third Report and Order and Fifth Notice of Proposed Rulemaking, 12 FCC Rcd  {O ' x 10943, 1101921,  160163 (1997) (220 MHz Third Report and Order); 47 C.F.R.  90.767. We note that in the  x 220 MHz service, the "substantial service" option may only be satisfied by geographic area licensees who offer either  x& fixed services as part of their system or have one or more incumbent cochannel licensees authorized in their  {Od' x^ geographic area. 47 C.F.R.  90.767(2)(b). This is not the case for the paging service. See also 47 C.F.R.  90.685  x (800 MHz EA licensees must provide service to onethird of the population of the geographic area within three years,  xD and twothirds of the population of the geographic area within five years of initial license grant; or, alternatively,  {O' x. demonstrate substantial service within five years); id.  90.665 (MTA 900 MHz SMR licensees must provide service  x to onethird of the population of the geographic area within three years, and twothirds of the population of the  xU geographic area within five years of initial license grant; or, alternatively, demonstrate substantial service within five years). \ Finally, any party relying on "substantial service"  xxin lieu of the threeyear and fiveyear coverage requirements must demonstrate that level of service or will automatically lose the geographic area license.  S8' e 67.` ` Blooston and AirTouch argue that the substantial service option is used in other market  xarea licensing situations to facilitate the provision of "niche" services in areas where an incumbent does  S' xnot operate, but that this option should not be employed in the paging context. yOv$'ԍBlooston Petition at 7; AirTouch Comments on Petitions for Reconsideration at 910. Blooston contends that  S' xunlike new services on relatively unlicensed spectrum (e.g., PCS), paging has little room for "niche"  Sm' xservices.Hm yO''ԍBlooston Petition at 7.H Blooston also contends that with only 25 kHz of spectrum, paging carriers have relatively little"m*$,l(l(,,"  xflexibility in what services they can offer, and that widearea coverage is preferable to coverage of isolated  S' xniche markets.: {O5'ԍId.: AirTouch adds that niche services "have not emerged or been proposed by any  S' xcommenter and would not promote continued development of widearea systems."jZ yO'ԍAirTouch Comments on Petitions for Reconsideration at 10.j We believe,  xhowever, that market forces, not regulation, should dictate whether serving a niche market would be viable for a paging provider.  S' e 68.` ` Advanced, AirTouch, Blooston, Metrocall, and ProNet argue that the vagueness of the  S' xdefinition of "substantial service" will result in an abundance of litigation.b yO% ' " ԍAdvanced Petition at 11; AirTouch Petition at 9; Blooston Petition at 6; Metrocall Petition at 1718;  {O ' x Metrocall Response to Petitions for Reconsideration at 17; ProNet Petition at 21; see, e.g., AirTouch Comments on  x Petitions for Reconsideration at 9 ("This vague concept will spawn volumes of litigation at the fiveyear mark when  x. parties attempt to determine whether a geographic area licensee has satisfied its construction obligation and should retain its license.").b ProNet suggests that  xsubstantial service could be defined as coverage of fifty percent at three years, and seventyfive percent  S5' xkat five years, of the geographic area that is not served by cochannel incumbent licensees.G5 yOq'ԍProNet Petition at 22.G ProNet also  xsuggests that the Commission could require licensees to show a specified level of infrastructure investment  S' xby the three and fiveyear deadlines.;,  {O'ԍId. ; AirTouch suggests that the Commission provide specific examples  S ' xof what construction levels would satisfy the substantial service test, as provided in the WCS Report and  Sj 'Order.J\j  {O' " ԍAirTouch Comments on Petitions for Reconsideration at 10 n.14 (citing WCS Report and Order, 12 FCC  {O' x Rcd at 1084344,  113). The rules adopted in the WCS Report and Order are found at 47 C.F.R.  27.127.325 (1997).J  S ' e 69.` ` We decline to adopt specific coverage requirements as the sole means of defining  x"substantial service," as suggested by ProNet. As already noted, the unserved area of an MEA or EA  S ' xMlicense (i.e., the area not served by cochannel incumbent licensees at the time the MEA or EA license  xis granted) may consist largely of spectrum in rural areas. We believe that imposing strict coverage  xrequirements to define "substantial service" in the unserved area would discourage new entrants from  xattempting to acquire licenses to serve rural areas. Nonetheless, we find that an objective criterion, similar  xto ProNet's suggestions, would be beneficial in determining substantial service in the unserved areas of  x*an MEA or EA. Therefore, we will presume that the substantial service coverage requirement is satisfied  xif an MEA or EA licensee provides coverage to twothirds of the population in the unserved area of the MEA or EA within five years of license grant.  S' e W70.` ` At the same time, we recognize the need for flexibility in areas where stringent coverage  xrequirements would discourage provision of any service. Therefore, we clarify that an MEA or EA  x@licensee may be able to satisfy the substantial service requirement even if it does not provide coverage  xto twothirds of the population in the unserved area within five years of license grant. AirTouch correctly  xpoints out that we offered guidance to WCS licensees with regard to factors that we would consider in" +,l(l(,,"  x@evaluating whether the substantial service requirement has been met, and we now apply this additional  S' xguidance to our paging licensees. {O5' "V ԍWCS Report and Order, 12 FCC Rcd at 1084344,  113 n.279 (citing the use of the substantial service test in SMR and PCS services, as well as WCS). Thus, the Commission may consider such factors as whether the  xlicensee is offering a specialized or technologically sophisticated service that does not require a high level  xof coverage to be of benefit to customers, and whether the licensee's operations serve niche markets. A  xplicensee may also demonstrate that it is providing service to unserved or underserved areas without  S' xtmeeting a specific percentage, as we permitted SMR providers in the 800 MHz band to do.| " {O'ԍSee 800 MHz Second Report and Order, 12 FCC Rcd at 1909495,  34.| Because  x3the substantial service requirement can be met in a variety of ways, the Wireless Telecommunications Bureau will review licensees' showings on a casebycase basis.  S5' e 71.` ` PCIA and AirTouch request clarification as to whether licensees who fail to meet coverage  x7requirements will be permitted to retain licenses for those facilities authorized, constructed, and operating  xat the time the geographic area license is cancelled, or only those authorized, constructed, and operating  S ' xDat the time of grant of the geographic area license.   yO'ԍPCIA Petition at 2425; AirTouch Comments on Petitions for Reconsideration at 19. PCIA states that adopting the latter approach would  xdiscourage "cherry picking," or providing service to only the most lucrative markets, in geographic service  xQareas. Moreover, PCIA believes that if the Commission were to allow a geographic area licensee to retain  x*the facilities it constructed, despite failure to comply with the requirements associated with a grant of the  xgeographic area license, speculators would be encouraged to participate in the market knowing that they  S ' xtcould partially comply with applicable obligations without placing their investment at risk.H  D yO'ԍPCIA Petition at 2425.H However,  xDOTC states that geographic area licensees should not have to face the possibility of a stranded investment  S7'because of PCIA's "all or nothing" approach. 7 yO' " ԍLetter from Oregon Telephone Corporation to William F. Caton, Acting Secretary, Federal Communications Commission of 5/9/97, at 2.  S' e 72.` ` We agree with petitioners' argument that licenses reinstated after termination of the  xggeographic area license should be limited to the sites authorized, constructed, and operating at the time  xpthe geographic area license was granted. In other words, the right to use channels any place in the  xgeographic area will be forfeited, but any licenses for which individual sites were constructed and  xoperating prior to the grant of the geographic area license will be reinstated. This is consistent with our  S' xrules for other services such as 900 MHz SMR service, $,  {O ' " ԍSee Amendment of Parts 2 and 90 of the Commission's Rules to Provide for the Use of 200 Channels  x* Outside the Designated Filing Areas in the 896901 MHz and the 935940 MHz Bands Allotted to the Specialized  {O0"' x Mobile Radio Pool, Second Order on Reconsideration and Seventh Report and Order, 11 FCC Rcd 2639, 264953,  2734 (1995).  and most recently for the 220 MHz service. {O$'ԍSee 220 MHz Third Report and Order, 12 FCC Rcd at 1101921,  160165.  xFurther, we believe that this approach properly balances our overarching goal of ensuring, to the extent  xVpossible, continuous service to the public and our policy of discouraging speculation and spectrum  xwarehousing. Moreover, we are not convinced that this approach would result in a stranded investment,"9,,l(l(,,"  xas OTC argues, since the licensee may choose to meet the substantial service coverage requirement. A  xlicensee unable to demonstrate "service that is sound, favorable, and substantially above a level of  xkmediocre service, which would barely warrant renewal" after five years could not have made a significant  xinvestment in paging facilities. Accordingly, we amend section 22.503(k) to provide that licensees who  xfail to meet their coverage requirements will be permitted to retain licenses only for those facilities  S' x@authorized, constructed, and operating at the time the geographic area license was granted.T {Oi'ԍSee 47 C.F.R.  22.503(k).T In such  xinstances, incumbent licensees will have the burden of showing when their facilities were authorized,  xxconstructed, and operating, and they should retain necessary records of these sites until they have fulfilled their construction requirements.  S' H. Geographic Licensing for Nationwide Channels  S '` ` 1. In General  S6 ' e 73.` `  Background. In the Notice, we proposed to exclude from competitive bidding the three  x 931 MHz channels already designated under our rules for nationwide network paging use, and all 929  xMHz channels for which the licensees had met the construction requirements for nationwide exclusivity  S ' xas of February 8, 1996, the adoption date of the Notice.e Z {O' "N ԍNotice, 11 FCC Rcd at 3114,  26. The three 931 MHz channels, 931.8875 MHz, 931.9125 MHz, and  xl 931.9375 MHz, were designated as nationwide channels in 1982. Amendments of Parts 2 and 22 of the  x Commission's Rules to Allocate Spectrum in the 928941 MHz Band and to Establish Other Rules, Policies, and  {O' x Procedures for OneWay Paging Stations in the Domestic Public Land Mobile Radio Service, First Report and Order,  {O' x 89 F.C.C.2d 1337 (1982), on reconsideration, 93 F.C.C.2d 908 (1983); see 47 C.F.R.  22.531(b), 22.551 (1995).  x Licensees on the 929 MHz channels could earn nationwide exclusivity under former section 90.495 of our rules by  x! constructing networks that consisted of 300 transmitters or more in the continental U.S., Alaska, Hawaii, and Puerto  x Rico, provided service to at least 50 urban markets listed in our rules, including 25 of the top 50 markets, and  xU provided service to two markets in each of the seven regions modeled on Regional Bell Operating Company regions.  {O'PCP Exclusivity Order, 8 FCC Rcd at 832223,  13; and 47 C.F.R.  90.495(a)(3) (1996).e The Commission specifically sought comment  xon whether a licensee who had obtained nationwide exclusivity on a paging channel should be given a  S9'single nationwide license for use of the channel instead of continuing under sitespecific authorizations.]9  {O'ԍNotice, 11 FCC Rcd at 3114,  26. ]  S' e 74.` ` The Second Report and Order and Further Notice awarded nationwide geographic area  xlicenses on the 931 MHz channels and to the eighteen licensees who had constructed sufficient stations  Sn' xto obtain nationwide exclusivity on 929 MHz channels under our rules as of February 8, 1996.n  {O 'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2761,  50. In  xaddition, we granted nationwide geographic area licenses to four licensees on the 929 MHz band that had  xMsufficient authorizations, as of February 8, 1996, to qualify for nationwide exclusivity on a conditional  S' x/basis, but had not completed buildout at that time. As stated in the Second Report and Order and  S' xFurther Notice, these four licensees had constructed the required number of transmitters to earn nationwide"-,l(l(,,K"  S' xMexclusivity on these channels.  {Oh' "R ԍId. The four licensees that conditionally qualified as of February 8, 1996 were TriState Radio Co, Inc.  x (929.2125 MHz), AirTouch (929.4875 MHz), PageMart II, Inc. (929.7625 MHz), and Communications Innovations  xR Corp. (CIC) (929.8125 MHz). On March 26, 1997, American Paging Inc. (API) filed a petition for partial  x reconsideration, contending that AirTouch was not entitled to a nationwide geographic area license on 929.4875 MHz.  x On April 20, 1998, TSR Wireless LLC (TSR Wireless) notified the Commission and other parties in this proceeding  xx that TSR Paging Inc. had merged with API and its subsidiaries to form a new entity, TSR Wireless; thus, API and  x TSR Paging were replaced in this proceeding by TSR Wireless. On October 22, 1998, TSR Wireless filed a petition  {O' xl of withdrawal of the petition for partial reconsideration filed by API.  Withdrawal of Petition for Partial Reconsideration, filed by TSR Wireless LLC, October 22, 1998.  "c On March 26, 1997, PSWF Corporation filed a petition for partial reconsideration contending that CIC had  yO< ' x not in fact constructed sufficient base stations to qualify for nationwide exclusivity. PSWF Petition for Partial  x Reconsideration, filed March 26, 1997. This matter was pending before the Enforcement Division. However, on  x November 5, 1998, the Commercial Wireless Division, Wireless Telecommunications Bureau, released an order,  {O ' x which in part, dismissed PSWF's petition for partial reconsideration, as requested by both PSWF and CIC. See  {O^ 'PSWF Corporation and Communications Innovations Corporation, Order, DA 982254, (Nov. 5, 1998). We also granted nationwide exclusivity to Nationwide 929.8875 LLC  x(Nationwide) on 929.8875 MHz based on showings that it had met the criteria for nationwide exclusivity  S' x as of February 8, 1996, under section 90.495(a)(3) of our rules.HP  {O' " ԍIn the Second Report and Order and Further Notice, we noted that Nationwide was jointly owned and  x controlled by AirTouch and Arch, who were in the process of securing Commission consent to assign their respective  {O' xQ regional exclusive system licenses to Nationwide. Second Report and Order and Further Notice, 12 FCC Rcd at  x^ 276162,  52. We also noted that AirTouch and Arch had regional exclusivity on 929.8875 MHz for four regional  x systems, and were parties to an agreement to operate their 929.8875 MHz facilities on an integrated basis to provide  {Ov' x* nationwide service. We further noted that prior to the Notice, AirTouch and Arch filed a nationwide exclusivity  x request on 929.8875 MHz for their combined systems, and certified that they had more than 300 transmitters in over  {O'40 states as of February 8, 1996, to meet the criteria for nationwide exclusivity under section 90.495(a)(3). Id.  ā In excluding these channels from  x_competitive bidding, we stated that it would not serve the public interest or be fair to take away  xexclusivity rights that licensees earned before the commencement of this proceeding. We also indicated  xthat the licensees on these channels had developed successful and efficient nationwide networks under our  xpreexisting rules, and that we did not believe that competitive bidding was necessary to further the goal  S'of developing competitive nationwide paging networks on these channels.R` {O'ԍId. at 2761,  50.R  S5' e 75.` `  Discussion . Advanced and Blooston argue that the exemption for nationwide licensees  xis arbitrary and capricious because it results in similarly situated licensees being treated in a disparate  S' xmanner.{ yOa 'ԍAdvanced Petition at 45; Blooston Petition at 56; Blooston Reply at 27.{ According to Advanced, incumbents that have met their fiveyear coverage requirement are  S ' xsimilar to nationwide licensees that met our previous buildout requirements to qualify for exclusivity.J  yO"'ԍAdvanced Petition at 45.J  x*Blooston contends that most nationwide licensees compete directly with other paging licensees, including  x<widearea 931 MHz and regional 929 MHz licensees, for regional and local customers and that it is  x"grossly unfair to allow 26 competitors in each market to forgo the costs and delays associated with  S ' xauctions."J  yO''ԍBlooston Petition at 56.J Blooston further contends that other paging licensees had the same expectation that the" .,l(l(,,N "  xnationwide licensees had of a reasonable opportunity to expand their systems incrementally in response  S'to consumer demand.@ {O5'ԍId. at 5.@  Sg' e 76.` ` Several petitioners support the exclusion of nationwide licenses from competitive bidding.  xAirTouch supports this exclusion because nationwide licensees had a reasonable expectation that the  S' xkchannels on which they had been granted exclusivity would be excluded from the auction.kZ yO'ԍAirTouch Comments on Petitions for Reconsideration at 79.k Arch argues  xcthat the Commission's auction authority is limited to only those situations where mutually exclusive  xapplications are accepted for filing, and no competing applications can be filed for nationwide channels,  Sh' xprecluding mutual exclusivity.Yh yO 'ԍArch Opposition at 5; Arch Reply at 34.Y Metrocall, PageMart, and PageNet argue that the exemption of  xnationwide licenses does no more than recognize the validity of licenses granted prior to this rulemaking  S' xproceeding.z yO' "c ԍMetrocall Response to Petitions for Reconsideration at 610; PageMart, Inc. Partial Opposition to Petition for Reconsideration (PageMart Opposition) at 3; PageNet Opposition at 12. PageMart further argues that the regulatory framework, and therefore the expectations, for  xnationwide exclusive licensees and sitespecific incumbents were radically different. PageMart explains  S ' xthat in contrast to nationwide licensees, the incumbent nonnationwide licensees "were never entitled to  Sj ' xMadditional coverage."Lj  yO'ԍPageMart Opposition at 34.L PageNet asserts its argument that including nationwide licenses in competitive  xbidding would constitute retroactive rulemaking and a taking in violation of the Fifth Amendment of the  S ' xUnited States.K b  yO'ԍPageNet Opposition at 38.K Blooston responds that "white space" on nationwide frequencies will not be used in many  xparts of the country for the foreseeable future and should be auctioned; there is no mutual exclusivity on  xmany of the nonnationwide channels in much of the country; nationwide licensees did not pay for their  xspectrum and thus have no greater reliance interest in the right to expand than nonnationwide licensees;  xand the use of auctions for nationwide frequencies would be no more of a denial of due process than the  S'use of auctions for other paging channels.G  yO'ԍBlooston Reply at 17.G  S' e 77.` ` Contrary to Advanced's and Blooston's contention, we do not believe that our decision  xQto exempt nationwide licensees from competitive bidding discriminates against other paging systems. We  xagree with PageMart, PageNet, and MetroCall that this decision merely recognizes licenses granted prior  xto this rulemaking proceeding. Our exclusivity rules provided nationwide licensees with the right to  xcontinue to build out anywhere in the country on their designated channels, whereas nonnationwide  x/paging licensees have been afforded no right to expand their service area beyond their interference  xDcontours. Thus, there are no areas available for auction on the channels on which nationwide geographic  xarea licensees operate, while there are available areas on the channels on which nonnationwide licensees  xgoperate. Finally, our rules make clear that licenses will be subject to auction only if mutually exclusive  S' x3applications are accepted for filing. We therefore affirm our decision in the Second Report and Order"/ ,l(l(,,"  xto grant nationwide geographic area licenses without competitive bidding to those licensees that met the  S'exclusivity criteria established under our previous rules.  {O5'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 276162,  5054.  Sg'` ` 2. MTel's Request for a Nationwide Geographic Area License  S4'  S' e 78.` ` Background. In the Notice, we sought comment on whether 931.4375 MHz, a channel  S' x}licensed extensively to MTel, should be redesignated as a nationwide channel.]!Z {O'ԍNotice, 11 FCC Rcd at 3114,  27. ] We noted that this  S' xchannel was allocated as a local paging channel and had not been reallocated as a nationwide channel.:" {O( 'ԍId.:  Si' xIn the Second Report and Order, we declined to extend nationwide exclusivity rights to MTel on 931.4375  S7' x*MHz.#7~ {OU'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2762,  53. We concluded that MTel had no expectation that substantial buildout of its system would result  S'in nationwide rights on this channel.:$ {O'ԍId.:  S ' e 79.` `  Discussion. MTel argues that denying it a nationwide grant on 931.4375 MHz is  xinconsistent with the Commission's grant of nationwide geographic area licenses to paging carriers in the  x"929 MHz band because its system, which consists of over 800 transmitters, meets the nationwide  S ' xexclusivity criteria established for 929 MHz licensees.%  yOG'ԍMobile Telecommunication Technologies, Corp. Petition for Reconsideration (MTel Petition) at 910. Thus, MTel contends that it is similarly situated  xwith the 929 MHz licensees that earned nationwide exclusivity, and reasonably expected to be treated  S ' xsimilarly.A& 2  {Oq'ԍId. at 10.A We disagree. In the Second Report and Order, we granted nationwide geographic area  Sm' xglicenses to those 929 MHz carriers that, as of February 8, 1996, the adoption date of the Notice, either  xRmet the construction requirements for nationwide exclusivity or had sufficient authorizations to  xIconditionally qualify for nationwide exclusivity. We recognize that MTel is extensively licensed on  x931.4375 MHz with over 800 transmitters in various locations throughout the United States. In addition,  xMseveral other 931 MHz channels are extensively licensed by one carrier. But these 931 MHz channels,  So' xincluding 931.4375 MHz, have never been designated as nationwide channels.='o  yO' "E ԍIn 1982, well before commencement of this rulemaking proceeding, three 931 MHz channels (931.8875,  {O ' x 931.9125 and 931.9375 MHz) were designated for nationwide use.  See Amendment of Parts 2 and 22 of the  x Commission's Rules to Allocate Spectrum in the 928-941 MHz Band and to Establish Other Rules, Policies, and  {O-"' x Procedures for OneWay Paging Stations in the Domestic Public Land Mobile Radio Services, First Report and  {O"' xg Order, 89 F.C.C.2d 1337, on reconsideration (Part 1), 92 F.C.C.2d 631 (1982), on reconsideration (Part 2), 93  {O#' x3 F.C.C.2d 908 (1983), aff'd sub nom., NARUC v. FCC, 737 F.2d 1095 (D.C.Cir. 1984); Amendment of Parts 2 and  x 22 of the Commission's Rules to Allocate Spectrum in the 928-941 MHz Band and to Establish Other Rules,  {OS%' x Policies, and Procedures for OneWay Paging Stations in the Domestic Public Land Mobile Radio Services, Third  {O&' xt Report and Order, 97 F.C.C.2d 900 (1984). The remaining thirty-seven other channels were made available for regional and local one-way paging service.= We did not establish"o0h',l(l(,,2"  xrules for a licensee to earn nationwide exclusivity on the thirtyseven channels in the 931 MHz band  xDreserved for local and regional paging, as we did for the thirtyfive exclusive 929 MHz channels, so MTel could not reasonably have expected to be granted nationwide status.  S4' e 80.` ` We also reject MTel's contention that denying nationwide exclusivity to it on 931.4375  xMHz is contrary to the public interest because it prevents MTel from providing for its customers'  S' xexpanding coverage needs.F( yO6'ԍMTel Petition at 19. F Our decision does not prevent MTel from expanding its system, since it may  xacquire MEA and EA licenses for this frequency in areas where it wishes to expand through competitive  xbidding. Previously, MTel obtained licenses on this channel on a transmitterbytransmitter basis, with  xno assurance that its applications would be granted because they would be subject to competing  xapplications. A geographic area licensee, however, will receive exclusive rights to the unserved area of  xthe geographic area. We reaffirm our decision to deny MTel a nationwide geographic area license on the 931.4375 MHz channel.  S6 'a I. Competitive Bidding Procedures  S '` ` 1. Auction Sequence   Sj' e 81.` `  Background . In the Notice, we sought comment on how paging licenses should be  S8' xkgrouped for competitive bidding purposes and on possible license groupings.[)8X {O0'ԍNotice, 11 FCC Rcd at 3125,  79.[ A number of acommenters  xxsuggested that the Commission should form at least two groups"the 929 MHz and 931 MHz licenses and  xthe lower band licenses"and auction them separately, while some proposed that the 900 MHz licenses  S' xbe auctioned first. In the Second Report and Order and Further Notice, we concluded that grouping  xinterdependent licenses for simultaneous bidding promotes our goal of awarding licenses to bidders that  S:' xvalue them most.*: {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 278182,  97. We reserved discretion, however, to determine specific license groupings based on  S'administrative considerations.:+| {O#'ԍId.:  S' e q82.` `  Discussion . PCIA suggests that the Commission conduct auctions for the lower band  xfrequencies before it conducts auctions for the 929 MHz exclusive and 931 MHz frequencies. PCIA  xargues that this sequence of auctions would reduce the economic hardship of the many small carriers on  S' xthe lower bands that will be subject to an application freeze pending the start of any auctions.H, yO 'ԍPCIA Petition at 1819.H This is  xprecisely the sort of issue that we believe the Bureau should consider in exercising its discretion, under  S' xMthe Second Report and Order and Further Notice, to determine the sequence of the paging auctions.- {O#'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 278182,  97.  Sp'Moreover, as the Commission noted in the Part 1 Third Report and Order and Second Further Notice,.p0  {O@&'ԍSee Part 1 Third Report and Order and Second Further Notice, 13 FCC Rcd at 44749,  124125.   "p1 .,l(l(,,R"  S' xthe Balanced Budget Act of 1997/ {Oh' " ԍSee Balanced Budget Act of 1997, Pub. L. No. 10533,  3002, 111 Stat. 251 (1997) (codified as amended at 47 U.S.C.  309(j)(3)(E)(i)). provides that "before the issuance of bidding rules," the Commission  S' xmust provide adequate time for parties to comment on proposed auction procedures.0" {O' " ԍSee Part 1 Third Report and Order and Second Further Notice, 13 FCC Rcd at 447,  123 (citing Balanced Budget Act of 1997,  3002(a)(1)(B)(iv)). In response to this  S' xZstatutory requirement, the Commission directed the Bureau, under its existing delegated authority,1^| {O' " ԍSee 47 C.F.R.  0.131(c), 0.331, and 0.332; see also Amendment of Part 1 of the Commission's  {O ' x Rules"Competitive Bidding Procedures, Order, Memorandum Opinion and Order, and Notice of Proposed Rule  {OJ 'Making, 12 FCC Rcd 5686, 5697,  16 (1997). to  xgseek comment prior to the commencement of each auction on a variety of auctionspecific operational  S4' xissues.24 {Ov 'ԍSee Part 1 Third Report and Order and Second Further Notice, 13 FCC Rcd at 448,  125. Since that time, it has been the Bureau's practice to issue a Public Notice seeking comment on  xthese issues, and on the establishment of minimum opening bids or reserve prices, well in advance of the  S' xapplication deadline for each auction.a34  {O' "} ԍSee, e.g., Location and Monitoring Service Spectrum Auction Scheduled for December 15, 1998; Comment  {Ol' x Sought on Reserve Prices or Minimum Opening Bids and Other Auction Procedural Issues, Public Notice, 13 FCC  xg Rcd 15501 (1998); 156-162 MHz VHF Public Coast Station Spectrum Auction Scheduled for December 3, 1998;  {O' xb Comment Sought on Reserve Prices or Minimum Opening Bids and Other Auction Procedural Issues, Public Notice, 13 FCC Rcd 17612 (1998).a We therefore conclude that the Bureau, under its existing  S' xdelegated authority and in accordance with the Balanced Budget Act of 1997, should seek further comment  Sh' xQon license groupings and auctions sequence, among other auctionspecific issues (e.g., minimum opening bids), prior to the start of the paging auctions.  S' 2.` ` Stopping Rule  Sj ' e  83.