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X -` X'`  (#%'0*,.8135@8:of residence of its labor force." See Final Redefinition of the BEA Economic Areas, 60 Fed.  X-- xReg. 13114 (March 10, 1995) (reducing number of EAs from 183 to 172). In addition, we would  xseparately license the following three EAlike areas: (1) Puerto Rico and the United States Virgin Islands; (2) Guam and the Northern Mariana Islands; and (3) American Samoa. We request comment on whether these geographic areas would be appropriate for licensing the 37 GHz and 39 GHz bands or whether other alternative licensing areas would be more appropriate.  Xv-x23. We note that Rand McNally & Company owns the copyright to the MTA/BTA Listings, which identify the BTAs contained in each MTA and the counties comprising each BTA. This information is also provided in Rand McNally's Trading System MTA/BTA  X1-Diskette and is geographically represented in a map contained in Rand McNally's 1992  X -Commercial Atlas & Marketing Guide. Rand McNally has licensed through an agreement with the Personal Communications Industry Association (PCIA) the use of its copyrighted MTA/BTA Listings and maps for certain services such as PCS and 800 MHz SMR. It is unclear as to whether the licensing agreement covers the intermediate links, which together with the end links enable the delivery of an endtoend service. We therefore encourage  X -PCIA and Rand McNally to clarify the licensing agreement.  Xy-x24. With regard to TIA's asserted continuing need for individually licensed links, we propose not to set aside any channels for individually licensed links in the 37 GHz band, but we seek comment on methods available to meet the needs of those who might desire individual links, smaller geographic service areas, or smaller spectrum blocks. For example, should we adopt rules regarding geographic partitioning to allow for smaller geographic  X-service areas? -r X#- xԍ See specific proposal at  8990, infra, regarding geographic partitioning for rural telephone companies. Should we allow some form of spectrum disaggregation? Commenters suggesting methods to meet the spectrum needs of private users should address specifically how their proposals would work from an administrative standpoint and how these proposals would comply with requirements in the Communications Act and the Commission's Rules that"  0*((5" licensees remain in control of the spectrum they are authorized to use and that any transfer of control must be approved by the Commission. In addition, commenters should address the implications of these arrangements for other proposed rules such as buildout requirements, transfer limitations for small business, and license terms. Alternatively, we request comment on whether these needs for individual microwave links can be met through the purchase of publicly available common carrier offerings by 37 GHz licensees. We also solicit comment on TIA's proposal and whether we should set aside some channels to accommodate individually licensed links, including whether we should adopt a channeling plan with some  XH-channel pairs smaller than 50 MHz (i.e., 2.5, 5, 10, 20 and 40 MHz). Further, we solicit comment on whether any channel blocks that may be set aside for individually licensed links should come exclusively from the 39 GHz band.  X -D. Licensing Method  X -x25. In its petition as originally filed, TIA did not recommend a licensing method for the 37 GHz band. However, in its amendment, TIA requests that the 37 GHz band not be subject to auctions, arguing that auctioning the band would serve no useful purpose and would add unacceptable costs and barriers to legitimate users of the spectrum. We have given careful consideration to but do not agree with TIA's argument, and thus we propose to use competitive bidding to select licensees in the 37 GHz band. Competitive bidding is an extremely efficient method of assuring, with a minimum of regulatory burden, that channels are assigned only to applicants with the greatest need for the spectrum.  X-X (#%'0*,.8135@8:ԍ See H.R. Rep. No. 111, 103d Cong., 1st Sess. 253 (1993), which states in pertinent part:  xj"The enactment of section 309(j) should not affect the manner in which the Commission issues  xlicenses for virtually all private services, including frequencies utilized by Public Safety Services,"&!0*((&"  xthe Broadcast Auxiliary Service, and for subcarriers and other services where the signal is  xindivisible from the main channel signal. Similarly, inasmuch as mass media broadcast signals  xiare provided to the general public without the payment of a subscription fee, the current licensing  XK- x\practices of the FCC remain unchanged." See also H.R. Conf. Rep. No. 213, 103d Cong., 1st Sess. 48182 (1993). In addition to the "principal use" requirement, for competitive bidding to" "0*((" be permitted, mutually exclusive applications for initial licenses or construction permits must  X-have been accepted for filingL#% X-ԍ See 47 U.S.C.  309(j)(1).L and the use of competitive bidding must promote the objectives contained in Section 309(j)(3)(A) through (D) of the Communications Act.  X-x27. In the Competitive Bidding Notice of Proposed Rule Making, we proposed that licenses for frequencies used as intermediate links in the provision of a continuous, endtoend  Xv-service to a subscriber would be subject to competitive bidding.\$v% X- xԍ See Implementation of Section 309(j) of the Communications Act Competitive Bidding,  X-PP Docket No. 93253, Notice of Proposed Rule Making, 8 FCC Rcd 7635, 7639  X-( 28) (1993) (Competitive Bidding Notice of Proposed Rule Making).\ In that Notice we stated that services such as common carrier pointtopoint microwave utilized as part of endtoend subscriber-based service offerings would fall within the criteria described in Section 309(j)(2)(A)(i) and (ii) because the licensed spectrum is used as an integral part of an endtoend service offering, enabling paying subscribers either to transmit directly or receive "communications signals utilizing frequencies on which the licensee is licensed to operate."  X -However, in the Second Report and Order in that proceeding, we decided not to auction  X -intermediate links.T% Q % X- xԍ See Implementation of Section 309(j) of the Communications Act Competitive Bidding,  X-PP Docket No. 93253, Second Report and Order, 9 FCC Rcd 2348, 23552356  X-( 41) (1994) (Competitive Bidding Second Report and Order).T We reasoned that before employing competitive bidding, the Commission is required to determine that mutually exclusive applications are likely to be filed and that such bidding would promote the objectives of Section 309(j)(3)(A) through (D) of the Communications Act. With regard to mutual exclusivity, we noted that in those frequency bands most often utilized as intermediate links, mutual exclusivity is usually avoided by employing a frequency coordination process for each intermediate link prior to the time an application is granted. With regard to the objectives of Section 309(j)(3)(A) through (D), we concluded that auctioning intermediate links could significantly delay the development and rapid deployment of new technologies, products and services for the benefit of the public, that auctions for these links could impose significant administrative costs on licensees and the Commission, and that it was unclear whether competitive bidding for intermediate links would recover for the public a significant portion of the value of the spectrum, prevent unjust  X-enrichment or promote efficient and intensive use of the spectrum.w&% XF'-#Xj\  P6G;CXP#э Id. at  43.w "&0*((S"Ԍ X-ԙx28. Our proposal to use BTA service areas in the 37 GHz band and our subsequent experience in licensing frequencies in the 39 GHz band has caused us to reconsider the decision not to license intermediate links by competitive bidding. First, as we concluded in  X-the Competitive Bidding Notice, pointtopoint microwave channels used as part of endtoend subscriber-based service offerings would meet the criteria set forth in Section 309(j)(2)(A). Therefore, we tentatively conclude that, based on TIA's description of the likely uses of the 37 GHz band by broadband PCS and other carriers, the use of such spectrum will satisfy the "principal use" test in the competitive bidding statute. Second, because BTAs are large areas, we believe that defining service areas by BTAs will likely result in the filing of mutually  X1-exclusive applications.'v1% X - xԍ In most pointtopoint microwave bands, service is licensed on a linkbylink basis and  x[licensees are required to coordinate and engineer their systems to avoid conflicts with existing  xand previously proposed systems. In the broadband PCS service, however, we have found that  Xe - xuse of largesized (i.e., MTA and BTA) service areas and appropriate field strength limits renders  xunnecessary such general prior coordination; instead, informal coordination among broadband PCS systems is needed only near service area borders. Third, our experience with auctions in other bands leads us to conclude that an auction for intermediate links within a well defined service area will neither significantly delay the provision of broadband PCS or other services to the public nor impose significant administrative costs on the applicants or the Commission. Fourth, a review of licenses in the 39 GHz band reveals that few channels are now available in most metropolitan areas and, thus, that making more channels available through competitive bidding will likely promote the development and rapid deployment of new technologies, promote economic opportunity and competition, and ensure that new and innovative technologies are readily accessible to the American people. Finally, some of the licensees in the 39 GHz band have offered to sell or lease their licenses to broadband PCS operators. These offers suggest that some of these licensees may not have ever intended to directly serve the public, but rather to hold their own auctions and thereby deprive the public of those revenues. Therefore in sum, we believe that an auction for the 37 GHz band may be desirable. An auction would place licenses in the hands of those who value this spectrum most highly, recover a portion of the value of the spectrum for the public, prevent the award of licenses to speculators and promote efficient use of this spectrum. Consequently, we find that an auction of this spectrum is likely to promote the objectives of Section 309(j)(3)(A) through (D) of the Communications Act. Accordingly, we propose to modify Section 1.2102(b)(4) of our rules to implement this proposal.  X7-E. Competitive Bidding Issues  X -  X -x29. We have proposed that we will use auctions to issue licenses in the 37 GHz band. Accordingly, we wish to fully explore issues related to competitive bidding. "'0*(("Ԍ X-`    d1.XxCompetitive Bidding Design(#  X-dxa. General Competitive Bidding Rules       X-x30. In the Competitive Bidding Second Report and Order and its progeny, we established the criteria to be used in selecting from among auction methodologies to use for each particular auctionable service and prescribed rules and procedures for general and  Xv-specific use.( vj2 X- x>ԍ Competitive Bidding Second Report and Order, 9 FCC Rcd 2348 (1994); recon. Second  X- xMemorandum Opinion and Order, 9 FCC Rcd 7245 (1994) (Competitive Bidding Second  X - x}Memorandum Opinion and Order); Third Report and Order, 9 FCC Rcd 2941 (1994)  X - x(Competitive Bidding Third Report and Order), establishing rules for narrowband PCS; recon.  xThird Memorandum Opinion and Order and Further Notice of Proposed Rulemaking, 10 FCC  X| - xRcd 175 (1994) (Competitive Bidding Third Memorandum Opinion and Order and Further Notice  Xe - xof Proposed Rulemaking); Fourth Report and Order, 9 FCC Rcd 2330 (1994), establishing rules  xfor Interactive Video and Data Service; Fifth Report and Order, 9 FCC Rcd 5532 (1994)  X7- xk(Competitive Bidding Fifth Report and Order), establishing rules for Broadband PCS; recon.  X - xFourth Memorandum Opinion and Order, 9 FCC Rcd 6858 (1994) (Competitive Bidding Fourth  X -Memorandum Opinion and Order). Generally, we concluded that awarding licenses to those parties who value them most highly would foster Congress's policy objectives. We noted there that, since a bidder's ability to introduce valuable new services and to deploy them quickly, intensively, and efficiently increases the value of a license to that bidder, an auction design that awards licenses to those bidders with the greatest willingness to pay tends to promote the development and rapid deployment of new services and the efficient and intensive use of the spectrum. We also found that: (l) licenses with strong value interdependencies should be auctioned simultaneously, and (2) multiple round auctions generally will yield more efficient allocations of licenses and higher revenues by providing bidders with information regarding other bidders' valuations of licenses, especially where there is substantial uncertainty as to  X-value.|) j2 X-ԍ Competitive Bidding Second Report and Order, 9 FCC Rcd 2348, 2360 ( 69). | Thus, we concluded, where the licenses to be auctioned are interdependent and their value is expected to be high, simultaneous multiple round auctions would best achieve the  Xb-Commission's goals for competitive bidding.O*bD j2 XW-ԍ Id. at 2366 ( 109111). O       X-dxb. Competitive Bidding Design for the 37 GHz Band     x  X-x31. SimultaneousMultipleRoundAuctions. Based on the factors identified in the  X-Competitive Bidding Second Report and Order and our prior auction experiences, we tentatively conclude that simultaneous multiple round auctions are appropriate for the 37 GHz"*0*((" band. Compared with other bidding mechanisms, simultaneous multiple round bidding will generate the most information about license values during the course of the auction and provide bidders with the most flexibility to pursue backup strategies. As in the case of  X-PCS,+j2 X4- xԍ W e adopted simultaneous multiple round auctions as the auction methodology for both  X- xbroadband and narrowband licenses. Competitive Bidding Fifth Report and Order, 9 FCC Rcd  X- xz5532, 5544 ( 3132) for broadband PCS and Competitive Bidding Third Report and Order, 9  X-FCC Rcd 2941, 29472949 ( 1721) for narrowband PCS.  the 37 GHz licenses are interdependent, and licensees likely will aggregate and substitute across spectrum blocks and geographic regions. Our experience to date is that simultaneous multiple round bidding is efficient and costeffective. Additionally,  Xv-s imultaneous multiple round bidding is likely to generate the most information about license values during the course of the auction and facilitate efficient aggregation of licenses across  XH-spectrum bands.,H4j2 X--ԍ See, e.g., Competitive Bidding Third Report and Order, 9 FCC Rcd 2941, 2946 ( 13). We seek comments on this tentative conclusion and on its impact on competitive bidding in the 37 GHz band.  X -x32. CircumstancesLeadingtoChoiceofOtherDesigns. We propose to tailor the  X -auction design to fit the characteristics of the licenses to be awarded.E- j2 X-ԍ Id. at 2947 ( 15).E While we tentatively conclude that simultaneous multiple round bidding is the most effective and efficient bidding design for the 37 GHz band, it is possible that another bidding method may be more appropriate for all licenses. Where there is less interdependence among licenses, there is also  X-less benefit to auctioning them simultaneously.2.j2 X-ԍ Id.2 When the values of particular licenses to be auctioned are low relative to the costs of conducting a simultaneous multiple round auction, we may need to consider auction designs that are relatively simple, with low administrative costs and minimal costs to auction participants. For example, with large numbers of low value licenses, we may decide that it is preferable to implement a low cost auction method  X-such as single round sealed bidding to minimize cost and expedite the licensing process. 2/G j2 X-ԍ Id.2 We may also wish to consider a single round of bidding in certain auctions where eligibility  X-requirements limit participation to few bidders. 20 j2 X"-ԍ Id.2 We additionally note that the presence of incumbents on certain channels, such as exist in the 39 GHz band, could affect the relative desirability and value of otherwise identical licenses in ways we do not anticipate. We seek comments on any alternative bidding designs and their applicability as a competitive bidding method in the 37 GHz band. "| 00*((P"Ԍ X-x 33. CombinatorialBidding. In general terms, combinatorial bidding allows bidders to  X-bid for multiple licenses as "all or nothing" packages.1j2 Xb- xԍ In combinatorial bidding, if a bid for a group of licenses exceeds the sum of the highest  xbids for the individual licenses that comprise the package, then the package bid would win. We  X4- xLmay wish to institute a premium so that the combinatorial bid would win only if it exceeded the  X-sum of the bids for individual licenses by a set amount.  Combinatorial bidding can be  X-implemented with either simultaneous or sequential auction designs.24j2 X-ԍ Competitive Bidding Third Report and Order, 9 FCC Rcd 2941, 29492950 ( 2324). While there are significant benefits associated with combinatorial bidding, especially in terms of efficient aggregation of licenses, we previously concluded that simultaneous multiple round auctions offer many of these same advantages without the same degree of administrative and  Xv-operational complexity and without biasing auction outcomes in favor of combination bids.23vj2 X -ԍ Id.2 However, since simultaneous multiple round bidding may potentially prove to be our preferred auction method for awarding 37 GHz licenses, we tentatively conclude that combinatorial bidding will be unnecessary in most 37 GHz auctions. While 37 GHz licenses are likely to be worth more to some bidders as a part of a package, we believe that simultaneous multiple round bidding will provide these bidders with ample opportunity to express the value of interdependent licenses. Moreover, we tentatively conclude that there will not be any extreme  X -discontinuity in value if some licenses in a package are not obtained.24 j2 X-ԍ Id.2 We believe that the opportunity to acquire licenses in aftermarket transactions and the ability to withdraw bids (upon additional payment) will limit the risks associated with failing to successfully acquire  X-all of the licenses in a desired package.25G j2 X-ԍ Id.2 In circumstances where we do not use simultaneous multiple round bidding, however, we may permit combinatorial bidding. We seek comment on these proposals and tentative conclusions.  X4-    dxc. Bidding Procedures`(#(#X       X-x!34. GroupingofLicenses. We determined in the Competitive Bidding Second Report  X-and Order that in a multiple round auction, highly interdependent licenses should be grouped together and put up for bid at the same time because such grouping provides bidders with the most information about the pieces of complementary and substitutable licenses during the  X-course of an auction.6 j2 XS%-ԍ Competitive Bidding Second Report and Order, 9 FCC Rcd 2348, 2366 ( 106107). We also determined that the greater the degree of interdependence among the licenses, the greater the benefit of auctioning a group of licenses together in a" 60*((o"  X-simultaneous multiple round auction.Q7j2 Xy-ԍ Id. at 23632364 ( 8994).Q Whether we use our preferred approach of a sequence of simultaneous multiple round auctions or sequential individual auctions, we must choose which licenses will be auctioned together. The importance of the choice of license groupings increases with the degree of interdependence among the individual licenses or groups of licenses to be auctioned. Grouping interdependent licenses together and putting them up for bid at the same time will facilitate awarding licenses to bidders who value them the most highly by providing bidders with information about the prices of complementary and  X_-substitutable licenses during the course of an auction.8_yj2 X -ԍ See, e.g., Competitive Bidding Third Report and Order, 9 FCC Rcd 2941, 2951 ( 26). Accordingly, we propose grouping 37 GHz licenses into the various simultaneous auctions by aggregating together those licenses exhibiting the greatest degree of interdependence so that there will be limited interdependence across groups.  X -x"35. Choosing which licenses to auction simultaneously requires a judgment about the  X -degree of interdependence, i.e., the extent to which the amount bidders are willing to pay for  X -one license depends on the price of another.29 *j2 X-ԍ Id.2 Licenses may be interdependent either because they are substitutes or because they are complements. With substitutes, the lower the price of one license, the less a bidder will be willing to pay for another. With complementary licenses, on the other hand, the lower the price of one license, the more a bidder will be willing to pay for another. This is true because generally complementary licenses are worth  XK-more as part of a package than individually.2:Kj2 X-ԍ Id.2 For example, bidders are likely to be willing to pay more for two geographically contiguous 37 GHz licenses than two equivalent noncontiguous licenses, and a single bidder may be willing to pay more for the two licenses than  X-would two separate bidders.2;j2 XC-ԍ Id.2  X-x#36. Based on the foregoing, we tentatively conclude that we will auction all 37 GHz licenses through a sequential series of simultaneous auctions. In each case, the licenses are complements as well as substitutes, and thus their values are highly interdependent. While we observe that, given the large number of licenses involved, it might be administratively impractical to auction all 37 GHz licenses together, we ask nonetheless whether the interdependencies among all 37 GHz licenses are sufficiently strong that we should make every effort to have a single 37 GHz auction. We also specifically solicit comments on alternative license groupings and ask bidders to explain how such groupings would benefit bidders. " = ;0*(("Ԍ X-x$37. BidIncrements. As with the rules we adopted for previous multiple round auctions for other services, we propose to establish minimum bid increments for bidding in  X-each round of the auction, based on the same considerations in our prior orders.L<j2 XK-ԍ Id. at 2953 ( 3032).L Where we use simultaneous multiple round auctions, it is important to specify minimum bid increments. The bid increment is the amount or percentage by which the bid must be raised above the  X-previous round's high bid in order to be accepted as a valid bid in the current bidding round.E=yj2 X-ԍ Id. at 2953 ( 30).E The application of a minimum bid increment speeds the progress of the auction and, along with activity and stopping rules, helps to ensure that the auction comes to closure within a  XH-reasonable period of time.2>H*j2 X# -ԍ Id.2 Establishing an appropriate minimum bid increment is especially important in a simultaneous auction with a simultaneous closing rule. In that case, all markets remain open until there is no bidding on any license and a delay in closing one  X -market will delay the closing of all markets.2? j2 X-ԍ Id.2  X -x%38. We propose to announce by public notice prior to auction the specific bid increment that will be used. We anticipate starting the 37 GHz auction with relatively large  X -bid increments, and adjusting the increments as bidding activity dictates.2@ j2 X-ԍ Id.2 Because we propose to use simultaneous multiple round auctions for most 37 GHz licenses, we believe that it is necessary to impose a minimum bid increment to ensure that the 37 GHz auctions conclude within a reasonable period. We believe that it is important in establishing the amount of the minimum bid increment to express such increment as both a percentage of the high bid from the previous round and as a fixed dollar amount per megahertz per service area population (MHzpops), whichever is greater. This will ensure a timely completion of the  X-auction even if bidding begins at a very low dollar amount.EA= j2 X-ԍ Id. at 2953 ( 31).E We also propose to retain the discretion to vary the minimum bid increments for individual licenses or groups of licenses at any time before or during the course of the auction, based on the number of bidders, bidding activity, and the aggregate high bid amounts. We propose to retain the discretion to keep an auction open if there is a round in which no bids or proactive waivers are submitted, as  X-discussed in  3948, infra. We seek comment on these proposals.  Xe-x&39. StoppingRulesforMultipleRoundAuctions. In multiple round auctions, a"e A0*((1"  X-stopping rule must be established for determining when the auction is over.B j2 Xy- x?ԍ Competitive Bidding Fifth Report and Order, 9 FCC Rcd 5532, 55505552 ( 4649);  Xb- xCompetitive Bidding Third Report and Order, 9 FCC Rcd 2941, 29542955 ( 3335); see also  xAmendments of Parts 2 and 90 of the Commission's Rules to Provide for the Use of 200  x0Channels Outside the Designated Filing Areas in 896901 MHz and 935940 MHz Bands  xAllocated to the Specialized Mobile Radio Pool, Implementation of Section 309(j) of the  xCommunications Act Competitive Bidding, and Implementation of Sections 3(n) and 322 of  xthe Communications Act, PR Docket No. 9325, GN Docket No. 93252, Second Report and  X- xOrder and Second Further Notice of Proposed Rule Making, 10 FCC Rcd 6884 (1995)(900 MHz  X - x1Second Report and Order) at  8183; see also Amendment of Parts 21 and 74 of the  xCommission's Rules with Regard to Filing Procedures in the Multipoint Distribution Service and  X - x/in the Instructional Television Fixed Service, Report and Order, MM Docket No. 94131, PP  X| -Docket No. 93253, FCC 95230 (June 30, 1995) at  114123 (MMDS Report and Order).Ĩ Three types of stopping rules exist that could be employed in simultaneous multiple round auctions: markets  X-may close individually, simultaneously or a hybrid approach may be used.C| j2 X- xkԍ Competitive Bidding Third Report and Order, 9 FCC Rcd 2941, 2954 ( 33); see also 900  X-MHz Second Report and Order at  81. Under a marketbymarket approach, bidding closes on each license after one round passes in which no new acceptable bids are submitted for that particular license. With a simultaneous stopping rule,  X-bidding remains open on all licenses until there is no bidding on any license.Dj2 XT- xԍ This approach has the advantage of providing bidders full flexibility to bid for any license  xas more information becomes available during the course of the auction, but it may lead to very  xzlong auctions, unless an activity rule is imposed. Furthermore, such a stopping rule may be vulnerable to strategic delay by bidders seeking to impede closure of the auction.  Under this approach, all markets will close if a single round passes in which no new acceptable bids are submitted for any license. Using a hybrid approach, we may use a simultaneous stopping rule, along with an activity rule designed to bring the markets subject to the simultaneous stopping rule to a close within a reasonable period of time, for the higher value licenses. And for lower value licenses, where the loss from eliminating some backup strategies is less, we may use simpler marketbymarket closing. Such a hybrid approach might simplify and speed  X -up the auction process without significantly sacrificing efficiency or expected revenue.E j2 X -ԍ See, e.g., Competitive Bidding Third Report and Order, 9 FCC Rcd 2941, 2954 ( 33). We propose announcing by Public Notice before each auction the stopping rule that we will use. We seek comments on the various options for stopping rules and ask commenters to address which rules would be optimal for simultaneous multiple round auctions of licenses in the 37 GHz band.  