` `  Background. In the Second Report and Order and Further Notice, we noted that most  x*commenters preferred a stopping rule based on licenses, frequencies, or markets, but that a few strongly  S ' xcfavored a simultaneous stopping rule.4  {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 278384,  102. For the paging service auctions, we adopted a new hybrid  xsimultaneous/licensebylicense stopping rule to reduce the risk of prolonged auctions, while still  S ' x"preserving most of the efficiency benefits of a simultaneous stopping rule."M5 | {O'ԍId. at 2784,  103.M This new rule, which we  xhave not used in prior auctions, features three phases. Phase I would last one month or 100 rounds,  S9' xDwhichever is later, and would employ the standard simultaneous stopping rule (i.e., bidding would remain  xopen on all licenses until bidding stops on all licenses). During Phase II, the Bureau would have the  xdiscretion to employ a licensebylicense stopping rule if it determines that the use of backup strategies  xis minimal. If the Bureau chooses to employ licensebylicense stopping in Phase II, bidding on a license  xwould close whenever 10 consecutive rounds pass with no new valid bids for that license, while remaining  xlicenses would close according to the standard simultaneous stopping rule. Phase III would begin after  xtwo months and 100 rounds. Thus, if it takes more than two months to complete 100 rounds, the auction  xwould move directly from Phase I to Phase III. In Phase III, the Bureau would employ the licenseby"25,l(l(,,"ԫ S' xlicense stopping rule described above. As we explained in the Second Report and Order and Further  S' xNotice, this approach "balances concerns about the time to complete the paging auction and the benefits  xof preserving backup strategies which give bidders the flexibility to acquire licenses that are consistent  Si' xwith their business plans."M6i {O'ԍId. at 2785,  103.M The Commission would retain the discretion in Phase III to declare after 200  x rounds that the auction will end after some specified number of additional rounds, in which case bids  xwould be accepted only on licenses for which the high bid increased in the three preceding rounds. We  xreserved discretion not to employ the hybrid stopping rule in future paging auctions based on our  S'experience in the first paging auction.:7Z {O 'ԍId.:  S7' e `84.` ` Discussion. Although two petitioners87 yO ' "} ԍMetrocall asserts that such a stopping rule is unnecessarily complex, and renews its comments in favor of  x a marketbymarket stopping approach. This approach would close bidding on a particular license if, after a certain  {OS' x number of additional rounds (e.g., five or ten), there are no new bids or proactive waivers. Metrocall alternatively  x suggests that if the Commission maintains the hybrid approach, it should begin the auction in Phase II so that the  x Bureau could sooner exercise its discretion to stop bidding in particular markets. Finally, Metrocall suggests that  xQ the Commission permit requests from high bidders to close bidding on those licenses if no new bids are received  x during a certain number of rounds. The Bureau would announce the request and specify that bidding would close  {O=' xx if no new bids were received during an additional period of time. See Metrocall Petition at 2425. PageNet argues  x that a licensebylicense stopping rule would focus the bidding on the most valuable spectrum, speed the auction,  x and deter speculation. Specifically, PageNet reiterates its suggestion that bidding close on any license for which new bids were not received after five rounds. PageNet Petition at 1415. now request reconsideration of the hybrid  S' xsimultaneous/licensebylicense stopping rule adopted in the Second Report and Order and Further Notice,  xpwe will maintain it for the paging auctions. As discussed in the preceding section, the Commission  S ' xtdirected the Bureau in the Part 1 Third Report and Order and Second Further Notice to seek comment  xprior to the commencement of each auction on a variety of auctionspecific operational issues, including  S: ' xDstopping rules.i9: P  {O*'ԍSee supra notes 305 and 307 and accompanying text.i By providing potential bidders with an opportunity to comment on the most appropriate  S ' xstopping rule for specific inventories of paging licenses (i.e., for each paging auction), we believe that this  xMapproach is consistent with the Balanced Budget Act of 1997 and the Commission's goal of increasing  S ' xthe efficiency of the competitive bidding process.:  {O$'ԍSee Part 1 Third Report and Order and Second Further Notice, 13 FCC Rcd at 376,  1 (1998). We retain discretion in the Bureau, however, to  So' xkutilize another stopping rule (e.g., our standard simultaneous stopping rule) after seeking further comment  S='on this issue in the preauction process, consistent with the Balanced Budget Act of 1997.;=t {OQ!' "< ԍSee 47 C.F.R.  1.2104(e) ("The Commission may establish stopping rules before or during multiple round auctions in order to terminate auctions within a reasonable time").  S' 3.` ` Limiting Information Available to Bidders During the Auctions  Sq' e '  85.` `  Background . The Second Report and Order and Further Notice provided for the release  xof a public notice prior to the auctions announcing precisely what information would be available to"?3;,l(l(,,"  S' xbidders, but indicated that this information "may be limited to the high bids (no identities of bidders)."< {Oh'ԍSee Second Report and Order and Further Notice, 12 FCC Rcd at 2786,  106.  x The Commission noted that withholding bidder identities is likely to speed the pace of the auctions by  xreducing opportunities for strategic gaming practices and by reducing the time needed to report and  Sg' xanalyze information at the end of each round.:=gZ {Oa'ԍId.: We also noted that little loss of efficiency would result  xMfrom withholding the identities of likely winners of adjacent licenses, because in the paging service, as  S'opposed to broadband PCS, there is no roaming and little uncertainty about the technology.:> {O 'ԍId.:  S' e J86.` `  Discussion. Metrocall, PageNet, and PCIA seek reconsideration of the Commission's  xdecision to: 1) limit generally the information available to bidders during the paging auctions; and 2)  xRleave to a later Public Notice the announcement of whether bidder identities in particular will be  S' xgwithheld.?~ yO 'ԍMetrocall Petition at 1819; PageNet Petition at 1214; PCIA Petition at 1315. Specifically, petitioners state that withholding bidders' identities would ensure that bidders  xwould not have equal access to information, because wellestablished paging companies would be easily  xidentified by bidding on licenses for spectrum on which they are incumbents, while newcomers, that might  Si ' x3be speculators, would not be similarly identifiable.@ i  yO' " ԍMetrocall Petition at 1819; PageNet Petition at 1213; PCIA Petition at 14. Petitioners refer to  x! Commission statements made in the context of other rulemakings that revealing bidder identities provides important  x! information on the value of the spectrum and permits more informed bidding strategies that ensure licenses are won by bidders that value the spectrum most highly. Thus, petitioners argue that withholding bidders'  xtidentities would encourage speculation, deny bidders information necessary to participate effectively in  S 'the auctions, and impair the efficiency of resulting license assignments.A  yO'ԍMetrocall Petition at 1819; PageNet Petition at 1214; PCIA Petition at 1315.   S ' e 87.` ` We retain discretion in the Bureau, pursuant to its existing delegated authority, to limit  xthe information disclosed to bidders in the paging auctions. Consistent with the Balanced Budget Act of  S7' x1997,iB7  {O]'ԍSee supra notes 305 and 307 and accompanying text.i the Bureau will issue a Public Notice seeking further comment on auctionrelated procedural  xtissues, including what information should be available to bidders. This will provide the Bureau with an  xopportunity to weigh, in the unique context of the paging auctions, the benefits and disadvantages of  xlimiting information such as bidder identities and related data. After seeking further comment on this  xissue, the Bureau will announce the precise information that will be available to bidders during the auctions.  S' 4.` ` Shortform Applications and Upfront Payments  Sl' e A88.` `  Background. Currently, applicants have the option to check "all markets" on their short xQform applications but submit an upfront payment to cover only those licenses on which they intend to bid  xin any one round. Permitting the selection of "all markets" gives bidders the flexibility to pursue backup"4B,l(l(,,"  S' xstrategies in the event they are unable to obtain their first choice of licenses.C {Oh'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 279394,  126. In the Second Report and  S' xOrder and Further Notice, we emphasized the importance of the "all markets" box in enabling the use of  xbackup strategies and noted that, absent the ability to pursue such strategies, the true value of the licenses  Si'might not be reflected in the final bid prices.:DiZ {Oc'ԍId.:  S' e 89.` ` Discussion. Several petitioners assert that permitting bidders to check the "all markets"  xIbox creates artificial mutual exclusivity contrary to the requirements of Section 309(j)(6)(E) of the  S' xCommunications Act.E {O) 'ԍPageNet Petition at 10; PCIA Petition at 12; Priority Petition at 6; see also 47 U.S.C.  309(j)(6)(E). They also contend that, since bidders' upfront payments need only correspond  xto the "largest combination of activity units on which the bidder anticipates being active in any single  S7' xround,"F7~ {OU'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2796,  136. the ability to check the "all markets" box encourages the participation of speculators in the  S' xauctions.G {O' " ԍArch Petition at 5, 78; PageNet Petition at 1012; PCIA Petition at 1013; see also Advanced Petition at 3 n.1. In turn, they argue, sincere bidders, including incumbents seeking to obtain geographic area  xlicenses in their existing service areas, may expend greater amounts to obtain licenses than if the  S ' xCommission required auction applicants to indicate each license on which they intend to bid.H j  {O'ԍSee Advanced Petition at 89; PageNet Petition at 12; PCIA Petition at 12. To deter  xspeculation, they suggest that the Commission should require each bidder to (1) specify the licenses on  xwhich it seeks to bid, and (2) submit an upfront payment corresponding to the total number of licenses specified.  S ' e =90.` ` In the Second Report and Order and Further Notice, the Commission expressly rejected  Sm' x3identical arguments made by commenters that opposed use of the "all markets" box.Im  {O 'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2793,  126. A bidder must  xsubmit an upfront payment sufficient to meet the eligibility requirements for any combination of licenses  xon which it might wish to bid in a round. This rule forces bidders to make a payment that reflects their  xZlevel of interest and protects against speculation. Moreover, we continue to believe that bidders should  xhave the flexibility to pursue backup strategies if they are unable to obtain their first choice of licenses.  x& As has been demonstrated by all recent auctions, providing bidders flexibility is crucial to an efficient  S;' xgauction and optimum license assignment.:J;  {Oi!'ԍId.: Since petitioners do not raise any arguments that have not  xbeen previously considered and rejected by the Commission, we will retain the current rules, which permit use of the "all markets" box and require an upfront payment for each license.  So' e 91.` ` Petitioners' claim that our current rules may require sincere bidders to pay more for  xgeographic area licenses than if we implemented their proposal is, we feel, more closely related to the  xQissue of minimum opening bids. The Commission is required to establish minimum opening bids for each" 5 J,l(l(,,"  S' xauctionable license absent a finding that to do so would contravene the public interest.^K {Oh'ԍSee, e.g., 47 U.S.C.  309(j)(4)(F).^ We do not find  xcircumstances here to convince us that establishing minimum opening bids for the paging auctions is  S' xcontrary to the public interest objectives contained in section 309(j) of the Communications Act.hL|Z yO' " ԍThese objectives include: fostering the rapid development and deployment of new technologies, products,  x; and services; promoting competition by avoiding excessive concentration and disseminating licenses among a wide  x* variety of applicants; recovering for the public a portion of the value of the spectrum resource and avoidance of  xx unjust enrichment; fostering efficient use of electromagnetic spectrum; and scheduling auctions so that potential  {O' x bidders have adequate time to develop business plans and assess the market; see 47 U.S.C.  309(j)(3); see also  {O~ ' x Auction of 800 MHz SMR Upper 10 Band; Minimum Opening Bids or Reserve Prices, Order, 12 FCC Rcd 16354 (1997).h We  x/note, however, that issues such as incumbency levels, limited available spectrum, and interference  x7protection requirements, among others, will likely lead to modest minimum opening bids for many paging  S' x geographic area markets.KM {O?' "V ԍSee Part 1 Third Report and Order and Second Further Notice, 13 FCC Rcd at 456,  141 ("Among other  x factors, the Bureau should consider the amount of spectrum being auctioned, levels of incumbency, the availability  xb of technology to provide service, the size of the geographic service areas, issues of interference with other spectrum  x bands, and any other relevant factors that could reasonably have an impact on valuation of the spectrum being auctioned.")K We further note that minimum opening bids are reducible at the Bureau's  S' xZdiscretion.LNP  {O'ԍId. at 455,  140.L These factors, we believe, adequately address petitioners' concerns regarding the risk of excessive bid amounts.  S5'5.` ` Bid Withdrawal  S'  S' e q92.` `  Background . In the Second Report and Order and Further Notice, we concluded that  S ' xthe Part 1 general bid withdrawal rule would apply in the paging auctions.O  {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2798,  143. The general bid withdrawal  xrule requires a bidder that withdraws a high bid during the course of an auction to make a payment equal  xto the difference between the withdrawn bid amount and the amount of the winning bid the next time the  S ' xlicense is offered by the Commission.TP t {O'ԍSee 47 C.F.R.  1.2104(g).T This payment amount is deducted from any upfront payments  S ' xor down payments that the withdrawing bidder has deposited with the Commission.TQ  {Ow 'ԍSee 47 C.F.R.  1.2106(e).T In response to some  x&commenters' concerns about reducing the possibility of mistaken bids, we noted that we had recently  ximplemented a new software feature designed to warn bidders of mistaken bids, and that this feature would  S8'be employed in the paging auctions.R8 {Op$'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2799,  146.  S' e 93.` `  Discussion. Blooston requests that the Commission modify its rules to allow bid  x}withdrawal without liability where it is demonstrated that the withdrawn bid was a typographical or"6*R,l(l(,,o"  x@clerical error, and the Commission was notified before other bidders relied on the information for bids  xplaced in subsequent rounds. Blooston reasons that, in the paging auctions, the opportunities for errors  xwill be increased because these auctions will involve some of the telecommunications industry's smallest  xDbusinesses, many of which would be firsttime participants in a spectrum auction and would, at the same  S4'time, be trying to serve their customers with small staffs.LS4 yO'ԍBlooston Petition at 2021.L  S' e J94.` ` We will apply our Part 1 general bid withdrawal rule, as stated in the Second Report and  S' xZOrder and Further Notice. Most of Petitioners' concerns have been addressed by modifications to the  xauction software that permit bid removal during a round. In addition, the auction software has been  x reconfigured to provide for incremental bidding. To place a bid on a license, a bidder simply enters a  xnumber between 1 and 9 in the "Bid Increment Multiplier" field. The software multiplies this number by  xthe preestablished minimum bid increment and adds the result to the high bid amount. Thus, bidders may  xplace a bid that exceeds the standing high bid by between one and nine times the bid increment. For  xexample, to bid the minimum acceptable bid, which is generally equal to one bid increment, a bidder will  xenter "1" in the "Bid Increment Multiplier" field and press submit. We believe that these software  xMmodifications provide adequate protection against the possibility of mistaken bids and also simplify the bidding process for inexperienced auction participants.  Sl'5 6.` ` The AntiCollusion Rule  S' e 95.` `  Background . In the Second Report and Order and Further Notice, the Commission  xrejected commenters' requests for safe harbors for certain discussions when the anti5ũcollusion rule is in  S' xkeffect.TX {O' " ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2802,  156; see also 47 C.F.R.  1.2105(c) (the anticollusion rule). We concluded that we lacked the record necessary to create these safe harbors and emphasized that the anticollusion rule prohibits discussions of the substance of bids or bidding strategies.  S' e 96.` `  Discussion. A number of petitioners request reconsideration of this conclusion. These  xpetitioners assert that because established paging carriers are likely to participate in the auctions, the lack  xof safe harbors will disrupt normal business relationships during the auctions and inhibit discussions  xamong incumbent carriers on such issues as intercarrier agreements and mergers or consolidations which,  S<'they argue, are aimed at providing better service to customers.U< yO'ԍBlooston Petition at 1819; PageNet Petition at 15; PCIA Petition at 2324; ProNet Petition at 2526.  S' e 97.` ` We will apply the Part 1 general anticollusion rule in the paging auction. A similar  S' xproposal to create safe harbors was considered and dismissed in the Part 1 Third Report and Order and  Sq' xSecond Further Notice, and we deny petitioners' requests for the reasons stated therein.VqB {OS"'ԍPart 1 Third Report and Order and Second Further Notice, 13 FCC Rcd at 46667,  162. We continue  xto believe that bidders are in the best position to determine when their discussions may give rise to a  xpotential violation of the rule. We note, however, that to the extent that discussions concerning normal  x*business relationships do not directly or indirectly convey in any manner the substance of bids or bidding"7V,l(l(,,"  S' xstrategies, such discussions are not prohibited by the anticollusion rule.W {Oh' "" ԍSee 47 C.F.R.  1.2105(c); see also Wireless Telecommunications Bureau Provides Guidance on the Anti {O2'Collusion Rule for D, E and F Block Bidders, Public Notice, 11 FCC Rcd 10134 (1996). We further note that the anti S' xcollusion rule was amended in the Part 1 Third Report and Order and Second Further Notice to permit  x holders of noncontrolling attributable interests in one applicant for a particular license(s) to obtain an  xDownership interest in, or enter into a consortium arrangement with, a second applicant for a license in the  xsame geographic area, provided the original applicant has withdrawn from the auction, is no longer placing  S' xbids, and has no further eligibility.X$ {O'ԍId. at 46566,  160; see also 47 C.F.R.  1.2105(c)(4)(iii). Thus, we clarify that the modified Part 1 anticollusion rule will apply in the paging auctions.  Si' 7.` ` Small Business Definition  S' e 98.` `  Background. In the Second Report and Order and Further Notice, the Commission  S' xMadopted tiered bidding credits based on small business size.Y {O''ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 281112,  178181. Specifically, entities with average gross  xrevenues of not more than $3 million would be eligible for a fifteen percent bidding credit, while entities  xwith average gross revenues of not more than $15 million would be eligible for a ten percent bidding  S8 ' xcredit.fZX8 H yO ' "3 ԍThese small business size standards have been approved by the Small Business Administration. Letter from  x Aida Alvarez, Administrator, Small Business Administration to Amy J. Zoslov, Chief, Auctions and Industry Analysis Division, Wireless Telecommunications Bureau of 12/2/98.f We concluded that this approach furthered our mandate under Section 309(j) of the Communications Act to disseminate licenses to a variety of applicants.  S ' e W99.` `  Discussion. Blooston requests a number of clarifications with respect to the rules for  Sl' xqualifying as a "small business."L[lh  yOt'ԍBlooston Petition at 2122.L In particular, Blooston seeks (1) confirmation that "gross revenues of  S9' x^all controlling principals"\9  {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2812,  180. does not refer to personal income (so as to avoid public disclosure of personal  S' xfinancial information and "double counting" where salaries are paid by the applicant to principals);I]  yO0'ԍBlooston Petition at 21.I (2)  S' xspecification of the equity requirement (i.e., what constitutes "significant equity") or elimination of an  xQequity requirement altogether; and (3) clarification that intercarrier agreements do not constitute affiliation for purposes of the small business definition.  S' e 100.` ` In the context of competitive bidding for broadband PCS C and F blocks, the Commission  S' xissued a number of orders refining the definition of "small business"J^ yO$'ԍ47 C.F.R.  24.720(b).J by providing exceptions that govern  xwhich entities or persons are included for the purpose of aggregating gross revenues and total assets"8^,l(l(,,"  S' xcounted in determining eligibility for small business treatment. _ {Oh' " ԍId.; see also Implementation of Section 309(j) of the Communications Act"Competitive Bidding, PP  {O2' x7 Docket No. 93253, Fifth Report & Order, 9 FCC Rcd 5532, 560809,  175176 (1994); Implementation of Section  {O' x 309(j) of the Communications Act"Competitive Bidding, Fifth Memorandum Opinion and Order, 10 FCC Rcd 403,  {O' x^ 42021,  2830, 43556,  5896 (1994) (Competitive Bidding Fifth Memorandum Opinion and Order) (modified  {O'by Erratum, 10 FCC Rcd 10659 (Jan 10, 1995)); Sixth Report & Order, 11 FCC Rcd 136, 14350,  1323 (1995).  In response to petitions seeking  x3relaxation of the $40 million personal net worth cap for members of the control group of a designated  xentity, attributable investors, and affiliates who are individuals, the Commission decided to eliminate the  Sg' xpersonal net worth cap altogether.`g {O 'ԍCompetitive Bidding Fifth Memorandum Opinion and Order, 10 FCC Rcd at 421,  30. Personal net worth has been defined as "the market value of all  xassets (real and personal, tangible and intangible) owned by an individual, less all liabilities (including  S' xpersonal guarantees) owed by the individual in his individual capacity or as a joint obligor."xa {O 'ԍSee former Narrowband PCS rules, 47 C.F.R.  24.320(e) (1995).x The  xCommission concluded that "the affiliation rules make the personal net worth rules largely unnecessary  xsince most wealthy individuals are likely to have their wealth closely tied to ownership of another  Sh' xbusiness."bh {O'ԍCompetitive Bidding Fifth Memorandum Opinion and Order, 10 FCC Rcd at 421,  30. The same principles apply in the paging context. Personal income is treated as an element  xpof personal net worth, and thus is not attributable. This approach also alleviates Blooston's "double counting" and privacy concerns.  S ' e `101.` ` To determine whether an applicant meets the eligibility size standards adopted for the  Si ' xpaging service in the Second Report and Order and Further Notice, gross revenues are calculated by  S7 ' xQaggregating the gross revenues of the applicant, its affiliates, and controlling principals.Wc7 8  {O'ԍSee 47 C.F.R.  22.223(b)(2).W The broadband  x3PCS rules mentioned above define an applicant's control group (the gross revenues and total assets of  xwhich were to be counted) as a group of qualifying investors holding an equity interest of at least 15  S ' x^percent.Jd  yO'ԍ47 C.F.R.  24.709(b).J Under the paging rule, no equity requirement is imposed on controlling principals of applicants  xmeeting the small business definition, but those principals whose gross revenues are counted must maintain  S8' xcontrol of the applicant.e8Z  {O2'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2812,  180. We indicated in the Second Report and Order and Further Notice that  S' xMguidance on the concept of control could be found in the definition of affiliation,f {O 'ԍ47 C.F.R.  22.223(d); see also Second Report and Order and Further Notice, 12 FCC Rcd at 2812,  180. which was derived  S'in part from the affiliation rules of the U.S. Small Business Administration.ZgF {O#'ԍSee, e.g., 13 C.F.R.  121.103. Z  Sm' e 102.` ` We said in the Second Report and Order and Further Notice that while specific equity  xDrequirements will not be employed, "the absence of significant equity could raise questions about whether";9g,l(l(,,"  S' xDthe applicant qualifies as a bona fide small business."h {Oh'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2812,  180. The Commission is concerned only with the lack  S' xof significant equity, and this is but one of several factors that are evaluated when determining de facto  xcontrol. The Commission did not create a brightline equity test because of the desire to afford businesses the flexibility to structure themselves in ways they deem most viable.  S' e 103.` ` In this Memorandum Opinion and Order, we clarify the paging size attribution rules as  S' xDadopted in the Second Report and Order and Further Notice to enable qualified small businesses to attract  xadequate financing. We also provide a definition of "controlling interest" to clarify the application of the  xcontrolling interest threshold in determining whether an entity qualifies to bid as a small business. Thus,  xkin calculating gross revenues for purposes of small business eligibility, applicants will be required to count  S' xthe gross revenues of the controlling interests of the applicant and their affiliates.iZ {O 'ԍSee, e.g., Baker Creek Communications, LP, Memorandum Opinion and Order, 13 FCC Rcd 18709 (1998). This approach is  S' xconsistent with our proposal in the Part 1 Third Report and Order and Second Further Notice,j {O_'ԍSee Part 1 Third Report and Order and Second Further Notice, 13 FCC Rcd at 38789,  1619. and is  xMsimilar to the attribution rules we applied in the 800 MHz SMR, LMDS, and VHF Public Coast auction  Sn 'proceedings.Zk~n ~ {O' " ԍSee 800 MHz Second Report and Order, 12 FCC Rcd at 19169,  275; Amendment of Parts 1, 2, 21, and  x 25 of the Commission's Rules to Redesignate the 27.5"29.5 GHz Frequency Band, to Reallocate the 29.5"30.0  x GHz Frequency Band, to Establish Rules and Policies for Local Multipoint Distribution Service and for Fixed  {O' xb Satellite Services, Second Report and Order, Order on Reconsideration, and Fifth Notice of Proposed Rulemaking,  x 12 FCC Rcd 12545, 1269293,  352 (1997); Amendment of the Commission's Rules Concerning Maritime  {Ox' xQ Communications, Third Report and Order and Memorandum Opinion and Order, 13 FCC Rcd 19853, 19886,  67 (1998).Z   S ' e 104.` ` A "controlling interest" includes individuals or entities with de jure and de facto control  S ' xgof the applicant. De jure control is 50.1 percent of the voting stock of a corporation or, in the case of  S ' xa partnership, the general partners. De facto control is determined on a casebycase basis, and includes  Sr' xthe criteria set forth in Ellis Thompson.@l r  {O' "p #C\  P6QɒP##C\  P6QɒP#э#X\  P6G;ɒP#See Ellis Thompson Corp., 76 Rad. Reg. 2d (P&F) 1125 (1994) (Ellis Thompson) (in which the Commission  x identified factors used to determine control of a business. Specifically, the Commission identified the following indicia of control: X(1) use of facilities and equipment;(# (2) control of daytoday operations; (3) control of policy decisions; (4) personnel responsibilities; (5) control of financial obligations; and (6) receipt of monies and profits.  {Op$' x Id. at 112728; see also Intermountain Microwave, 24 Rad. Reg. (P&F) 983 (1963); Stephen F. Sewell, Assignments  {O:%' xb and Transfers of Control of FCC Authorizations Under Section 309(d) of the Communications Act of 1934, 43 Fed.  yO&'Comm. L.J. 277 (1991).@ The "controlling interest" definition also provides specific  xguidance on calculation of various types of ownership interests. For purposes of calculating equity held  x^in an applicant, the definition provides for full dilution of certain stock interests, warrants, and convertible" :l,l(l(,,"  S' xdebentures.m {Oh'ԍSee 47 C.F.R.  1.2110(b)(4)(v). Compare 47 C.F.R.  24.709(b)(7). In addition, the definition provides for attribution of partnership and other ownership  xinterests, including stock interests held in trust, nonvoting stock, and indirect ownership through  x@intervening corporations. Once individuals or entities with a controlling interest are determined under  xthe definition, only the revenues of those individuals or entities and their affiliates will be counted for small business eligibility.  