Xb-x'40. In the event we adopt a simultaneous stopping rule, we propose to retain the discretion to declare at any point in a simultaneous multiple round auction that the auction will end after one additional round or some other specified number of additional rounds. This"43E0*(( " will prevent bidders from strategically delaying an auction by bidding on one license in order  X-to delay the closing of bidding on all licenses.EFj2 Xb-ԍ Id. at 2955 ( 35).E This proposal would also ensure ultimate Commission control over the duration of the auction. Moreover, we tentatively reserve the discretion to vary the duration of bidding rounds or the interval at which bids are accepted  X-(e.g., run two or more rounds per day rather than one), in order to move the auction toward  X-closure more quickly.3Gyj2 X-ԍ Id. 3 If this mechanism is used, we would most likely shorten the duration and/or intervals between bidding rounds where there are relatively few licenses to be auctioned, where the value of the licenses is relatively low or in early rounds to speed the auction process. Where license values are expected to be high or where large numbers of licenses are being auctioned, we propose increasing the duration and/or intervals between  X -bidding rounds.2H *j2 X-ԍ Id.2 We would announce by Public Notice, and may vary by announcement during an auction, the duration and intervals between bidding rounds. We seek comment on these proposals.  X -x(41. ActivityRules. In order to ensure that simultaneous auctions with simultaneous stopping rules close within a reasonable period, we believe that it may be necessary to impose an activity rule to prevent bidders from waiting until the end of the auction before participating. Because simultaneous stopping rules generally keep all markets open as long as anyone wishes to bid, they also create an incentive for bidders to hold back until prices  XK-approach equilibrium before making a bid and risking additional payment for withdrawing.IKj2 X-ԍ Id. at 2955 ( 36); see also 900 MHz Second Report and Order at  83.  X4-As noted above, this could lead to very long auctions. An activity rule is less important when markets close onebyone because failure to participate in any given round may result in losing the opportunity to bid at all, if that round turns out to be the last.  X-x)42. In the Competitive Bidding Second Report and Order, we adopted the MilgromWilson activity rule as our preferred activity rule where a simultaneous stopping rule is  X-used.Jj2 X -ԍ Competitive Bidding Second Report and Order, 9 FCC Rcd 2348, 23712373 ( 135145). We have subsequently adopted or proposed the MilgromWilson rule in each of our  X-simultaneous multiple round auctions.@K& j2 Xj$- x ԍ See 900 MHz Second Report and Order at  8890; see also Competitive Bidding Third  XS%- x/Report and Order, 9 FCC Rcd 2941, 29552957 ( 3640); see also MMDS Report and Order at  114123.@ The MilgromWilson approach encourages bidders to participate in early rounds by limiting their maximum participation to some multiple of their"| K0*((P"  X-minimum participation level.Lj2 Xy-ԍ See, e.g., Competitive Bidding Third Report and Order, 9 FCC Rcd 2941, 2958 ( 37). Bidders are required to declare their maximum eligibility in terms of MHzpops, and make an upfront payment equal to a dollar amount per MHzpops  X-(e.g., $0.02 per MHzpops).jMyj2 X-ԍ See discussion of upfront payments at  54, infra.j That is, bidders will be limited to bidding on licenses  X-encompassing no more than the number of MHzpops covered by their upfront payment.2N*j2 X-ԍ Id.2 Licenses on which a bidder is the high bidder from the previous round, as well as licenses on which a new valid bid is placed, count toward this MHzpops limit. Under this approach, bidders will have the flexibility to shift their bids among any licenses for which they have applied so long as the total MHzpops encompassed by those licenses does not exceed the number for which they made an upfront payment. Moreover, bidders will be able to secure the freedom to participate at whatever level they deem appropriate by making a sufficient upfront payment. To preserve their maximum eligibility, however, bidders would be required to maintain some minimum activity level during each round of the auction.  X -x*43. Under the MilgromWilson proposal, the minimum activity level, measured as a fraction of the self declared maximum eligibility, will increase during the course of the  X -auction. For this purpose, Milgrom and Wilson divide the auction into three stages.Ov j2 X3- xԍ The auction would move from stage one to stage two when, after three rounds of bidding,  xthe high bid has changed on five percent or fewer of the licenses (measured in terms of MHz xpops) being auctioned. Stage three would begin when the high bid has changed on two percent  xor fewer licenses (measured in terms of MHzpops) over three rounds. We retain the discretion  X- xto modify this method and announce such modification by Public Notice. See, e.g., Competitive  X-Bidding Third Report and Order, 9 FCC Rcd 2941, 2956 n.16. During the first stage of the auction, a bidder is required to be active on licenses encompassing onethird of the MHzpops for which it is eligible. The penalty for falling below that activity  Xb-level is a reduction in eligibility.Pb j2 X,-ԍ See, e.g., Competitive Bidding Third Report and Order, 9 FCC Rcd 2941, 2956 n.16.Ē At this stage, bidders would lose three MHzpops in maximum eligibility for each MHzpops below the minimum required activity level. In other words, each bidder would retain eligibility for three times the MHzpops for which it is an  X-active bidder, up to the MHzpops covered by the bidder's upfront payment.>Q j2 X"-ԍ Id. at  38.> In the second stage, bidders are required to be active on twothirds of the MHzpops for which they are eligible. The penalty for falling below that activity level would be a loss of 1.5 MHzpops in eligibility for each MHzpops below the minimum required activity level. In the third stage, bidders are required to be active on licenses encompassing all of the MHzpops for which"}Q0*(("  X-they are eligible.2Rj2 Xy-ԍ Id.2 The penalty for falling below that activity level is a loss of one MHzpops in eligibility for each MHzpops below the minimum required activity level. Each bidder thus retains eligibility equal to its current activity level (1 times the MHzpops for which it is an active bidder). We seek comment on this proposed activity rule.  X-x+44. Finally, to avoid the consequences of clerical errors and to compensate for unusual circumstances that might delay a bidder's bid preparation or submission on a particular day, we propose permitting each bidder to request and automatically receive a  XH-waiver of the activity rule once every three rounds.2SHyj2 Xr -ԍ Id.2 In the Competitive Bidding Fourth  X1-Memorandum Opinion and Order, we stated that the Commission retained the discretion to modify the method and timing of submitting waivers and to allow for two types of waivers  X -"proactive" and "automatic."T *j2 X-ԍ Competitive Bidding Fourth Memorandum Opinion and Order, 9 FCC Rcd 6858, 6861 ( 15). As explained therein, proactive waivers invoked in a round in which there are no new valid bids will keep an auction open, while an automatic waiver submitted in a round in which no other bidding activity occurs will not keep an auction  X -open.2U j2 X3-ԍ Id.2 Proactive waivers are submitted by the bidder, while automatic waivers would be submitted automatically for a bidder whenever a bidder's eligibility would be reduced because of insufficient bidding activity and a waiver is available unless the bidder specifically chooses  Xy-not to have the automatic waiver apply.2Vyuj2 X-ԍ Id.2 Automatic activity rule waivers would be automatically applied by the bidding system in any round where a bidder's activity is below the requested activity level as long as the bidder has waivers remaining.  X-x,45. Under this proposal, we would announce by Public Notice how many waivers bidders would receive. A waiver would permit a bidder to maintain its eligibility at the same level as in the round for which the waiver is applied. A waiver, however, could not be used to correct an error in the amount bid. This would ensure that bidders are not arbitrarily penalized by having their eligibility reduced due to an accidental act or circumstances not under the bidder's control. We seek comments on these proposals.  X|-x-46. We tentatively conclude that the MilgromWilson approach will best achieve our goals of affording bidders flexibility to pursue back up strategies, while at the same time ensuring that simultaneous auctions are concluded within a reasonable period of time. Accordingly, we seek comment on imposing such an activity rule in conjunction with a simultaneous stopping rule to award 37 GHz licenses. We also seek comment on whether to" & V0*((" use a simplified waiver procedure, if we adopt an activity rule for 37 GHz licenses. For example, bidders might be permitted five automatic waivers from the activity rule during the  X-course of an auction.>Wj2 XK-ԍ Id. at  40.> If we adopt an activity rule of auctioning 37 GHz licenses, we propose to announce by Public Notice before each auction the activity rule that will be  X-employed in that particular auction.X1yj2 X- xԍ Our rules allow us to make any such modifications to activity rules as appropriate for a  x<particular auction. We here propose to retain the discretion to choose among the following other  xLactivity rules on a casebycase basis: (1) a MilgromWilson rule with one or two stages rather  xthan three, (2) a requirement that bidders be active on a single license in each round, (3) a rule  xthat a bidder's activity level remain within a single range throughout the auction (i.e., remain  xZactive on some percentage of the total MHzpops covered by the upfront payment), (4) a rule that  x!replaces the maximum allowed bidding levels in the MilgromWilson rule with a bidding  X-- x]premium for exceeding those maximums, or (5) a combination of the foregoing rules. See  X-Competitive Bidding Third Report and Order at  4041. We seek comment on these issues.  X-  Xv-x.47. While we are proposing the adoption of the MilgromWilson activity rule by this  X_-Notice, we also retain the discretion to use an alternative activity rule for 37 GHz if we determine that the MilgromWilson rule is too complicated or costly to administer. Any such change would be announced by Public Notice before commencement of the auction. We seek comment on this proposal.  X -x/48. DurationofBiddingRounds . We propose to reserve the discretion to vary the  X -duration of bidding rounds or the interval at which bids are accepted (e.g., run more than one  X -round per day) in order to move the auction toward closure more quickly.qY r j2 X-ԍ See, e.g., 900 MHz Second Report and Order at  86.q Under this proposal, we would announce any changes to the duration of and intervals between bidding rounds either by public notice prior to the auction or by announcement during the auction. We seek comment on this issue.  Xb-  X-    d2.xProcedural and Payment Issues  X-dxa. PreAuction Application Procedures       X-x049. In this section we propose general competitive bidding rules and procedures. These rules are structured to ensure that bidders and licensees are qualified and will be able to"# Y0*((4"  X-construct systems quickly and offer service to the public.Zj2 Xy- xԍ See, e.g., Competitive Bidding Third Report and Order at  43; see also 900 MHz Second  Xb-Report and Order at  97. By ensuring that bidders and license winners are serious, qualified applicants, these rules will minimize the need to re-auction licenses and will prevent delays in the provision of 37 GHz service and, thus, of PCS service to the public. In addition, we propose adopting general procedural and processing rules based on rules for other auctionable services, such as those contained in Part  X-24 of the Commission's Rules for PCS.[bj2 X - xԍ See Implementation of Sections 3(n) and 332 of the Communications Act, Regulatory  X -Treatment of Mobile Services, Third Report and Order, 9 FCC Rcd 7988, 8026 ( 67) (1994).   X_-x150. In the Competitive Bidding Second Report and Order, we established general  XH-competitive bidding rules and procedures that may be modified on a servicespecific basis.O\Hj2 X-ԍ See 47 C.F.R. Part 1, Subpart Q.O  X1-We propose following the procedural and payment rules established in the Competitive  X -Bidding Second Report and Order with certain minor modifications designed to address particular characteristics of the 37 GHz service.  X -x251. ShortFormApplications. In the Competitive Bidding Second Report and Order, we determined that we should require only a shortform application prior to competitive bidding, and that only winning bidders should be required to submit a longform license  X-application after the auction.2]j2 X-ԍ Id.2 We have previously determined that such a procedure would  Xy-fulfill the statutory requirements and objectives and adequately protect the public interest.|^y^ j2 X-ԍ See, e.g., Competitive Bidding Third Report and Order at  43.| Accordingly, we propose to extend the application of these rules to the competitive bidding process for 37 GHz licenses.  X-x352. We propose that, before each 37 GHz auction, the Wireless Telecommunications  X-Bureau will release an initial Public Notice announcing the auction. These initial Public Notices would specify the licenses to be auctioned and the time, place and method of competitive bidding to be used, including applicable bid submission procedures, bid withdrawal procedures and payments, stopping rules and activity rules and other important  X-information.>_ j2 Xj$-ԍ Id. at  42.> These initial Public Notices will also specify the filing window for shortform applications. x  Xe-x453. AmendmentsandModifications. Under this proposal, all bidders would be"e _0*((1" required to submit shortform applications on FCC form 175 by the date specified in the applicable initial Public Notice. If only one application that is acceptable for filing for a particular license is received, and thus there is no mutual exclusivity, we would by Public Notice cancel the auction for this license and establish a date for the filing of a longform  X-application, the acceptance of which will trigger the procedures permitting petitions to deny.`j2 X-ԍ Id. at  43; see also 900 MHz Second Report and Order at  105106.  X-To en courage maximum bidder participation, we propose to provide applicants with an  Xv-opportunity to correct minor defects in their shortform applications prior to the auction. On the date set for submission of corrected applications, applicants that on their own discover  XH-minor errors in their applications (e.g., typographical errors, incorrect license designations)  X1-also would be permitted to file corrected applications. Recently, we waived the ex parte rules as they applied to the submission of amended shortform applications for the A and B blocks of the broadband PCS auctions, to maximize applicants' opportunities to seek Commission  X -staff advice on making such amendments.`a yj2 X- x č Commission Announces that Mutually Exclusive "Short Form" Applications (Form 175)  X- xto Participate in Competitive Bidding Process ("Auctions") are Treated as Exempt for Ex Parte  X-Purposes, Public Notice, 9 FCC Rcd 6760 (1994).` We propose to apply the same principles to the  X -37 GHz auctions. Under our proposal, applicants would not be permitted to make any major modifications to their applications, including changes in markets and changes in control of the applicant, or additions of other bidders into the bidding consortia, until after the auction. Applicants could modify their shortform applications to reflect formation of consortia or changes in ownership at any time before or during an auction, provided such changes would not result in a change in control of the applicant, and provided that the parties forming consortia or entering into ownership agreements have not applied for licenses in any of the  X4-same geographic license areas.b4j2 X- xԍ Competitive Bidding Second Memorandum Opinion and Order at  52; Erratum, Mimeo No. 50228 (released: October 19, 1994). In addition, applications that are not signed would be dismissed as unacceptable. After reviewing the corrected applications, a Public Notice would be released, announcing the names of all applicants whose applications have been accepted for filing. Applicants identified in the Public Notice would then be required to submit the full amount of their upfront payment (defined below in  5455) to the Commission's lock-box bank by the date specified in the Public Notice, which generally will be no later than 14 days before the scheduled auction. After we receive from our lock-box bank the names of all applicants who have submitted timely upfront payments, we would then issue a Public Notice announcing the names of all applicants that have been determined to be qualified to bid. An applicant who fails to submit a sufficient upfront payment to qualify it to bid on any license being auctioned will not be identified on this Public Notice as a qualified bidder. Each applicant listed on this fourth Public Notice will be issued a bidder identification number and further information and instructions regarding the auction procedures. We seek comments on these proposals.     "b0*((<"Ԍ X-dxb. Upfront Payment       X-x554. We propose to require all auction participants to tender in advance to the Commission a substantial upfront payment as a condition of bidding in order to ensure that only serious, qualified bidders participate in auctions and to ensure payment of an additional  X-assessment (discussed at  5660, infra) in the event of bid withdrawal or default. The standard upfront payment formula is $2,500 or $0.02 per pop per MHz for the largest  X_-combination of MHzpops, whichever is greater.gc_j2 X-ԍ Competitive Bidding Second Report and Order at  171.g This upfront payment calculation will define the upper bound of MHzpops on which a bidder will be permitted to bid in any round, and so should be calculated by bidders to reflect the maximum MHzpops from any  X -combination of licenses on which they may want to bid in a single round.*d yj2 XD - xԍ As discussed infra, however, we would retain the flexibility to consider using a simpler  xpayment requirement if circumstances warrant. The upfront payment amount would be announced by Public Notice before each auction.* We believe that this formula is appropriate for 37 GHz services. Using this formula will provide bidders with the flexibility to change their strategy during an auction and to bid on a larger number of smaller licenses or a smaller number of larger licenses, so long as the total MHzpops combination does not exceed that amount covered by the upfront payment. If licenses covering the nation are being auctioned simultaneously, a bidder would not be required to file an upfront payment representing national coverage unless it intends to bid on licenses covering the entire nation in any single bidding round. Under this proposal, we would announce the upfront payment amount for each license in a Public Notice issued prior to the auction. We seek comments on these proposals.  X-x655. Upfront payments generally will be due no later than 14 days before a scheduled  X-auction.iej2 X-ԍ Competitive Bidding Second Report and Order at  171. i This period should be sufficient to allow us sufficient time to process upfront payment data and release a Public Notice listing all qualified bidders. The specific procedures to be followed in the tendering and processing of upfront payments are set forth in Section 1.2106 of the Commission's Rules.  XN-    dxc. Down Payment and Full Payment       X -x756. In the Competitive Bidding Second Report and Order , we established a 20 percent down payment requirement for winning bidders to discourage default between the auction and" e0*((["  X-licensing and to ensure payment of the additional assessment if such default occurs.Afj2 Xy-ԍ Id. at  190. A We concluded that a 20 percent down payment was appropriate to ensure that auction winners have the necessary financial capabilities to complete payment for the license and to pay for the costs of constructing a system, while not being so onerous as to hinder growth or diminish  X-access. 2gyj2 X-ԍ Id.2 We also determined that this amount was appropriate for the broadband PCS  X-auctions . oh*j2 Xh -ԍ See Competitive Bidding Fifth Report and Order at  73.o We believe that the reasoning employed in those Orders is equally applicable to the 37 GHz service. Thus, we tentatively conclude that, with the exception of small  X_-businesses eligible for installment payments (as proposed at  8286, infra), winning bidders in 37 GHz auctions must supplement their upfront payments with a down payment sufficient to bring their total deposits up to 20 percent of their winning bid(s). Under this proposal, if the upfront payment already tendered by a winning bidder, after deducting any bid withdrawal and default payments due, amounts to 20 percent or more of its winning bids, no additional deposit would be required. If the upfront payment amount on deposit is greater than 20 percent of the winning bid amount after deducting any bid withdrawal and default payments due, the additional monies would be refunded. If a bidder has withdrawn a bid or defaulted but the amount of the payment cannot yet be determined, the bidder would be required to  X-make a deposit of 20 percent of the amount bid on such licenses.|ij2 X-ԍ See, e.g., Competitive Bidding Third Report and Order at  49.| When it becomes possible to calculate and assess the default payment, any excess deposit would be refunded. Upfront payments would be applied to such deposits and to bid withdrawal and default payments due before being applied toward the bidder's down payment on licenses the bidder  X4-has won and seeks to acquire.>j4j2 Xq-ԍ Id. at  49.> We seek comment on these proposals.  X-x857. We propose to require winning bidders to submit the required down payment by cashier's check or wire transfer to our lockbox bank by a date to be specified by Public  X-Notice, generally within five (5) business days following the close of bidding.k= j2 X - x-ԍ Additionally, we propose adopting an installment payment option for small businesses that  X!-are winning bidders in the 37 GHz auction. See  8185, infra. All auction winners generally would be required to make full payment of the balance of their winning bids within five (5) business days following Public Notice that the license is ready for grant. Under this proposal, we would grant the license within ten (10) business days after receiving  X|-full payment.|l| j2 X'-ԍ See, e.g., Competitive Bidding Third Report and Order at  51.| We seek comment on this proposal."| l0*((P"Ԍ X-ԙ    dxd. Bid Withdrawal, Default and Disqualification       X-x958. In either a sequential or simultaneous auction, it is critically important that potential bidders understand that there will be a substantial payment assessed if they withdraw a high bid, are found not to be qualified to hold licenses or are unable to pay a balance  X-due.>mj2 X-ԍ Id. at  49.> We therefore propose the following withdrawal, default and disqualification rules. Any bidder who withdraws a high bid during an auction before we declare the bidding closed, or defaults by failing to remit the required down payment within the prescribed time, would be required to reimburse us in the amount of the difference between its high bid and the amount of the winning bid the next time the license is offered by us, if the subsequent  X -winning bid is lower.n yj2 XD - xԍ In the unlikely event that there is more than one bid withdrawal on the same license, we  xywould hold each withdrawing bidder responsible only for the difference between its withdrawn  xbid and the amount of the winning bid the next time the license is offered by us. This procedure  X-would ensure that each bidder who withdraws is responsible for its bid.   After bidding closes, a defaulting auction winner would be assessed an additional payment of three percent of the subsequent winning bid or three percent of the  X -amount of the defaulting bid, whichever is less.oJ j2 X- xԍ See 47 C.F.R.  1.2104 (g) and 1.2109. If a license is reoffered by auction, the  x"winning bid" refers to the high bid in the auction in which the license is reoffered. If a license  x=which is the subject of withdrawal or default is instead offered to the highest losing bidders in  x-the initial auction, the "winning bid" refers to the bid of the highest bidder who accepts the offer.  X(- xLosing bidders would not be required to accept the offer, i.e., they may decline without penalty.  xWe wish to encourage losing bidders in simultaneous multiple round auctions to bid on other  x[licenses, and therefore would not hold them to their losing bids on a license for which a bidder has withdrawn a bid or on which a bidder has defaulted. The additional three percent payment is designed to encourage bidders desiring to withdraw their bids, to do so before bidding ceases. This additional payment would also apply if an auction winner were disqualified or failed to remit the balance of its winning bid after having made the required down payment. We would hold deposits made by defaulting or disqualified auction winners until full payment of  Xy-the additional assessment.pyj2 X# - x.ԍ In rare cases in which it would be inequitable to retain a down payment, we will entertain requests for waiver of this provision. We believe that these payments will discourage default and ensure that bidders have adequate financing and that they meet all eligibility and qualification requirements. A defaulting auction winner is ineligible to participate in any reduction which includes the license on which it defaulted. In addition, if a default or disqualification involves gross misconduct, misrepresentation or bad faith by an applicant, we would also retain the ability to declare the applicant and its principals ineligible to bid in future auctions, and would be able to take any other action that it deemed necessary, including institution of proceedings to revoke any existing licenses held by the applicant. We seek comments on"p0*((" these proposed default rules.  X-x:59. In the event that an auction winner defaults or is otherwise disqualified after an auction is closed, an issue arises as to whether we should hold a new auction or simply offer the license to the secondhighest bidder. We believe that, as a general rule, when an auction winner defaults or is otherwise disqualified after having made the required down payment, the  Xv-best course of action is to reauction the license either to existing or new applicants.qvj2 X-ԍ See, e.g., Competitive Bidding Third Report and Order at  5152. Although we recognize that this may cause a brief delay in the initiation of service to the public, during the time between the original auction and the disqualification circumstances may have changed so significantly as to alter the value of the license to auction participants  X -as well as to parties who did not participate.2r yj2 XD -ԍ Id.2 In this situation, we believe that awarding  X -licenses to the parties that value them most highly can best be assured though a reauction.2s *j2 X-ԍ Id.2 However, if the default occurs within five (5) business days after bidding has closed, we would retain the discretion to offer the license to the second highest bidder at its final bid level, or if that bidder declines the offer, to offer the license to other bidders (in descending order of their bid amounts) at their final bid levels. If only a small number of relatively low value licenses are to be reauctioned, we may choose to offer the license to the highest losing bidders since the cost of running an auction may not exceed the benefits. We invite comments on these proposals.  X4-x;60. If a new auction becomes necessary because of default or disqualification more than five (5) business days after bidding has ended, we propose allowing the Commission to afford new parties an opportunity to file applications because so much time is likely to have passed that different parties may be interested in bidding and existing applicants may have different valuations of the license. One of our primary goals in conducting auctions is to assure that all seriously interested bidders are in the pool of qualified bidders at any  X-re-auction.tj2 X6-ԍ See, e.g., Competitive Bidding Third Report and Order at  5152. We believe that achievement of this goal outweighs the short delay that we recognize may result from allowing new applications in a reauction. Indeed, if we were not to allow new applicants in a reauction, interested parties may be forced into an aftermarket transaction to obtain the license, which would itself delay service to the public and deny recovery by the government of a reasonable portion of the value of the spectrum. We seek comment on this proposal.  