S' e W105.` ` When an applicant cannot identify controlling interests under the definition, the revenues  xZof all interest holders in the applicant and their affiliates will be counted. For example, if a company is  xZowned by four entities, each of which has 25 percent voting equity and no shareholders' agreement or  xvoting trust gives any one of them control of the company, the revenues of all four entities must be  xcounted. Treating such a corporation in this way is similar to our treatment of a general partnership"all  xgeneral partners are considered to have a controlling interest. This rule, we believe, looks to substance over form in assessing eligibility for small business status.  S6 ' e 106.` ` We note that our intent here is to provide flexibility that will enable legitimate small  xRbusinesses to attract passive financing in a highly competitive and evolving telecommunications  x&marketplace. We believe that this controlling interest threshold will function effectively to ensure that  xVonly those entities truly meriting small business status are eligible for small business provisions. In  Sj' xparticular, we believe that the de jure and de facto concepts of control used to determine controlling  xDinterest in an applicant and the application of our affiliation rules will effectively prevent larger firms from illegitimately seeking status as a small business.  S' e 107.` ` Finally, Blooston requests that the Commission clarify that intercarrier agreements and  xother recognized arrangements between otherwise independent paging carriers do not constitute  S9' xaffiliations.Jn9Z yO3'ԍBlooston Petition at 22. J Blooston describes "intercarrier agreements" as arrangements between licensees to allow  xlcoordinated operation in overlapping areas, "so that the 'no man's land' required for interference  S' xprotection becomes unnecessary."Ao {O]'ԍId. at 19.A Section 22.223(d)(2)(ii) of the Commission's rules states that for  S' xtpurposes of affiliation, "[c]ontrol can arise through . . . contractual or other business relations . . . ."Qp| yO'ԍ47 C.F.R.  22.223(d)(2)(ii).Q  x7Section 22.223(d)(9) is more explicit, stating that affiliation "arises where one concern is dependent upon  xtanother concern for contracts and business to such a degree that one concern has control, or potential  S' xlcontrol, of the other concern."Mq  {O 'ԍId.  22.223(d)(9).M Thus, affiliation will arise whenever a business or contractual  xrelationship, including intercarrier agreements as defined by Blooston, demonstrates that level of control.  xWe believe that our existing rule provides sufficient guidance on the concept of control for purposes of  Sn'affiliation.rn {O$' " ԍSee id.  22.223(d); see also Part 1 Third Report and Order and Second Further Notice, 13 FCC Rcd at 392,  27. ";; r,l(l(,,"Ԍ S' 8.` ` Bidding Credits and Installment Payment Plans for Designated Entities  S' e 108.` `  Background . In the Notice, we sought comment on the type of designated entity  Sh' xDprovisions that should be incorporated into our competitive bidding rules for paging services.\sh {O'ԍNotice, 11 FCC Rcd at 3132,  117.\ Although  x_many commenters supported adopting bidding credits and allowing installment payments, some  xcommenters argued that numerous designated entities currently compete in the paging industry and need  S' xMno special encouragement or assistance to participate.tZ {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2805,  166. In the Second Report and Order and Further  S' xMNotice, we rejected those arguments and adopted bidding credits for two tiers of small businesses and  Sk'provided for installment payments._uk {O 'ԍId. at 2811,  178, 2813,  184. _  S' e 109.` ` Discussion . Several petitioners have renewed those arguments. Three petitioners object  x3to the availability of bidding credits and installment payments in the context of competitive bidding for  S ' xpaging licenses.vv ~ yO'ԍArch Petition at 56; PageNet Petition at 16; PCIA Petition at 2123.v PCIA reasons that such provisions are not necessary because (1) many of the  xestablished paging carriers are small businesses; (2) many licenses will cover relatively small service areas,  xmaking special assistance to small businesses unnecessary; (3) paging requires less capital than other  xservices that have been subject to competitive bidding; and (4) partitioning will provide adequate  S ' xopportunity for participation of small businesses in the paging industry.Ew  yO'ԍPCIA Petition at 22.E PageNet asserts that bidding  x7credits and installment payments are unnecessary and unfair in the context of paging because of the large  Sm' xQnumber of operating incumbents.Hxm yO'ԍPageNet Petition at 16.H PageNet argues that with these preferences, nonincumbents may be  S:' xable to pay a lower price for spectrum than an incumbent that has substantially builtout its service area.:y:.  {O'ԍId.:  xPageNet also questions why such new entrants should be given preferences when the level of incumbency  S' xIwould prevent meeting construction benchmarks and providing widearea service.:z  {O4'ԍId.: A number of  xestablished paging carriers express concern that competitive bidding for paging licenses will put them at  xthe mercy of speculators who will acquire spectrum and "greenmail" those incumbents that need additional  S;' xgspectrum to expand their existing networks to better serve their customers.{;R  yO-"'ԍAdvanced Petition at 68; Metrocall Petition at 16; Preferred Networks Petition at 1, 56. Arch does not object to  xtauctioning paging licenses generally but does object to the availability of bidding credits and installment  xpayments, similarly arguing that such provisions would encourage speculation and unfairly disadvantage  S'incumbents.G| yO$&'ԍArch Petition at 56.G "o<r|,l(l(,,i"Ԍ S' e  110.` ` In contrast, one petitioner believes that the bidding credits and installment payments, as  xxadopted, do not do enough to assist small businesses. Specifically, CCTS suggests that the provisions for  xZbidding credits, installment payments, and partitioning, which are designed to facilitate participation by  xdesignated entities, are inadequate to achieve that goal in the paging auctions. CCTS further argues that  xsuch provisions do not overcome the barriers that will be faced by small and rural paging companies that  xdo not qualify as designated entities and do not have the resources to bid for licenses defined by Economic  xAreas. According to CCTS, EAs, which include urban areas and their suburban and rural surroundings,  S' xdo not conform to the geographic areas served by small and rural companies,w} {O'ԍConsolidated Petition at 56; see also Blooston Petition at 23.w and the availability of  xpartitioning does not help small and rural companies, which may be at a disadvantage in attempting to  S5'negotiate with larger, better capitalized geographic licensees.L~5Z yO/ 'ԍConsolidated Petition at 6.L  S' e 111.` ` The Commission concluded in the Part 1 Third Report and Order and Second Further  S ' xNotice that installment payments should not be offered in auctions in the immediate future, including the  Sk 'paging auctions.wk  {O'ԍSee Part 1 Third Report and Order, 13 FCC Rcd at 401,  43. w In eliminating installment payments, we stated that:  "XCongress did not require the use of installment payments in all auctions, but rather recognized  "them as one means of promoting the objectives of Section 309(j)(3) of the Communications Act.  "The Commission continues to experiment with different means of achieving its obligations under  "the statute, and has offered installment payments to licensees in several auctioned wireless  "services. Installment payments are not the only tool available to assist small businesses. Indeed,  "4we have conducted auctions without installment payments. Moreover, Section 3007 of the  "EBalanced Budget Act requires that the Commission conduct certain future auctions in a manner  "that ensures that all proceeds from such bidding are deposited in the U.S. Treasury not later than  Sm'September 30, 2002.cm| {O'ԍId.  at 39899,  40 (footnotes omitted).c(#  xtThis conclusion was based on the record in the Part 1 proceeding, the record developed on installment  xfinancing for broadband PCS C block licensees, and on recent decisions eliminating installment payment  S' xfinancing for the Local Multipoint Distribution Service and 800 MHz Specialized Mobile Radio. {OO' " ԍSee Part 1 Third Report and Order and Second Further Notice , 13 FCC Rcd at 396, 397  35, 398,  38  {O' x & n.91; see also Rulemaking to Amend Parts 1, 2, 21, and 25 of the Commission's Rules to Redesignate the 27.5 x 29.5 GHz Frequency Band, to Reallocate the 29.530.0 GHz Frequency Band, to Establish Rules and Policies for  {O ' x^ Local Multipoint Distribution Service and for Fixed Satellite Services, Second Order on Reconsideration, 12 FCC  {Ou!'Rcd 15082, 1508892,  912 (1997); 800 MHz Memorandum Opinion and Order, 12 FCC Rcd at 10014,  130. In  xaddition, the Commission has explained that elimination of installment payments better serves the public  xinterest because obligating licensees to pay for their licenses as a condition of receipt requires greater  S' xfinancial accountability from applicants.R\  {On%' " ԍSee, e.g., Part 1 Third Report and Order and Second Further Notice, 13 FCC Rcd at 39798,  38; see also  {O8&' x} Fresno Mobile Radio, Inc. v. FCC, No. 9781459 (D.C. Cir. Feb. 5, 1999) (After thoroughly considering the  x& competing statutory objectives set forth under 47 U.S.C.  309(j)(3), the Commission's decision to rescind its"',l(l('" installment payment plan for small businesses in the 800 MHz SMR auction was reasonable).R Thus, consistent with (and for the reasons set forth in) the Part"=X,l(l(,,"  S' xg1 Third Report and Order and Second Further Notice, we will not allow installment payment financing in the paging service auctions.  Sh' e 112.` ` Petitioners have raised no arguments regarding bidding credits that were not previously  S5' xconsidered and rejected by the Commission. We stated in the Second Report and Order that although  xbidding credits do not guarantee the success of small businesses, we believe that they provide such bidders  S' xwith an opportunity to successfully compete against larger, wellfinanced bidders.X {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2811,  178. We also noted that  xadopting tiered bidding credits furthers our mandate under Section 309(j) of the Communications Act to  Sj' xxdisseminate licenses to a variety of applicants.:j {O 'ԍId.: Moreover, the tiered bidding credit structure we adopted  xkachieves a reasonable compromise between the arguments of those advocating greater bidding credits and  S' xthose advocating against the use of bidding credits.M| {O 'ԍId. at 2811,  179.M In response to petitioners' arguments that the  xavailability of bidding credits will facilitate speculation and "greenmail," we are confident that our unjust  S ' xenrichment rule provides adequate protection against such practices. As we noted in the Second Report  Sl ' xand Order, this rule was established specifically to deter speculation and participation in the licensing  xprocess by those who do not intend to offer service to the public, or intend to use our provisions to obtain  S ' xa license at a lower cost than they otherwise would have to pay, and later to sell it for a profit.  {O'ԍId. at 2818,  195 (citing Competitive Bidding Second Report and Order, 9 FCC Rcd at 2394,  25859). Under  xtthe rule, if a licensee that utilized bidding credits seeks to make any change in ownership structure that  xwould render the licensee ineligible for bidding credits, or eligible only for a lower bidding credit, the  xlicensee must first seek Commission approval, and then reimburse the government for the amount of the  x bidding credit, or the difference between the original bidding credit and the one for which it is eligible  S'after the change.M yOH'ԍ47 C.F.R.  22.217(b)(2).M  S' e  113.` ` To balance the impact on small businesses of eliminating installment payments, we amend  xZour rules to increase the tiered bidding credits available to paging bidders, consistent with the schedule  S<' xof bidding credits adopted in the Part 1 Third Report and Order and Second Further Notice.<0  {O 'ԍPart 1 Third Report and Order and Second Further Notice, 13 FCC Rcd at 40304,  47. Thus, an  xentity that, together with its affiliates and controlling interests, has average gross revenues for the  x*preceding three years not to exceed $3 million will qualify for a 35 percent bidding credit. An entity that,  xZtogether with its affiliates and controlling interests, has average gross revenues for the preceding three  x@years not to exceed $15 million will qualify for a 25 percent bidding credit. Based on our past auction  x/experience, we believe that these bidding credit levels will provide adequate opportunities for small businesses of varying sizes to participate in the paging auction(s).  S' e d 114.` ` We will not adopt separate bidding credits for rural telephone companies ("rural telcos").  Sr' xAs we observed in the Fifth Memorandum Opinion and Order, rural telcos' existing benefits allow them"r> ,l(l(,,"  S' xgto compete effectively for licenses that serve rural territories. {Oh'ԍCompetitive Bidding Fifth Memorandum Opinion and Order, 10 FCC Rcd at 462,  111. In addition to partitioning, rural telcos  xmay qualify for financial benefits from the Rural Electrification Administration and the Universal Service  S' xFund.:Z {O'ԍId.: These benefits compensate for lack of a bidding credit. The Commission has also noted in the  xpast that rural telcos may be able to benefit from the use of their existing infrastructure in the provision  xof some services, and that such economies of scale give rural telcos an advantage in bidding for  S'licenses.^ {O ' " ԍSee Rulemaking to Amend Parts 1, 2, 21, and 25 of the Commission's Rules to Redesignate the 27.529.5  x GHz Frequency Band, to Reallocate the 29.530.0 GHz Frequency Band, to Establish Rules and Policies for Local  x Multipoint Distribution Service and for Fixed Satellite Services, CC Docket No. 92297, and Suite 12 Group Petition  {O ' x for Pioneer Preference, Third Notice of Proposed Rulemaking and Supplemental Tentative Decision, 11 FCC Rcd 53, 124,  194 (1995).^  S' e 115.` ` The paging rules provide that winning bidders have ten (10) business days to make timely  Sh' xxpayment following notification that their authorizations are ready to be awarded.Qh {O'ԍSee 47 C.F.R.  22.215.Q We will permit auction  x7winners to make their final payments within ten (10) business days after the applicable deadline, provided  xthat they also pay a late fee of five percent of the amount due, without being considered in default. This  S' xMchange will conform our paging rules with the generallyapplicable Part 1 rules.2  {O' " ԍSee Part 1 Third Report and Order and Second Further Notice, 13 FCC Rcd at 42830,  9396 (amending 47 C.F.R.  1.2109(a)). As we stated in the  S ' xPart 1 Third Report and Order and Second Further Notice, we believe that in establishing this additional  xMten business day period during which winning bidders will not be considered in default, we provide an  xZadequate amount of time to permit winning bidders to adjust for any lastminute problems in arranging  S ' xfinancing and making final payment.N  {O0'ԍId. at 42930,  95.N We decline to provide a lengthier late payment period because  xwe believe that extensive relief from initial payment obligations could threaten the integrity, fairness and  xefficiency of the auction process. A late fee of five percent is consistent with general commercial practice  xand provides some recompense to the federal government for the delay and administrative or other costs  x3incurred. In addition, we believe that a five percent fee is large enough to deter winning bidders from  xmaking late payments and yet small enough so as not to be punitive. Therefore, winning bidders that do  xnot submit the required final payment and five percent late fee within the 10 business days late payment  xperiod will be declared in default and will be subject to the default payment specified in section  Sl'1.2104(g)(2) of the Commission's rules.Wl {O*"'ԍSee 47 C.F.R.  1.2104(g)(2).W  S' e # 116.` ` We emphasize that our decision to permit late payments is limited to payments owed by  xwinning bidders that have submitted timely initial down payments. We continue to believe that the strict  x^enforcement of payment deadlines enhances the integrity of the auction and licensing process by ensuring  Sm' xtthat applicants have the necessary financial qualifications. In this connection, we believe that the bona  S;' xDfide ability to pay demonstrated by a timely initial down payment is essential to a fair and efficient auction";?,l(l(,,"  xtprocess. Thus, we have not proposed to modify our approach of requiring timely submission of initial  xkdown payments that immediately follow the close of an auction. We believe that it is reasonable to expect  xthat winning bidders timely remit their down payments given that it is their first opportunity to  xMdemonstrate to the Commission their ability to make payments toward their licenses. Similarly, we do  xnot allow for any late submission of upfront payments, as to do so would slow down the licensing process by delaying the start of an auction.  S' e J117.` ` Finally, we reiterate that the procedures set forth in Part 1, Subpart Q of our rules apply  Sh' x}to the paging service unless otherwise indicated in Part 22 of our rules.Kh {O'ԍSee id.  22.201.K We therefore clarify that  xapplicants at the short- and long-form application stages are subject to the reporting requirements  S'contained in the Part 1 ownership disclosure rule.KZ {O 'ԍSee id.  1.2112.K  S 'A V. THIRD REPORT AND ORDER ă  S6 ' A.` ` Introduction and Background  S ' e 118.` ` In the Second Report and Order, the Commission adopted rules governing geographic area  xlicensing of paging systems for exclusive channels in the 3536 MHz, 4344 MHz, 152159 MHz, 454460  xkMHz, 929930 MHz, and 931932 MHz bands allocated for paging. We adopted competitive bidding rules  xfor granting mutually exclusive applications, adopted partitioning for nonnationwide geographic area  x}licenses, imposed coverage requirements on nonnationwide geographic area licenses, and awarded  xgnationwide geographic area licenses on the 929 MHz and 931 MHz bands. We concurrently adopted a  S' xFurther Notice seeking comment on whether we should adopt coverage requirements for nationwide  Sm' xgeographic area licenses,m {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2820,  202. various rules related to partitioning and disaggregation by paging licensees,Wm~ {O'ԍId. at 282125,  20318.W  S:'and whether we should revise the application procedures for shared channels.T: {O'ԍId. at 2826,  21920.T  S' e # 119.` ` In this Third Report and Order, we adopt rules that address issues raised in the Further  S' xNotice. The rules we adopt today are designed to expedite the introduction of paging and messaging  xservices to unserved and underserved areas and to increase the flexibility of entities, including small businesses, to tailor licenses to meet market demands.  S' B.` ` Discussion  Sq' ` ` 1. Coverage Requirements for Nationwide Geographic Area Licensees   S ' e r120.` `  Background.  As we discussed in the Memorandum Opinion and Order On  S' xReconsideration adopted today, the Commission designated three channels in the 931 MHz band for"@,l(l(,,"  S' xexclusive nationwide use.L {Oh'ԍSee supra at  74.L Licensees on the nationwide 931 MHz frequencies were required initially to  xconstruct stations in at least 15 Standard Metropolitan Statistical Areas, and to offer service on a  S' xgnationwide basis within two years of the start of service.$Z yO' "< ԍAmendments of Parts 2 and 22 of the Commission's Rules to Allocate Spectrum in the 928941 MHz Band  xx and to Establish Other Rules, Policies, and Procedures for OneWay Paging Stations in the Domestic Public Land  {O$' x Mobile Radio Service, Memorandum Opinion and Order on Reconsideration (Part 2), 93 F.C.C.2d 908, 917 (1983);  {O'see 47 C.F.R.  22.527(b)(5)(1994). In 1993, to encourage the development of  x<widearea paging systems, the Commission also implemented exclusive licensing of qualified local,  x@regional, and nationwide paging systems on thirtyfive of the forty 929 MHz channels licensed, at that  S' xtime, under Part 90 of our rules.mF {O 'ԍPCP Exclusivity Order, 8 FCC Rcd at 831920,  6. m To earn nationwide exclusivity on 929 MHz channels, licensees were  xrequired to construct 300 transmitters or more in the continental United States, Alaska, Hawaii, and Puerto  S' xRico.W {O'ԍSee 47 C.F.R.  90.495(c)(3).W Licensees were also required to provide service to at least 50 urban markets, including 25 of the  xtop 50 markets, and to two markets in each of the seven regions modeled on Regional Bell Operating  S5'Company regions.:5j  {O?'ԍId.:  S' e 121.` ` As we have already explained, the Second Report and Order and Further Notice awarded  xInationwide geographic area licenses on the three nationwide 931 MHz channels and to the eighteen  xlicensees who had constructed sufficient stations to obtain nationwide exclusivity on 929 MHz channels  S7 ' xunder our rules as of February 8, 1996.7  {O'ԍSee supra at  74 (citing Second Report and Order and Further Notice, 12 FCC Rcd at 2761,  5052). In addition, we granted nationwide geographic area licenses  xto four licensees on the 929 MHz band that had sufficient authorizations, as of February 8, 1996, to  xpqualify for nationwide exclusivity on a conditional basis. We also granted nationwide exclusivity to  xNationwide on 929.8875 MHz based on showings that it had met the criteria for nationwide exclusivity  Sk' xas of February 8, 1996. In the Second Report and Order, we noted that our existing Part 22 and Part 90  xrequirements for construction of nationwide systems were not consistent, and both sets of requirements  x/differ from the construction and coverage requirements applicable to nationwide narrowband PCS  S' xVlicenses.  {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2762,  54. As a result, we sought comment in the Further Notice on whether to impose minimum  xcoverage requirements for nationwide paging licenses, and on what the appropriate coverage area should  xgbe. We asked, for example, whether coverage should be required on a per MTA basis or a nationwide  x@basis. We also sought comment on whether we should auction the entire nationwide license, or just a  S'portion of the license, if the licensee fails to meet the coverage requirements.M  {O#'ԍId. at 2820,  202.M  S' 122.` ` Discussion. We consider first the constitutional and statutory arguments commenters  xmake in opposition to coverage requirements. PageNet and PageMart argue that additional coverage  x requirements would be a taking without just compensation in violation of the Fifth Amendment of the"<A,l(l(,,"  S' x3United States Constitution. yOh' "+ ԍPageMart II, Inc. Comments (PageMart Comments) at 4; Comments of Paging Network, Inc. (PageNet Comments) at 59; Reply Comments of Paging Network, Inc. (PageNet Reply Comments) at 23 & 6. PageMart contends that if the Commission does not allow some kind of  S' xgrace period for nationwide licensees to conform to any new standard, the action "would be a de facto  S' x*modification of a licensee's authorization, a taking, which raises serious legal considerations."H  yO['ԍPageMart Comments at 4.H PageNet  xargues that additional coverage requirements would interfere with its investmentbacked expectation that  xit would operate facilities on nationwide channels without additional licensing by third parties; auctioning  xunserved areas resulting from the loss of a nationwide license would secure a public financial benefit at  xthe expense of the nationwide licensee; and additional coverage requirements would circumscribe  S' x<PageNet's nationwide service area.A {O ' " ԍPageNet Comments at 59 (relying on Connolly v. Pension Benefit Guaranty Corp., 106 S. Ct. 1018, 1026  x* (1986) (setting out three factors for determining whether a federal agency action qualifies as a taking in violation  x of the Fifth Amendment: "(1) the extent to which regulation has interfered with distinct investmentbacked  x expectations; (2) the character of the government action; and (3) the economic impact of the regulation on the claimant").A The first step in a takings analysis, however, is to determine  Si' xwhether there is a protected property right at issue,^ib  {Ok' " ԍPeterson v. United States DOI, 899 F.2d 799, 807 (9th Cir. 1990), cert. denied, 498 U.S. 1003 (1990) (citing  {O5' x Bowen v. Public Agencies Opposed to Social Security Entrapment, 477 U.S. 41, 5455 (1986); and FHA v. The  {O'Darlington, Inc., 358 U.S. 84, 91 (1958)). and courts have held that licensees have no property  S6' x^right in their licenses.TH6  {O^' "< ԍSee Ashbacker Radio Corp. v. FCC, 326 U.S. 327, 331 (1945) ("No licensee obtains any vested interest in  {O(' x any frequency."); FCC v. Sanders Brothers Radio Station, 309 U.S. 470, 475 (1940) (stating that "[t]he policy of  x the [Communications] Act is clear that no person is to have anything in the nature of a property right as a result of  {O' xg the granting of a license"); National Association of Broadcasters v. FCC, 740 F.2d 1190, 1211 (D.C. Cir. 1984)  {O' xk (citing Sanders Brothers); see also In re Application of Bill Welch, 3 FCC Rcd 6502, 6503,  11 (1998) (stating that  x the plain language of Sections 301 and 304 of the Act addresses "congressional concerns that the Federal Government  x retain ultimate control over radio frequencies, as against any rights, especially property rights, that might be asserted by licensees who are permitted to use the frequencies").T Moreover, where, as here, the government retains the power to alter rights it has  S' xcreated,*  yO;' "} ԍIn granting exclusivity, we neither intended to create a property right in favor of nationwide licensees, nor  x would creating a property right be a proper exercise of our authority under the Act. Section 301 explicitly states  x that "the purpose of this Act, among other things, [is] to maintain the control of the United States over all the  x% channels of radio transmission; and to provide for the use of such channels, but not the ownership thereof, by persons  xx for limited periods of time, under licenses granted by Federal authority, and no such license shall be construed to  x create any right, beyond the terms, conditions, and periods of the license." 47 U.S.C.  301. Section 304 of the Act  x prohibits grant of a license "until the applicant thereof shall have waived any claim to the use of any particular  x frequency or of the electromagnetic spectrum as against the regulatory power of the United States because of the  {O{#' x previous use of the same, whether by license or otherwise." Id. at  304. Cf. Peterson, 899 F.2d at 807 (explaining  x that, for purposes of determining whether there is a constitutionally protected property interest in federal government  x* contractual agreements, the "sovereign power, even when unexercised, is an enduring presence that governs all  x* contracts subject to the sovereign's jurisdiction, and will remain intact unless surrendered in unmistakable terms (citations omitted)). the right is not considered "private property," and exercise of the retained power is not"B,l(l(,,a"  S' xconsidered a "taking" for Fifth Amendment purposes. {Oh' "y ԍDemocratic Central Comm. v. Washington Metro. Area Transit Comm'n, 38 F.3d 603, 60607 (D.C. Cir. 1994). Accordingly, the Commission's grant of exclusivity to nationwide licensees does not enjoy constitutional protection.  Sg' e 123.` ` Metrocall and ProNet argue that imposing additional coverage requirements on nationwide  S4' x*carriers would modify nationwide licenses in violation of Section 316 of the Communications Act.BX4" yO' " ԍComments of Metrocall, Inc. (Metrocall Comments) at 57; Reply Comments of Metrocall, Inc. (Metrocall  x7 Reply Comments) at 8; ProNet Inc. Comments on Further Notice of Proposed Rulemaking, (ProNet Comments) at 67; ProNet Reply Comments at 3. B We  x disagree. Section 316 provides for a hearing process before Commission modification of a particular  xlicense. The provision does not deprive the Commission of its authority to establish rules of general  S' xapplicability to an industry through its rulemaking authority.