X -  X -    d3.xRegulatory Safeguards  X-dxa. Transfer Disclosures and AntiTrafficking Provisions     " t0*((;"Ԍ X-x<61. The Communications Act, as amended by the 1993 Budget Act, directs us to "require such transfer disclosures and antitrafficking restrictions and payment schedules as may be necessary to prevent unjust enrichment as a result of the methods employed to issue  X-licenses and permits." 47 U.S.C. 309(j)(4)(E). In the Competitive Bidding Second Report  X-and Order, we adopted safeguards designed to ensure that the requirements of Section  X-309(j)(4)(E) are satisfied.xuj2 X-ԍ Competitive Bidding Second Report and Order at  210226, 258265.x We propose applying specific rules governing unjust enrichment by small businesses, which are discussed below in  9193. In addition, we propose applying the transfer disclosure requirements contained in Section 1.2111(a) of our rules to all 37 GHz licenses obtained through the competitive bidding process. Generally, any applicant transferring any of its licenses within three years after the initial grant of that license will be required to file, together with its transfer application, the associated contracts for sale, option agreements, management agreements, and all other documents disclosing the total consideration received in return for the transfer of its license. We propose giving particular scrutiny to auction winners who have not yet begun commercial service and who seek approval for a transfer of control or assignment of their licenses after the initial license grant, in order to determine if any unforeseen problems relating to unjust enrichment have arisen outside the small business context. In addition, this reporting requirement will provide us with valuable information that will enable us to evaluate how well the various auction methods have achieved our objectives. We seek comment on this proposal.  X4-        dxb. Rules Prohibiting Collusion       X-x=62. In the Competitive Bidding Second Report and Order we adopted special rules  X-prohibiting collusive conduct in the context of competitive bidding.Mvyj2 X-ԍ See 47 C.F.R.  1.2105 (c).M We indicated that such rules would serve the objectives of the Budget Act by preventing parties, especially the largest firms, from agreeing in advance to bidding strategies that divide the market according to their strategic interests and disadvantage other bidders. We propose applying these rules to the 37 GHz band. The rule prohibits bidders from communicating with one another after shortform applications have been filed regarding the substance of their bids or bidding strategies, and also prohibits bidders from entering into consortium arrangements or joint  XN-bidding agreements after the deadline for shortform applications has passed.OwN*j2 X)!-ԍ See 47 C.F.R.  1.2015(c)(1).O In the  X7-Competitive Bidding Second Memorandum Opinion and Order, we modified the rule so that bidders who have not filed Form 175 applications for licenses in any of the same geographic license areas may enter into such discussions, consortia, or arrangements, or add equity partners, during the course of an auction, because of the relatively low risk of anticompetitive"!w0*((<" conduct among bidders that have not applied for licenses in any of the same geographic  X-areas.xj2 Xy- xԍ 47 C.F.R.  1.2105(c)(3); Competitive Bidding Second Memorandum Opinion and Order,  Xb-9 FCC Rcd at 7254, Erratum, 1994 WL 575828 (October 19, 1994). Further, in the Competitive Bidding Fourth Memorandum Opinion and Order, we noted that communications among bidders concerning matters unrelated to the license auctions  X-would be permitted.yyj2 X- x ԍ Competitive Bidding Fourth Memorandum Opinion and Order at  59. See also Letter  xLto R. Michael Senkowski from Rosalind K. Allen, Acting Chief, Commercial Radio Division, rel.  xKDec. 1, 1994 (discussions that indirectly provide information that affects bidding strategy are also precluded by anticollusion rules). We seek comment on this proposal.  X-x>63. In addition, bidders would be required to identify on their Form 175 applications all parties with whom they have entered into any consortium arrangements, joint ventures, partnerships or other agreements or understandings which relate to the competitive bidding  XH-process.zHj2 X- xԍ See, e.g., 900 MHz Second Report and Order at  95; see also Competitive Bidding Third  X-Report and Order at  64. Bidders will also be required to certify that they have not entered and will not enter into any explicit or implicit agreements, arrangements or understandings with any parties, other than those identified, regarding the amount of their bid, bidding strategies or the particular properties on which they will or will not bid. After the shortform applications are filed and prior to the time that the winning bidder has made its required down payment, all bidders will be prohibited from cooperating, collaborating, discussing or disclosing in any manner the substance of their bids or bidding strategies with other bidders, unless such bidders are members of a bidding consortium or other joint bidding arrangement identified on  X-the bidder's shortform application.2{ j2 X-ԍ Id.2 We seek comment on this proposal.  Xb-x?64. We also propose requiring winning bidders to attach as an exhibit to the long form application a detailed explanation of the terms and conditions and parties involved in any bidding consortia, joint venture, partnership or other agreement or arrangement they had  X-entered into relating to the competitive bidding process prior to the close of bidding.|0 j2 X- xԍ See, e.g., 900 MHz Second Report and Order at  96; see also Competitive Bidding Third  X -Report and Order at  65. All such arrangements must have been entered into prior to the filing of shortform applications. Where specific instances of collusion in the competitive bidding process are alleged during the petition to deny process, we will conduct an investigation or refer such complaints to the  X-United States Department of Justice for investigation.>} j2 X<&-ԍ Id.> Bidders who are found to have violated the antitrust laws, in addition to any penalties they incur under the antitrust laws, or""{}0*((" who are found to have violated the Commission's Rules in connection with participation in the auction process may be subject to a variety of sanctions, including forfeiture of their down payment or their full bid amount, revocation of their license(s), and may be prohibited from participating in future auctions. We seek comment on the applicability of these rules to licenses in the 37 GHz band.  X-  Xv-    d4.xDesignated Entity Provisions  X_-dxa. Introduction       X1-x@65. The Communications Act, as amended by the 1993 Budget Act, directs us to "ensure that small businesses, rural telephone companies, and businesses owned by members of minority groups and women are given the opportunity to participate in the provision of  X -spectrumbased services."E~ j2 Xe -ԍ 47 U.S.C.  309(j)(4)(D).E The statute requires us to "consider the use of tax certificates, bidding preferences, and other procedures" in order to achieve this congressional goal. In  X -addition, Section 309(j)(3)(B) provides that in establishing eligibility criteria and bidding methodologies we shall promote "economic opportunity and competition . . . by avoiding excessive concentration of licenses and by disseminating licenses among a wide variety of applicants, including small businesses, rural telephone companies, and businesses owned by  Xb-members of minority groups and women."Gbyj2 X-ԍ 47 U.S.C.  309(j)(3)(B). G Finally, Section 309(j)(4)(A) provides that to promote these objectives we shall consider alternative payment schedules including lump sums or guaranteed installment payments.  X-xA66. In instructing us to ensure the opportunity for these "designated entities" (DEs) to participate in auctions and spectrumbased services, Congress was well aware of the problems that they would have in competing against large, wellcapitalized companies in auctions and the difficulties they encounter in obtaining capital. For example, the legislative history accompanying our grant of auction authority states generally that the Commission's regulations "must promote economic opportunity and competition," and "[t]he Commission will realize these goals by avoiding excessive concentration of licenses and by disseminating licenses among a wide variety of applicants, including small businesses and businesses owned  XN-by members of minority groups and women."=N*j2 X)!-ԍ House Report at 254.= The House Report states that the House Committee was concerned that, "unless the Commission is sensitive to the need to maintain opportunities for small businesses, competitive bidding could result in a significant increase in  X -concentration in the telecommunications industries."2 j2 X%-ԍ Id.2 More specifically, the House Committee was concerned that adoption of competitive bidding should not have the effect of "excluding" small businesses from our licensing procedures, and anticipated that we would"#0*((;" adopt regulations to ensure that small businesses would "continue to have opportunities to  X-become licensees.":j2 Xb-ԍ Id. at 255.:  X-xB67. Consistent with Congress's concern that auctions not operate to exclude small businesses, the provisions relating to installment payments were clearly intended to assist small businesses. The House Report states that these related provisions were drafted to  Xv-"ensure that all small businesses will be covered by the Commission's regulations."2vyj2 X -ԍ Id.2 It also states that the provisions in section 309(j)(4)(A) relating to installment payments were intended to promote economic opportunity by ensuring that competitive bidding does not  X1-inadvertently favor incumbents with "deep pockets" "over new companies or startups."21*j2 X -ԍ Id.2  X -xC68. In addition, with regard to access to capital, Congress made specific findings in the Small Business Credit and Business Opportunity Enhancement Act of 1992, that "small business concerns, which represent higher degrees of risk in financial markets than do large  X -businesses, are experiencing increased difficulties in obtaining credit." j2 XJ-ԍ Small Business Credit and Business Opportunity Enhancement Act of 1992,  331(a)(3), Pub. Law 102366, Sept. 4, 1992. As a result of these difficulties, Congress resolved to consider carefully legislation and regulations "to ensure that small business concerns are not negatively impacted" and to give priority to passage of  Xy-"legislation and regulations that enhance the viability of small business concerns."Iyuj2 X-ԍ Id. at  331(b)(2),(3).I  XK-xD69. In our initial implementation of Section 309(j) of the Communications Act, we  X4-established in the Competitive Bidding Second Report and Order eligibility criteria and general rules that would govern the special measures for DEs, including small businesses. We also identified several measures, including installment payments, spectrum setasides, bidding credits and tax certificates, from which we could choose in establishing rules for auctionable spectrumbased services. We stated that we would decide whether and how to use these special provisions, or others, when we developed specific competitive bidding rules for particular services. In addition, we set forth rules designed to prevent unjust enrichment by DEs who transfer ownership in licenses obtained through the use of these special measures or who otherwise lose their DE status.  XN-xE70. We have employed a wide range of special provisions and eligibility criteria designed to meet the statutory objectives of providing opportunities to DEs in other spectrumbased services. For instance, minorityowned and womenowned businesses in the nationwide" $& 0*(("  X-narrowband PCS auction received a 25 percent bidding credit on certain channels;dj2 Xy-ԍCompetitive Bidding Third Report and Order at  72.d in the regional narrowband PCS auction womenowned and minorityowned businesses received a 40 percent bidding credit on certain channels and small businesses were eligible for  X-installment payments on all channels;yj2 X- x/ԍ Id. at  87. See also Competitive Bidding Third Memorandum Opinion and Order and  X-Further Notice of Proposed Rulemaking at  58, 9297. in the broadband PCS auction, we established  X-separate entrepreneurs' blocks with varying degrees of installment payments.@_j2 Xh - xԍ Competitive Bidding Fifth Memorandum Opinion and Order at  103; see also  xImplementation of Section 309(j) of the Communications Act Competitive Bidding, Amendment  xof the Commission's Cellular PCS CrossOwnership Rule, and Implementation of Sections 3(n)  xand 332 of the Communications Act Regulatory Treatment of Mobile Services, PP Docket No.  X - x/93253, GN Docket No. 90314, and GN Docket No. 93252, Further Notice of Proposed Rule  X- xMaking, FCC 95263, released June 23, 1995, (Competitive Bidding Further Notice of Proposed  X-Rule Making); Sixth Report and Order, FCC 95301, released July 18, 1995. @ In the multichannel multipoint distribution service (MMDS), we established bidding credits and  Xv-installment payments for small businesses.Yv: j2 Xa-ԍ MMDS Report and Order at  182189.Y The measures adopted thus far for each service were established after closely examining the specific characteristics of the service and determining whether any particular barriers to accessing capital stood in the way of DE opportunities. After examining the record in the competitive bidding proceeding in PP Docket 93253, we established provisions necessary to enable small businesses to overcome the barriers to accessing capital in each particular service. Moreover, the measures we adopted also were designed to increase the likelihood that small businesses who win licenses  X -in the auctions become strong competitors in the provision of wireless services.  X -xF71. In response to many comments explaining how we should implement Congress's mandate, we adopted several rules designed to encourage the participation of women and minorities in broadband PCS by addressing greater difficulties these groups experience in accessing capital. We analyzed these special provisions for minorities and women under the  XK-"intermediate scrutiny" standard established in Metro Broadcasting, Inc. v. FCC, 497 U.S.  X4-547, 564565 (1990) and determined that they were constitutional.t4 j2 X!-ԍ See Competitive Bidding Fifth Report and Order at  9.t  X-xG72. However, on June 12, 1995, the Supreme Court decided in Adarand Constructors,  X-Inc. v. PenaWj2 X<&-ԍ 63 U.S.W.L., No. 931841 (U.S. June 12, 1995).W that "all racial classifications . . . must be analyzed by a reviewing court under"%M0*(("  X-strict scrutiny."/j2 Xy- xԍ 63 U.S.W.L. at 4530. The Court overruled Metro Broadcasting to the extent that it held  xthat remedial programs based on racial classifications should be reviewed using an intermediate  XK-scrutiny test./ The Court ruled that any federal program that makes distinctions on the basis of race must serve a compelling governmental interest and must be narrowly tailored to  X-serve that interest.;Kj2 X-ԍ Id. at 4533.;  X-xH73. The holding in Adarand would apply to any proposal to incorporate racebased measures into our 37 GHz auction rules. At this time, we may not have developed a record sufficient to sustain racebased measures in the 37 GHz band based on the standard  X_-established by Adarand._j2 X - xԍ See, e.g., Competitive Bidding Further Notice of Proposed Rule Making, FCC 95263 (June 23, 1995). We therefore propose to limit special provisions initially to small businesses in the 37 GHz band. As discussed below, we propose to define small business in a way that would increase the likelihood of women and minorityowned businesses establishing eligibility for special provisions. We do, however, believe that racebased measures could survive strict scrutiny from the courts. Moreover, we do not concede that any of our auction rules are unconstitutional. We simply believe that auction rules we develop must now be evaluated under a stricter constitutional standard than had been previously relied upon, and that at a minimum, this requires us to build a record concerning the participation of minorities and women in spectrumbased services before we adopt race and genderbased measures.  Xb-xI74. Adarand thus introduces an additional level of complexity in implementing Congress' mandate to ensure that businesses owned by minorities and women are provided  X4-"the opportunity to participate in the provisions of spectrumbased services."F4j2 X{-ԍ 47 U.S.C.  309(j)(4)(D). F Although  X-Adarand did not address genderbased preferences, we have included them here in an effort to  X-seek the broadest possible comment.hG j2 X- xԍ See Telephone Electronic Corp. v. FCC, No. 951015 (D.C. Cir. March 15,  x1995)(discussing Commission's rules establishing both gender and racespecific preferences for  X!-Broadband PCS.) See also Lamprecht v. FCC, 958 F.2d 382 (D.C. Cir. 1992). h We welcome comment as to the appropriateness of our approach. Accordingly, we seek comment on how we can best promote opportunities for  X-businesses owned by minorities and women in the 37 GHz band in light of Adarand. We seek the broadest possible comments including, but not limited to, responses to the following questions:       X|-dXxDo we have a compelling interest in establishing opportunityenhancing measures in"|& 0*((2" the 37 GHz band specifically for minority and womenowned businesses? If so, what is that compelling interest? Are there characteristics specific to the 37 GHz band that demonstrate that race and/or genderbased measures are needed to satisfy the mandate of 47 U.S.C.  309(j)(3)(A)?(#  X-dXxWhat evidence (statistical, documentary, anecdotal or otherwise) can be marshalled to support the proposed compelling interest?(#  XH-dXxWhat techniques could we employ that would be narrowly tailored to further the proposed compelling interest? Would such techniques include bidding credits and installment payments? Are raceconscious or genderconscious measures necessary, or are there raceor genderneutral measures that would be effective?(# Commenters are encouraged to provide us as much evidence as possible with regard to past discrimination, continuing discrimination, discrimination in access to capital, underrepresentation and other significant barriers facing businesses owned by minorities and women in obtaining licenses in the 37 GHz band and in licensed communications services generally.   X` hp x (#%'0*,.8135@8: 43 + 10 x  Xi xMlog10(mean output power in watts) dB, or 80 dB, whichever is the lesser attenuation. See 47 C.F.R.  21.106(a)(2)(iii).= Additionally, we propose to allow a maximum EIRP of +55 dBW for operations in both the 37 and 39 GHz bands. This  X -is consistent with our proposals in WT Docket No. 94148._  0 Xn-ԍ See note 1, supra, at  17._ In that proceeding, we proposed to abolish the limitation on maximum transmitter power and to increase the maximum EIRP to +55 dBW for most microwave frequencies from 4 GHz to 40 GHz,  X -including the 39 GHz band.I k 0 X"- xԍ These proposals were based partly on TIA recommendations. See Suggested Rule  X#- xChanges for Merging Part 21 and Part 94 into Part 101, submitted by TIA on April 6, 1994, and letter from Robert J. Miller to Karen Rackley (May 2, 1994).I This higher EIRP should allow for increased path reliability on long paths. Further, keeping our proposal consistent in both bands should allow for manufacturing efficiencies resulting from greater commonality in equipment. We also propose to adopt a 0.001% frequency tolerance for equipment operating in either the 37 GHz"y70*((i" or the 39 GHz bands. We agree with TIA that this improvement in frequency stability would maximize the use of each channel block, is well within the current stateoftheart at these frequencies, and can be achieved without significant cost. Furthermore, we propose to amend the bandwidth rule to clarify that, for channel block assignments, the authorized bandwidth is  X-equivalent to an unpaired channel block assignment or to either half of a paired channel block  X-assignment, e.g., 50 MHz, and to unambiguously specify that when adjacent channels are aggregated, equipment is permitted to operate over the full channel block aggregation without  X_-restriction._ 0 X- xLԍ If this proposal is adopted, unwanted emissions would continue to be suppressed at the  xaggregate channel block edges based on the same rolloff rate as is now specified for a single channel block.  We request comment on these proposals, especially the effect aggregation would have on cochannel and adjacent channel operations. In addition to the proposals made above, we solicit comment on whether a further lessening of technical requirements is appropriate. Specifically, we request comment on whether we should continue to specify a required frequency tolerance. If frequency tolerance were not specified in the rules, equipment would be required to merely maintain its operations fully within the "emission  X -mask" at all times.v K 0 X- x=ԍ See note 186, supra. See also 47 C.F.R.  21.101. We observe that the effect of requiring  xoperations to stay within the emission mask at all times would be to reduce the frequency  X- xtolerance to levels more restrictive than that recommended by TIA, i.e., instead of a permitted  X- xydrift in frequency of + 384.25 kHz, no drift whatsoever would be permitted outside the emission  xmask. Of course, transmitters would be permitted to drift within the emission mask and licensees could purchase equipment with less drift if they had a need for greater capacity.   XK-rrns116. In addition, licensees of rectangular service areas are specifically reminded that: Xr4` hp x (#%'0*,.8135@8:0*((7"  `< ?      #|\  P6G;~P#Appendix A: Proposed Rules #Xj\  P6G;CXP#у Parts 1, 2, 21 and 94 of title 47 of the Code of Federal Regulations are proposed to be amended as follows:  X-f  PART 1 PRACTICE AND PROCEDURE ĐTP  Xi- 1. The authority citation for Part 1 continues to read as follows:  X; - AUTHORITY: 47 U.S.C. 151, 154, 303, and 309(j) unless otherwise noted. 2. Add paragraph (a)(8) to Section 1.2102 and revise paragraph (b)(4) of Section 1.2102 to read as follows:  X -  1.2102 Eligibility of applications for competitive bidding.  X- (a) * * *  Xl- (8) Basic trading area licenses in the 37.038.6 GHz and the 38.640.0 GHz bands.  X>- (b) * * * (4) Applications for channels in all frequency bands, except those listed in paragraph (a)(8), which are used as intermediate links in the provision of an integral, endtoend, subscriberbased service. * * * * * "o?0*0*0*"  X-Xx PART 2 FREQUENCY ALLOCATIONS AND RADIO TREATY MATTERS;  X-GENERAL RULES AND REGULATIONS (#  1. The authority citation for Part 2 continues to read as follows:  X- AUTHORITY: Sec. 4, 302, 303, and 307 of the Communications Act of 1934, as amended, 47 U.S.C. Sections 154, 302, 303 and 307, unless otherwise noted.  X_- 2. Section 2.106, the Table of Frequency Allocations, is amended as follows: a. Remove the existing entries for 37.037.5 GHz, 37.539.5 GHz, and 39.540.5 GHz in columns (1) through (3) and for 37.038.6 GHz, 38.639.5 GHz, 39.540.0 GHz, and 40.040.5 GHz in columns (4) through (7). b. Add entries in numerical order for 37.0 37.5 GHz, 37.5 38.0 GHz, 38.0 38.6 GHz, 38.6 39.5 GHz, 39.5 40.0 GHz, and 40.0 40.5 GHz in columns (1) through (7).  Xy- c. Remove International Footnote No. 899.  XK-  2.106 Table of Frequency Allocations * * *"@0*((u" 3'3'Standard'3''Current Windows FormRSXP\ ,A  hh  H #,72PG; ,P# h ddx !HddxAvvvvv{q h     && "l International table "United States table "<(FCC use designators&     & && "E2Region 1 allocation GHz" Region 2 allocation GHz""&Region 3 allocation GHz"Government" NonGovernment"U&Rule part(s)"+Specialuse frequencies(     ( &w& "o jG(1)h"   (2)h"Lw F* (3)h"Allocation GHz (4)w"Allocation GHz $' (5)w"[' '(6)w"-  -(7)(    ( &w& "mp*" *"Jd*"*"'P *"H'*" -*&   !  & &&  37.0 37.5 FIXED MOBILE SPACE RESEARCH (spaceto Earth) 37.0 37.5 FIXED MOBILE SPACE RESEARCH (spaceto Earth) 37.0 37.5 FIXED MOBILE SPACE RESEARCH (spaceto Earth) 37.0 37.5 FIXED MOBILE  37.0 37.5 FIXED MOBILE  DOMESTIC PUBLIC FIXED (21) PRIVATE OPERATIONALFIXED MICROWAVE (94) &!  5  & &&  37.5 38.0 FIXED  K:l iFIXEDSATELLITE (spaceto Earth) MOBILE SPACE RESEARCH (spaceto Earth) Earth ExplorationSatellite (spacetoEarth)   37.5 38.0 FIXED  K:l iFIXEDSATELLITE (spaceto Earth) MOBILE SPACE RESEARCH (spaceto Earth) Earth ExplorationSatellite (spacetoEarth)   37.5 38.0 FIXED  K:l iFIXEDSATELLITE (spaceto Earth) MOBILE SPACE RESEARCH (spaceto Earth) Earth ExplorationSatellite (spacetoEarth)   37.5 38.0 FIXED MOBILE   37.5 38.0 FIXED MOBILE    DOMESTIC PUBLIC FIXED (21) PRIVATE OPERATIONALFIXED MICROWAVE (94)  &5  +  & &&  38.0 38.6 FIXED  K:iFIXEDSATELLITE (spaceto Earth) MOBILE Earth ExplorationSatellite (spacetoEarth) : 38.0 38.6 FIXED  K:iFIXEDSATELLITE (spaceto Earth) MOBILE Earth ExplorationSatellite (spacetoEarth) : 38.0 38.6 FIXED  K:iFIXEDSATELLITE (spaceto Earth) MOBILE Earth ExplorationSatellite (spacetoEarth): 38.0 38.6 FIXED MOBILE : 38.0 38.6 FIXED MOBILE:  DOMESTIC PUBLIC FIXED (21) PRIVATE OPERATIONALFIXED MICROWAVE (94): &+  +   & &&  38.6 39.5 FIXED FIXEDSATELLITE (spaceto Earth) MOBILE Earth ExplorationSatellite (spacetoEarth)e 38.6 39.5 FIXED FIXEDSATELLITE (spaceto Earth) MOBILE Earth ExplorationSatellite (spacetoEarth)e 38.6 39.5 FIXED FIXEDSATELLITE (spaceto Earth) MOBILE Earth ExplorationSatellite (spacetoEarth)e 38.6 39.5 US291e 38.6 39.5 FIXED FIXEDSATELLITE (spaceto Earth) MOBILE US291e  DOMESTIC PUBLIC FIXED (21) PRIVATE OPERATIONALFIXED MICROWAVE (94) Auxiliary Broadcasting (74)e &+  5  :& &&  39.5 40.0 FIXED FIXEDSATELLITE (spaceto Earth) MOBILE MOBILESATELLITE (spaceto Earth) Earth ExplorationSatellite (spacetoEarth) 39.5 40.0 FIXED FIXEDSATELLITE (spaceto Earth) MOBILE MOBILESATELLITE (spaceto Earth) Earth ExplorationSatellite (spacetoEarth) 39.5 40.0 FIXED FIXEDSATELLITE (spaceto Earth) MOBILE MOBILESATELLITE (spaceto Earth) Earth ExplorationSatellite (spacetoEarth) 39.5 40.0 FIXEDSATELLITE (spaceto Earth) MOBILESATELLITE (space toEarth) US291 G117 39.5 40.0 FIXED FIXEDSATELLITE (spaceto Earth) MOBILE MOBILESATELLITE (space toEarth) US291  DOMESTIC PUBLIC FIXED (21) PRIVATE OPERATIONALFIXED MICROWAVE (94) Auxiliary Broadcasting (74) &5  I  e& &&  40.0 40.5 EARTH EXPLORATION SATELLITE (Earthtospace) FIXED FIXEDSATELLITE (spaceto Earth) MOBILE MOBILESATELLITE (spaceto Earth) SPACE RESEARCH (Earthto space) Earth ExplorationSatellite (spacetoEarth)! 40.0 40.5 EARTH EXPLORATION SATELLITE (Earthtospace) FIXED FIXEDSATELLITE (spaceto Earth) MOBILE MOBILESATELLITE (spaceto Earth) SPACE RESEARCH (Earthto space) Earth ExplorationSatellite (spacetoEarth)! 40.0 40.5 EARTH EXPLORATION SATELLITE (Earthtospace) FIXED FIXEDSATELLITE (spaceto Earth) MOBILE MOBILESATELLITE (spaceto Earth) SPACE RESEARCH (Earthto space) Earth ExplorationSatellite (spacetoEarth)! 40.0 40.5 FIXEDSATELLITE (spaceto Earth) MOBILESATELLITE (space toEarth) G117! 40.0 40.5 FIXEDSATELLITE (spaceto Earth) MOBILESATELLITE (spaceto Earth) ! ! &I    & && "mp*#" *#"Jd*#"*#"'P *#"H'*#" -*"k"A%W#W#hhx"   ! X- hh  H  '3''Current Windows FormRSXP\ 3'3'Current Windows FormRSXP\ *AB [ # Xj\  P6G;CXP# PART 21 DOMESTIC PUBLIC FIXED RADIO SERVICES ĐTP 1. The authority citation for Part 21 continues to read as follows:  X- AUTHORITY: Secs. 1, 2, 4, 201205, 208, 215, 218, 303, 307, 313, 403, 404, 410, 602, 48 Stat. as amended, 1064, 1066, 10701073, 1076, 1077, 1080, 1082, 1083, 1087, 1094, 1098, 1102; 47 U.S.C. 151, 154, 201205, 208, 215, 218, 303, 307, 313, 314, 403, 404, 602; 47 U.S.C. 552, 554.  XH- 2. In  21.101(a), the frequency band 19,700 to 40,000 MHz is removed from the table and the frequency bands 19,700 to 37,000 MHz and 38,600 to 40,000 MHz and footnote 7 are added in numerical order to the table to read as follows:  X -  21.101 Frequency tolerance. (a) * * * m !HddxAvvvvv{q AddxyB  m  q ! h "  bFrequency range (MHz)h"W ` ` *Frequency tolerance (percent)q Z y hg- " Y"All fixed and base stationsDI"zMobile stations over 3 wattsDI"Mobile stations 3  X[-watts or less1Z q  gh- "S *h".