( B {O} ' " ԍSee Committee for Effective Cellular Rules v. FCC, 53 F.3d 1309 (D.C.Cir. 1995); Upjohn Co. v. FDA, 811  {OG' x F.d 1583 (D.C. Cir. 1987); WBEN, Inc. v. FCC, 396 F.2d 601, 618 (2d Cir.), cert. denied, 393 U.S. 914 (1968)  x (stating that "[a]djudicatory hearings serve an important function when the agency bases its decision on the peculiar  x7 situation of individual parties who know more than anyone else. But when, as here, a new policy is based upon  x the general characteristics of an industry, rational decision is not furthered by requiring the agency to lose itself in  {Oi' x; an excursion into detail that too often obscures fundamental issues rather than clarifies them."); California Citizens  {O3' x Band v. United States, 375 F.2d 43, 52 (9th Cir. 1967) (stating that the primary function of Section 316 "is to protect  xD the individual licensee from a modification order of the Commission and is concerned with the conduct and facts  x peculiar to an individual licensee"); Amendment of Part 22 of the Commission's Rules to Provide for Filing and  {O' x Processing of Applications for Unserved Areas in the Cellular Service and to Modify Other Cellular Rules, Further  {OW' x Memorandum and Opinion on Reconsideration, 12 FCC Rcd 2109, 212728,  37 (1997); and Revision of Rules and  {O!' xQ Policies for the Direct Broadcast Satellite Service, Report and Order, 11 FCC Rcd 9712, 9766,  139 (1995) (stating  x that "the Commission may modify any station license or construction permit if in its judgment such action will  x promote the public interest, convenience, and necessity, and, ... such modification may appropriately be accomplished through notice and comment rulemaking").( It is well established that licenses may be  Sh'modified in a rulemaking proceeding as long as a reasoned explanation is provided for doing so. h {O' " ԍSee CECR v. FCC, 53 F.3d at 1317 (citing Florida Cellular Mobile Communications Corp. v. FCC, 28 F.3d  {O'191 (D.C. Cir. 1994)); Rainbow Broadcasting Co. v. FCC, 949 F.2d 405 (D.C. Cir. 1991)).   S' e J124.` ` Several commenters also argue that nationwide licensees' compliance with existing rules  xtcreated a reasonable expectation that they would enjoy exclusivity on a nationwide basis, and imposing  S ' xadditional coverage requirements would improperly subject those licensees to retroactive rulemaking..X , yOh ' " ԍAirTouch Comments on Further Notice of Proposed Rulemaking (AirTouch Comments) at 2; Metrocall  x Comments at 8; Metrocall Reply Comments at 7; PageNet Reply Comments at 45; PageMart Comments at 23; ProNet Comments at 34..  xWe disagree. We acknowledge that to the extent we decide to impose coverage requirements, it would  xDbe unfair to commence the construction period with the grant of the nationwide geographic area licenses,  xbecause these licenses would have been granted well before the adoption of any coverage requirements.  xHowever, if we adopt coverage requirements whose effect would be prospective only, giving nationwide  xlicensees sufficient opportunity to know what the requirements are and to conform their conduct" CL,l(l(,,"  S' xaccordingly, we will not be engaging in retroactive rulemaking." {Oh' " ԍSee Landgraf v. USI Film Products, 511 U.S. 244, 265 (1994) (stating that in examining allegations of  x retroactive legislation, "[e]lementary considerations of fairness dictate that individuals should have an opportunity  x@ to know what the law is and to conform their conduct accordingly; settled expectations should not be lightly disrupted"). Moreover, as the Court of Appeals for  xthe District of Columbia has stated, "'[i]t is often the case that a business will undertake a certain course  xDof conduct based on the current law, and will then find its expectations frustrated when the law changes.  xThis has never been thought to constitute retroactive rulemaking, and indeed most economic regulation  S4' xwould be unworkable if all laws disrupting prior expectations were deemed suspect.'"Z4 {O ' " ԍChemical Waste Management, Inc. v. EPA, 869 F.2d 1526, 1536 (D.C. Cir. 1989)); see also Landgraf, 511  x U.S. at 269 (stating that "[a] statute does not operate 'retrospectively' merely because it is applied in a case arising from conduct antedating the statute's enactment ... or upsets expectations based on prior law" (citations omitted)). While additional  xIcoverage requirements might disrupt nationwide licensees' expectations, they would not make past  xbehavior unlawful or otherwise impose a penalty for past actions and, thus, would not have an impermissible retroactive effect.  S5' e 125.` ` Certain commenters also argue against nationwide coverage requirements on the basis that  xnationwide licensees are not similarly situated with either MEA/EA paging licensees or narrowband PCS  xlicensees. PageNet and ProNet argue that nationwide and nonnationwide geographic area licensees should  xnot be subject to identical regulatory treatment because nationwide carriers have already complied with  Si ' xcoverage requirements similar to the coverage requirements of other geographic area licensees.i  yO'ԍPageNet Comments at 45; PageNet Reply Comments at 56; ProNet Comments at 37.  x3Similarly, PCIA argues that nationwide and nonnationwide geographic area licensees are not similarly  xsituated because nationwide licensees have already committed the resources necessary to construct  xnationwide networks consistent with preexisting Commission buildout rules, and licenses were granted  S ' x subject to these explicit requirements.J d  yO'ԍPCIA Reply Comments at 5.J Blooston, however, argues that a failure to impose coverage  xrequirements would result in similarly situated applicants being treated in a disparate manner in violation  S7' xgof the requirements of regulatory parity set forth in the Omnibus Budget Reconciliation Act of 1993.~7  yO'ԍComments of Blooston, Mordkofsky, Jackson & Dickens (Blooston Comments) at 2.~  xProNet and Metrocall argue that, whereas nascent paging services, including narrowband PCS, need  xregulatory incentives to promote competition, efficient spectrum use, and universal service, paging is a  xmature, highly competitive service, in which market forces compel licensees to use their allocations  Sk' xefficiently.}k  yO 'ԍMetrocall Comments at 9; ProNet Comments at 56; ProNet Reply Comments at 5.} ProNet further notes that the Commission's pending Narrowband PCS Further Notice  S9'sought comment on relaxing or eliminating coverage requirements altogether for narrowband PCS.\9 yO"' " ԍProNet Reply Comments at 5 (emphasis in original) (referencing Amendment of the Commission's Rules  {O#' xk to Establish New Personal Communications Services, Narrowband PCS, Report and Order and Further Notice of  {O$'Proposed Rulemaking, 12 FCC Rcd 12972 (1997) (Narrowband PCS Further Notice)).  S' e 126.` ` Commenters also present several other arguments against additional coverage requirements  xfor nationwide geographic area licensees, contending that additional requirements are unjustified and"D8,l(l(,,K"  S' xwould not serve the public interest. yOh' " ԍAirTouch Comments at 23; Reply Comments of Arch Communications Group, Inc. (Arch Reply Comments)  x at 24; Metrocall Comments at 39; Metrocall Reply Comments at 48; PageMart Comments at 24; PageNet  xV Comments at 210; PageNet Reply Comments at 27; Comments of the Personal Communications Industry  x Association (PCIA Comments) at 46; PCIA Reply Comments at 35; and ProNet Comments at 27; ProNet Reply Comments at 26. Specifically, several commenters argue that nationwide licensees  xhhave already met the goal of providing nationwide service by meeting their original coverage  S' x requirements.x yO' " ԍAirtouch Comments at 3; Arch Reply Comments at 3; Metrocall Comments at 35; PageNet Comments at  xx 23; PageNet Reply Comments at 34; and ProNet Comments at 3. Metrocall states that it has "constructed and is  x operating over 1,100 transmitters throughout the United States on two exclusive, nationwide 929 MHz frequencies,  x and continues to expand its nationwide systems." Metrocall Comments at 4. PageNet notes that it already serves  x "over 600,000 nationwide customers on its nationwide systems and has spent over 100 million dollars on the buildout of facilities." PageNet Comments at 3.  They also contend that competition in markets where customers demand widearea  xservice, in addition to the significant investment already made in developing nationwide systems, impels  xxnationwide licensees to continue to expand nationwide systems and alleviates any concern about spectrum  S' xwarehousing.QX  yO' " ԍAirTouch Comments at 3; Arch Reply Comments at 3; Metrocall Comments at 4, 8; Metrocall Reply  x Comments at 78; PageNet Reply Comments at 2, 34, & 6; PCIA Comments at 5; PCIA Reply Comments at 3, 5; ProNet Comments at 35, 6; ProNet Reply Comments at 3, 6.Q A number of commenters also contend that adding coverage requirements would create  x*unnecessary economic burdens, disrupting business activities and service offerings created in reliance on  S' xprevious rules.@ yOK' "c ԍAirTouch Comments at 34; Arch Reply Comments at 34; Metrocall Comments at 5; PageMart Comments  x at 2; PCIA Comments at 5; PCIA Reply Comments at 3; ProNet Reply Comments at 3. Metrocall argues that having  x expended considerable money and resources to build out nationwide networks, nationwide licensees would be forced  x to incur further expenses in meeting new requirements, not because of subscriber demand or sound network  x management, "but because of regulatory fiat." Metrocall Comments at 8. ProNet also states that additional coverage  x requirements would "disproportionately burden nationwide licensees by necessitating construction of multiple  x transmitters throughout sparsely populated portions of the country, requiring a substantial (but, probably, an inefficient) capital expenditure." ProNet Reply Comments at 4.  AirTouch argues that nationwide licensees, like other CMRS providers, must already  Sh'demonstrate that they provide "substantial service" to earn a license renewal expectancy.Hh yO 'ԍAirTouch Comments at 3.H  S' e 127.` ` SBT, however, supports additional coverage requirements to prevent spectrum warehousing  S' xand ensure buildout. yO!' "_ ԍComments to Further Notice of Proposed Rulemaking by Small Business in Telecommunications (SBT Comments) at 26. SBT suggests that nationwide licensees should be required to construct, within  xone year of the effective date of this Order, enough base stations within each of the top 30 MTAs to cover  Si ' xat least 75 percent of the nation's population.@i  {O %'ԍId. at 3.@ SBT further urges the Commission to publicly notice the  S6 ' xfiling of nationwide carriers' construction reports, so the public can review the reports for accuracy.B6  {Oh''ԍId. at 56.B "6 E$,l(l(,, "  xBlooston argues that nationwide carriers should be required to serve onethird of the U.S. population  xDwithin three years, and twothirds within five years, but opposes allowing nationwide carriers to meet the  S' xIrequirement by showing substantial service.J yO'ԍBlooston Comments at 23.J Blooston argues that the coverage requirements are  x}necessary to reduce the "distinct competitive advantage" nationwide licensees have because of their  S4' x&exemption from the paging auctions.@4X {O,'ԍId. at 2.@ Blooston further contends that coverage requirements would  xxprevent nationwide licensees from "skimming the cream" by serving only areas of high population density,  S' xMwhich would result in lack of service to rural areas.: {OX 'ԍId.: While acknowledging that nationwide licensees  xarguably have a competitive advantage because of their exemption from auctions, ProNet responds that  xthe advantage was earned, at considerable expense, through compliance with construction requirements  S5' x"that far exceed what will ultimately be required of geographic licensees."w5| {OQ'ԍProNet Reply Comments at 4; see Metrocall Reply Comments at 46.w PageNet responds that  x*"cream skimming" is contrary to the interests of nationwide licensees because of the market realities they  S'face.M yO}'ԍPageNet Reply Comments at 4.M  Si ' e N128.` ` Commenters that oppose coverage requirements also oppose any cancellation of nationwide  xclicenses based on a failure to meet those requirements. PageNet specifically argues that the loss of  xnationwide licenses based on new coverage requirements would be seriously damaging to nationwide  xcarriers, would restrict the ability of nationwide licensees to expand their systems, and would ultimately  S ' xlead to the public's being unable to receive nationwide service.I  yO'ԍPageNet Comments at 34.I SBT opposes the cancellation of a  Sj' xnationwide geographic area license, in its entirety, for failure to meet coverage requirements.Ej.  yO8'ԍSBT Comments at 69.E SBT  xsuggests that a failure to meet coverage requirements should result in a forfeiture of the licensee's  xnationwide authority and an auction of unserved areas; such an auction would be reserved for small  S' xxbusiness entities, which often provide service to underserved areas.C  {O/'ԍId. at 78. C SBT further urges the Commission  xto impose a forfeiture on nationwide licensees that fail to meet coverage requirements and preclude them  Sk' x}from further expanding their systems.@kP  {O[!'ԍId. at 7.@ Blooston states that regulatory parity and the rural service  xVmandate dictate that nationwide licenses be cancelled and auctioned upon a carrier's failure to meet  S'coverage requirements.H yO$'ԍBlooston Comments at 3.H  S' e 129.` ` While petitioners have not persuaded us that there are any legal impediments to the  xadoption of coverage requirements for nationwide geographic area paging licensees, we conclude that it"lFr,l(l(,,B"  S' xgis best to defer any decision on this issue until we resolve similar issues raised in the Narrowband PCS  S' xFurther Notice. Doing so will allow us to more fully consider the question of whether regulatory parity  xwith respect to coverage requirements is appropriate not only for nationwide and MEA/EA paging  Si' xDlicensees, but also for nationwide paging and narrowband PCS carriers. In the Narrowband PCS Further  S7' xNotice, we sought comment on whether to conform narrowband PCS rules to our paging rules by allowing  xxnarrowband PCS licensees to meet their performance requirements through a demonstration of substantial  S' xservice as an alternative to meeting the coverage requirements provided under the existing rules.s {O:'ԍNarrowband PCS Further Notice, 12 FCC Rcd at 12996,  44.s We  xfurther sought comment on whether to conform MTAbased narrowband PCS coverage requirements to  Sl' x<the same requirements adopted for MTA and EA paging licenses in this proceeding.MlZ {Of 'ԍId. at 12997,  45.M As a result,  S9' xcommenters in the Narrowband PCS proceeding have raised the issue of whether narrowband PCS,  x^nationwide paging, and MTA/EA licensees provide substantially similar services. We believe that we need  x*to consider this issue more carefully and to make a decision on nationwide paging coverage requirements in conjunction with a decision on narrowband PCS.  S; ' e d130.` ` This will enable us to better look into the question of whether nationwide paging carriers  xZprovide nationwide coverage that extends to rural areas. While a number of petitioners claim that they  xDare providing service on a nationwide basis, they have not offered any information on the extent to which  xnationwide paging geographic area licensees have built out their markets. We have previously indicated  xthat nationwide licensees have exceeded the construction thresholds required to earn nationwide  S<' xexclusivity;< {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2761,  50. however, we find that we have little data on actual buildout, and we are concerned about  S ' x<whether rural areas have sufficient access to paging services. ~ yO'' "< ԍWe do not accept sitespecific applications for facilities located within the geographic area, except where  {O' xb an environmental assessment, international coordination, or consent for transfer of control is required. See 47 C.F.R.  xU  22.503(g). In addition, incumbent licensees may add or modify sites without filing sitespecific applications related  {O' x to facilities located within their existing interference contour. See id.  90.693; and Second Report and Order and  {OK'Further Notice, 12 FCC Rcd at 2764,  58.  When we sought comment in the  S' xDNarrowband PCS Further Notice on whether to eliminate all coverage requirements for narrowband PCS,  S' x}we asked about the potential impact of doing so on service to rural areas.4  {Ox'ԍNarrowband PCS Further Notice, 12 FCC Rcd at 1299798,  4546.  Accordingly, we defer  xresolution of whether to impose coverage requirements on nationwide paging geographic area licensees  S>' x_to the Narrowband PCS proceeding. If we ultimately determine that coverage requirements are  xappropriate for either nationwide narrowband PCS or nationwide paging geographic area licensees, we will decide, at that time, what the consequence of failing to meet those requirements should be. "G ,l(l(,,1"Ԍ S' ` ` 2. Partitioning (#  S'` `  a.Nationwide Geographic Area Licenses  S4' e 131.` ` Background. In the Second Report and Order, we adopted geographic partitioning  S' xprovisions for MTA and EA paging licensees., yOj' " ԍPartitioning is the assignment of geographic portions of the geographic area paging license along geopolitical  {O2'or other boundaries. Second Report and Order and Further Notice, 12 FCC Rcd at 2817,  192. , In the Further Notice, we sought comment on whether  S'nationwide geographic area licensees should also be permitted to partition their license areas.M" {O 'ԍId. at 2821,  203.M  Sj' e 132.` ` Discussion. Metrocall states that nationwide geographic area licensees should be permitted  S7' xto partition their licenses in the same manner as MTA and EA licensees.J7 yO 'ԍMetrocall Comments at 20.J ProNet supports partitioning  xxfor nationwide geographic area licensees because partitioning provides increased flexibility to tailor service  xofferings and will also allow local and rural telephone companies to operate in areas where a nationwide  S ' xnetwork is unlikely to expand.F D yO'ԍProNet Comments at 8.F PCIA and PageMart also support partitioning for nationwide licensees,  x7contending that there is no reason to treat nationwide geographic area licensees differently than MTA and  S8 ' xEA licensees.\8  yO'ԍPageMart Comments at 4; PCIA Comments at 6.\ Metrocall and ProNet further contend that the fact that nationwide geographic area  x licenses were not acquired through competitive bidding should not prevent nationwide licensees from  S ' xhaving the right to partition their licenses.` d  yO'ԍMetrocall Comments at 20; ProNet Comments at 8.` We agree with these commenters. Geographic partitioning  xkwould be an effective means of providing nationwide geographic area licensees with the flexibility to tailor  x7their service offerings to meet market demands and facilitating greater participation in the paging industry  x*by small businesses and rural telephone companies. Although we recognize the value that other licensees  x3place on their competitively won licenses, we believe that the overall goal of partitioning operational  xflexibility outweighs any possible disadvantage of allowing nationwide licensees to receive a financial  x*windfall though partitioning. We therefore will permit partitioning of nationwide geographic area licenses to any eligible party.  S' e 133.` ` Consistent with our partitioning rules established for broadband PCS licensees, we  S' xpermitted MTA and EA licensees to partition service areas along any boundaries defined by the parties.  {Oh!' "E ԍSecond Report and Order and Further Notice, 12 FCC Rcd 2817,  192 (referencing Partitioning and  {O2"'Disaggregation Report and Order and Further Notice).  xWe adopt the same rule for partitioning of nationwide geographic area licenses. Thus, we will permit  xpartitioning of nationwide geographic area paging licenses based on any boundaries defined by the  S;'parties.;P  {O+&'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2817,  192. "H,l(l(,,"Ԍ S'` `  b.Buildout Requirements   S' e d 134.` `  Background . In the Further Notice, we tentatively concluded that both the partitioner  xand partitionee of a geographic area should be subject to coverage requirements that ensure that both  S5' xportions of the license area will be served.N5 {O'ԍId. at 2822,  209.N We proposed to require that a partitionee meet the same  xbuild-out requirements as the original licensee within its partitioned area, regardless of when the license  xcwas acquired. Under this proposal, a partitionee of a geographic area would be required to provide  xcoverage to onethird of the population in its partitioned area within three years of the license grant, and  x&to twothirds of the population within its partitioned area within five years of the license grant. In the  xalternative, partitionees would have the option of providing "substantial service" within five years of  S' xlicense grant.:Z {O 'ԍId.: We also sought comment on build-out requirements for partitioned nationwide geographic  xMarea licenses, and what buildout requirements should apply where a licensee partitions a portion of its  S 'license area after the initial tenyear license term has expired.:  {O)'ԍId.:  S7 ' e 135.` ` Discussion. AirTouch agrees with the Commission that both the partitioner and  S ' xpartitionee should be subject to the same buildout requirements within their respective licensed areas.H ~ yO"'ԍAirTouch Comments at 5.H  S ' xgAirTouch and ProNet, however, support the elimination of the "substantial service" option.Z  {O'ԍId. at 56; ProNet Comments at 89.Z PageNet  xbelieves that partitioning should be allowed only after the initial geographic area licensee has met the  xbuildout requirements for the entire geographic area, and proposes that partitioning before a geographic  xarea licensee meets its construction requirements should be allowed only on a waiver basis where good  S' xcause is shown.e yOE'ԍPageNet Comments at 12; PageNet Reply Comments at 8.e PageNet believes that the ability to partition may encourage bidders in the auction to  xyhave unlawful contact with other bidders, particularly if the market is highly contested, and that  xgeographic area licensees may seek to avoid the cancellation of their licenses by partitioning to a "straw  Sl' xIman" when they fail to meet our coverage requirements.:l0  {O<'ԍId.: Metrocall opposes PageNet's proposal,  xcontending that permitting partitioning only on a waiver basis would unduly restrict a licensee's flexibility  S'in the mature paging industry.  {Oh!'ԍMetrocall Reply Comments at 11; see also ProNet Comments on Petitions for Reconsideration at 13.  S' e (136.` ` PCIA and Metrocall are also concerned that the partitioning rules may be used to  Sm' xcircumvent the Commission's construction requirements.`mT  yOa%'ԍMetrocall Comments at 22; PCIA Comments at 67.` Metrocall suggests that geographic area  x<licensees' coverage benchmarks should be based on the entire geographic area, which includes the  xpartitioned area, to prevent the geographic area licensee from using partitioning to circumvent the coverage"I,l(l(,,"  S' xrequirements.J yOh'ԍMetrocall Comments at 22.J PCIA states that certain unscrupulous licensees might construct only part of their systems,  xand then, shortly before the construction deadline, partition the unconstructed area to another party in a  S' xkprearranged, sham transaction.DX yO'ԍPCIA Comments at 7.D PCIA explains that such a transaction would allow the geographic area  Sg' xklicensee to maintain its license even though the partitionee would forfeit its license.:g {O'ԍId.: To avoid this result,  xPCIA suggests that the partitioner should be responsible for buildout in the partitioned area if the  S' xpartitionee fails to build out.:z {O 'ԍId.: Thus, PCIA supports cancellation of the entire license if buildout in the  S' xpartitioned area is not completed by either the partitionee or the partitioner.:  {Oz 'ԍId.: SBT responds that the  S'partitioner should not be responsible for the partitionee's failure to construct.D yO'ԍSBT Comments at 11.D   S5' e ~137.` ` We find that commenters have not provided evidence that "sham" arrangements between  xgeographic area licensees and other parties to avoid construction requirements are likely to occur in the  xpaging service or have already taken place in other services. We also disagree with PageNet's concern  xthat allowing the geographic area licensee to partition prior to completing its coverage requirements will  xresult in unlawful activity between bidders concerning partitioning because, as Metrocall notes, this type  S6 ' xof activity falls within our anticollusion rules.t6 .  {O'ԍ47 C.F.R.  1.2105(c); see Metrocall Reply Comments at 11.t Therefore, we will allow all MEA and EA licensees to  xpartition at any time after the grant of their geographic area licenses, and all nationwide geographic area  S 'licensees to partition upon the effective date of this Order.    yO0' " ԍWe note that with the adoption of the ULS rules, FCC Form 603 will be used for requesting approval of  x assignment of licenses, including partitioning and disaggregation requests. We also note that no parties commented  xD on the question of what buildout requirements should apply where a licensee partitions its license area after the initial tenyear license term has expired, and we will not address this issue at this time.   Sj' e 138.` ` We adopt the proposal set forth in the Further Notice, and provide an additional option  S8' xfor meeting our coverage requirements, as we have for several other services.<8 {O ' "E ԍSee 47 C.F.R.  24.714(f) (Broadband PCS); id.  90.911 (Upper and lower channels of 800 MHz band);  {OJ!'id.  90.813 (MTA 900 MHz SMR); id.  90.1019 (Phase II EA, Regional, or Nationwide 220 MHz bands).< Under the first option,  xpartitionees of MEA or EA licenses must provide coverage to onethird of the population in their  xZpartitioned area within three years of the initial grant of the license, and to twothirds of the population  xgin their partitioned area within five years of the initial grant of the license; or, licensees may provide, in  xthe alternative, substantial service within five years of the grant of the MEA or EA license. Under the  xVsecond option, the original licensee may certify at the time of the partitioning transaction that it has already met, or will meet, the coverage requirements for the entire geographic area. "J,l(l(,,"Ԍ S' e J139.` ` Under the first option, both the partitioner and partitionee are individually responsible for  x7meeting the coverage requirements for their respective areas. Failure by either party to meet its coverage  S' xrequirements will result in the automatic cancellation of its license without further Commission action.= {O' "E ԍSee 47 C.F.R.  24.714(f) (Broadband PCS); id.  90.911 (Upper and lower channels of 800 MHz band);  {O'id.  90.813 (MTA 900 MHz SMR); id.  90.1019 (Phase II EA, Regional, or Nationwide 220 MHz bands).=  x Under the second option, only the partitioner's license will be cancelled if it fails to meet the coverage  xrequirements for the entire geographic area. The partitionee will not be subject to coverage requirements  S' xxexcept for those necessary to obtain renewal.$ {O' " ԍSee 47 C.F.R.  90.813 (MTA 900 MHz SMR); see also 800 MHz Second Report and Order, 12 FCC Rcd at 1914445,  195 & 196 (Upper and Lower 800 MHz Band). Partitioners whose licenses are cancelled will retain those  xsites authorized, constructed, and operating at the time the geographic area license was granted. We reject  x*commenters' proposal to eliminate the "substantial service" option because we believe that this option will  x^encourage licensees to build out their systems while safeguarding the financial investments made by those  x/licensees who are financially unable to meet specific population coverage requirements. Thus, the  xZsubstantial service alternative will promote service growth while helping licensees to remain financially viable and retain their licenses.  Si ' e 140.` ` We have explained above that we will defer any decision regarding whether to impose  S6 ' xcoverage requirements on nationwide geographic area licensees to our Narrowband PCS proceeding.  xcAccordingly, we will not impose coverage requirements at this time on partitionees of a nationwide  xgeographic area license, and will defer reaching a decision on this issue until we resolve the question of  xgcoverage requirements for nationwide licensees generally. We believe that it would be inappropriate to  xsubject entities that obtain partitioned licenses from nationwide geographic area licensees to coverage  S8' x*requirements when no such requirements have been established for partitioners.Z8~ {OV' " ԍSee 800 MHz Second Report and Order, 12 FCC Rcd at 19144,  194 ("[I]t would be inappropriate to  x subject entities that obtain partitioned licenses or disaggregated spectrum from incumbent SMR licensees to additional performance requirements when no such requirements currently exist for these licenses."). However, partitionees of nationwide licenses may be subject to coverage requirements in the future.  S'` `  c.License Term  S9' e 141.` ` Background. In the Further Notice, we proposed that a partitionee (including a  xpnationwide license partitionee) be authorized to hold its license for the remainder of the partitioner's  xoriginal tenyear term and be afforded the same renewal expectancy as a geographic area licensee. We  xfurther proposed to grant a partitionee a preference in a renewal proceeding if it can demonstrate that it  xphas provided substantial service during its past license term and has substantially complied with the  S;'Communications Act and applicable Commission rules and policies.; {O{!'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2823,  211.  S' e 142.` ` Discussion . AirTouch, Metrocall, and SBT support our proposal to authorize a partitionee  x&(including a nationwide geographic area license partitionee) to hold its license for the remainder of the  So' xpartitioner's original tenyear term.vo2  yOA&'ԍAirTouch Comments at 6; Metrocall Comments at 23; SBT Comments at 18.v No commenters opposed this proposal. However, SBT proposes  xthat when an area is partitioned within one year of the renewal date of the original license, the partitionee"<K ,l(l(,,"  S' xshould receive the license for a oneyear term.D yOh'ԍSBT Comments at 23.D Thus, the partitonee's license term would extend beyond  xthe partitioner's license term. The majority of commenters also support our proposal to grant a partitionee  S' xthe same renewal expectancy as the original licensee.;X {O'ԍ Id.; We also note that no commenters opposed this proposal.  S4'` `  S' e 143.` ` We conclude that partitionees should be authorized to hold their licenses for the remainder  S' xof the partitioner's original tenyear term. As we stated in the Further Notice, we find this approach to  xbe reasonable in that a partitioner should not be able to confer greater rights than it was awarded under  xthe terms of its license grant. We also believe that authorizing partitionees to hold licenses for the  xpartitioner's original term will promote our goal of providing service to all areas. We decline to adopt  x*SBT's proposal that a partitionee receive a oneyear term when any partitioning transaction occurs within  xone year of the renewal date of the original license because, in this instance, the partitioner would be  x3conferring greater rights than it was awarded under the terms of its license grant. We also find that a  Sj ' xpartitionee should be granted the same renewal expectancy as the partitioner. In the CMRS Third Report  S8 ' xand Order, we adopted a renewal expectancy standard for all CMRS providers, including paging  S ' xElicensees.t  {O'ԍSee CMRS Third Report and Order, 9 FCC Rcd at 8157,  386.t Under this standard, a CMRS licensee will be entitled to a renewal expectancy if it  xgdemonstrates that it has provided substantial service during the license term and has complied with the  S ' xCommission's rules and policies and the Communications Act.: | {O'ԍId.: This renewal expectancy standard  xprovides additional incentive for licensees to provide service, thereby promoting investment in and rapid deployment of new technologies and services.  S' ` ` '3. Disaggregation  Sn'` `  a.In General  S' e '144.` ` Background. In the Notice, we sought comment on whether we should allow spectrum  S' xdisaggregation. yO' " ԍDisaggregation is the assignment of discrete portions or "blocks" of spectrum licensed to a geographic area licensee. We did not receive sufficient comment on this issue, and therefore we' sought further  S' xxcomment. In the Further Notice, we specifically asked commenters to address the feasibility of spectrum  Sq' xdisaggregation for paging.qf  {Ow!'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2824,  212. Commenters were also asked to address whether minimum disaggregation  x7standards are necessary for paging services, and whether nationwide geographic area licensees should be  S 'permitted to disaggregate spectrum.:   {O$'ԍId.: "L ,l(l(,,"Ԍ S' e 145.` ` Discussion Several commenters oppose the adoption of paging spectrum disaggregation  S' xrules. yO5'ԍArch Reply Comments at 4; PageNet Comments at 11; PageMart Comments at 45; PCIA Comments at 78. PageMart states that there are no public benefits to allowing the disaggregation of paging  S' xspectrum.?X yO'ԍPageMart at 4.? PageMart and PCIA state that the more spectrum is divided, the less desirable it becomes,  Sg' xand the more difficult it is to reaggregate.Og {O'ԍId.; PCIA Comments at 8.O PageNet contends that the Commission's inquiry into  x7disaggregation of paging channels is premature because it is unaware of any technology designed for 900  S' xMHz paging channels using less than 25 kHz.Hz yO 'ԍPageNet Comments at 11.H PCIA also contends that disaggregation is neither  S' xtechnically nor practically feasible given the current status of paging technology.F  yOx 'ԍPCIA Comments at 78.F PCIA states that  S' x*disaggregation poses substantial and unacceptable risks of interference.@ {O'ԍId. at 8.@ PCIA explains that cochannel  xand adjacent interference will occur because paging equipment is designed to operate over 25 kHz  S5' xchannels, and a "spillover" effect will occur if the equipment is used on a smaller bandwidth.:5,  {O'ԍId.: Metrocall  xstates that it is not convinced that disaggregating spectrum from a single paging frequency is a viable  S' x7option at this time, but it does not believe that the rules should completely forbid disaggregation.J  yO-'ԍMetrocall Comments at 23.J Thus,  xgMetrocall indicates that the Commission should retain discretion to review disaggregation proposals on  xa casebycase basis, and allow disaggregation if it can be demonstrated that it is technically feasible and  S6 'both parties can provide legitimate signaling services on their respective portions of spectrum.:6 N  {O$'ԍId.:  S ' e 146.` ` AirTouch supports disaggregation, contending that disaggregation provides licensees with  S ' xDflexibility, encourages efficient use of spectrum, and promotes regulatory parity.J  yO'ԍAirTouch Comments at 67.J AirTouch also argues  xthat disaggregation is consistent with the Commission's policy of permitting flexible use of the  S7' xspectrum.@7p {OG!'ԍId. at 7.@ SBT contends that disaggregation should be limited to only small businesses during the  S'original licensee's construction period.D yO#'ԍSBT Comments at 19.D  S' e 147.` ` Although several commenters oppose establishing disaggregation rules at this time, we will  x permit MEA, EA, and nationwide geographic area licensees to engage in disaggregation. We also will"kM,l(l(,,Y"  S' xnot impose a minimum limit on spectrum disaggregation in the paging service. yOh' " ԍThis is consistent with the approach with have taken in broadband PCS, 220 MHz, WCS, 800 MHz, and 900 MHz services. We conclude that the  xmarket should determine if paging spectrum is technically and economically feasible to disaggregate. In  x&addition, allowing disaggregation will encourage the further development of paging equipment capable  xkof operating on less than 25 kHz. Our experience in broadband PCS demonstrates that parties are capable  x^of determining the economic and technical feasibility of disaggregation arrangements and will make sound  S' xbusiness judgments regarding the propriety of these arrangements.z  {O' " ԍPartitioning and Disaggregation Report and Order and Further Notice, 11 FCC Rcd at 21860,  49 ("[W]e  xb will not restrict the amount of broadband PCS spectrum that can be disaggregated. ...While our broadband PCS rules  x! do not contain specific channelization requirements, the rules do require compliance with emission limitations in the  x frequency bands immediately outside and adjacent to each of the broadband PCS frequency blocks. Therefore, while  x we will allow disaggregating parties to negotiate channelization plans among themselves as part of their  x! disaggregation agreements, we will continue to require that such plans provide the necessary outofband emission protections to third party licensees as required by our rules."). We further conclude that allowing  xspectrum disaggregation at this time could potentially expedite the introduction of service to underserved  xareas, provide increased flexibility to licensees, and encourage participation by small businesses in the  xlprovision of services. We also find that commenters have not provided sufficient evidence that  xinterference to adjacent or cochannel licensees is a substantial risk that should preclude the Commission  xfrom allowing disaggregation of paging spectrum. We find that our existing technical rules provide parties  xZwith sufficient protection from interference. We also believe that all qualified parties should be eligible  xto disaggregate any geographic area license. Open eligibility to disaggregate spectrum promotes prompt service to the public by facilitating the assignment of spectrum to the entity that values it most.  S ' ` ` b. Buildout Requirements  S ' e  148.` ` Background. In the Further Notice, we proposed the adoption of a flexible approach to  Sk' xconstruction requirements for disaggregators and disaggregatees.ukb  {Om'ԍSecond Order and Further Notice, 12 FCC Rcd at 2825,  216.u We proposed that either the  xgdisaggregator or disaggregatee entering the geographic market should be obligated to provide coverage  xto onethird of the population within three years of the license grant, and to twothirds of the population  S' xtwithin five years of the license grant.:  {Of'ԍId.: In the alternative, we would permit either the disaggregator or  S'the disaggregatee to provide substantial service to the geographic area within five years of license grant.:  {O'ԍId.: ` `   S9' e 149.` ` Discussion. AirTouch and SBT are the only commenters that addressed this issue, and  S' xboth support the imposition of buildout requirements on the disaggregator and the disaggregatee.\ yO#'ԍAirTouch Comments at 8; SBT Comments at 19.\  xAirTouch believes that the Commission's proposal to allow either party to meet the construction  x*requirements would permit licensees who have not utilized their spectrum to engage in sham transactions"N,l(l(,,r"  S' xto retain only the portion of the spectrum they intend to use.B {Oh'ԍId. at 78.B SBT also argues that the original licensee  xshould not be able to use disaggregation as a means of meeting the coverage requirements for its  S'spectrum.MZ yO'ԍSBT Comments at 19.M  S4' e 150.` ` We adopt the coverage proposal set forth in the Further Notice for MEA and EA licenses,  xand also provide disaggregating parties with an additional option. Under the first option, which is the  S' x_option proposed in the Further Notice, the parties may agree that either the disaggregator or the  S' xdisaggregatee will be responsible for meeting the coverage requirements for the geographic service area./ {O' ' " ԍSee 47 C.F.R.  24.714 (Broadband PCS); id.  90.911 (Lower channels of 800 MHz band); id.  90.813  {O '(MTA 900 MHz SMR); id.  90.1019 (Phase II EA, Regional, or Nationwide 220 MHz bands)./  xUnder this option, the disaggregating party certifying responsibility for the coverage requirements of an  xMEA or EA license will be required to provide coverage to onethird of the population of the licensed  xgeographic area within three years of license grant, and to twothirds of the population within five years  xof license grant; or, in the alternative, provide substantial service to the geographic area within five years  xof license grant. Under the second option, the disaggregator and disaggregatee may certify that they will  Sk ' xgshare the responsibility for meeting the coverage requirements for the entire geographic area./k F {OQ' " ԍSee 47 C.F.R.  24.714 (Broadband PCS); id.  90.911 (Lower channels of 800 MHz band); id.  90.813  {O'(MTA 900 MHz SMR); id.  90.1019 (Phase II EA, Regional, or Nationwide 220 MHz bands)./ Under  xthis option, both parties jointly will be required to provide coverage to onethird of the population of the  xZlicensed geographic area within three years of license grant, and to twothirds of the population within  xfive years of license grant; or, in the alternative, provide substantial service to the geographic area within five years of license grant.  S9' e ~151.` ` We believe that these options are appropriate because our rules for disaggregation should  xallow for flexibility, and also be consistent with our rules established in other services. The goal of our  xcoverage requirements in both the partitioning and disaggregation contexts is to ensure that the spectrum  xis used to the same degree that would have been required had the partitioning or disaggregation transaction  Sm' xnot taken place.m {O'ԍSee Partitioning and Disaggregation Report and Order and Further Notice, 11 FCC Rcd at 21864,  61. Our rules do not dictate the amount of spectrum that licensees must use to meet  xtcoverage requirements. Thus, a licensee who disaggregates a portion of its spectrum block to another  xparty may still meet its preexisting construction requirements for the entire geographic area by using the  xspectrum it has retained. Similarly, a party who receives a portion of the spectrum from the original  x^licensee can also meet the construction requirements for the entire geographic area by using the spectrum  x^it has acquired. In addition, parties can share responsibility for meeting construction requirements for the entire geographic area by combining areas they serve.  S' e 152.` ` We recognize that if the parties to a disaggregation agreement select the first option,  xsituations may arise where a party minimally builds its system but will retain its license because the other  x}party has met the coverage requirements for the geographic area. Nonetheless, we believe that it is  x&appropriate for one party to assume full responsibility for construction within the shared service area,  xbecause service would be offered to the required percentage of the population on a common frequency,  xeven if not on the entire spectrum. Under the first option, if the certifying party fails to meet the"O4 ,l(l(,,"  xcoverage requirements for the entire geographic area, that party's license will be subject to cancellation,  S' xbut the noncertifying party's license will not be affected. {O5' "l ԍSee Amendment of Part 90 of the Commission's Rules to Provide for the Use of the 220222 MHz Band  {O' xx by the Private Land Mobile Radio Service, Fifth Report and Order, PR Docket No. 89552, FCC 98186,  24 (Aug.  {O' xM 6, 1998) (220 MHz Fifth Report and Order); (Phase II EA, Regional, or Nationwide 220 MHz Band); 800 MHz  {O' x Second Report and Order, 12 FCC Rcd at 1914546,  197 & 199 (Upper and lower channels of 800 MHz band  {O]' x! and MTA 900 MHz SMR); Partitioning and Disaggregation Report and Order and Further Notice, 11 FCC Rcd at 21865,  63 (Broadband PCS). However, if the parties to a disaggregation  xagreement select the second option and jointly fail to satisfy the coverage requirements for the entire  Sg' xgeographic area, both parties' licenses will be subject to cancellation.^gJ {OQ ' " ԍSee 220 MHz Fifth Report and Order, FCC 98186 at  24; 800 MHz Second Report and Order, 12 FCC  {O ' xl Rcd at 1914546,  199 (Lower channels of 800 MHz band and MTA 900 MHz SMR); Partitioning and  {O 'Disaggregation Report and Order and Further Notice, 11 FCC Rcd at 21865,  63 (Broadband PCS). We note that MEA or EA  x*licensees whose licenses are cancelled will retain those sites authorized, constructed, and operating at the time the geographic area license was granted.  S' e A153.` ` As we did with respect to the issue of coverage requirements for partitionees of nationwide  xgeographic area licenses, we will defer any decision on such requirements for disaggregatees of nationwide  xggeographic area licensees until we decide the question of whether to impose coverage requirements on  S' xgnationwide geographic area licensees generally.Tp  {O'ԍSee supra at  12930.T Thus, disaggregatees of nationwide licenses may be subject to coverage requirements in the future.  Si '` `  c.License Term  S ' e 0154.` ` Background. The Further Notice proposed the adoption of a similar license term for  S ' xdisaggregatees as was proposed for partitionees, i.e., a disaggregatee would be authorized to hold its  S ' xlicense for the remainder of the disaggregator's original tenyear license term.u   {OA'ԍSecond Order and Further Notice, 12 FCC Rcd at 2825,  217.u We also proposed that  x"a disaggregatee should be afforded a renewal expectancy if it can demonstrate that it has provided  xsubstantial service during the past license term and has substantially complied with the Communications  S'Act and applicable Commission rules and policies.:  {O:'ԍId.:  S' e 155.` ` Discussion . AirTouch, the only commenter to address this issue, supports our proposal,H& yOf!'ԍAirTouch Comments at 7.H  xtwhich we adopt. Disaggregatees will therefore be authorized to hold licenses for the remainder of the  xdisaggregator's original tenyear term. As we concluded with respect to partitioners, the disaggregator  x7should not be entitled to confer greater rights than it was awarded under the initial license grant. We also conclude that a disaggregatee should be afforded the same renewal expectancy as the disaggregator. "P,l(l(,,X"Ԍ S'\` ` 4. Combination of Partitioning and Disaggregation  S' e d156.` ` Background. In the Further Notice, we tentatively concluded that if disaggregation is  x/feasible, we should permit combinations of partitioning and disaggregation, subject to the rules we  S5'proposed for each. 5 {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2825,  218.\  S' e 157.` ` Discussion. As the sole commenter on this issue, AirTouch supports a combination of  xkpartitioning and disaggregation for paging licenses. AirTouch contends that the Commission should adopt  xrules that accommodate both partitioning and disaggregation because each promotes the participation of  xIsmall businesses in the paging industry and the efficient use of spectrum. We agree and adopt our  xproposal. We believe that allowing carriers to engage in combinations of partitioning and disaggregation  xwill expedite the introduction of service to underserved areas, foster efficient spectrum use, provide  xincreased flexibility to licensees, eliminate market entry barriers, and encourage market participation by  xsmall businesses. As in other wireless services, we further conclude that in the event that there is a  xconflict in the application of the partitioning and disaggregation rules, the partitioning rules should  S 'prevail.  Z {O'ԍSee Partitioning and Disaggregation Report and Order and Further Notice, 11 FCC Rcd at 21866,  66.  S '` ` 55. Unjust Enrichment Provisions Regarding Partitioning and Disaggregation (#  S8' e 158.` `  Background. In the Further Notice, the Commission sought comment on proposals for  xadjusting installment payments for licensees that partition or disaggregate spectrum. 5 With regard to  xxpartitioning, the Commission proposed that unjust enrichment rules apply to small businesses that partition  S' x"to nonsmall businesses or to small businesses qualifying for a lower bidding credit.  {O,'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2822,  207. We sought  xQcomment on how these unjust enrichment payments should be calculated. With regard to disaggregation,  xwe sought comment on a tentative conclusion that, if we permit a qualified small business licensee to  xdisaggregate to a nonsmall business entity or a small business qualifying for a lower bidding credit, the  S' xdisaggregating licensee should be required to repay on a pro rata basis any benefits it received from the  S' xspecial small business provisions.M ~ {O'ԍId. at 2884,  214.M This would include accelerated payment of bidding credits, unpaid principal, and accrued interest. We sought comment on how these repayments should be calculated.  S ' e 159.` `  Discussion. ProNet recommends that small businesses be subject to the Commission's  S' xunjust enrichment rules when such businesses partition to a nonsmall business.F  yO!'ԍProNet Comments at 9.F AirTouch concurs that  x_unjust enrichment provisions should extend to partitioning, and believes that nonsmall business  xpartitionees should reimburse the Commission "for the amount of benefit received from bidding credits  S=' x. . . relating to the portion of the geographic area which has been partitioned."H= yO}%'ԍAirTouch Comments at 4.H AirTouch suggests that"=Q0 ,l(l(,,/"  x/the amount of repayment be calculated according to the population and amount of spectrum in the  S'partitioned area,B {O5'ԍId. at 45.B and suggests a similar unjust enrichment approach for disaggregation.@Z {O'ԍId. at 7.@  Sg' e 160.` ` In the Memorandum Opinion and Order on Reconsideration, we eliminated the use of  S5' xinstallment payments for auctioned spectrum in the paging service.M5 {O'ԍSee supra at  111.M We need not address, therefore, how  S' xpartitioning and disaggregation will affect installment payments. Further, since the release of the Further  S' xNotice, the Commission has adopted a general rule that determines the amount of unjust enrichment  S' xgpayments assessed for all current and future licensees that engage in partitioning and disaggregation.~ {O 'ԍSee Part 1 Third Report and Order and Second Further Notice, 13 FCC Rcd at 409,  57.  Sk' xSpecifically, the rules adopted in the Part 1 Third Report and Order and Second Further Notice indicate  x^that if a licensee seeks to partition any portion of its geographic area, the amount of the unjust enrichment  x"payment will be calculated based on the ratio of the population in the partitioned area to the overall  S' xpopulation of the license area.: {O'ԍId.: In the event of disaggregation, the amount of the unjust enrichment  xkpayment will be based upon the ratio of the amount of spectrum disaggregated to the amount of spectrum  Sm ' xheld by the disaggregating licensee.:m  {O'ԍId.: The unjust enrichment provisions adopted in the Part 1 Third  S; ' xReport and Order and Second Further Notice will apply to any MEA or EA paging licensee that receives  xa bidding credit and later elects to partition or disaggregate its license. When combined partitioning and  xdisaggregation is proposed, we will, consistent with our rules for other services, use a combination of both  x_population of the partitioned area and amount of spectrum disaggregated to make these pro rata  Sp'calculations.p4  {OD' "/ ԍSee, e.g., Partitioning and Disaggregation Report and Order and Further Notice, 11 FCC Rcd at 21866,  x@  66; Rulemaking to Amend Parts 1, 2, 21, and 25 of the Commission's Rules to Redesignate the 27.529.5 GHz  x Frequency Band, to Reallocate the 29.530.0 GHz Frequency Band, to Establish Rules and Policies for Local  {O' xZ Multipoint Distribution Service and for Fixed Satellite Services, Fourth Report and Order, 13 FCC Rcd 11655,  {Oh'11669,  25 (1998); 220 MHz Fifth Report and Order, FCC 98186,  19.  S ' ` ` 6. Application Fraud  S' e h 161.` ` Background. In response to the Notice, the Federal Trade Commission (FTC) raised the  Sr' x*issue of paging application fraud.r {O"'ԍSee Comment of the Federal Trade Commission, filed March 18, 1996 (FTC Comments on Notice). According to the FTC, telecommunications investment frauds are of  xttwo basic types: (1) "application mills," which use telemarketing to sell application preparation services  x7for wireless licenses for thousands of dollars to consumers, claiming that telecommunications businesses  xwill seek to lease or buy the licenses for many times the telemarketers' applications fees; and (2)  x"buildout" schemes, through which telemarketers sell, again for thousands of dollars, interests in limited  x/liability companies or partnerships that supposedly will acquire wireless licenses, build and operate"sR|,l(l(,,5"  S' x&telecommunications systems, and pay the consumers high dividends. {Oh' " ԍSee FTC Comments on Notice at 1; see also Second Report and Order and Further Notice, 12 FCC Rcd at 2826,  219. Although the FTC stated that  x3awarding licenses on a geographic area basis through competitive bidding will reduce the incidence of  xsuch fraud, the shared PCP channels, which will not be subject to geographic area licensing, remain  Sg'vulnerable to abuse.g" {O)' " ԍFTC Comments on Notice at 911. The shared PCP channels are all the non929 MHz Part 90 shared channels and the five 929 MHz shared channels.  S' e q162.` ` In the Further Notice, we sought comment on: (1) how the Form 600, which is the long  x form application for an authorization in the Wireless Telecommunications Bureau (and which is being  x&replaced by Form 601), could be revised to provide applicants with information regarding the risks of  xtelecommunications investment and warning signs of possible investment fraud; (2) whether application  x^preparation services should be required to sign the Form 600 and to certify that the applicant has received  x3in writing pertinent information regarding the Commission's rules and the obligations of licensees; and  xx(3) whether PCIA, as frequency coordinator, should be required to implement additional procedures in the  S 'coordination process to reduce fraudulent or speculative applications. | {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2826,  220.  S7 ' e 163.` ` Discussion. Initially, we note that we recently have established electronic filing  S ' x}procedures for wireless license applications.&  {O' "3 ԍSee Wireless Telecommunications Bureau Announce New Procedures for Filing Part 22 Paging Applications  {O|'in Universal Licensing System (ULS) Starting June 1, 1998, Public Notice, DA 98989 (May 22, 1998).& However, applicants for shared PCP channels must  xcurrently file manually because electronic filing via the universal licensing system (ULS) has not yet been  xtinstituted for the shared channels. Nonetheless, electronic filing for the shared paging channels will be  xQmandatory six months after the date it first becomes possible to file applications electronically. The FTC  xsuggests that we modify the longform application to include: specific information on the Commission's  xrules against speculation and trafficking, applicable construction requirements and penalties for non xcompliance, and general information on fraud, including the number of the FCC Call Center in case the  S' xDapplicant has any questions.Dj  yO'ԍFTC Comments at 10.D Additionally, the FTC urges us to require that application preparers certify  xthat they have forwarded pertinent information concerning the possibility of fraud to the applicants a  x^standardized document that contains clear warnings about Commission regulations and includes a number  S' x"for the FCC Call Center.A  {O 'ԍId. at 11.A SBT suggests that we modify Form 600 to include a warning near the  S' xsignature block stating that failure to construct will result in the cancellation of licenses.X  yO"' " ԍSBT suggests the following warning: "The person signing this form acknowledges that they will construct  xZ and operate the proposed radio facilities. Failure to construct the proposed radio facilities within the required construction period shall result in cancellation of the license granted hereunder." SBT Comments at 21. SBT also  xMsuggests that we require the applicant to include a showing of reasonable assurance of transmitter site  Sm' xtavailability upon reasonable notice by the Commission; and that we request additional information (i.e.,  xname, address, employer, telephone number, and signature) about the application preparers, if they are not";S,l(l(,,"  S' xthe applicant.: {Oh'ԍId.: AirTouch requests that the language from paragraph 219 of the Second Report and Order  S' xgand Further Notice, setting forth the FTC's description of the types of telecommunications investment  x&fraud, be incorporated into publicly distributed information and into the signature block on FCC Form  Si' x600.HiZ yOc'ԍAirTouch Comments at 8.H Metrocall suggests that the Commission require information showing that the applicant has a  S6' x&reasonable assurance of a transmitter site and is financially qualified,) 6 yO' "8 ԍMetrocall Comments at 1617. Metrocall also suggests that the Commission may only want to send a  {O '"defect letter" inquiring about site specifications to "applicants that display speculative warning signs." Id.) and specific information about  S'whether grant of the application would serve the public interest.A!D {O 'ԍId. at 13.A  S' e 164.` ` We are currently in the process of modifying FCC Form 601 to include language near the  xDsignature block that warns applicants that the failure of the licensee to construct will result in cancellation  xof the license. Specifically, Form 601 will state: "Upon grant of this license application, the licensee may  xxbe subject to certain construction or coverage requirements. Failure to meet the construction or coverage  xrequirements may result in cancellation of the license. Consult appropriate FCC regulations to determine  xthe construction or coverage requirements that apply to the type of license requested in this application."  xWe believe this language will be helpful to applicants in all services and may be of some use in deterring  xfraud. At the same time, we agree with PCIA and Metrocall that fraud victims may or may not be given  xxa meaningful opportunity to read the application forms submitted on their behalf by application preparation  S ' x@services.g"  yOH'ԍMetrocall Comments at 1718; PCIA Reply Comments at 8.g Further, when electronic filing is implemented for the shared channels, applicants will not  xsubmit a handwritten signature, thus raising the possibility that the applicant may never see the electronic  Sl' xform.~#lf  yOr'ԍAll that is required is the applicant's taxpayer identification number (TIN).~ Therefore, we are not convinced that the inclusion of specific information on the longform  xapplication regarding application fraud will necessarily decrease such fraud. Additionally, an application  xQmill may obtain reasonable assurance of a transmitter site and file hundreds of applications specifying that  xsingle site. Therefore, the "reasonable assurance" requirement will not necessarily reduce fraud and we  x*will not require applicants to supply this additional information. Nor will we require application preparers  x@to certify as to the accuracy of the application. According to PCIA and Metrocall, this could possibly  x&affect legitimate professional consulting and engineering services wary of attesting to the accuracy of  S'information supplied by applicants.e$  yO 'ԍMetrocall Comments at 18; PCIA Reply Comments at 10.e  S' e 165.` ` Consequently, we must look to additional methods of combatting fraud, including through  xPCIA, the frequency coordinator. PCIA acknowledges that it is willing to educate the public concerning  S;'issues that are typically the focus of misleading statements by application mills.\%;  {Oa%'ԍPCIA October 26, 1998 Ex Parte at 16.\ Further, PCIA, as a ";T%,l(l(,,"  S' x@result of discussions with the FTC, has already taken steps to reduce application fraud.H& yOh'ԍPCIA Comments at 1213.H Previously,  S' xMPCIA only sent confirmation of coordination to the application preparer.m'X {O'ԍId. at 13; PCIA October 26, 1998 Ex Parte at 16.m Now, PCIA's coordination  x3confirmation form (as well as all other correspondence during the coordination process) is sent to the  Sg' xapplicant as well as the contact representative.q(g {O'ԍPCIA Comments at 13; PCIA October 26, 1998 Ex Parte at 16.q PCIA also states that it is working with the FTC to  xVrevise the postcard it sends to applicants and their contact representatives, which indicates that the  x/application has been received and gives a PCIA file number, to include more information about the  S' xkCommission's application and construction requirements.H)| yO 'ԍPCIA Comments at 1213.H In addition, PCIA now always provides a co S' xchannel printout indicating cochannel licensees for new applicants whenever the channel is shared.A*  {OG'ԍId. at 13.A We  xapplaud these measures and encourage PCIA to do as much as possible to make applicants aware of the  S5'potential for fraud by application mills.+"5 yOs' " ԍPCIA states that in an auction environment, frequency coordination will not be required prior to the  {O;' xx submission and grant of market area licenses. PCIA October 26, 1998 Ex Parte at 16. However, applicants on the  x shared PCP channels will still be subject to frequency coordination because these channels are not subject to competitive bidding.   S' e 166.` ` PCIA also contends that application mills thrive because the Commission has failed to  xprovide clear information on licensing, construction, assignment of licenses, management agreements, and  Si ' xkfrequency availability.A,i  {O'ԍId. at 15.A Thus, PCIA suggests that the Commission issue public notices concerning those  S6 ' xissues that are the subject of misleading statements by application mills.D-6  {O'ԍId. at 1516.D The Commission has issued  S ' xsuch public notices in the past,.  {OO' "I ԍSee, e.g., WTB's Enforcement Division Releases Consumer Brochure on Telecommunications Investment  {O'Scams, Public Notice, 1996 WL 627923, (Oct. 31, 1996). and will continue to issue public notices in the future that are designed  xto inform the public and warn them of the potential for fraud arising out of the preparation and filing of  xFCC applications. Such public notices will also provide information regarding the application and  Sj' xlicensing process, specifically focusing on construction requirements and frequency availability./Dj yO"' " ԍPCIA also suggests modifying the Form 800A construction letter, which is a computergenerated letter sent  x7 to Part 90 licensees requesting confirmation that construction has been completed. Comments of PCIA at 1315;  xD and PCIA October 26, 1998 ex parte at 16. PCIA suggests that Form 800A should only be generated when newly  x issued licenses would give rise to a new construction obligation. PCIA Comments at 1314; and PCIA October 26,  {O2%' xU 1998 Ex Parte at 16. PCIA also states that the Commission should require both the licensee and the person or entity  x that actually performed the construction to sign the Form 800A attesting to the completion of construction. PCIA  {O&' x Comments at 1415; and PCIA October 26, 1998 Ex Parte at 16. We note that Form 800A will be replaced in the  x/ ULS system with a Construction/Coverage Reminder Notice that will be sent to all licensees prior to their "'.,l(l('"  xk construction/coverage deadline to remind them to notify the Commission upon completion. At the time the Form  x 800A or the Construction/Coverage Reminder Notice is first sent, the licensee has presumably already paid its fee  x to the application preparer and any fraudulent activity has most likely occurred. We believe that alerting the public  x| to the possibility of fraud will be better accomplished through Commission public notices, the Commission's website, and PCIA's distribution of information.  Further,"jUx/,l(l(,,"  x we will modify our website so that information regarding fraud on the shared paging channels will be  xaccessible directly from the Commission's homepage as well as from the Wireless Telecommunications  S' xBureau's homepage . We believe these steps will help reduce speculation and application fraud by increasing the amount of information available to the public.  S' e #167.` ` Finally, once we have completed the modification of FCC Form 601 to include warning  xZlanguage as described above, the Wireless Telecommunications Bureau will release a public notice that  x7removes our interim licensing rules for both the lower band shared PCP channels and the five shared 929  Sh' xMHz PCP channels.0hx yO ' "c ԍ In the public notice, the Wireless Telecommunications Bureau will remove section 90.494(g) of our rules, which outlines the interim licensing procedures for the five shared 929 MHz PCP channels.  Presently, our interim paging rules for the shared PCP paging channels permit only  S5' xQincumbents to file for new sites at any location.15 {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 275758,  43. We allow nonincumbents to file applications, but only  S' xfor private, internaluse systems.:2b  {O'ԍId.: Once the interim licensing rules are removed, nonincumbents will  x&be permitted to file applications on the shared PCP paging channels for new sites at any location. We  xfurther note that while frequency coordination is no longer required on the exclusive paging channels, all  xapplications for new sites filed on the shared PCP paging channels will continue to require frequency  xcoordination prior to the filing of these applications with the Commission. Accordingly, we amend section  x90.175(f) to clarify that frequency coordination is only needed for shared frequencies in the 929930 MHz band.  Sj'D VI. CONCLUSION ă  S' e 9168.` ` In the Order on Reconsideration, we modify rules adopted in the Second Report and  S' xgOrder and Further Notice by replacing MTAs with MEAs for geographic area licensing of the 929 and  S' x931 MHz bands. We affirm our decision in the Second Report and Order and Further Notice to award  xxlicenses for EAs for paging systems operating in the 3536 MHz, 4344 MHz, 152159 MHz, and 454460  x3MHz bands. In addition, we clarify and amend our rules to permit holders of systemwide licenses to  xinclude remote, standalone transmitters under the systemwide call sign or, alternatively, to maintain  xseparate licenses for any remote, standalone transmitters. We clarify that grandfathered nonexclusive  xllicensees on the thirtyfive exclusive 929 MHz channels will continue to operate under the same  xarrangements established with the exclusive incumbent licensees and other nonexclusive incumbent  S<' xlicensees prior to the adoption of the Second Report and Order and Further Notice. We also amend  xSection 22.503(k) of our rules to provide that holders of MEA and EA paging licenses who fail to meet  xtheir coverage requirements will be permitted to retain licenses only for those facilities authorized, constructed, and operating at the time the geographic area license was granted.  S>' e 169.` ` With regard to our competitive bidding rules for the paging service, we direct the Bureau,  xDconsistent with the Balanced Budget Act of 1997, to seek further comment on: the license groupings and" V 2,l(l(,,"  xlsequence of the paging auctions; an appropriate stopping rule for the paging auctions; and what  xinformation, such as bidder identities, should be disclosed to bidders during the paging auctions. We  x"decline to require that bidders specify each individual license on which they will bid and submit an  xupfront payment for each license; permit bid withdrawal without monetary liability; or modify our anti xcollusion rule to provide safe harbors for certain business discussions during the auctions. In addition,  S' xconsistent with our actions in the recent Part 1 Third Report and Order and Second Further Notice, we  xwill not allow installment payments, but will allow licensees to make their final payments within ten (10)  x*business days of the payment deadline subject to a late fee of five (5) percent of the amount due. Lastly,  Si' xDconsistent with our proposal in the Part 1 Third Report and Order and Second Further Notice, we clarify our attribution rules by providing a definition of "controlling interest."  S' e F170.` ` In the Third Report and Order, we defer any decision on whether we should impose  x coverage requirements on nationwide geographic area licensees until the Commission resolves similar  Sl ' xissues raised in the Narrowband PCS proceeding. The Third Report and Order also adopts rules for  xpartitioning and disaggregation of MEA, EA, and nationwide geographic area licenses. Finally, in order  xto deter fraud by application mills on the shared channels, we will add language to the longform  x/application regarding construction and coverage requirements and we will disseminate information regarding the potential for fraud and our licensing rules through public notices and our website.  S;'  VII. PROCEDURAL MATTERS AND ORDERING CLAUSES ă  S' A.` ` Procedural Matters  So' e ,171.` ` This is a permitbutdisclose notice and comment rule making proceeding. Ex parte  x@presentations are permitted, except during the Sunshine Agenda period, provided they are disclosed as  S 'provided in the Commission's rules.s3  {Or'ԍSee generally 47 C.F.R.  1.1201, 1.1203, 1.1206(a). s  S' e ,172.` ` As required by the Regulatory Flexibility Act (RFA), the Commission has prepared a  xSupplemental Final Regulatory Flexibility Analysis (Supplemental FRFA) of the possible impact on small  S>' xentities of the rules adopted in this Memorandum Opinion and Order on Reconsideration.C4>Z yO8'ԍ5 U.S.C.  604.C The  x<Supplemental FRFA is set forth in Appendix C. As also required by the RFA, the Commission has  x@prepared a Final Regulatory Flexibility Analysis (FRFA) of the expected impact on small businesses of  S' xthe rules adopted in this Third Report and Order.Q5 {O0'ԍId.  601 et seq.Q The FRFA is set forth in Appendix D. The Office  St' xof Public Affairs, Reference Operations Division, will send a copy of the Memorandum Opinion and  SB' xOrder on Reconsideration, including the Supplemental FRFA, and Third Report and Order, including the  xFRFA, to the Chief Counsel for Advocacy of the Small Business Administration, in accordance with the RFA.  Sw' e 0173.` ` This Memorandum Opinion and Order on Reconsideration and Third Report and Order  x_contains information collection requirements that the Commission is submitting to the Office of Management and Budget requesting clearance under the Paperwork Reduction Act. " W|5,l(l(,,!"Ԍ S' B.` ` Ordering Clauses  S' e J174.` ` Authority for issuance of this Memorandum Opinion and Order on Reconsideration and  Sh' xxThird Report and Order is contained in Sections 4(i), 303(r), 309(j), 332, and 405 of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 303(r), 309(j), 332, and 405.   S' e 175.` ` Accordingly, IT IS ORDERED that the petitions for reconsideration or clarification listed  xin Appendix A ARE GRANTED to the extent provided herein and otherwise ARE DENIED; and that the  xPetition for Partial Reconsideration of PSWF Corporation filed April 11, 1997, is to the extent provided  xherein DISMISSED as moot. This action is taken pursuant to Sections 4(i), 303(r), 309(j), 332, and 405  x*of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 303(r), 309(j), 332, and 405, and Section 1.429(i) of the Commission's rules, 47 C.F.R.  1.429(i).  Sk ' e m176.` ` IT IS FURTHER ORDERED that the petitions for reconsideration and application for  S8 ' xreview of the CWD Order listed in footnote 52 ARE DENIED. This action is taken pursuant to Sections  x*4(i), 303(r), 309(j), 332, and 405 of the Communications Act of 1934, as amended, 47 U.S.C.  154(i),  x303(r), 309(j), 332, and 405, and Sections 1.429(i) and 1.115 of the Commission's rules, 47 C.F.R.  1.429(i), 1.115.  S:' e  177.` ` IT IS FURTHER ORDERED that the Commission's rules ARE AMENDED as set forth  S' xQin Appendix B. IT IS FURTHER ORDERED that the provisions of this Memorandum Opinion and Order  S' xMon Reconsideration and Third Report and Order and the Commission's rules, as amended in Appendix  S' xB, SHALL BECOME EFFECTIVE 60 days after publication of this Memorandum Opinion and Order  Sq'on Reconsideration and Third Report and Order in the Federal Register.  S ' e 178. ` ` IT IS FURTHER ORDERED that a Public Notice will be issued by the Wireless  S' xTelecommunications Bureau following the adoption of this Memorandum Opinion and Order on  S' xZReconsideration and Third Report and Order that will remove the interim licensing rules on the shared PCP channels from the Commission's rules.  S' e 0179.` ` IT IS FURTHER ORDERED that the Commission's Office of Public Affairs, Reference  S' xOperations Division, SHALL SEND a copy of this Memorandum Opinion and Order on Reconsideration  S' xgand Third Report and Order, including the Supplemental Final Regulatory Flexibility Analysis and Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. ` `  hhCqFEDERAL COMMUNICATIONS COMMISSION ` `  hhCqMagalie Roman Salas ` `  hhCqSecretary" X5,l(l(,,]!"  S' YAPPENDIX A ă  S' PETITIONS 1. Advanced Paging, Inc. (Advanced) 2. AirStar Paging, Inc. (AirStar) 3. American Paging, Inc. (API) 4. Arch Communications Group (Arch) 5. Big Bend Telephone Company, Inc. (Big Bend) 6. Blooston, Mordkofsky, Jackson & Dickens (Blooston) Arthur Dale & Angela Hickman d/b/a Omnicom AzCOM Paging, Inc. Cascade Utilities, Inc. Cleveland Mobile Radio Sales, Inc. Clifford D. Moeller & Barbara J. Moeller d/b/a Valley Answering Service ComNav, Inc. d/b/a Radiotelephone of Maine (ComNav) Lubbock Radio Paging Service, Inc. (Lubbock) Oregon Telephone Corporation Penasco Valley Telephone Cooperative, Inc. Prairie Grove Telephone Company Professional Answering Service, Inc. Radiofone, Inc. Robert F. Ryder d/b/a Radio Paging Service Telephone & Two Way Teletouch Licenses, Inc. Ventures in Paging, L.C. 7. Century Telephone Enterprises, Inc. (Century) 8. Consolidated Communications Telecom Services, Inc. (Consolidated) 9. Lincoln County Telephone System, Inc. (Lincoln) 10. Metrocall, Inc. (Metrocall) 11. MidRivers Telephone Cooperative, Inc. (MidRivers) 12. Morris Communications, Inc. (Morris) 13. Mobile Telecommunications Technologies Corp. (MTel) 14. National Telephone Cooperative Association (NTCA) 15. Nationwide Paging, Inc. (Nationwide) 16. NuclaNaturita Telephone Company (NuclaNaturita) 17. Paging Network, Inc. (PageNet) 18. Personal Communications Industry Association (PCIA) 19. Preferred Networks, Inc. (Preferred Networks) 20. Priority Communications, Inc. (Priority) 21. ProNet, Inc. (ProNet)  S '22. PSWF Corporation (PSWF)u6  yO=#'ԍPSWF filed separate petitions on March 26, 1997, and April 11, 1997.u 23. Puerto Rico Telephone Company (PRTC)  So"'24. Robert Kester, et. al. (Robert Kester) 25. Schuylkill Mobile Fone, Inc. (Schuylkill) 26. Teletouch Licenses, Inc. (Teletouch) 27. TSR Paging, Inc. (TSR) "$YX6,l(l(,,%"Ԍ28. Western Maryland Wireless Company (Western Maryland) 29. Western Paging I Corporation and Western Paging II Corporation (Western Paging)  Sg' OPPOSITIONS/COMMENTS 1. AirTouch Opposition 2. AirTouch Comments 3. API Comments 4. Arch Opposition 5. ComNav Comments 6. Communication Innovations Corporation (CIC) Opposition 7. Lubbock Comments 8. Metrocall Response to Petition 9. MTel Comments 10. Nationwide Opposition 11. NuclaNaturita Comments 12. Oregon Telephone Corporation (OTC) Comments 13. PageMart II, Inc. (PageMart) Opposition 14. PageNet Comments 15. PCIA Opposition 16. Penasco Valley Telephone Cooperative (Penasco) Comments 17. Professional Answering Service (Professional) Comments 18. ProNet Comments 19. SpaceMark Communications Comments 20. Ventures in Paging, L.C. Comments  S' REPLIES TO OPPOSITIONS/COMMENTS 1. AirStar 2. AirTouch 3. API 4. Arch 5. Big Bend 6. Blooston 7. Century 8. MidRivers 9. NTCA 10. NuclaNaturita 11. PageNet 12. ProNet 13. PRTC "!Z6,l(l(,,:""  S' EX PARTE 1. AirTouch filed July 15, 1997 2. Electronic Engineering Company filed September 10, 1997 3. Federal Trade Commission (FTC) filed June 10, 1997 4. NTCA filed November 18, 1997 5. PageNet filed October 27, 1998 6. PCIA filed June 18, 1997 7. PCIA filed December 1, 1997 8. PCIA filed April 7, 1998 9. PCIA filed April 29, 1998 10. PCIA filed September 3, 1998 11. PCIA filed September 18, 1998 12. PCIA filed September 21, 1998 13. PCIA filed October 13, 1998 14. PCIA filed October 26, 1998  Sj' OTHER 1. Metrocall Motion for Stay Pending Reconsideration and Clarification filed April 11, 1997  S'2. Radiofone, Inc. Notice of Withdrawal as Party7 yO9' "  ԍPursuant to this notice of withdrawal, Radiofone, Inc. withdrew as a party to the petition for reconsideration filed on April 11, 1997, by Blooston, Mordkofsky, Jackson & Dickens. filed June 11, 1997  S'3. TSR Wireless LLC Notification8  yO^' "u ԍTSR Paging, Inc. merged with American Paging, Inc. and its subsidiaries to form a new entity, TSR Wireless LLC. filed April 20, 1997  Sk' x34. TSR Wireless LLC Withdrawal of Petition for Partial Reconsideration9kx yO' "V ԍTSR Wireless LLC withdrew the petition for reconsideration filed on March 26, 1997, by American Paging Inc. filed October 22, 1998 "[9,l(l(,,"  S' COMMENTS IN RESPONSE TO FURTHER NOTICE 1. AirTouch 2. Blooston 3. FTC 4. Metrocall 5. NuclaNaturita 6. PageMart 7. PageNet 8. PCIA 9. ProNet 10. Small Business in Telecommunications (SBT)  Si ' REPLIES 1. AirTouch 2. Arch 3. Blooston 4. Century 5. Metrocall 6. PageNet 7. PCIA 8. ProNet "k\9,l(l(,,"  S'Z APPENDIX B ă Part 22 of Chapter 1 of Title 47 of the Code of Federal Regulations is amended as follows: 1. The authority citation for Part 22 continues to read as follows: AUTHORITY: Sections 4, 303, 309 and 332, 48 Stat. 1066, 1082, as amended; 47 U.S.C. 154, 303, 309 and 332, unless otherwise noted. 2. Section 22.213 is revised to read as follows:  S '  22.213 Longform application (FCC Form 601).  "Each successful bidder for a paging geographic area authorization must submit a "longform"  xZapplication (Form 601) within ten (10) business days after being notified by Public Notice that it is the  xcwinning bidder. Applications for paging geographic area authorizations on FCC Form 601 must be  xsubmitted in accordance with  1.2107 and  1.2112 of this chapter, all applicable procedures set forth  xin the rules in this part, and any applicable Public Notices that the FCC may issue in connection with an  x auction. After an auction, the FCC will not accept longform applications for paging geographic area  xauthorizations from anyone other than the auction winners and parties seeking partitioned authorizations pursuant to agreements with auction winners under  22.221. 3. Section 22.215 is amended by revising paragraph (a) to read as follows:  S'  22.215 Authorization, grant, denial, default, and disqualification.  "8(a) Each winning bidder will be required to pay the full balance of its winning bid no later than  x3ten (10) business days following the release date of a Public Notice establishing the payment deadline.  xIf a winning bidder fails to pay the balance of its winning bids in a lump sum by the applicable deadline  xas specified by the Commission, it will be allowed to make payment no later than ten (10) business days  x&after the payment deadline, provided that it also pays a late fee equal to five (5) percent of the amount  xMdue. When a winning bidder fails to pay the balance of its winning bid by the late payment deadline, it  x<is considered to be in default on its authorization(s) and subject to the applicable default payments.  xAuthorizations will be awarded upon the full and timely payment of winning bids and any applicable late fees. * * * * *  "_4. Section 22.217 is amended by revising paragraph (a) and adding paragraph (b)(4) to read as follows:  S!'  22.217 Bidding credits for small businesses.  "(a) A winning bidder that qualifies as a small business or a consortium of small businesses as  xdefined in  22.223(b)(1)(i) may use a bidding credit of thirtyfive (35) percent to lower the cost of its  xwinning bid. A winning bidder that qualifies as a small business or a consortium of small businesses as  xdefined in  22.223(b)(1)(ii) may use a bidding credit of twentyfive (25) percent to lower the cost of its winning bid. (b) * * * "=']9,l(l(,,("Ԍ "y(4) If a small business that utilizes a bidding credit under this section partitions its authorization  x7or disaggregates its spectrum to an entity not meeting the eligibility standards for the same bidding credit,  xthe partitioning or disaggregating licensee will be subject to the provisions concerning unjust enrichment as set forth in  1.2111(e)(2) and (3) of this chapter. 5. Section 22.219 is removed. 6. Section 22.221 is amended by revising paragraphs (b) and (c) to read as follows:  S5'  22.221 Eligibility for partitioned authorizations. * * * * *  "(b) Each party to an agreement to partition the authorization must file a longform application  x(FCC Form 601) for its respective, mutually agreedupon geographic area together with the application for the remainder of the MEA or EA filed by the auction winner.  "(c) If the partitioned authorization is being applied for as a partial assignment of the MEA or EA  xtauthorization following grant of the initial authorization, request for authorization for partial assignment of an authorization shall be made pursuant to  1.948.  "7. Section 22.223 is amended by revising paragraphs (b)(1) and (b)(2) and adding paragraphs (b)(4) and (e) to read as follows:  Sk'  22.223 Definitions concerning competitive bidding process. * * * * * (b) * * * (1) * * *  "+(i) Together with its affiliates and controlling interests has average gross revenues that are not more than $3 million for the preceding three years; or  "R(ii) Together with its affiliates and controlling interests has average gross revenues that are not more than $15 million for the preceding three years.  "(2) For purposes of determining whether an entity meets either the $3 million or $15 million  xaverage annual gross revenues size standard set forth in paragraph (b)(1), the gross revenues of the entity, its affiliates, and controlling interests shall be considered on a cumulative basis and aggregated. (3) * * * * *  "(4) Applicants without identifiable controlling interests. Where an applicant (or licensee) cannot  xQidentify controlling interests under the standards set forth in this section, the gross revenues of all interest holders in the applicant, and their affiliates, will be attributable. * * * * *  So"'(e) Controlling interest.  S<#' "8(1) For purposes of this section, controlling interest includes individuals or entities with de jure  S $' xand de facto control of the applicant. De jure control is greater than 50 percent of the voting stock of a  S$' xcorporation, or in the case of a partnership, the general partner. De facto control is determined on a case xZbycase basis. An entity must disclose its equity interest and demonstrate at least the following indicia  Sp&'of control to establish that it retains de facto control of the applicant: "p&^9,l(l(,,'"Ԍ "(i) The entity constitutes or appoints more than 50 percent of the board of directors or management committee;  "_(ii) The entity has authority to appoint, promote, demote, and fire senior executives that control the daytoday activities of the licensee; and  S4'(iii) The entity plays an integral role in management decisions.   * (2) Calculation of certain interests.  "c(i) Ownership interests shall be calculated on a fully diluted basis; all agreements such as warrants,  xstock options and convertible debentures will generally be treated as if the rights thereunder already have been fully exercised.  "(ii) Partnership and other ownership interests and any stock interest equity, or outstanding stock, or outstanding voting stock shall be attributed as specified below.  "(iii) Stock interests held in trust shall be attributed to any person who holds or shares the power  xQto vote such stock, to any person who has the sole power to sell such stock, and, to any person who has  xthe right to revoke the trust at will or to replace the trustee at will. If the trustee has a familial, personal,  xor extra-trust business relationship to the grantor or the beneficiary, the grantor or beneficiary, as appropriate, will be attributed with the stock interests held in trust. (iv) Non-voting stock shall be attributed as an interest in the issuing entity.  "h(v) Limited partnership interests shall be attributed to limited partners and shall be calculated according to both the percentage of equity paid in and the percentage of distribution of profits and losses.  "8(vi) Officers and directors of an entity shall be considered to have an attributable interest in the  xentity. The officers and directors of an entity that controls a licensee or applicant shall be considered to have an attributable interest in the licensee or applicant.  "(vii) Ownership interests that are held indirectly by any party through one or more intervening  xcorporations will be determined by successive multiplication of the ownership percentages for each link  xin the vertical ownership chain and application of the relevant attribution benchmark to the resulting  xproduct, except that if the ownership percentage for an interest in any link in the chain exceeds 50 percent or represents actual control, it shall be treated as if it were a 100 percent interest.  "(viii) Any person who manages the operations of an applicant or licensee pursuant to a  xtmanagement agreement shall be considered to have an attributable interest in such applicant or licensee  xif such person or its affiliate pursuant to paragraph (d) has authority to make decisions or otherwise engage in practices or activities that determine, or significantly influence (A) The nature or types of services offered by such an applicant or licensee; (B) The terms upon which such services are offered; or (C) The prices charged for such services.  "y(ix) Any licensee or its affiliate who enters into a joint marketing arrangement with an applicant  xkor licensee, or its affiliate, shall be considered to have an attributable interest, if such applicant or licensee,  xor its affiliate, has authority to make decisions or otherwise engage in practices or activities that determine, or significantly influence, (A) The nature or types of services offered by such an applicant or licensee; (B) The terms upon which such services are offered; or (C) The prices charged for such services. 8. Section 22.225 is amended by revising paragraphs (a)(1), (b)(1) and (e) to read as follows:  S<#'  22.225 Certifications, disclosures, records maintenance and audits.  S$'(a)` ` * * *  "(1) The identity of the applicant's controlling interests and affiliates, and, if a consortium of small businesses, the members of the joint venture; and "='_9,l(l(,,'"Ԍ* * * * * (b) * * *  "8(1) Disclose separately and in the aggregate the gross revenues, computed in accordance with  x 22.223, for each of the following: the applicant, the applicant's affiliates, the applicant's controlling  S'interests, and, if a consortium of small businesses, the members of the joint venture ; * * * * *  S5' e (e)` ` Definitions. The terms affiliate, small business, consortium of small businesses, gross revenues, and controlling interest used in this section are defined in  22.223.  "E9. Section 22.503 is amended by revising paragraphs (b)(2), (b)(3), (h), (i), and (k) to read as follows:  S '  22.503 Paging geographic area authorizations. * * * * * (b) * * *  "(2) Major Economic Areas (MEAs) and Economic Areas (EAs) are defined below. EAs are  S' xMdefined by the Department of Commerce, Bureau of Economic Analysis. See Final Redefinition of the  xMEA Economic Areas, 60 FR 13114 (March 10, 1995). MEAs are based on EAs. In addition to the  xDepartment of Commerce's 172 EAs, the FCC shall separately license Guam and the Northern Mariana  xIslands, Puerto Rico and the United States Virgin Islands, and American Samoa, which have been assigned FCCcreated EA numbers 173175, respectively, and MEA numbers 4951, respectively. (3) The 51 MEAs are composed of one or more EAs as defined in the table below: O ddx !ddx`<< O      MEAs EAs  J !ddx`<< Addx`<< J  U  R  1 (Boston)R 13U U  2 (New York City)VR 47, 10U U  3 (Buffalo)R 8U  V Ry  4 (Philadelphia)0y 1112 y J Addx`<< addx0`<< J  u  l  5 (Washington) l 1314u U 0 lR  6 (Richmond)!R 1517, 20U U   7 (CharlotteGreensboroGreenvilleRaleigh)O#R 1819, 2126, 4142, 46U U ! 8 (Atlanta)$R 2728, 3740, 43U U O# 9 (Jacksonville)%R 29, 35U U $ 10 (TampaSt. Petersburg Orlando)N'R 30, 3334"&`9,l(l(,,&#&"U  % Ry  11 (Miami)y 3132 y J addx0`<< ddxa<< J  u  l  12 (Pittsburgh)l 9, 5253u U  lR  13 (CincinnatiDayton)OR 4850U U  14 (Columbus)R 51U U O 15 (Cleveland)R 5455U U  16 (Detroit)NR 5658, 6162U U  17 (Milwaukee) R 5960, 63, 104105, 108U U N 18 (Chicago) R 6466, 68, 97, 101U U   19 (Indianapolis)M R 67U U   20 (MinneapolisSt. Paul) R 106107, 109114, 116U  M  Ry  21 (Des MoinesQuad Cities)'y 100, 102103, 117  y J ddxa<< ddx'a<< J  u   l  22 (Knoxville)l 4445u U ' lR  23 (LouisvilleLexingtonEvansville)R 47, 6970, 72U U  24 (Birmingham)FR 36, 74, 7879U U  25 (Nashville)R 71U U F 26 (MemphisJackson)R 73, 7577U U  27 (New OrleansBaton Rouge)ER 8085U U  28 (Little Rock)R 9092, 95U U E 29 (Kansas City)R 93, 99, 123U   Ry  30 (St. Louis)ty 94, 96, 98 y J ddx'a<< ddxta<< J  u  l  31 (Houston)l 8687, 131u U t lR  32 (DallasFort Worth)>R 8889, 127130, 135, 137138U U  33 (Denver)R 115, 140143U U > 34 (Omaha) R 118121U U  35 (Wichita)="R 122U U   36 (Tulsa)#R 124U U =" 37 (Oklahoma City)$R 125126U U # 38 (San Antonio)<&R 132134U U $ 39 (El PasoAlbuquerque)'R 136, 139, 155157"&a9,l(l(,,=&%"U  <& Ry  40 (Phoenix)y 154, 158159  y J ddxta<< ddxb<< J  u  l  41 (SpokaneBillings)l 144147, 168u U  lR  42 (Salt Lake City)OR 148150, 152U U  43 (San FranciscoOaklandSan Jose)R 151, 162165U U O 44 (Los AngelesSan Diego)R 153, 160161U U  45 (Portland)NR 166167U   Ry  46 (Seattle) y 169170 Ny J ddxb<< ddx b<< J  u N l  47 (Alaska)H l 171u U   lR  48 (Hawaii) R 172U U H  49 (Guam and the Northern Mariana Islands) R 173U U   50 (Puerto Rico and U.S. Virgin Islands)GR 174U    Ry  51 (American Samoa)y 175 Gy * * * * *   S3' "/(h) Adjacent geographic area coordination required. Before constructing a facility for which the  xinterfering contour (as defined in  22.537 or  22.567, as appropriate for the channel involved) would  xextend into another paging geographic area, a paging geographic area licensee must obtain the consent of  xthe relevant cochannel paging geographic area licensee, if any, into whose area the interfering contour  x@would extend. Licensees are expected to cooperate fully and in good faith attempt to resolve potential  xkinterference problems before bringing matters to the FCC. In the event that there is no cochannel paging  xgeographic area licensee from whom to obtain consent in the area into which the interfering contour would  xextend, the facility may be constructed and operated subject to the condition that, at such time as the FCC  xgissues a paging geographic area authorization for that adjacent geographic area, either consent must be  xobtained or the facility modified or eliminated such that the interfering contour no longer extends into the adjacent geographic area.  S' "(i) Protection of existing service. All facilities constructed and operated pursuant to a paging  xgeographic area authorization must provide cochannel interference protection in accordance with 22.537  Sk' xMor  22.567, as appropriate for the channel involved, to all authorized cochannel facilities of exclusive  xlicensees within the paging geographic area. Nonexclusive licensees on the thirtyfive exclusive 929 MHz  xchannels are not entitled to exclusive status, and will continue to operate under the sharing arrangements  xestablished with the exclusive licensees and other nonexclusive licensees that were in effect prior to  xxFebruary 19, 1997. MEA, EA, and nationwide geographic area licensees have the right to share with nonexclusive licensees on the thirtyfive exclusive 929 MHz channels on a noninterfering basis. * * * * *  S%' "[(k) Coverage Requirements. Failure by an MEA or EA licensee to meet either the coverage  x}requirements in paragraphs (k)(1) and (k)(2), or alternatively, the substantial service requirement in  xgparagraph (k)(3), will result in automatic termination of authorizations for those facilities that were not"<'b9,l(l(,,A'"  xauthorized, constructed, and operating at the time the geographic area authorization was granted. MEA  xand EA licensees have the burden of showing when their facilities were authorized, constructed, and  xxoperating, and should retain necessary records of these sites until coverage requirements are fulfilled. For  xthe purpose of this paragraph, to "cover" area means to include geographic area within the composite of  xthe service contour(s) determined by the methods of  22.537 or 22.567, as appropriate for the particular  xchannel involved. Licensees may determine the population of geographic areas included within their service contours using either the 1990 census or the 2000 census, but not both.  "9(1) No later than three years after the initial grant of an MEA or EA geographic area  xauthorization, the licensee must construct or otherwise acquire and operate sufficient facilities to cover one  xthird of the population in the paging geographic area. The licensee must notify the FCC at the end of the  x7threeyear period pursuant to  1.946, either that it has satisfied this requirement or that it plans to satisfy the alternative requirement to provide substantial service in accordance with paragraph (k)(3).  "(2) No later than five years after the initial grant of an MEA or EA geographic area authorization,  xthe licensee must construct or otherwise acquire and operate sufficient facilities to cover two thirds of the  xZpopulation in the paging geographic area. The licensee must notify the FCC at the end of the five year  xxperiod pursuant to  1.946, either that it has satisfied this requirement or that it has satisfied the alternative requirement to provide substantial service in accordance with paragraph (k)(3). * * * * * i10. Section 22.507 is amended by revising paragraph (c) to read as follows:  S8'  22.507 Number of transmitters per station. * * * * *  Sl' "[(c)  Consolidation of separate stations. The FCC may consolidate sitespecific contiguous  xauthorizations upon request (FCC Form 601) of the licensee, if appropriate under paragraph (a)i. Paging  xlicensees may include remote, standalone transmitters under the single systemwide authorization, if the  x"remote, standalone transmitter is linked to the system via a control/repeater facility or by satellite.  xIncluding a remote, standalone transmitter in a systemwide authorization does not alter the limitations  xprovided under  22.503(f) on entities other than the paging geographic area licensee. In the alternative,  xQpaging licensees may maintain separate sitespecific authorizations for standalone or remote transmitters.  xtThe earliest expiration date of the authorizations that make up the single systemwide authorization will  xdetermine the expiration date for the systemwide authorization. Licensees must file timely renewal  xMapplications for sitespecific authorizations included in a single systemwide authorization request until the request is approved. Renewal of the systemwide authorization will be subject to  1.949. 11. Paragraph (c) of Section 22.509 is removed. 412. New Section 22.513 is added to read as follows:  S=#' x  22.513 Partitioning and disaggregation. MEA and EA licensees may apply to partition their  xauthorized geographic service area or disaggregate their authorized spectrum at any time following 4grant  x7of their geographic area authorizations. Nationwide geographic area licensees may apply to partition their  xauthorized geographic service area or disaggregate their authorized spectrum at any time as of [insert  Sq&'effective date of the Third Report and Order]. "?'c9,l(l(,,'"Ԍ S' "(a) Application required. Parties seeking approval for partitioning and/or disaggregation shall apply for partial assignment of a license pursuant to  1.948.  Sh' "(b)  Partitioning. In the case of partitioning, requests for authorization for partial assignment of  xa license must include, as attachments, a description of the partitioned service area and a calculation of  xthe population of the partitioned service area and the authorized geographic service area. The partitioned  xservice area shall be defined by 120 sets of geographic coordinates at points at every 3 degrees azimuth  xfrom a point within the partitioned service area along the partitioned service area boundary unless either  Sj' xan FCCrecognized service area is used (e.g., MEA or EA) or county lines are followed. The  xgeographical coordinates must be specified in degrees, minutes, and seconds to the nearest second latitude  xtand longitude, and must be based upon the 1983 North American Datum (NAD83). In the case where  xFCCrecognized service areas or county lines are used, applicants need only list the specific area(s) through use of FCC designations or county names that constitute the partitioned area.  S9 '(c)  Disaggregation. Spectrum may be disaggregated in any amount.  S ' "E(d) Combined partitioning and disaggregation. Licensees may apply for partial assignment of authorizations that propose combinations of partitioning and disaggregation.  S<' "(e) License term. The license term for a partitioned license area and for disaggregated spectrum shall be the remainder of the original licensee's license term as provided for in  1.955.  S'(f)  Coverage Requirements for partitioning.  S?'(1) Parties to a partitioning agreement must satisfy at least one of the following requirements:  S' "(i) The partitionee must satisfy the applicable coverage requirements set forth in  22.503 (k)(1), (2) and (3) for the partitioned license area; or  "R(ii) The original licensee must meet the coverage requirements set forth in  22.503 (k)(1), (2)  xand (3) for the entire geographic area. In this case, the partitionee must meet only the requirements for renewal of its authorization for the partitioned license area.  "+(2) Parties seeking authority to partition must submit with their partial assignment application a certification signed by both parties stating which of the above options they select.  "(3) Partitionees must submit supporting documents showing compliance with their coverage requirements as set forth in  22.503 (k)(1), (2) and (3).  "(4) Failure by any partitionee to meet its coverage requirements will result in automatic cancellation of the partitioned authorization without further Commission action.  S!'(2)  Coverage Requirements for disaggregation. (1) Parties to a disaggregation agreement must satisfy at least one of the following requirements:  "(i) Either the disaggregator or disaggregatee must satisfy the coverage requirements set forth in 22.503 (k)(1), (2) and (3) for the entire license area; or "x&d9,l(l(,,'"Ԍ "(ii) Parties must agree to share responsibility for meeting the coverage requirements set forth in 22.503 (k)(1), (2) and (3) for the entire license area.  "(2) Parties seeking authority to disaggregate must submit with their partial assignment application a certification signed by both parties stating which of the above requirements they meet.  "(3) Disaggregatees must submit supporting documents showing compliance with their coverage requirements as set forth in  22.503 (k)(1), (2) & (3).  "+(4) Parties that accept responsibility for meeting the coverage requirements and later fail to do so will be subject to automatic license cancellation without further Commission action. 13. Section 22.531 is amended by revising paragraph (f) to read as follows:  S6 '  22.531 Channels for paging operation. * * * * *  "<(f) For the purpose of issuing paging geographic authorizations, the paging geographic areas used  xfor UHF channels are the MEAs, and the paging geographic areas used for the low and high VHF channels are the EAs (see  22.503(b)). 14. Section 90.175 is amended by revising paragraph (f) to read as follows:  S8'  90.175 Frequency coordination requirements. * * * * *  "E(f) For frequencies in the 929930 MHz band listed in paragraph (b) of  90.494. A statement from the coordinator recommending the most appropriate frequency."9e9,l(l(,,"  S' YAPPENDIX C ă  S' Supplemental Final Regulatory Flexibility Analysis ă  Sg' Memorandum Opinion and Order on Reconsideration  S' "As required by the Regulatory Flexibility Act (RFA),:\ {Oj' " ԍ5 U.S.C.  603 & 604. Congress amended the RFA, id.  601 et seq., by the Contract With America  {O4' x Advancement Act of 1996, Pub. L. No. 1045121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996. an Initial Regulatory Flexibility Analysis  S' x(IRFA) was incorporated in Appendix A of the Notice in this proceeding, and a Final Regulatory  S' x"Flexibility Analysis (FRFA) was incorporated in Appendix C of the subsequent Second Report and  Sk' xOrder.;k {O ' " ԍNotice of Propose Rulemaking, 11 FCC Rcd 3108 (1996); Second Report and Order and Further Notice, 12 FCC Rcd 2732 (1997). As described below, two petitions for reconsideration of the Second Report and Order raise an  S9' xissue concerning the previous FRFA. The Memorandum Opinion and Order on Reconsideration addresses  xthose reconsideration petitions, among others. This associated Supplemental Final Regulatory Flexibility Analysis (Supplemental FRFA) also addresses those petitions and conforms to the RFA.  Sn ' I. Need for and Purpose of this Action ă  S ' "In the Second Report and Order, the Commission adopted rules for geographic area licensing of  x3Common Carrier Paging and exclusive 929 MHz Private Carrier Paging and procedures for auctioning  S ' xmutually exclusive applications for these licenses. The actions taken in this Memorandum Opinion and  Sq' xgOrder on Reconsideration are in response to petitions for reconsideration or clarification of the Second  S?' xReport and Order. Throughout this proceeding, we have sought to promote Congress's goal of regulatory  xgparity for all Commercial Mobile Radio Services (CMRS), and to encourage the participation of a wide  xvariety of applicants, including small businesses, in the paging industry. In addition, we have sought to  xestablish rules for the paging services that will streamline the licensing process and provide a flexible  xoperating environment for licensees, foster competition, and promote the delivery of service to all areas of the country, including rural areas.  S's  II. Summary of Significant Issues Raised in Response  S'- to the Final Regulatory Flexibility Analysis   "l\Priority Communications, Inc.'s (Priority) petition for reconsideration raises various issues, one  S' x^of which is in direct response to the FRFA contained in the Second Report and Order. Priority states that  S' xthe FRFA did not address alternatives to competitive bidding, e.g., granting geographic area licenses,  S' xwithout competitive bidding, to incumbents of highly encumbered areas.u<F yO!'ԍPriority Communications, Inc. Petition for Reconsideration at 1113.u We disagree with the  Sx' xcontention that the Commission failed to consider alternatives to competitive bidding. In the Second  SF' xReport and Order, the Commission considered and rejected proposals to retain sitebysite licensing for  xthe paging industry. In rejecting the proposals, the Commission found that geographic area licensing  xprovides flexibility for licensees and ease of administration for the Commission, facilitates further build xQout of widearea systems, and enables paging operators to meet the needs of their customers more easily.  x3Moreover, the Commission concluded that geographic area licensing will further the goal of providing"{f<,l(l(,,H"  xcarriers that offer substantially similar services more flexibility to compete, and will enhance regulatory  S'symmetry between paging and other service in the CMRS marketplace.= {O5'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2744,  15 & 2748,  23.  "The Commission further concluded that it would grant mutually exclusive applications for  xgeographic area licenses through competitive bidding even in areas extensively built out by an incumbent  x}licensee. The Commission specifically considered and rejected proposals to award geographic area  xlicenses, without competitive bidding, to any incumbent providing coverage to 70 percent or more of the  xpopulation or to twothirds of the population in the license area. Similarly, the Commission rejected a  xkproposal not to hold auctions where an incumbent licensee is serving at least 50 percent of the geographic  x/area or 50 percent of the population in that market. The Commission also considered and rejected  xproposals to award a dispositive preference in the auction to a licensee that provides service to onethird  x}or greater of the population, or onehalf or greater of the geographic area, or to restrict competitive  S ' xbidding to incumbent licensees.O> Z {O 'ԍId. at 275859,  45.O In rejecting these proposals, the Commission concluded that market forces, not regulation, should determine participation in competitive bidding for geographic area licenses.  " In its petition for reconsideration, the National Telephone Cooperative Association (NTCA)  S ' xcontends that the FRFA failed to address alternatives that parties suggested in response to the Notice to  S ' xminimize the impact of the rule changes adopted in the Second Report and Order on small BETRS  xoperators. NTCA specifically contends that the Commission did not address the investment BETRS  xoperators would be unable to recover once they were required to terminate operations upon notification  xby a geographic area licensee of interference. NTCA further contends that the Commission did not  xaddress the adverse impact on small BETRS operators resulting from auctions that "pit them against  S' xpaging operations that have no interest in the site licenses needed for BETRS operations."Z? yO,'ԍNTCA Petition for Reconsideration at 78.Z Initially, we  Sm' xnote that NTCA did not raise these issues in response to the Notice. NTCA has raised these issues only  S;' xin response to the Second Report and Order. We also disagree with the contention that the Commission  xfailed to consider alternatives that would minimize the impact on small BETRS operators. The  x3Commission specifically found it unnecessary to adopt the plan that Puerto Rico Telephone proposed,  xIunder which (1) BETRS operators would be given preferential treatment over paging operators for  xcmutually exclusive applications (on a sitebysite basis), and (2) the Commission would designate a  S=' x^frequency block for reallocated frequencies solely for BETRS use.@=| {OY'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2751,  29. Based on the potentially competitive  xMenvironment in local exchange services, the Commission saw no basis for distinguishing BETRS from  S' xother commercial radio services that are auctionable under Section 309(j) of the Communications Act.VA {O!'ԍId. at 275254,  3235.V  x7Rather, the Commission determined that BETRS licensees should be required to participate in competitive  x&bidding for paging licenses. In considering proposals to continue licensing BETRS facilities on a site xspecific basis, the Commission decided that BETRS licensees could obtain site licenses on a secondary  xbasis and enter into partitioning agreements with paging geographic area licensees. With respect to the  S' xissue of stranded costs, the Second Report and Order does not limit BETRS operators' options to that of  xobtaining licenses on a secondary basis. As already explained, they may also obtain coprimary licenses  Ss' xtthrough partitioning. Moreover, the Commission has adopted specific procedures in the Memorandum"sgA,l(l(,,!"  S' xOpinion and Order on Reconsideration to limit the extent to which BETRS providers will be required to discontinue operations at secondary sites.  Sh'  III. Description and Estimate of the Number of Small Entities  S5'to Which the Rules Will Apply \  S' "The rules adopted in the Memorandum Opinion and Order on Reconsideration will affect all small  xbusinesses that hold or seek to acquire commercial paging licenses. As noted, a FRFA was incorporated  Sj' xZinto the Second Report and Order.FBj {O'ԍId. at 286169.F In that analysis, we described the small businesses that might be  S8' x@significantly affected at that time by the rules adopted in the Second Report and Order. Those entities  x@include existing commercial paging operators and new entrants into the paging market. To ensure the  xmore meaningful participation of small business entities in the auctions, the Commission adopted a two S ' xtiered definition of small businesses in the Second Report and Order: (1) an entity that, together with its  xaffiliates and controlling interests, has average gross revenues for the three preceding years of not more  xthan $3 million; or (2) an entity that, together with affiliates and controlling interests, has average gross  S ' x}revenues for the three preceding years of not more than $15 million.MC Z {O'ԍId. at 2811,  179.M Because the Small Business  xAdministration (SBA) had not yet approved this definition, the Commission relied in the FRFA on the  S ' xMSBA's definition applicable at that time to radiotelephone companies, i.e., an entity employing less than  Sp' x1,500 persons.Dp {O'ԍId. at 2863 (citing 13 C.F.R.  121.201, Standard Industrial Classification Code 4812). Given the fact that nearly all radiotelephone companies had fewer than 1,000 employees,  xand that no reasonable estimate of the number of prospective paging licensees could be made, the  x^Commission assumed, for purposes of the evaluations and conclusions in the FRFA, that all the auctioned  x16,630 geographic area licenses would be awarded to small entities. In December 1998, the SBA  S'approved the twotiered size standards for paging services set forth in the Second Report and Order.E~ yO' " ԍLetter from Aida Alvarez, Administrator, Small Business Administration, to Amy J. Zoslov, Chief, Auctions and Industry Analysis Division, Wireless Telecommunications Bureau of 12/2/98.  "In the FRFA, the Commission anticipated that approximately 16,630 nonnationwide geographic  xarea licenses will be auctioned. No party submitting or commenting on the petitions for reconsideration  S' xgiving rise to this Memorandum Opinion and Order on Reconsideration commented on the potential  x3number of small businesses that might participate in the commercial paging auction and no reasonable  x^estimate can be made. While we are unable to predict accurately how many paging licensees meeting one  SA' xof the above definitions will choose to participate in or be successful at auction, our Third CMRS  S' xCompetition Report estimated that, as of January 1998, there were more than 600 paging companies in  S' xxthe United States.F\ yOS"' "c ԍImplementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and  {O#' x Analysis of Competitive Market Conditions With Respect to Commercial Mobile Services, Third Report, FCC 989,  {O#'at 40 (June 11, 1998) (Third CMRS Competition Report). The Third CMRS Competition Report also indicates that at least ten of the top twelve  xpublicly held paging companies had average gross revenues in excess of $15 million for the three years  Sx' xgpreceding 1998.mGx  {O''ԍSee Third CMRS Competition Report, App. C at 5. m Data obtained from publicly available company documents and SEC filings indicate"xh G,l(l(,,+"  xthat this is also true for the three years preceding 1999. While the Commission expects these ten  xcompanies to participate in the paging auction, the Commission also expects, for the purposes of the  xDevaluations and conclusions in this Supplemental FRFA, that a number of geographic area paging licenses will be awarded to small businesses.  S'  IV. Description of Projected Reporting, Recordkeeping,  S'and Other Compliance Requirements \  Sh' "lWith one exception, this Memorandum Opinion and Order on Reconsideration does not impose  xadditional recordkeeping or other compliance requirements beyond the requirements contained in the  S' xSecond Report and Order. If an MEA or EA licensee fails to meet its coverage requirements, that  xlicensee will have the burden of showing which of its facilities were authorized, constructed, and operating  xat the time the geographic area license was granted. MEA and EA licensees will need to retain necessary records of any such facilities until they meet the geographic area license coverage requirements.  S '-  V. Steps Taken to Minimize Significant Economic Impact on  S 'P Small Entities, and Significant Alternatives Considered \  "The previous FRFA stated that the rules adopted for geographic area licensing will affect the  xCommon Carrier Paging and exclusive 929 MHz Private Carrier Paging services. This Supplemental  xFRFA concludes that a number of geographic area commercial paging licenses may be awarded to small  x"businesses. As described below, our actions taken to implement the transition to geographic area licensing and competitive bidding represent a balancing of various factors.  ""Certain petitioners suggested replacing Rand McNally MTAs with Major Economic Areas (MEAs)  xfor the 929 MHz and 931 MHz bands. Considering these requests, we have decided to adopt MEAs  S' x@instead of MTAs.yH {O<'ԍMemorandum Opinion and Order on Reconsideration at Section IV.B.1.y Because MEAs are composed of EAs, licensees with paging systems on both the  xlower channels and the 929 and 931 MHz bands, including small businesses, will be able to operate their  xsystems more efficiently. The MEA designation will also enhance competition because paging systems  xxon the lower channels, including small business paging systems, will be able to combine their EAs to form  xgMEAs. In addition, we considered and rejected a recommendation to use Basic Trading Areas (BTAs)  xQfor geographic area licensing on the lower paging bands. In rejecting the BTA designation, we concluded  xthat EAs, which the majority of commenters supported, best reflect the geographic area that the paging  x7licensees on the lower channels seek to serve. We also found that the use of EAs will not prevent paging  xoperators of small systems from participating in the auction. We noted that bidding credits will allow  xsmall businesses to compete against larger bidders. In addition, our partitioning rules will allow entities, including small businesses, to acquire licenses for areas smaller than EAs.  "pA number of petitioners have requested that we reconsider our decision to grant mutually exclusive  xapplications for geographic area licenses through competitive bidding even in areas extensively built out  x3by an incumbent licensee. Again balancing various interests, we have affirmed the use of competitive  xQbidding to grant mutually exclusive paging applications. We have rejected the petitioners' request because  xZopen eligibility promotes prompt service to the public by allocating spectrum to the entity that values it  Sq"' xmost.MIq"Z {Ok&'ԍId. at Section IV.B.3.M We believe that the market should decide whether an economically viable paging system can be  xestablished in the unserved area of a geographic market. Our decision on this issue will provide adjacent">#iI,l(l(,,$"  xgeographic area licensees and new entrants, including small businesses, with the opportunity to establish  xa viable system that serves the public as well as an incumbent. Moreover, we see no reason to give  xlicensees that serve a substantial portion of a geographic area an advantage over other entities, including small businesses, that may also value the spectrum in that particular market.  "ASeveral petitioners request that we clarify section 22.723 of our rules, which requires Rural  xRadiotelephone Service (RRS) licensees, including BETRS operators, to discontinue operations once the  xpaging geographic area licensee notifies the RRS licensee that its cochannel secondary facilities may  xtcause interference to the geographic area licensee's existing or planned facilities. The petitioners argue  xthat our rules will allow geographic area licensees to terminate BETRS upon any allegation of harmful  S' x*interference. In response to this concern, we are adopting new procedures in the Memorandum Opinion  S' x}and Order that geographic area licensees must follow in notifying a BETRS operator that its facility  xcauses or will cause interference with the geographic area licensee's service contour in violation of our  Sk ' xinterference rules.FJk  {O 'ԍId. at  31.F The new procedures limit the termination of operating BETRS cochannel secondary facilities until harmful interference would occur.  S ' " In the Second Report and Order, we defined a systemwide license by the aggregate of the  xinterference contours around each of the incumbent's contiguous sites operating on the same channel. We  xalso concluded that incumbent licensees may add or modify sites within their existing interference contours  xwithout filing sitespecific applications, but may not expand their existing interference contours without  S' x^the consent of the geographic area licensee.KZ {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2764,  58. Several petitioners expressed confusion over our definition  x*of "contiguous sites" for the purpose of determining an incumbent's "aggregate interference contour." In  xaddition, one petitioner asked that we define "composite interference contours" to include all authorized  xtransmitters, including valid construction permits, regardless of the grant date. Another petitioner  xrequested that we include remote transmitters within systemwide licenses, or in the alternative maintain  xseparate licenses for any standalone or remote transmitter. Recognizing these concerns and balancing  S' xvarious interests as explained more fully in the Memorandum Opinion and Order,yL {Oa'ԍMemorandum Opinion and Order on Reconsideration at Section IV.B.6.y we have maximized  xthe definition of composite interference contour to reduce unnecessary regulatory burdens on licensees,  xreduce administrative costs on the industry, and thereby benefit consumers. In this regard, we have  xkclarified that contiguous sites, for the purpose of defining an incumbent's composite interference contour,  xare defined by overlapping interference contours, not service contours. We further state that all authorized  xsitespecific paging licenses and construction permits are included in a composite interference contour.  xQFinally, we have amended section 22.507 to allow systemwide licensees to maintain separate licenses for  xQany standalone or remote transmitters, or to include remote and standalone sites within the systemwide license.  "_On a related matter, petitioners asked the Commission to allow reversion to the geographic area  xlicensee of spectrum recovered from an incumbent in all instances except where an incumbent licensee  xdiscontinues operations in a location wholly encompassed by the incumbent's composite interference  xcontour. In balancing the various relevant considerations, we concluded that no demonstration had been  xmade showing that the geographic area licensee would be unable to serve areas wholly surrounded by an" j~L,l(l(,, "  S' x^incumbent.MM {Oh'ԍId. at Section IV.B.5.M Moreover, we do not believe the public interest would be served by withholding such areas  xfrom the geographic area licensee in hope that the incumbent will one day resume service to those areas.  xWe further noted that if incumbents, including small businesses, wish to serve reverted areas, they may  xseek to enter into partitioning agreements with the geographic area licensees. Similarly, a number of  xpetitioners contended that systemwide licenses should include areas where an incumbent licensees'  xZinterference contours do not overlap, but where no other licensee could place a transmitter because of  x*interference rules. We considered and rejected this proposal, finding that inclusion of areas outside of an  xDincumbent's interference contours would be contrary to our objective of prohibiting encroachment on the  Sh' xggeographic area licensee's operations.MNhZ {Ob 'ԍId. at Section IV.B.6.M Incumbents seeking to expand their contours, including small businesses, may participate in the auction or seek partitioning agreements with geographic area licensees.  S' "In the Second Report and Order, the Commission elected not to impose a limit or "cap" on the  S ' xnumber of licensees that may operate on shared paging channels.sO  {O)'ԍSecond Report and Order and Further Notice at 2757,  42.s Two petitioners asked us to reconsider  Sj ' xthat determination. Again, balancing the options, we reaffirmed our prior decision.xPj ~ {O'ԍMemorandum Opinion and Order on Reconsideration, at Section IV.D.x A "cap" would not  xpromote efficient use of spectrum because the capacity limits on paging channels are based primarily on  xuse and not the number of licensees. Our goal is to increase the use of these shared channels, not to  x*unduly restrict access to them. This decision will provide new entrants, including small businesses, with another opportunity to acquire paging spectrum.  S8' "In the Second Report and Order, the Commission also eliminated the Part 90 height and power  xMlimitations on 929 MHz stations and increased the maximum permitted effective radiated power (ERP)  S' xIto 3,500 watts.Q {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 277374,  78. Some petitioners have asked for clarification as to whether incumbent 929 MHz  xlicensees must file a modification application to increase the current ERP for their base stations up to the  xmaximum permissible. In response to this request, we have clarified that incumbent 929 MHz licensees  x&need not file a modification application to increase the ERP for base stations at any location, including  S' xexterior base stations, as long as they do not expand their existing composite interference contour.wR {OI'ԍMemorandum Opinion and Order on Reconsideration at Section IV.F.w This  xclarification conforms our technical requirements for height and power with the general rule that  xVincumbents need not file applications for internal system changes. Adopting this rule will minimize burdens on all entities, including small businesses, that increase the ERP of their base stations.  "One petitioner advocated that we make our coverage requirements more stringent by requiring  xgeographic area licensees to provide coverage to onethird of the market area within one year, and two xDthirds within three years. We considered and rejected this proposal because we believe that our coverage  xrequirements adequately promote prompt service to the public without being unduly burdensome on  xMlicensees, including small businesses, that need a reasonable amount of time to complete construction.  xMoreover, we believe that overly stringent coverage requirements unfairly favor incumbents by erecting  xgformidable barriers to new entrants, including small businesses. Several petitioners also requested that"k4 R,l(l(,,"  xgwe eliminate the "substantial service" option for meeting MEA or EA coverage requirements. We have  xrejected this request because we believe that the "substantial service" option will facilitate buildout in  xDrural areas, encourage licensees to provide new services, and enable new entrants to satisfy our coverage  Sg' xrequirements in geographic areas where incumbents are already substantially built out.wSg {O'ԍMemorandum Opinion and Order on Reconsideration at Section IV.G.w We believe that  xrural service providers as well as new entrants are likely to include small businesses, and thus retaining  xlthe "substantial service" option should benefit small businesses. While we will presume that the  x"substantial service" option is satisfied if an MEA or EA licensee provides coverage to twothirds of the  xpopulation in unserved areas within five years of license grant, we decline to adopt specific coverage  xrequirements as the sole means of defining "substantial service." Giving licensees flexibility to satisfy the "substantial service" option in different ways should benefit small businesses.  S' "In the Part 1 Third Report and Order and Further Notice, the Commission suspended the  S ' x<availability of installment payment financing for small businesses participating in future auctions.xT Z {O 'ԍSee Part 1 Third Report and Order, 13 FCC Rcd at 39798,  38.x  Sj ' xConsistent with this decision, the Memorandum Opinion and Order on Reconsideration rescinds  xtinstallment payment financing for the paging auctions. To balance the impact of this decision on small  xZbusinesses, however, we are increasing the bidding credits available to qualifying entities. The revised  S ' xrule conforms to a schedule of bidding credits adopted in the Part 1 Third Report and Order and Second  S ' x^Further Notice.RU  {O,'ԍSee id. at 40304,  47.R Under this rule, an applicant will qualify for a twentyfive percent (25%) bidding credit  xif the average gross revenues for the preceding three years of the applicant, its affiliates and controlling  x3interests do not exceed $15 million. Similarly, an applicant will qualify for a thirtyfive percent (35%)  xxbidding credit if the average gross revenues for the preceding three years of the applicant, its affiliates and  S' xMcontrolling interests do not exceed $3 million. As we stated in the Part 1 Third Report and Order and  S' xSecond Further Notice, we believe that these increased bidding credits will provide small businesses with  Sq' xadequate opportunities to participate in the paging auctions.;Vq~ {O'ԍId. ; Moreover, we are further conforming the  x<paging competitive bidding rules to the Part 1 rules by allowing winning bidders to make their final  xpayments within ten (10) business days after the payment deadline, provided that they also pay a late fee  S' xof five (5) percent of the amount due.W {O'ԍSee Part 1 Third Report and Order, 13 FCC Rcd at 42830,  9396 (amending 47 C.F.R.  1.2104(g)(2)). As we stated in the Part 1 Third Report and Order and Second  S' xQFurther Notice, we believe that this additional tenday period provides winning bidders with adequate time  St'to adjust for any lastminute problems in arranging financing and making final payment.NXt {O 'ԍId. at 42930,  93.N "Al4 X,l(l(,,"Ԍ S'& ,3 VI. Report to Congress ă  S' "lThe Commission will send a copy of the Memorandum Opinion and Order on Reconsideration,  x including this Supplemental FRFA, in a report to Congress pursuant to the Small Business Regulatory  S5' x*Enforcement Fairness Act of 1996.VY5 {O'ԍSee 5 U.S.C.  801(a)(1)(A).V In addition, the Commission will send a copy of the Memorandum  S' xOpinion and Order on Reconsideration, including this Supplemental FRFA, to the Chief Counsel for  S' xAdvocacy of the Small Business Association. A copy of the Memorandum Opinion and Order on  S' xReconsideration and Supplemental FRFA (or summaries thereof) will also be published in the Federal  Sm'Register.KZmZ {Og 'ԍSee id.  604(b).K& "mmZ,l(l(,,"  S'Y APPENDIX D ă  S' Final Regulatory Flexibility Analysis ă  Sg'<Third Report and Order  S' "As required by the Regulatory Flexibility Act (RFA),c[Z {Oj' " ԍ5 U.S.C.  603. Congress amended the RFA, id.  601 et seq., by the Contract With America Advancement  x Act of 1996, Pub L. No. 1045121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996.c an Initial Regulatory Flexibility Analysis  S' x^(IRFA) was incorporated in Appendix D of the Second Report and Order and Further Notice of Proposed  S' xRulemaking in this proceeding.z\ {O' 'ԍSecond Report and Order and Further Notice, 12 FCC Rcd 2732 (1997).z The Commission sought written public comment on the proposals in  Sk' xthat Further Notice of Proposed Rulemaking, including comment on the IRFA. As described below, no  x7commenter raised an issue concerning the IRFA. The Commission's Final Regulatory Flexibility Analysis  S'in this Third Report and Order conforms to the RFA.M]| {O"'ԍSee 5 U.S.C.  604.M  S ' I. Need for and Purpose of this Action ă  S; ' "In the Second Report and Order, the Commission adopted coverage requirements for and decided  xto allow partitioning by nonnationwide geographic area licensees, including small businesses. In the  S ' xkFurther Notice of Proposed Rulemaking, the Commission sought comment on whether to adopt coverage  xrequirements for nationwide geographic area licenses, whether to allow partitioning by nationwide  xgeographic area licensees, whether to permit disaggregation of paging licenses, and whether to revise the  S>' xapplication procedures for shared channels. In the Third Report and Order, the Commission concludes  xkthat it is best to defer any decision on coverage requirements for nationwide geographic area licenses until  S' xxsimilar issues raised in the Narrowband PCS Further Notice of Proposed Rulemaking are resolved.^ {O' "y ԍThird Report and Order at Section V.B.1. (citing Narrowband PCS Further Notice, 12 FCC Rcd 12972 (1997)). The  x Commission further modifies the paging rules to permit partitioning by all nationwide geographic area  x&licensees and to allow disaggregation by all MEA, EA, and nationwide geographic area licensees. The  SA' xThird Report and Order also adopts rules governing the coverage requirements for parties to partitioning  x"or disaggregation agreements involving MEA or EA licenses, and the license term of partitioned or  S' xdisaggregated MEA, EA, and nationwide geographic area licenses. Further, the Third Report and Order  xpermits MEA, EA, and nationwide geographic area licensees to combine partitioning and disaggregation.  xThese partitioning and disaggregation rules will allow entities in addition to the initial geographic area  x^licensees, including small businesses, to participate in providing paging services. Indeed, partitioning and  xdisaggregation should be well suited to small businesses that do not wish to acquire an entire geographic  S' xDarea license. Finally, the Third Report and Order establishes additional mechanisms to inform consumers  xgof the rules governing paging licenses and the danger of fraudulent schemes perpetrated by application mills. These mechanisms should help to reduce application fraud and protect consumers. "Fnh ^,l(l(,,"Ԍ S'  II. Summary of Issues Raised in Response to the  S'Initial Regulatory Flexibility Analysis ă  "None of the commenters submitted comments specifically in response to the IRFA. We have,  S4' xhowever, taken small business concerns into account in the Third Report and Order, as discussed in Sections V and VI of the FRFA.   S'  III. Description and Estimate of the Number of Small Entities  Si'to Which the Rules Will Apply ă  S' "The rules adopted in the Third Report and Order will affect small businesses that hold or seek  xto acquire commercial paging licenses. These entities include small business nationwide geographic area  xxlicensees that decide to partition or disaggregate, small businesses that obtain MEA or EA licenses through  xpauction and subsequently decide to partition or disaggregate, and small businesses that may acquire  xpartitioned and/or disaggregated MEA, EA, or nationwide geographic area licenses. To ensure the more  xmeaningful participation of small business entities in the auctions, the Commission adopted a twotiered  S ' xdefinition of small businesses in the Second Report and Order: (1) an entity that, together with affiliates  xand controlling interests, has average gross revenues for the three preceding years of not more than $3  xmillion; or (2) an entity that, together with affiliates and controlling interests, has average gross revenues  S:' xfor the three preceding years of not more than $15 million._: {O'ԍSecond Report and Order and Further Notice, 12 FCC Rcd at 2811,  179. In December 1998, the Small Business  S' xQAssociation approved the twotiered size standards for paging services set forth in the Second Report and  S'Order.`Z yO' " ԍLetter from Aida Alvarez, Administrator, Small Business Administration, to Amy J. Zoslov, Chief, Auctions and Industry Analysis Division, Wireless Telecommunications Bureau of 12/2/98.  Sp'MEA and EA Licenses  S ' "In the Final Regulatory Flexibility Analysis incorporated in Appendix C of the Second Report and  S' xgOrder, the Commission anticipated that approximately 16,630 nonnationwide geographic area licenses  S' xwill be auctioned. No parties, however, commented in response to the Further Notice of Proposed  St' xRulemaking on the number of small businesses that might elect to use the proposed partitioning and  xdisaggregation rules and no reasonable estimate can be made. While we are unable to predict accurately  x&how many paging licensees meeting one of the above definitions will participate in or be successful at  S' xauction, our Third CMRS Competition Report estimated that, as of January 1998, there were more than  S' xt600 paging companies in the United States.a\ yO' "c ԍImplementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and  {O ' x Analysis of Competitive Market Conditions With Respect to Commercial Mobile Services, Third Report, FCC 989,  {O!'at 40 (June 11, 1998) (Third CMRS Competition Report). The Third CMRS Competition Report also indicates that  xQat least ten of the top twelve publicly held paging companies had average gross revenues in excess of $15  SE' xmillion for the three years preceding 1998.gbE {O$'ԍSee Third CMRS Competition Report, App. C at 5. g The Commission expects that these ten companies will  xparticipate in the paging auction and may employ the partitioning or disaggregation rules. The  x/Commission also expects, for purposes of the evaluations and conclusions in this Final Regulatory  x Flexibility Analysis, that a number of paging licenses will be awarded to small businesses, and at least"oh b,l(l(,,x"  xAsome of those small business licensees will likely also take advantage of the partitioning and  xdisaggregation rules. We are unable to predict accurately the number of small businesses that may choose  x3to acquire partitioned or disaggregated MEA or EA licenses. The Commission expects, however, for  xpurposes of the evaluations and conclusions in this Final Regulatory Flexibility Analysis, that entities  x<meeting one of the above definitions will use partitioning and disaggregation as a means to obtain a  xpaging license from an MEA or EA licensee at a cost lower than the cost of the license for the entire MEA or EA.  Sh'Nationwide Geographic Area Licenses  "IThe partitioning and disaggregation rules pertaining to nationwide geographic area licenses adopted  S' x3in the Third Report and Order will affect the 26 licensees holding nationwide geographic area licenses  xto the extent they choose to partition or disaggregate, as well as any entity that enters into a partitioning  xor disaggregation agreement with a nationwide geographic area licensee. No parties, however, commented  xon the number of small business nationwide geographic area licensees that might elect to partition or  xdisaggregate their licenses and no reasonable estimate can be made. While we are unable to state  xaccurately how many nationwide geographic area licensees meet one of the above small business  S ' x@definitions, our Third CMRS Competition Report indicates that at least eight of the top twelve publicly  xheld paging companies hold nationwide geographic area licenses and had average gross revenues in excess  S9' xof $15 million for the three years preceding 1998.bc9 {O'ԍThird CMRS Competition Report, App. C at 5.b The Commission expects at least some of these eight  xVcompanies to employ the partitioning or disaggregation rules, and also expects, for the purposes of  xevaluations and conclusions in this Final Regulatory Flexibility Analysis, that nationwide geographic area  xklicensees meeting one of the above definitions may use the partitioning or disaggregation rules. No parties  xcommented on the number of small businesses that may choose to acquire partitioned or disaggregated  xlicenses from nationwide geographic area licensees and, again, no reasonable estimate can be made.  x While we are unable to predict accurately the number of small businesses that may choose to acquire  x^partitioned or disaggregated licenses from nationwide geographic area licensees, the Commission expects,  xfor purposes of the evaluations and conclusions in the Final Regulatory Flexibility Analysis, that entities  xZmeeting one of the above small business definitions will use partitioning and disaggregation as a means to obtain a paging license from a nationwide geographic area licensee.  S'Fraud on Shared Paging Channels  "The additional mechanisms established to inform consumers of the paging rules and the potential  xfor paging application fraud on the shared channels will not affect small businesses seeking to acquire a  xlicense on a shared paging channel, except that small businesses interested in investing in shared channel licenses will be more informed of the potential for fraud.  Sp' ] IV. Summary of Projected Reporting, Recordkeeping,  S='and Other Compliance Requirements ă  S ' "cThe rules adopted in the Third Report and Order impose reporting and recordkeeping requirements  xon small businesses, as well as others, seeking to obtain or transfer licenses through partitioning and  xdisaggregation. The information requirements would be used to determine whether the proposed  xDpartitionee or disaggregatee is an entity qualified to obtain a partitioned license or disaggregated spectrum.  x&This information will be a onetime filing by any applicant requesting such a license. The information  xcan be submitted on FCC Form 490 or Form 603 for Part 22 paging services until July 1, 1999. Part 22"$pZc,l(l(,,%"  xapplicants must file electronically in the Universal Licensing System (ULS) on Form 603 on or after July  xc1, 1999. The Commission estimates that the average burden on the applicant is three hours for the  xinformation necessary to complete these forms. The Commission estimates that seventyfive percent of  xthe respondents, which may include small businesses, will contract out the burden of responding. The  x Commission estimates that it will take approximately 30 minutes to coordinate information with those  x^contractors. The remaining twentyfive percent of respondents, which may include small businesses, are  xestimated to employ inhouse staff to provide the information. Applicants filing electronically, including  xQsmall businesses, will not incur any per minute online charge. The Commission estimates that applicants  xcontracting out the information would use an attorney or engineer (average of $200 per hour) to prepare the information.  S' 9 V. Steps Taken to Minimize Burdens on Small Entities ă  Si ' " The rules adopted in the Third Report and Order are designed to implement Congress' goal of  xgiving small businesses, as well as other entities, the opportunity to participate in the provision of  xspectrum-based services. The rules are also consistent with the Communications Act's mandate to identify  xQand eliminate market entry barriers for entrepreneurs and small businesses in the provision and ownership of telecommunications services.  S8'Partitioning and Disaggregation  "=Partitioning of nationwide geographic area licenses and disaggregation of MEA, EA, and  xnationwide geographic area licenses will facilitate market entry by parties that may lack the financial  xcresources to participate in auctions, including small businesses. Partitioning and disaggregation are  xgexpected to enable small businesses to obtain licenses for areas smaller than MEA, EA, and nationwide  xareas, or smaller amounts of spectrum, at costs they will be able to afford. Allowing for the partitioning  x*and disaggregation of MEA and EA licenses prior to fulfillment of construction requirements by the initial  xlicensees will facilitate the immediate entry of new competitors, including small businesses, into the paging  xmarket. Finally, the Commission's decision to allow parties to partitioning or disaggregation agreements  xof MEA and EA licenses to choose between two options to meet the coverage requirements will provide small businesses with more flexibility in managing their resources.  S'Fraud on Shared Paging Channels  "+As stated above, the additional mechanisms established to deter paging application fraud on the  xshared channels are not expected to have an impact on any small business or other entity applying for a  x paging license on a shared channel. The changes are intended to protect consumers from application  xfraud. Small businesses interested in investing in shared channel licenses, however, will be more informed of the potential for fraud.  S ' VI. Significant Alternatives Considered ă  "=The Commission considered and rejected the following alternative proposals concerning  xypartitioning, disaggregation, coverage requirements for parties to partitioning and disaggregation agreements, and license terms.  S$'Partitioning  "EThe Commission declined to adopt Paging Network, Inc.'s (PageNet) proposal that partitioning  x3should be allowed only after the initial geographic area licensee has met the buildout requirements for">'qc,l(l(,,'"  xthe entire geographic area, and that partitioning before a geographic area licensee meets its construction  xrequirements should be allowed only on a waiver basis where good cause is shown. PageNet's concern  xwas that the ability to partition may encourage bidders in the auction to engage in unlawful contact with  xother bidders, particularly if the market is highly contested, and that geographic area licensees may seek  xto avoid the cancellation of their licenses by partitioning to a "straw man" when they fail to meet our  S' xcoverage requirements.ad {Oi'ԍThird Report and Order at Section V.B.2.b.a The Commission found, however, that there was no evidence that "sham"  x*arrangements between geographic area licensees and other parties to avoid construction requirements are  xlikely to occur in the paging service or have already taken place in other services. The Commission also  xIdetermined that any unlawful activity between bidders concerning partitioning falls within our anti xcollusion rules. Finally, allowing parties to partition spectrum immediately after license grant will  xfacilitate the entry of new competitors to the paging market, many of whom will be small businesses seeking to acquire a smaller service area or smaller amount of paging spectrum at a reduced cost.  Si 'Disaggregation  "A number of petitioners opposed our proposal to allow MEA, EA, and nationwide geographic area  x3licensees to disaggregate, contending that disaggregation of paging spectrum is neither technically nor  xtpractically feasible. Small Business in Telecommunications (SBT) proposes that disaggregation should  xbe limited only to small businesses during the original licensee's construction period. In considering and  xrejecting the petitioners' arguments, we concluded that the market should determine whether it is  S' xtechnically or economically feasible to disaggregate spectrum.NeZ {O'ԍId. at Section V.B.3.a.N We further concluded that all qualified  xparties should be eligible to disaggregate any geographic area license because open eligibility to  xdisaggregate spectrum promotes prompt service to the public by facilitating the assignment of spectrum  x}to the entity that values it most. We found that allowing spectrum disaggregation at this time could  xVpotentially expedite the introduction of service to underserved areas, provide increased flexibility to licensees, and encourage participation by small businesses in the provision of services.  S'Coverage Requirements  "hThe Commission declined to adopt Metrocall, Inc.'s proposal that geographic area licensees'  x&coverage benchmarks should be based on the entire geographic area, including the partitioned area, to  xgprevent the geographic area licensee from using partitioning to circumvent coverage requirements. As  xstated previously, we found that there was no evidence that "sham" arrangements between geographic area  xlicensees and other parties to avoid construction requirements are likely to occur in the paging service or  xhave already taken place in other services. The Commission also declined to adopt PCIA's proposal that  xthe partitioner should be responsible for buildout in the partitioned area if the partitionee fails to build  xout, and that the entire license should be cancelled if buildout in the partitioned area is not completed by  S' xeither the partitionee or the partitioner.Nf {O-#'ԍId. at Section V.B.2.b.N The decision not to place the ultimate responsibility for the  xpartitionee's coverage requirements on the partitioner, as well as the decision to provide parties to  xpartitioning agreements with two options for meeting the coverage requirements, is expected to encourage  xMmore partitioning agreements, including agreements involving small businesses. The resulting benefits will be the same for disaggregation arrangements. "!r~f,l(l(,,G""Ԍ "Finally, the Commission declined to adopt commenters' proposal to eliminate the "substantial  xservice" option as it applies to coverage requirements in the partitioning and disaggregation context. We  xfound that maintaining the "substantial service" option will encourage licensees to build out their systems  xwhile safeguarding the financial investments made by those licensees who are financially unable to meet  xgspecific population coverage requirements. Thus, we found that the substantial service alternative will  S' x&promote service growth while helping licensees to remain financially viable and retain their licenses.:g {Oi'ԍId.:  x<Retaining the "substantial service" option will also allow small businesses flexibility in meeting their coverage requirements.  S5'License Term  "We decline to adopt SBT's proposal that when an area is partitioned within one year of the  x*renewal date of the original tenyear license term, the partitionee should receive the license for a oneyear  xterm. We found that adopting this proposal would result in the partitioner conferring greater rights than it was awarded under the original terms of its license grant.  S ' /VII. Report to Congress ă  Sj' "The Commission shall send a copy of the Third Report and Order, including this Final Regulatory  xFlexibility Analysis, in a report to Congress pursuant to the Small Business Regulatory Enforcement  S' xZFairness Act of 1996.VhZ {O'ԍSee 5 U.S.C.  801(a)(1)(A).V In addition, the Commission will send a copy of the Third Report and Order,  xIincluding this Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small  S' x@Business Association. A copy of the Third Report and Order and Final Regulatory Flexibility Analysis  Sn'(or summaries thereof) will also be published in the Federal Register.Kin {O'ԍSee id.  604(b).K