*h"*h"*q q D hh-  ` *`  19,700 to 37,000 ............&h  0.03&h  0.03 &h  0.03 q q  hh-   37,000 to 38,600 ............h  0.001h"] .........................h"......................q  & h-   X- 38,600 to 40,0007 ...........  0.001   0.001  0.001  * * *  WB  X-7 Equipment installed prior to January 1, 1998, may employ a frequency tolerance of 0.03%.  Xl-However, equipment installed on or after that date shall comply with the +0.001% tolerance limit. * * * * * "X'B0*((&"Ԍ 3. In Section 21.105, the existing unlabeled paragraph is revised as paragraph 21.105(a) and paragraph 21.105(b) is added to read as follows:  X-  21.105 Bandwidth. (a) * * * * * (b) For channel block assignments, the authorized bandwidth is equivalent to an unpaired  XH-channel block assignment or to either half of a symmetrically paired channel block  X1-assignment. When adjacent channels are aggregated, equipment is permitted to operate over the full channel block aggregation without restriction. XxNOTE: Unwanted emissions shall be suppressed at the aggregate channel block edges based on the same rolloff rate as is specified for a single channel block in paragraphs 21.106(a)(2)(ii) and (iii) of this chapter. (# 4. In  21.107(b), the frequency band 37,000 to 38,600 MHz is added in numerical order to the table to read as follows:  XK-  21.107 Transmitter power.  X- * * * * * (b) * * * c AddxyB  addxCH c  Z   I- "[7Frequency band (MHz)c" Maximum allowable transmitter /power I"Maximum allowable EIRPZ  q  Ihx ""ZFixed (W)uh"QMobile (W)uh"Fixed (dBW)uh"Mobile (dBW)q q  hhx "*h" *h"l^*h"*h"%7 *q q u hhx  37,00038,600 ..............Wh" .......................Wh"MQ.......................Wh#+55Wh"C......................q   hwx  38,60040,000 ..............w" .......................w"h1.5w# +55w"*....................... Ww * * * * * " 'C0*((%["Ԍ 5. In  21.108(c), the frequency "Above 31,300" is removed from the table and the frequency band 38,600 to 40,000 MHz and footnote 4 are added in numerical order to the table to read as follows:  X-  21.108 Directional antennas.  Xv- * * * * *  X_- (c) * * *  ANTENNA STANDARDS addxCH  ddx DkVc "  t W" 6 x6 ":MFrequency (MHz) "& Category   h"Maximum  beamwidth zto 3 dB points 8(included jangle in `degrees)`"<fMinimum ?antenna ;Ugain (dBi)`"Minimum radiation suppression to angle in >degrees from centerline of main beam in ~decibels"t t " 6 -txY6 "i$" Y" "U" X-5o to  X-10o" X-10o to  X-15o" X-15o to  X-20o" X-20o to  X-30o" X-30o to  X- 100o " X-4!100o :k!to  X-4!140o " X-^#140o d#to  X-^#180ot q ` 6h -txY6 "e*Eh"c *Eh"*Eh"Q*Eh"*Eh"*Eh"*Eh"*Eh"+* Eh"<!* Eh"f$*q q  6h -txY6   X-38,600 to 40,0004  A#$N/A#e38#25#29#33#36#T42 #A!55 #mT$55q E  * * *  Xq- 4 This antenna standard applies only to licensees of grandfathered links. Antennas installed prior to January 1, 1998, may be of Category B. However, antennas installed on or after that  XC-date shall be of Category A.  * * * * * 6. In  21.122, paragraph (f) is added to read as follows:  X-  21.122 Microwave digital modulation. * * *  X]"- (f) Facilities in the band 38,60040,000 MHz that are licensed to licensees of grandfathered links and that are constructed on or after January 1, 1998 shall transmit at minimum equivalent digital efficiency of 1 bps/Hz and equipment installed on or after that date shall  X%-also have the capability to support the transmission of 1 bps/Hz. 7. In  21.701, the frequency band 37,00038,600 MHz is added to paragraph (a) in"&D0*((a&)" numerical order and paragraph (j) is revised as paragraphs (j)(1), (j)(2) and (j)(3) to read as follows:  X-  21.701 Frequencies. (a) * * * * * *  X1-37,00038,600 MHz  X -38,60040,000 MHz4 * * * * * (j)(1) Assignments in the band 37,000 MHz40,000 MHz shall be according to the following channeling plan:  ddx DkVc ddxyE`* qq E h-txY "J Paired Channel Blocksq q  y hh-txY "wChannel Group A[h"&Channel Group Bq  Z  hI-txY "]uChannel i0No.I  Frequency Block (MHz)I" Channel ,No. I  Frequency Block (MHz)Z q [ Ih-txY #o!1A &h"x 38,60038,650&h#)1B &h"V39,30039,350q q  hh-txY #o!2A h"x 38,65038,700h#)2B h"V39,35039,400q q &#o!3A h"x 38,70038,750h#)3B h"V39,40039,450q q #o!4A yh"x 38,75038,800yh#)4B yh"V39,45039,500q q  hh-txY #o!5A h"x 38,80038,850h#)5B h"V39,50039,550q q y hh-txY #o!6A [h"x 38,85038,900[h#)6B [h"V39,55039,600q q #o!7A h"x 38,90038,950h#)7B h"V39,60039,650q q [#o!8A = h"x 38,95039,000= h#)8B = h"V39,65039,700q q #o!9A !h"x 39,00039,050!h#)9B !h"V39,70039,750q q = #i10A #h"x 39,05039,100#h#10B #h"V39,75039,800q q !#i11A $h"x 39,10039,150$h#11B $h"V39,80039,850q q ##i12A &h"x 39,15039,200&h#12B &h"V39,85039,900q q $#i13A r'h"x 39,20039,250r'h#13B r'h"V39,90039,950"&E0*((%%"q   & h-txY #i14A "x 39,25039,300#14B "V39,95040,000   ^ ddxyE`* ddxF`* ^   a Y-txY #i15A Y"x 37,00037,050Y#15B Y"V37,70037,750aq  Yh-txY #i16A sh"x 37,05037,100sh#16B sh"V37,75037,800q q #i17A h"x 37,10037,150h#17B h"V37,80037,850q q s#i18A Uh"x 37,15037,200Uh#18B Uh"V37,85037,900q q #i19A h"x 37,20037,250h#19B h"V37,90037,950q q U#i20A 7 h"x 37,25037,3007 h#20B 7 h"V37,95038,000q q #i21A  h"x 37,30037,350 h#21B  h"V38,00038,050q q 7 #i22A  h"x 37,35037,400 h#22B  h"V38,05038,100q q  #i23A h"x 37,40037,450h#23B h"V38,10038,150q q  #i24A h"x 37,45037,500h#24B h"V38,15038,200q q #i25A lh"x 37,50037,550lh#25B lh"V38,20038,250q q #i26A h"x 37,55037,600h#26B h"V38,25038,300q q l#i27A Nh"x 37,60037,650Nh#27B Nh"V38,30038,350q    hw-txY #i28A w"x 37,65037,700w#28B w"V38,35038,400  Nw T ddxF`* ddxF T  q N h-x "aUnpaired Channel Blocksq Z  hI-x "]uChannel i0No.I" Frequency  Block (MHz)Z q ) Ih-x "m_29h"o 38,40038,450q q "m_30eh"o 38,45038,500q q "m_31h"o 38,50038,550q   e hw-x "m_32W w"o 38,55038,600  w (2) Channel Blocks 1 through 32 are assigned for use within Basic Trading Areas (BTAs). Applicants are to apprise themselves of any grandfathered links within the BTA for which they seek a license. In Channel Blocks 15 through 32, new Government links may be added if those links can be operated without unduly interfering with existing nonGovernment stations. All of the channel blocks may be subdivided as desired by the licensee and used within its service area as desired without further authorization subject to the terms and conditions set forth in  21.711. See  24.202(b) of this chapter for the definition of BTAs"&F0*((%"  X-and Public Notice, Report No. CW9402, for a listing of the counties comprising each BTA. (3) Licensees shall not have an ownership interest in more than four of Channel Blocks 1 through 28 and no more than two of Channel Blocks 29 through 32 in any BTA. (i) For the purpose of this section, licensees are entities having an ownership interest of five or more percent or other attributable ownership interest, as defined in Section 24.204(d), in a license in Channel Blocks 1 through 32. In applying Section 24.204(d), applicants who are neither broadband personal communications services (PCS) nor cellular licensees shall be treated as if they were broadband PCS applicants. (ii) Grandfathered links shall be counted toward the ownership limit in each BTA through which they pass or in which they are located. * * * * * 8.  21.711 is revised to read as follows:  Xb-  21.711 Special requirements for operation in the band 37,000 to 40,000 MHz. (a) Assigned channel blocks in the band 37,00040,000 MHz that are licensed by Basic Trading Area (BTA) may be subdivided and used anywhere within the BTA without further authorization, subject to the following terms and conditions: (1) No interference may be caused to existing or previously appliedfor stations operating as a grandfathered link. (2) The antenna structure height employed at any location shall not exceed the criteria set forth in  17.7 of this chapter unless, in each instance, authorization for use of a specific maximum antenna structure for each location has been obtained from the Commission prior to the erection of the antenna. (3) The field strength of any transmitter operating within an assigned channel block and  X -BTA shall not exceed   dBu at the boundary of another BTA or a rectangular service area without the prior consent of the licensee to which that channel is assigned in such other BTA or rectangular service area. (4) Licensees in the 37,000 to 38,600 MHz band shall maintain a computerreadable database with the coordinates of their sites, frequencies (occupied bandwidth) assigned to their sites, EIRP, and other technical information for all of their links needed to facilitate coordination with and the addition of new Government links.  X#'- (b) Conversion Plan: Licensees of rectangular service areas shall construct an average of"#'G0*((%"  X-four permanently installed and operating links per hundred square kilometers within their licensed service areas for each licensed channel block and shall file a certification stating that they have met said construction threshold by [insert date that is 18 months from the adoption of a Report and Order in this proceeding]. (1) The right to take advantage of the above eighteenmonth buildout provision shall apply only to those entities holding valid licenses as of [insert the date of adoption of the Report and Order in this proceeding]. (2) No later than [insert 18 months from the adoption of a Report and Order in this proceeding], licensees of rectangular service areas not meeting the above construction threshold shall file a list of permanently installed and operating links that they wish to have grandfathered. Failure to file timely a list of installed and operating links shall result in automatic cancellation of the respective licenses. (3) Licenses for rectangular service areas shall be automatically canceled on [insert 19 months from the adoption of a Report and Order in this proceeding] if the licensee does not file a certification stating that it meets the above construction threshold. (4) Temporary links shall not be grandfathered. (5) Any grandfathered link which subsequently ceases operations for a period of thirty consecutive days or more shall be deemed automatically forfeited, in which case the authorization shall be returned to the Commission, and the right to use "returned" spectrum shall go to the BTA licensee. "H0*(("  X-w6 PART 94 PRIVATE OPERATIONALFIXED MICROWAVE SERVICE X-TP 1. The authority citation for Part 94 continues to read:  X- AUTHORITY: Sections 4, 303, 48 Stat. 1066, 1082, as amended; 47 U.S.C. 154, 303, unless otherwise noted.  Xv-  X_- 2. In  94.61(b), the frequency band 37,000 to 38,600 MHz is added in numerical order to the table and footnote 18 is revised to read as follows:  X -  94.61 Applicability. * * * * * (b) * * * J ddxF ddxyI` ` J   q  h-x "bFrequency band (MHz)h"Aq q y hh-x ". *[h"=*q q  hh-x #>37,000 to 38,600h (18).q q [ hh-x #>38,600 to 40,000=h (9) (18) and (23).q   hw-x ". *w"=* =w * * *  Xy- 18 Channel Blocks 1 through 32 are assigned for use within Basic Trading Areas (BTAs). Applicants are to apprise themselves of any grandfathered links within the BTA for which they seek a license. In Channel Blocks 15 through 32, new Government links may be added if those links can be operated without unduly interfering with existing nonGovernment stations. All of the channel blocks may be subdivided as desired by the licensee and used within its service area as desired without further authorization subject to the terms and conditions set forth in  21.711. See  21.701(j)(1) of this chapter for the channeling plan.  X-See  24.202(b) of this chapter for the definition of BTAs and Public Notice, Report No. CW9402, for a listing of the counties comprising each BTA. * * * 3. In  94.63, the frequency band 37,000 to 38,600 MHz is added to the second sentence of" 'I0*((%" paragraph (a) to read as follows:  X-  94.63 Interference protection criteria for operational fixed stations. (a) * * * As an exception to the above requirement, when the proposed facilities are to be operated in the bands 932935, 941944, 37004200, 59256425, 65256875, 10,55010,680, 10,70011,700, 17,70019,700, 21,20021,800, 22,40023,000, 37,00038,6000, or 38,60040,000 MHz applicants shall follow the prior coordination procedure specified in  21.100(d) of this chapter. * * * * * * * * 4. In  94.67, the frequency band 31,300 to 40,000 MHz is removed from the table and the frequency bands 31,300 to 37,000 MHz and 38,600 to 40,000 MHz are added in numerical order to the table to read as follows:  X-  94.67 Frequency tolerance. * * * J ddxyI` ` !ddx4J  J  <= -x "!  fFrequency band (MHz)X"CTolerance as @percentage of Massigned Jbfrequency<4` ` 0 * * * ` 0` 31,300 to 37,000 ............................................BN0.03 37,000 to 38,600 ............................................BN0.001  X-38,600 to 40,000 ............................................ BN0.0019   ydddJxy * * *  X- 9 Equipment installed prior to January 1, 1998, may employ a frequency tolerance of 0.03%.  X-However, equipment installed on or after that date shall comply with the +0.001% tolerance limit. X&J0*((%3Jf, eXԌ 5. In Section 94.71, paragraph 94.71(f) is added to read as follows:  X-  94.71 Emission and bandwidth limitations. * * * * * (f) For channel block assignments in the 3740 GHz band, the authorized bandwidth is 50  X_-MHz. When adjacent channels are aggregated, equipment is permitted to operate over the full channel block aggregation without restriction. XxNOTE: Unwanted emissions shall be suppressed at the aggregate channel block edges based on the same rolloff rate as is specified for a single channel block in paragraphs 21.106(a)(2)(ii) and (iii) of this chapter. (# Xx(# 6. In  94.73, the frequency band 37,000 to 38,600 MHz is added to the table to read as follows:  Xy-  94.73 Power limitations. * * * Y !ddx4J  AddxK Y "<  Z  4" I-txY "gFrequency band (MHz)Jh" Maximum allowable transmitter $power wI" X-6Maximum allowable EIRPZ  q  Ih--tY "Y" Fixed (W)h"GMobile (W)h"Fixed (dBW)h"Mobile (dBW)q q w hh--tY "r*Yh"9*Yh"b*Yh"*Yh"%7 *q q  hh--tY  37,000 to 38,600 ......h", .......................h"C.......................h"+55h"*.......................q  Y hw--tY  38,600 to 40,000 ......Kw", .......................Kw"^}1.5Kw"+55Kw"*....................... w * * * " 'K0*((%"Ԍ 7. In  94.75, the frequency band 38,600 to 40,000 MHz is revised to read as follows:  X-  94.75 Antenna limitations. * * * * * (b) * * *  ANTENNA STANDARDS AddxK  addx LkVc " t " 6 --tY6 ":MFrequency (MHz) "& Category  0 h"Maximum  beamwidth zto 3 dB points 8(included jangle in `degrees)w "<fMinimum ?antenna ;Ugain (dBi)w "Minimum radiation suppression to angle in >degrees from centerline of main beam in ~decibels"t t  " 6 -txY6 "i$0" Y" "U" X -5o to  X-10o" X -10o to  X-15o" X -15o to  X-20o" X -20o to  X-30o" X -30o to  X- 100o " X -4!100o :k!to  X-4!140o " X -^#140o d#to  X-^#180ot q w  6h -txY6 "e*\h"c *\h"*\h"Q*\h"*\h"*\h"*\h"*\h"+* \h"<!* \h"f$*q q  6h -txY6   X-38,600 to 40,00013 A#$N/A#e38#25#29#33#36#T42 #A!55 #mT$55q \  * * *  X- 13 This antenna standard applies only to licensees of grandfathered links. Antennas installed prior to January 1, 1998, may be of Category B. However, antennas installed on or after that  XZ-date shall be of Category A.  * * * * * 8.  94.94 is amended by adding a sentence to the end of the section to read as follows:  X-  94.94 Microwave digital modulation.  X- * * * Facilities in the band 38,60040,000 MHz that are licensed to licensees of grandfathered links and that are constructed on or after January 1, 1998 shall transmit at minimum equivalent digital efficiency of 1 bps/Hz and equipment installed on or after that  X]"-date shall also have the capability to support the transmission of 1 bps/Hz. "]"L0*((!H"  `<  #|\  P6G;~P#Appendix B: Initial Regulatory Flexibility Analysis #Xj\  P6G;CXP#ѐTP  Pursuant to Regulatory Flexibility Act of 1980, the Commission finds as follows:  X-A. Reason For Action: We find that there is a need for additional pointtopoint microwave channels, which could be used by broadband PCS and cellular licensees for backhaul and backbone links. This rule making proceeding is initiated to obtain comment regarding proposals to make the 37 GHz band available for pointtopoint communications and to amend the rules for the 39 GHz band.  X$ -B. Objective: The objectives of this proposal are to provide adequate pointtopoint microwave spectrum, including channels for the support of broadband PCS and other services, and to provide for technical commonality across the bands.  X -C.  Legal Basis: The proposed action is authorized by Sections 4(i), 303(c), 303(f), 303(g), 303(r) and 309(j) of the Communications Act of 1934, as amended, 47 U.S.C. Sections 154(i), 303(c), 303 (f), 303(g), 303(r) and 309(j). These provisions authorize the Commission to make such rules and regulations as may be necessary to encourage more effective use of radio  Xl-as is in the public interest. T //  X>-D. Description, Potential Impact, and Number of Small Entities Affected: Bidding credits, installment payments, and reduced upfront payments are proposed for small businesses. In addition, this proposal may provide new opportunities for radio manufacturers and suppliers of radio equipment, some of which may be small businesses, to develop and sell new equipment. We invite specific comments on these points by interested parties.  X- x  X-E. Reporting, Record Keeping, and Other Compliance Requirements: Applicants must apply in order to be eligible for the auction. Highbidders at the auction must apply for their respective licenses. Rectangular service area licensees must either certify that they meet the construction threshold or file a list of operating links that they wish to have grandfathered. Licensees in the 37 GHz band would be required to maintain a computerreadable database with the coordinates of their sites, frequencies (occupied bandwidth) assigned to their sites, EIRP, and other information for all of their links in order to facilitate the addition of new Government links.  X -F. Federal Rules That Overlap, Duplicate, or Conflict With This Rule: None.  X"-G. Significant Alternatives: If promulgated, this proposal will provide additional pointtopoint spectrum, which can be used for the support of broadband PCS and other services. We are unaware of other alternatives which could provide sufficient spectrum in the immediate future. We solicit comment on this point."r%M0*((E$H"     X-  Partial Dissenting Statement of Chairman Reed E. Hundt ă Amendment of the Commission's Rules Regarding the 37.038.6 GHz and 38.640.0 GHz Bands; Implementation of Section 309(j) of the Communications Act Competitive Bidding, 37.038.6 GHz and 38.640.0 GHz (ET Docket No. 95183, RM 8553, and PP Docket No. 93253)   xThis Notice of Proposed Rulemaking proposes to: (1) establish technical and service rules for the 37 GHz band; (2) alter significantly the rules for the 39 GHz band; and (3) license the spectrum in these bands by means of competitive bidding. I wholeheartedly support almost all aspects of this decision, which makes significant strides toward increasing the value of the spectrum to the public, by placing licenses in the hands of those who value the spectrum most highly. Regrettably, the Notice of Proposed Rulemaking includes a statement of intent with respect to processing that seriously undermines this otherwise commendable effort. xI therefore must dissent from the portion of the decision that announces an intention to continue processing those pending applications that are not mutually exclusive. Instead, the Commission should defer processing all applications during the pendency of the rulemaking. Assuming the Commission ultimately decides to auction this spectrum, the pending applications should be dismissed. Applicants would have an opportunity to refile, and participate in an auction. xThere is no longer any serious dispute that sound public policy requires assigning spectrum licenses by competitive bidding except where there are clear and compelling public" (N0*0*0*&H" interest reasons to the contrary. No compelling reasons have been given here. Auctions put licenses into the hands of those who value them most highly, and who are therefore most likely to provide service the public desires and to do so quickly and efficiently. Auctions also permit the U.S. Treasury to recover for the public a portion of the value of the public's spectrum. xBy a unanimous vote, the Commission has expressed an intent to move to auctions for this spectrum. The Commission proposes to change the rules for the spectrum in this band, in large part because existing rules provide little or no incentive for licensees to build out systems and offer service. In fact, our current rules allow applicants to define the size of their service areas without any real showing of need. The only requirement is that the service area be drawn as a rectangle. The current rules actually create incentives for applicants to request large amounts of spectrum in large, selfdefined, geographic areas, regardless of whether they are using the spectrum efficiently. xUnder existing rules, applicants have paid only a $180 application fee, which would be returned if the applications were dismissed. Often, when the Commission gives away licenses, the applicants sell the licenses shortly thereafter, and this spectrum is no exception. For example, one company that obtained 30 licenses in September 1993 soon sold them for $12.5 million 2,300 times the amount the original licensee paid in application fees. We should not be surprised by these sales. They are the logical consequence of rules that assign  X:&-spectrum by date stamp.":&O0*(($H"ԌxThere is ample Commission precedent and clear legal authority for dismissing pending  X-applications that are inconsistent with new Commission rules. See, e.g., Hispanic Information  X-and Telecommunications Network v. F.C.C., 865 F.2d 1289, 1294 (D.C. Cir. 1989). Private  Xv-OperationalFixed Microwave Service, 48 Fed. Reg. 32,578 (1983), aff'd, Affiliated  XH-Communications Corp. v. FCC, No. 831686, unpublished judgment (D.C. Cir. May 8, 1985). The Commission gave away billions of dollars worth of spectrum before it obtained auction authority, but there is no reason to continue this practice. While any single decision to process pending applications (whether by lottery, or otherwise) may seem in isolation not to be terribly costly, those decisions in the aggregate inflict serious harm on the public interest. xUnder current rules, once an applicant files, and the Wireless Telecommunications Bureau places the application on public notice, other interested applicants have a limited opportunity to file competing applications. Contrast this approach with the approach under auctions, in which the Commission publicly announces its intent to open up spectrum, holds public seminars, provides extensive information in bidding packages, and generally does everything it can to ensure that the universe of interested businesses have a full and fair opportunity to obtain licenses. Under the current rules, people interested in filing competing applications must obtain the services of Washington insiders lawyers and lobbyists who monitor the weekly public notices listing all applications. xThis problem is especially acute in the case of the spectrum at 39 GHz, for which there was a land rush in July 1995, because it is spectrum that the Commission identified as":&P0*(($H" useful for backhaul links required by Personal Communications Services (PCS) licensees.  X-Amendment of the Commission's Rules to Establish New Personal Communications Services, Second Report and Order, GEN Docket No. 90314, RM 7140, RM 7175, RM 7618, 8 FCC Rcd 7700, 7741. Most potential PCS licensees do not yet know where and whether they will obtain licenses (the C, D, E, and F block licenses). The winners in the A and B blocks, who received their licenses in June 1995, would have been required to act almost instantaneously to have a shot at the 39 GHz spectrum before the land rush. xThe Commission itself has identified PCS winners as potential licensees for the 39 GHz spectrum. It makes sense to license this spectrum in such a way that PCS licensees have a real opportunity to participate. It makes no sense to process applications under rules that provide PCS licensees little or no meaningful opportunity to express their interest in this spectrum to the Commission. And yet, that is exactly what the Commission, by processing pending applications, would be doing. xIf all pending applications were granted, there would be no channels left in most major markets, and few channels available in other markets. The majority (in which I join with respect to this point) would defer processing of mutually exclusive applications, and thus leave open the possibility that these channels might be available to future applicants, assuming that pending applications are dismissed, and the Commission proceeds to auction. Some may argue that half a loaf is better than none. I say simply that a whole loaf is better than half a loaf, and the Commission should not process any pending applications at all.":&Q0*(($H"ԌxIssuing licenses by processing pending applications, rather than by auction, is a giveaway. In the absence of an auction, we do not know exactly what this spectrum is worth. However, extrapolating from publicly available values, the entire 39 GHz band could be worth $950 million. Even if the pending nonmutually exclusive applications are worth a fraction of this amount, it is money that belongs to the American public. I see no reason to deprive the U.S. Treasury of meaningful revenues, particularly if we simply propose to give these spectrum licenses away to applicants that are likely to resell them privately for significant amounts. Although this is the season of giving, this is not supposed to be the Federal Chanukah/Christmas Present Commission, particularly as Congress and the Administration struggle to find ways to meet the country's pressing need for a balanced budget. "R0*((VH"  IK#G6X@`7 F~@# SEPARATE STATEMENT  `IOF  HK COMMISSIONER ANDREW C. BARRETT ă  ?<# x6X@`7 >X@#  ?V< Re: Amendment of the Commission's Rules Regarding the 37.038.6 GHz and 38.640.0 GHz Bands; Implementation of Section 309(j) of the Communications Act Competitive Bidding, 37.038.6 GHz and 38.640.0 GHz [Notice of Proposed Rulemaking and Order]  ?> <xToday, the Commission issues a Notice of Proposed Rulemaking proposing to amend Parts 1, 2, 21 and 94 of our rules to provide channeling plan and licensing and technical rules for fixed pointtopoint microwave operations in the 37.038.6 GHz band. We also propose to amend the licensing and technical rules for  ?& <38.640.0 GHz band. The Commission has decided to process pending applications that are nonmutually exclusive and which were put on public notice sixty (60) days before the date of the recently imposed application freeze. Pending mutually exclusive applications and those nonmutually exclusive applications put on public notice less than sixty (60) days before the freeze will be held in abeyance pending the completion of the rulemaking in this proceeding. xI support the decision to process the nonmutually exclusive applications for two (2) primary reasons. First, the Commission does not have auction authority for applications that are not  ?<mutually exclusive.q X-ԍ#d6X@`7f@#See 47 C.F.R.  21.31(b).q Therefore, I see no justification for refusing to process these applications in order to provide some certainty for those applicants. Second, while some would have us believe that a great deal of these applications may be from speculators, I continue in my belief that the government should not prejudge any applicant's intention with respect to the provision of service. Again, I emphasize that not every applicant that does not acquire a license through the competitive bidding process should be deemed suspect. To that end, I believe that the Commission has determined to take the appropriate course of action with regard to the pending nonmutually exclusive applications."Sy0*((D%H"  Y-X(## Xw PE37XP#P  ?<#x6X@`7 >X@#  Yy-S# Xw PE37XP#SEPARATE STATEMENT IHOF nCOMMISSIONER SUSAN NESS T DISSENTING IN PART T T TPT  Y -` Xr hp x (#%'0*,.8135@8: