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Some of these DARS channels may provide some programming that is similar to what is available on local stations.  S- ` x4.` ` However, it does not necessarily follow that satellite DARS would have a significant  xadverse impact on terrestrial broadcasters, many of whom offer essentially locally oriented programming.  S- xTerrestrial broadcasting has the ability to provide local public affairs programming, local news and  xweather, local traffic reports and local personalities. We believe that consumers attach great significance  xto such programming. We request comment on whether consumers would alter their listening patterns by  xzabandoning local stations to any significant degree. In this regard, we note that existing audio services provided at fixed locations by satellite do not appear to have adversely effected local radio broadcasting.  S - ` x5.` ` Implementation of satellite DARS potentially will stimulate significant economic growth  x"by creating jobs in various sectors. Satellite DARS could create jobs in industries involved in  xltechnological development and manufacture of spacecraft and receiver components, installation of  xreceivers in vehicles, programming creation and origination, building and operation of satellite uplink  xNfacilities and construction and operation of customer service centers. These activities will require  xemployees with various levels of expertise and training. Moreover, many of these economic opportunities  x?would be available to nonlicensees, including small and minority owned businesses. Because the  xconstruction costs for the space stations proposed in the pending applications range from $320 million  xzto over $622 million, and the manufacturing costs for their proposed ground segment(s), including the  x.feeder link earth stations and the end user receivers, are expected to be millions of dollars more, satellite DARS potentially will lead to substantial investment in the U.S. economy.  S- ` x6.` ` The process of establishing DARS in the United States began in 1990 when Satellite CD  xjRadio (CD Radio) filed a Petition for Rulemaking to allocate spectrum for DARS. At the same time, CD  xyRadio filed an application to provide digital quality audio by satellite which was accepted as tendered for  x.filing on October 19, 1990. In February 1992, the World Administrative Radio Conference (WARC 92)  SP- xadopted international frequency allocations for satellite digital audio broadcasting.{PB yO-  ԍXxInternational Telecommunication Union, Final Acts of the World Administrative Radio Conference (Malaga  Torremolinos, 1992). The Conference allocated use of the 23102360 MHz band in Region 2 solely to the   yU. S. and limited the introduction of broadcastingsatellite services (sound) to the upper 25 MHz (23352360  yO-  MHz) pending the action of a further conference to be convened no later that 1998. See Allocation Order,  yO-supra  n. 1, at para 26.(#{ Per U.S. proposals,  x]the frequencies designated in this country are 23102360 MHz (SBand). In November 1992, the  xCommission released a Notice of Proposed Rulemaking and Further Notice of Inquiry (Allocation Notice)  S-proposing to implement the WARC 92 allocation domestically.xB yO"-ԍXxNotice of Proposed Rule Making and Further Notice of Inquiry, 7 FCC Rcd. 7776 (1992).(#Ǝ x  S- ` x7.` ` The Commission established a December 15, 1992 cutoff date for applications proposing  xsatellite DARS service to be considered in conjunction with CD Radio's application. In response to the  xcutoff notice, five additional applications were filed. As two of those five applicants have withdrawn,  x\the remaining applicant pool consists of CD Radio, Primosphere Limited Partnership (Primosphere), Digital Satellite Broadcasting Corporation (DSBC) and American Mobile Radio Corporation (AMRC)."  +))88e""Ԍ S- ` ԙx8.` ` In its recent Allocation Order, the Commission amended the Table of Frequency  xAllocations to allocate 50 MHz of spectrum, 23102360 MHz, for satellite DARS use on a primary basis.  xThe Commission further noted that this proceeding would be initiated to address satellite DARS implementation.  S`-  S8- ` Qx9.` ` In the DARS allocation proceeding we also addressed terrestrial digital technology that  x>may permit licensees in our current AM and FM services to convert to digital transmission with CD  S- xquality sound. Two industry committees are studying technical standards that relate to this issue.]B yOP-ԍxSee discussion infra at para 48.] We  x.continue to fully support these activities, and when we receive the reports of these two committees, we  xwill act expeditiously to consider changes to our rule to also permit AM and FM licensees to improve their service by offering digital sound.  S -<(II. DISCUSSIONă A. Economic Impact on Existing Terrestrial Broadcasters and Impact on the Public Interest  S -  S - ` Qx 10.` ` When we allocated spectrum for satellite DARS last January, we stated that we would  SX- xexamine the effect that this new service could have on terrestrial broadcasting. In the Allocation Order  xwe concluded that the allocation of frequencies for nationwide satellite DARS is consistent with our  xobligations under Section 307(b) of the Communications Act, which requires us to ensure equitable  xygeographic distribution of radio services. Additionally, we stated that in our satellite DARS service rules  xproceeding, we would "request information on and consider all relevant and available information which  S- x<addresses the impact of satellite DARS on traditional service".iXB yO-ԍ XxAllocation Order, supra n. 1 at para 25.(#i We noted the possibility that "competition  xfrom a new regional or national satellite radio service might diminish the financial ability of some  S@- xterrestrial stations to provide local service"P@B yO-ԍ XxId. at para 24.(#P and listed a series of factors that might be relevant for  S-analyzing the potential economic impact of satellite DARS.ExB yO0-ԍ XxId .(#E  S- ` px 11.` ` Evaluation of the potential impact on broadcasters should be made in the context of  xSection 7 of the Communications Act. Section 7 makes it clear that opponents of this new technology  xbear the burden to show that licensing DARS is inconsistent with the public interest. The public interest  xin this regard is the provision of services of value to the listening public and includes the protection of  xcompetition, not competitors. The economic impact of satellite DARS on existing radio broadcasters is  xrelevant to this inquiry to the extent that such impact would predictably lead to serious loss of important  xservices to consumers, taking into account the potential for future enhancements of terrestrial broadcasting  xby the introduction of new technologies and by appropriate changes in the Commission's rules for  xLterrestrial broadcasting. In this section, we seek comment on how satellite DARS might affect terrestrial  xbroadcasters and, consequently, affect the interests of the listening public. We also seek comment on what might be an appropriate regulatory response to such impact. "  +))88!"Ԍ S- ` #x 12.` ` In the Allocation Order, we concluded that allocation of spectrum for satellite DARS was  xin the public interest. We cited several benefits the public would receive from this service. These include  S- xthe provision of continuous radio service of compact disc quality, an increased choice of overtheair audio  xprogramming and service to underserved and unserved areas. We noted that satellite DARS has the  xpotential to provide new services to rural listeners, minority and ethnic groups, and nonEnglish speaking  x\audiences. Finally we stated that the service has the potential to provide opportunities for economic  S- xdevelopment and improve the U.S. position in the international marketplace.TB yOx-ԍxAllocation Order at para. 22.T We continue to believe that  xLsatellite DARS has the potential to offer substantial benefits to the public. We request comment on this conclusion and on other possible public interest benefits that might accrue from this service.  S - ` $x 13.` ` We recognize that initiation of satellite DARS may not be without some costs to local  x=broadcasters, particularly in the area of their advertising revenues. Specifically, although satellite DARS  xmay increase the total amount of time spent listening to radio, satellite DARS may also reduce the  xaudience for terrestrial radio. That reduction in audience may, in turn, reduce the advertising revenues  x.available to local broadcasting. We seek comment on the potential and likelihood of such an impact, and  xits effect, if any, on the continued financial viability of traditional broadcasting and on the amount of local  xand public affairs programming that traditional broadcasters provide. We particularly seek comment on  x[the effect of satellite DARS given the disparity between the services in the number of stations permitted  xto broadcast to each community as a whole, the number of commonly owned channels that will be available in each community, and the reach of each station in the two services.  S@- ` x 14.` ` We also seek comment on whether, and to what extent, satellite DARS may decrease  xyterrestrial radio listenership. In addressing this, commenters should provide the models and assumptions  xunderlying their predictions and answer, at a minimum, the following questions: What is the expected  xjcustomer equipment cost and any subscription fee? What service will be provided on a partially or fully  xadvertisersupported basis? How much of satellite DARS listening will be in automobiles and how much  xwill be at stationary sites? In responding, commenters should take account of the nature of the service  xprovided. For example, listeners of CD quality music might be primarily in automobiles, but the same  xmight not be true for children's programming or programming in languages other than English. Satellite  xDARS's impact on the local radio audience will also depend on the availability of terrestrial DARS, so  xcommenters should include in their analyses their assumptions regarding the probable timetable for introduction of that service.  S`- ` Ax15.` ` In estimating any decline in terrestrial radio audiences, we request commenters to consider  xthe currently available alternatives to terrestrial radio and their impact on the terrestrial radio industry.  xSubscription packages of digital audio service already are available to U.S. households via cable and  xdirecttohome satellite transmissions. These services include Digital Music Express (DMX), which  xinitiated service in September 1991. DMX currently offers digital audio service to cable subscribers  xthrough a satellite feed to a cable company or directly to commercial companies via a one meter satellite  Sp#- x!antenna. p#XB yOh'-ԍ XxThis service will soon be offered to Kuband FSS residential dish owners with compatible equipment.(#ƞ DMX's basic service offers thirty channels of digital audio with no voiceovers and no  xcommercials. Those receiving directly from a satellite antenna also can choose an enhanced service"H$  +))88%"  x.offering seventyseven channels of digital audio. Another company, Music Choice, offers similar digital  xaudio services to cable customers and, through secondary vendor DirecTV, to DBS satellite system  xlowners. What, if anything, does the impact of existing national digital audio systems on terrestrial  xbroadcasting indicate about the potential impact of satellite DARS on terrestrial broadcasting? How does the added factor of mobile service proposed by satellite DARS proponents affect this analysis?  S- ` 2x16.` ` We also seek comment regarding advertising revenues that may be lost due to competition  xLfrom satellite DARS. We note national advertising presently accounts for an estimated 1718 percent of  S- xztotal radio advertising revenues and local advertising accounts for the other estimated 8283 percent. B yO( -  ?ԍXxAverage 19931994 estimates of Radio Advertising Bureau, Veronis & Suhler & Assoc. and McCannErickson, cited in Primosphere's January 1995 comments.(#  xIn their analyses, commenters should treat separately the effect on national and local advertising revenues.  xkIn addressing the question of advertising revenues, commenters should consider the following factors:  xWill a loss of listeners to satellite DARS services that may not sell advertising reduce the quantity of radio  xjadvertising offered for sale? If so, would such a reduction cause the price of advertising to change? How  xwould these factors, in turn, affect broadcast radio advertising revenues? For satellite DARS services that  S - xare based on advertising, advertising will most likely be sold on a national basis.  B yO-  ԍ XxWe seek comment on the technical and economic feasibility of regionally or locally targeted advertising on satellite DARS services. (# Commenters should  xaddress the impact of this additional competition for radio advertising dollars for small, medium, and large  xstations. Additionally, because of differences in demographics and other factors, not all advertising  xLexposures are of equal value. Commenters should consider expected satellite DARS listening patterns in  xestimating the value of advertising exposures that might be lost to terrestrial radio. For example, is  xzsatellite DARS listening likely to be concentrated in morning and evening "drive time" periods and are advertising rates higher than average during those periods?  S- ` x17.` ` We also recognize that advertising revenue losses could significantly vary among local  x"broadcasters. Therefore, we seek comment on whether, and the extent to which, local station  xcharacteristics, including, but not limited to, profitability, market share, programming format (including  xthe share of local programming), the number of households in the market, and the number of stations in  xthe market could affect a particular station's revenue loss. We specifically solicit comment on this issue with respect to terrestrial stations operating in small markets.  Sx- ` x18.` ` Because revenue losses may translate into reduced profit margins, reductions in services  xNoffered, or other operational changes, we seek comment on radio station profit margins, with data  xzdisaggregated by market size and other relevant station characteristics. We note that large numbers of  S- x\radio stations apparently operate at losses xB yO"-ԍ XxSee, e.g., National Association of Broadcasters Radio Financial Report 1992.(#ƒ and request comment on how we should utilize reported  xaccounting profitability data to assess radio station viability. In particular, we seek comment on whether  xany stations might offer less local programming or go off the air as a result of competition from satellite  xDARS service. The viability of a radio station is determined by a variety of factors, and consequently,  xLcomments should establish a credible connection between satellite DARS competition and any predicted impact on radio station viability. "   +))88!"Ԍ S- ` x19.` ` To the extent that satellite DARS would result in advertising revenue losses or other  x[adverse financial impacts for local terrestrial broadcasters, we seek comment on how such revenue losses  xwould affect the public interest. In particular, how would DARS competition affect the programming that  xlocal radio broadcasters provide? While listeners could turn to satellite DARS services for national  x>programming and advertising, we believe that even with spot beams, local news, weather, traffic, and  xpublic affairs programming could not practically be provided via satellite DARS. Would the advent of  x!satellite DARS lead to changes in local programming, including news, traffic, and weather? What  xMpercentage of terrestrial audio broadcast programming is currently devoted to local issues? Does this  xpercentage vary systematically with market size or station characteristics? Will competition from satellite  xDARS give local broadcasters an incentive to provide more local programming, or less? How profitable  xis local programming? Are the potential risks of decreased local service greater in these areas? Will  xstations with strong local programming schedules benefit from increased audiences at the expense of  xstations without such programming? In what other ways would DARS financially affect a local  xbroadcaster's ability to serve the public interest, convenience and necessity? In analyzing the effect of  xlocal broadcasters' revenue losses on the public interest, we also seek comment on the extent to which  xcompetition may spur incumbents to improve their service, thereby benefitting the public interest. We  xjseek comment on innovative measures terrestrial radio stations may take to respond to competition from  xsatellite DARS, particularly implementing digital transmission techniques in their own service offerings,  xjand the impact of these measures on terrestrial radio's ability to compete. We also seek comment on any  xpossible effects of satellite DARS on terrestrial radio not specifically mentioned herein and on local broadcasters' ability to continue to serve the public interest.  S- ` x20.` ` Given our concern about the effect of satellite DARS on local broadcasting, we seek  xcomment on appropriate ways to evaluate such effects. In the course of normal, marketdriven economic  xdevelopment some local broadcasters experience continuing losses. These broadcasters usually undergo  x/extensive reorganization, often after a change in ownership. Occasionally, they actually turn in their  xbroadcast licenses. How could we best determine if these failures reflect normal market conditions or  xwhether they reflect significant problems in the local broadcasting industry resulting from competitive satellite DARS systems?  SP-B.  Design of Service  S- ` `x21.` ` In establishing satellite DARS, our goal is to ensure that the listening public's needs are  xmet by the most efficient and responsive service possible. To this end, we discuss below possible service  x=requirements for satellite DARS. We solicit comment on these proposals. We also request comment on  xLwhether other service requirements are warranted. Commenters should explain and justify their analysis  xof each proposal, including consideration of the public interest benefits. Commenters should also indicate  xthe extent to which their service rule proposals and analysis apply in the event that satellite DARS spectrum is auctioned. x1 . Classification of Service  Sp#- ` ax22.` ` First, we seek comment on whether licensees should be able to determine their own  x/regulatory classification or whether there are reasons to justify requiring them to provide service in a  xKparticular manner. Three of the four current satellite DARS applicants propose nonbroadcast/subscription  xservices. The fourth applicant, Primosphere, proposes to operate as an advertiser supported broadcast service. "'  +))88O)"Ԍ S- ` Ax23. ` ` Historically, all domestic satellite (domsat) operators were licensed to provide services on  S- x[a common carrier basis. B yO@-  ԍXxSee Amendment to the Commissions Regulatory Policies Governing Domestic Fixed Satellites and Separate International Satellite Systems, __FCC Rcd __, FCC 95146 (released April 25, 1995). (# Shortly thereafter, domsat operators began to request authorization to provide  x[service on a noncommon carrier basis to particular customers. In response, the Commission established  xits transponder sales policy. Pursuant to this policy, the Commission relies on the analysis set forth in  S`- xNARUC I` B yO -  ԍXxNational Association of Regulatory Commissioners, 525 F. 2d 630 (1976 D.C.Cir.), cert. denied, 425 U.S.  yO-999 (1976) (NARUC I).(# which identified two criteria as determinative of whether a service may be provided on a non xcommon carrier basis: 1) whether there are reasons implicit in the nature of the service to expect an  xkindifferent holding out to the eligible user public and 2), if not, whether there is or should be any legal  x.compulsion to serve the public indifferently. In the DARS service, there does not appear to be a reason  S- xto impose common carrier status on licensees. First, under the NARUC I criteria and based on the  xexamples of applications on file, DARS providers will not be holding themselves out indifferently to serve  xthe public but instead will be providing programming of their own selection. Further, we see nothing on  xythe face of the applications or comments to suggest that it would be necessary to require that this service  S -be common carrier.aX xB yO8-  ԍXxCf. Mobile Satellite Service, 2 FCC Rcd 485 (1987) at para. 34, where the Commission determined that   because only one MSS system could be accommodated in the available spectrum, that system should be required to provide service on a nondiscriminatory basis.(#a We request comment on this tentative conclusion.  S - ` x24.` ` A broadcasting service involves the transmission of programming intended for direct  S - x/reception by the general public.M B yO-ԍxSee 47 C.F.R. 2.1.M In the context of developing service rules for DBS, a satellite based  xnational programming distribution service, the Commission has held that a service offered pursuant to  SX- xa subscription agreement using a scrambled signal is not broadcasting.nXX( B yO -  lԍXxSubscription Video, 2 FCC Rcd 1001, 1006 (1987) (licensees that limit receipt of program services to  yO-  paying subscribers are providing nonbroadcast services); aff'd sub nom National Association for Better Broadcasting v F.C.C., 849 F. 2d 665 (D.C. Cir. 1988).(#n Here, three out of four of the  xapplications on file propose services offered pursuant to a private contractual relationship with the  xsubscribing audience using a scrambled signal. Thus, it is clear that the intention of three applicants is  x]to provide nonbroadcast service within the meaning of Section 2.1 of the Commission's rules and  S- xSubscription Video.:H B yO -ԍxId.: Accordingly, a requirement that all DARS licensees operate as broadcasters appears to be unwarranted and inappropriate. We request comments on this tentative conclusion.  S@- ` x25.` ` As noted above, three of the four current applicants propose to operate in a subscription  xmode. These applicants also could accept advertising in conjunction with subscription fees or as a sole  xrevenue source. NAB has requested that satellite DARS be authorized on a "subscription only" basis,  xarguing that to do so would differentiate satellite DARS from terrestrial stations and thereby help minimize  xharm to traditional broadcasting. NAB also posited that a subscription requirement would provide satellite  xLDARS providers with the economic framework to permit delivering niche programming to specialized or"x +))88"  S- xgeographically dispersed markets.tB yOh-ԍxLetter to Chairman, FCC from President and CEO of NAB, May 3, 1995.t We request comment on the legal, policy and practical implications  x[of requiring DARS service to be provided on a subscription basis. We also request comment on whether  xadvertising should or should not be permitted if this option is chosen, but tentatively conclude that requiring subscription service should not limit providers from accepting advertisements.  S8- ` x26.` ` We could allow satellite DARS providers to tailor their services to meet the requirements  xof their targeted customers. Under this option, any regulatory classification of licensees would depend  xon their business choices. Further, once applicants are granted licenses, they would be free to tailor their  S- xDARS service offerings in response to market demand.XB yO -  ԍXxSee Comments of Primosphere at 6 stating that consumer choice would be further expanded by a mix of subscription and advertiser supported services.(# This approach is similar to that taken by the  S- x]Commission in its 1982 rules to govern DBS.B yO -  LԍXxDBS is the only precedent we have for rules governing satellite broadcasting although directtohome service in the Cband appears the same to the viewer. (# The Commission decided to avoid requiring DBS  xklicensees to operate under a specified service classification. Instead, the Commission indicated that it  xwould consider the particular services proposed by individual applicants in making any service  S -classification decisions.  B yO-  ԍXxSee Inquiry into the Development of Regulatory Policy in regard to Direct Broadcast Satellites for the    Period Following the 1982 Regional Administrative Radio Conference, 86 FCC 2d 719 (1981) (NPRM);  yOX-  /90 FCC 2d 676 (1982) (Report and Order); aff'd sub nom National Association of Broadcasters v F.C.C., 740 F. 2d 1190 (1984).(#  S -x2.` ` Public Interest Obligations  S - ` x27.` ` We seek proposals for and comments on possible public service rules for satellite DARS.  xLIn this regard, the Commission has the obligation to make licensing decisions that are consistent with the  S0- xpublic interest, convenience and necessity.G0 B yO-ԍx47 U.S.C. 307 (a).G In addition, licensees providing broadcast services are subject  xto specific public interest obligations. We seek comment on whether satellite DARS providers offering  xsubscription or nonbroadcast services should also be subject to similar public interest obligations.  xCommenters offering proposals on this issue are specifically requested to consider what public service  S- xjofferings would not necessarily be provided absent regulatory obligations. Should public service rules be  xlimited to licensees offering broadcasting services, those providing subscription services, or should they  xbe imposed on all satellite DARS licensees? With regard to nonbroadcast satellite DARS licensees, we  xyseek comment on the Commission's authority under the Communications Act to regulate licensees in this  xmanner. Commenters should also address any constitutional implications of imposing such public service  S- xLobligations in light of Daniels Cablevision, Inc. v U.S., B yO$-  ԍx835 F. Supp 1 (D.D.C. 1983), appeals pending sub nom. Time Warner Entertainment Co. L.P. v FCC, No. x935349 and consolidated cases (D.C.Cir.). where the U.S. District Court for the District of  xColumbia struck down provisions of the 1992 Cable Act requiring certain public interest obligations for  x DBS operators, and rendered other relevant decisions. We recognize that public interest obligations  xwould impose a cost on satellite DARS providers. We request commenters to estimate the cost of"P  +))88"  xproviding public interest programming. Are the estimated costs outweighed by the public interest benefits  xof more news and informational programming? Could these costs be so significant that they might potentially hamper the deployment and success of the service?  S`- ` x28.` ` We seek comment on public interest requirements that terrestrial radio broadcasters face  xand on the impact of those requirements on the current and future profitability of terrestrial radio stations.  xWe believe that this information will have predictive value in determining whether DARS providers should  xbe subject to similar obligations. For example, one of the major public interest obligations of terrestrial  x[radio broadcasters is to provide reasonable access to their facilities for use by legally qualified candidates  S- xLfor federal elective office.]B yO -ԍx47 U.S.C. 312(a); 47 C.F.R. 73.1944.] Radio broadcasters who permit use of their facilities by any legally qualified  Sp- xcandidate must also afford equal opportunities to use such facilities to all other candidates for that office.GpXB yOh -ԍx47 C.F.R. 73.1941.G  xIn addition, broadcasters are required to develop and carry out an EEO program designed to ensure that  xpotential employees are not discriminated against on the basis of race, color, religion, national origin or  S - xsex.G B yO-ԍx47 C.F.R. 73.2080.G Perhaps most importantly, broadcasters are obliged to serve the needs and interests of the members  xof their communities of license. As a means to this end, the Commission requires broadcasters to maintain  S - xlists of programs aired which address community issues.M xB yO-ԍx47 C.F.R. 73.3526(a)(9).M Commenters are asked to discuss the following:  xWhat public interest offerings would not be included by service providers in an unregulated market  x/environment? Do terrestrial radio public interest programming requirements increase profitability by providing valuable information to listeners or do they reduce profitability? x3. Ancillary Services  S- ` x29.` ` We also seek comment on whether licensees in the 2310 2360 MHz band, allocated  xLdomestically for Broadcastsatellite (sound) on a primary basis, should be permitted to offer nonDARS  xservices on an ancillary basis. If so, what limits, if any, should apply? The current satellite DARS  xapplicants propose to offer additional services to their end users which are ancillary to DARS. These  x include highspeed broadcast data or locationbased geographic information, electronic graphic/visual  x!information, voice mail, and alphanumeric messages on dedicated channels or in conjunction with  S-(multiplexed into) the channels used for digital audio.B yOH -  ԍXxSee AMRC Application at 5, DSBC Application, Section C at 9, CD Radio Application at 3536 and Primosphere Application, Appendix 1 at 20.(#  SP- ` x30.` ` Ancillary uses of allocated bands are legally permissible. For example, with regard to  S(- xDBS, we permitted temporary ancillary uses of satellite spectrum.  (` B yO(%-  ԍXxThis authority is subject to certain restrictions including compliance with technical power and transmission   0requirements that ensure home reception capability, initiation of DBS within the initial license term,   provision of DBS service on the same transponder and ancillary service does not exceed 50% each day.  yO'-See United States Satellite Broadcasting, Inc., 1 FCC Rcd. 977 (1986).(#  We seek comment on whether  xancillary uses should be permitted in this service and if so, how they should be defined, specifically in" H  +))88z"  xthe context of satellite DARS. For example, since the principal use of the spectrum capacity is for  xsatellite DARS audio programming, what percentage of the spectrum capacity could be devoted to  xancillary services? In addition, how would we monitor such a requirement, particularly in a digital  xenvironment where different service offerings may not appear to be different from a technical perspective?  xWould a requirement to certify compliance and reliance on complaints be sufficient? Would such a requirement create an unwarranted burden on licensees?  S-C. Licensing Approaches  Sp- ` x31.` ` In the Allocation Order, we adopted domestically the international frequency allocation  xof 50 MHz of spectrum for this service. To alleviate potentially difficult and lengthy coordination with  S - xLother administrations, particularly Canada, we propose to initially license a maximum of 40 MHz. B yO -ԍxSee discussion re international coordination, infra at paras 6267. We  x[now request comment on how much of this spectrum should be authorized for immediate use by DARS,  xhow much spectrum should be assigned to each licensee, and the number of competitors that should be  xjaccommodated in the available spectrum. In connection with this, we request comment on the minimum  xnumber of channels necessary to provide effective and economically viable nationwide DARS service and  xon how much spectrum is necessary to support this minimum number of channels? We note that the four  x-current satellite DARS applications propose various numbers of near CD quality channels for each system,  S- xe.g., 11, 23, 30, and 32 (16 CONUS channels and 16 additional channels in 31 spot beams). These  xxapplicants originally stated that their spectrum requirements to offer their channels were 10 MHz, 50 MHz,  x20 MHz and 25 MHz, respectively. We also note that the ATV Grand Alliance system claims to have  x=enough capacity to deliver 75 CD quality stereo channels in 6 MHz as a terrestrial service. We ask how many channels per megahertz can be delivered by satellite to mobile users.  S- ` Bx32.` ` How many service providers are necessary to provide competition in this market? To  xwhat extent would the existence of multiple DARS providers increase the likelihood that public interest  xybenefits, including low consumer costs, can be achieved? To what extent are other licensing models, such  xas those used for DBS or PCS, helpful in making decisions regarding the number of satellite DARS  xyproviders? We also seek comment on how to assign spectrum that might become available if one or more  xapplicants fail to implement their proposals. Should new applications be solicited, or should the spectrum be assigned in equal shares to the existing applicants?  S- ` ~x 33.` ` In determining the entities eligible to be licensed in this service, we have identified three  xbasic options: to license the available spectrum to the current four applicants; to license less that the total  xavailable spectrum to the four applicants and auction the remainder; or to accept new applications and  xauction all licenses. These approaches are described below and we seek comment on them and on any  xother alternatives. The first option would assign the available spectrum to the four applicants that filed  xjin response to the Commission's 1992 cutoff notice. The spectrum would be divided equally among the  xLqualified applicants. Assuming all four of the pending applications are qualified, each would be awarded  xa 12.5 MHz segment or, if we determine that the lower 10 MHz of spectrum is not available for  S"- x\assignment at this time, a 10 MHz spectrum segment. "XB yO&-ԍxSee discussion infra at paras 6267 regarding international coordination with Canadian terrestrial systems. Two of the current applicants suggested the  xavailable spectrum be divided equally among the four. We seek comment on this proposal and whether"p#   +))88%"  S- xa 10 MHz assignment would be feasible, i.e., whether a viable satellite DARS service could be provided using a 10 MHz spectrum block.  S- ` x!34.` ` We believe that this approach would recognize certain equities in favor of the current  xapplicants. It has been almost five years since the first DARS application was filed by CD Radio. Since  xthat time we have accepted CD Radio's application, accepted competing applications by establishing and  xissuing an official cutoff date notice, and allocated spectrum for DARS on a primary basis as had been  xrequested in CD Radio's petition. These actions have been fully consistent with the procedures previously  xLused in establishing other satellite services where applications are often accepted before the Commission  xallocates spectrum and establishes service rules. Moreover, the Commission has held that adherence to  Sp- xcutoff procedures promotes " 'orderliness, expedition and finality' in the licensing process". !pB yO -  ԍXxSee Mobile Satellite Service, 6 FCC Rcd. 4900, 4914 (1991). See also Radio Athens, Inc. (WATH) v FCC, 401 F.2d 398,40001 (D.C. Cir. 1968); John W. Talbott, 60 FCC 2d 511, 513 (1976).(#  It has also  SH - xfound that in some instances, reopening the cutoff to new applications would delay the proceeding.Z"H B yO-ԍxMobile Satellite Service, id.Z  xApplicants state that they have expended substantial sums of money in apparent reliance on the  xyCommission's satellite cutoff procedures including filing and other application related fees and expenses.  xjWe seek comment on the merits of these and any other equities in favor of the current applicants and on the fairness of any action that would reopen the cutoff.  SX- ` x"35.` ` On the other hand, the satellite application cutoff procedures are in contrast to the  xLpractices followed in licensing other services. For example, in the broadcast service, applications are not  x/accepted for filing and afforded cutoff protection until spectrum is allocated to the service, channels  xestablished and allotted to specific communities, and service rules are adopted. Similarly, in other recently  xestablished services such as broadband and narrowband PCS and Interactive Video Distribution Service  S- x(IVDS), we allocated spectrum and established licensing and service rules before accepting applications.# B yO-  ԍxSee, e.g., New Personal Communications Services, GEN Docket No. 90314, 8 FCC Rcd. 7700 (1993),  yO- xrecon. 9 FCC Rcd. 4957 (1994) (broadband PCS); ET Docket No. 92100, 8 FCC Rcd. 7162 (1993), recon, 9 FCC  xhRcd. 1309 (1994)( narrowband PCS); Interactive Video and Data Services, GEN Docket No. 912, 7 FCC Rcd. 1630,  yO8-recon, 7 FCC Rcd. 4923 (1992).  x[We seek comment on whether the public is better served by following the broadcast cutoff model or the  xysatellite model. In this regard, we also seek to determine answers to a number of questions related to any  xzequities of the four applicants presumably tied to reliance on continued Commission adherence to the  xLsatellite cutoff model. Specifically, what is the level of actual investment by the four applicants to date  xkand how does that investment compare to the value of the spectrum and the potential sales value of a  xDARS license in an immediate, postgrant private transfer. How would the Commission assess the value  x=of the contributions made by the current applicants in furthering the development of satellite DARS? If  xwe were to reopen the proceeding for new applicants and we receive mutually exclusive applications, is  xit possible and desirable to compensate for such value in an auction environment by, e.g., assigning appropriate bidding credits to the current applicants?  S- ` Px#36.` ` A second option would be to designate a segment of less than the full amount of spectrum  S- xthat we believe is useable at this time,$B yO'-ԍxSee discussion, infra regarding international coordination at paras 6267. and to award the remaining spectrum to other new applicants.  xThe spectrum designated for the current four applicants would still be divided equally, but the band"` ( $ +))88"  xysegments ultimately licensed to each would be less than 10 MHz, either in equal segments or in segments  x.of different amounts. Under this scenario, we would need to determine how much spectrum to keep for  xnew applicants, whether the remaining spectrum can accommodate the pending applicants, how and for  xwhat purpose to license the spectrum not assigned to the four current applicants, and how to choose an  S`- x=additional applicant or applicants for the remaining spectrum. If any of the two band segments (i.e., the  xyspectrum band for current applicants and the spectrum band for new applicants) could not accommodate  xall applicants eligible to be licensed in each, we could assign the "mutually exclusive" band segment  xthrough the auction procedures proposed herein. This approach offers a compromise between a desire to  xacknowledge the equities in favor of the four current applicants and an interest in efficient spectrum  xmanagement that auction procedures might achieve. We seek comment on all aspects of this option,  x{including the minimum spectrum block required to provide a viable satellite DARS service, and its possible implementation.  S - ` x$37.` ` A third option would be to reopen the processing window and allow additional applicants  xto file satellite DARS proposals. If this option is chosen, it is likely that additional applications will be  x[filed and that a mutually exclusive situation could result. The Commission must then determine whether  xto assign licenses through lottery, comparative hearing or competitive bidding. We discuss a framework  x0for a possible auction below. We seek comment on this option, including mechanisms such as an  xappropriate bidding credit or similar mechanism that would recognize the extent of investment by each  x[of the four current applicants to date. We also seek comment on the magnitude of the expected recovery  xfor the public of a portion of the value of this public spectrum resource made available for commercial use.  Sh- ` x%38.` ` If auctions are used under option three, we propose to divide the 50 MHz of spectrum into  S@- xLblocks of an appropriate size% @B yO-  MԍxSee discussion infra at paras 94111 re auctions. If we use an auction to assign this spectrum, all 50 MHz  xcould be auctioned because, in an auction, bidders can take account of the potential international coordination  xdifficulties that encumber the lower 10 MHz of spectrum. If the lower 10 MHz is, in fact, less well suited to providing service, bids will be lower on that block than on the rest of the spectrum. and license those spectrum blocks on a nationwide basis. Each applicant  xwould be permitted to bid successfully on several blocks of spectrum, contiguous or not. This band plan  xwould permit applicants to assemble blocks of spectrum best suited to the service that they intend to  x\provide. The current satellite DARS applicants differ significantly regarding the digital signal coding  x-rates needed to produce near compact disk (CD) quality sound. These differences translate into differences  x in the amount of spectrum required to transmit a channel of near CD quality music. Thus, while the  x-applicants have apparently agreed that they can share the 50 MHz allocated, dividing the allocation evenly  xamong them might not lead to optimal service to the public. We seek comment on whether, because  xsatellite DARS will face competition from terrestrial radio services, CD players in automobiles and homes,  xand audio services delivered as part of cable and satellite services, there could be effective competition in delivery of audio services with fewer than four satellite DARS providers.  S`- ` x&39.` ` We seek comment on an appropriate band plan for option three and on whether a spectrum  x-cap is needed. One band plan possibility is to divide the 50 MHz into 10 five MHz blocks. Alternatively,  xwe could attempt to fashion a band plan for auctions that is more consistent with the plan to divide  xspectrum evenly among the four existing applicants. We seek comment on these options as well as on  x/other alternatives. The purpose of a spectrum cap would be to ensure reasonable competition in the  x-provision of near CD quality audio services. One spectrum cap possibility is 20 MHz. Under this option,"" % +))88$"  xif we were to divide the band into 5 MHz blocks, licensees could hold up to four blocks. We seek  S-comment on this and on other spectrum cap possibilities.&B yO@-  ԍxWe also seek comment as described in paras 5759 on whether agreements between licensees to share cross polarized frequencies should count toward a spectrum cap should we adopt one.  S`- ` x'40.` ` With respect to option two, a combination of licensing the four applicants and possible  xauctions, the choice of a band plan would depend on the amount of spectrum that we would plan to  xauction. Similarly, the band plan would depend on whether all 40 MHz we expect to be initially available  xjshould be licensed initially, or if some smaller amount should be licensed first and the remainder at a later  xtime. In addressing this issue, we request that parties address how much spectrum and how many  xproviders should be licensed as discussed below. Rather than propose a specific plan, we ask commenters to address the issues of how much spectrum to assign to each licensee and how to structure the plan. D. Licensing Procedures  S - ` x(41.` ` To enable us to license applicants as expeditiously as possible, we are proposing  xalternative licensing approaches that will be consistent with the three options outlined above. First, we  xpropose service rules that will enable licensees to operate systems efficiently, avoiding harmful  xinterference to other licensees. Second, we propose additional rules and licensing qualifications specific  xto a licensing approach based on Commission approval of the four current applicants. Finally, we propose  x[auction procedures that would allow the Commission to implement such a selection method if it chooses to reopen the processing group to additional applicants. x` ` 1. Technical Rules x  S@-  |x)42. As in past satellite licensing proceedings, we propose technical requirements that reflect  S- x]the unique nature of the service proposed and that promote entry opportunities for applicants.I'  B yO-  ԍXxIn the domestic fixed-satellite service, for example, we adopted a full frequency reuse requirement for space  yO-  stations to ensure spectral efficiency when it appeared that orbital locations were limited. See, e.g.,  yOh-  Licensing Space Stations in the Domestic Fixed-Satellite Service, 101 FCC 2d 223 (1985), at paras. 11-12;  yO0-see also, United States v. Storer Broadcasting, 351 U.S. 192 (1956).(#I  xComments received throughout the allocation proceeding and in response to the filed applications,  xincluding the supplemental comments recently filed by CD Radio and DSBC, form the basis of our  xtechnical proposals. We seek comment on whether these proposals maximize spectrum and orbit resource  x\efficiency. We seek additional comment on whether these technical rules will accomplish our goal to  xOensure that satellite DARS applications can be considered and the service can be implemented expeditiously. x` `  a. Service Area  S- ` Rx*43.` ` First, we seek comment on whether we should adopt rules mandating a service area  xycoverage requirement for satellite DARS systems. Two of the four pending satellite DARS applications  xpropose service solely to the 48 contiguous states of the United States (CONUS). Two propose coverage  xof the CONUS, Alaska, Hawaii, Puerto Rico and/or the Virgin Islands. Recognizing that there are areas  xMoutside the CONUS underserved by terrestrial broadcasting, we seek comment on whether to require" ' +))88e""  xsatellite DARS systems to provide 50state coverage or 50state plus Puerto Rico/Virgin Island coverage, as we do in the fixedsatellite service. x x` `  b. Service Link Margin  S8- ` Rx+44.` ` Satellite DARS reception in any geographic area, including within the CONUS, and  x=especially to mobile end users, depends heavily on the available service link margin for a high percentage  S- xyof service availability.y(XB yOP-  ԍXxService link margin identifies the amount of excess received power available to the end user receiver in an   "ideal free-space propagation environment (where there is no signal blockage or attenuation from precipitation) to reproduce the information originally transmitted by the satellite.(#y The service link margin necessary for satellite DARS reception has been a topic  xof discussion throughout the comments on the satellite DARS proposals. Service link margin is related  S- xto satellite visibility which may be limited in some urban and suburban areas.F)XB yO -   ԍXxIncreased instances of signal blockage can be expected in suburban areas where there is heavy foliage and   in "urban canyons" where tall buildings could limit satellite visibility and cause multipath interference (from reflected signals).(#F Satellite visibility may  xalso be limited in geographic areas outside of the CONUS where low elevation angles above the horizon  xkfrom the end user to the DARS space station could lead to increased instances of signal blockage. An increase in signal blockage decreases the available service link margin of a satellite DARS system.  S - ` x,45.` ` The service link margins identified in the pending satellite DARS applications range from  S - xZapproximately 4 dB to 14 dB.* B yOP-  ԍXxNPR notes that the satellite DARS proponents do not agree on an acceptable service link margin. See NPR Comments at 3.(# Parties question whether the satellite DARS proposals provide the amount  S - xof service link margin necessary for urban and suburban environments.+ ` B yO-ԍXxAdvance Communications Corporation Comments at 3; NAB Petition to Deny Primosphere at 8.(#Ƒ Comments do not offer technical  xanalyses to demonstrate and specify the service link margin necessary for mobile reception in urban and  xsuburban environments. The satellite DARS applicants do, however, propose several techniques to solve  xthe complex problem of maintaining adequate service link margin in a mobile environment. DSBC, for  S- xexample, notes that coverage in urban canyons may be enhanced by using rake receivers.=, B yOp-  /ԍXxRake receivers can aggregate and process CDMA signals, a technique which DSBC maintains is employed  yO8-  in the cellular telephone systems now implemented by some U.S. operators. See DSBC Opposition,   ]Technical Response at 5-6. DSBC adds that it is committed to its proposed "system A", one of three  yO-  systems proposed by DSBC in their original application which uses OCDM technology. See DSBC Opposition at 20. (#= Two of the  xsatellite DARS applicants propose to employ a frequency and satellite diversity system which they contend  S-will maintain sufficient service link margin.-B yO#-  \ԍXxIn a proposed frequency and satellite diversity DARS system, identical audio programming information is   transmitted from two space stations located approximately 30 degrees apart on two frequencies that are   separated by approximately 20 MHz. It is argued that the two independent signals from the two space   stations would arrive at the user simultaneously and the receiver would select the stronger of the two signals  yO&-  to effectively provide greater service link margin. See Primosphere Reply, Engineering Statement at 5; CD Radio Reply, Technical Appendix at 1.(# "h- +))88"Ԍ S- ` x-46.` ` We propose that applicants be required to identify the service link margin for their systems  xand to demonstrate that their systems will provide that service link margin in a mobile environment, under  S- x=clear sky conditions, to the geographic areas they intend to serve.O.B yO-ԍxSee para 43 supra.O We also seek comment on whether  xa specific value should be used to define an adequate service link margin for the specified service areas in urban and suburban environments and, if so, what that value is and the analysis for it. xc. Receiver Inter-Operability and Tunability  S- ` x.47.` ` Comments on the satellite DARS applications raise the issue of whether the Commission  x[should set receiver interoperability standards for satellite DARS. Some parties contend that substantial  Sp- xbenefits would be gained if a single standard is adopted.c/pXB yOh -ԍxNAB Reply at 4; Digital Cable Radio Comments at 8.c Another party asserts that a single standard  xwould encourage consumer investment in satellite DARS equipment and create the economies of scale  S - xnecessary to make DARS receiving equipment affordable.D0 B yO-ԍxAMRC Comments at 5.D Multistandard DARS receivers almost  xMinevitably would be more expensive than single standard receivers. Parties did not address whether a  xsingle satellite DARS receiver design should be compatible with competing satellite DARS formats and/or  xterrestrial broadcasting services such as traditional AM and FM and planned digital inband, onchannel (IBOC) DARS on AM and FM frequencies.  S0- ` x/48.` ` Testing and evaluation of proposed digital audio radio technologies has been ongoing  xsince 1991. As we noted in the Allocation Order, two industry committees are considering issues relating  xto DARS technical standards. The Electronic Industry Association's Consumer Electronics Group  x(EIA/CEG) is developing standards for terrestrial and satellite DARS and the National Radio Systems  x!Committee (NRSC), sponsored jointly by EIA/CEG and NAB, is pursuing the development and  ximplementation of standards for terrestrial DARS systems to operate in the AM and/or FM broadcast  xybands. Both committees are cooperating in testing DARS technologies. Laboratory testing is expected to  xjbe completed in June or July 1995. EIA/CEG currently plans to conduct field measurements in July and  S-August 1995. A final report and recommendation is anticipated by the end of 1995.1xB yO-ԍxEx Parte Statement filed by EIA Digital Audio Radio Subcommittee on March 15, 1995.  S- ` x049.` ` One concern is that the additional cost to manufacture a receiver that is compatible with  xall competing satellite DARS and terrestrial formats may exceed the price range applicants are targeting  SP- xfor their individual satellite receivers.2 PB yO!-  MԍXxThe individual satellite receiver costs to the consumer are estimated by the applicants to range from $50   /to $300. Individual satellite receiver cost estimates are based on existing technology. The standards for   >terrestrial DARS are still under development and it is difficult to determine the added cost to the satellite receiver to include this technology.(# We are further concerned that the market penetration projected  x=by the satellite DARS applicants may not be attainable if the cost of individual satellite DARS receivers  xis too high. We request comment on the costs and benefits of adopting a single standard for satellite DARS. " 2 +))88-"Ԍ S- ` x150.` ` We also seek comment on whether individual satellite DARS receivers should be remote  xcommand tunable across the entire 23102360 MHz band. This tunability would be accomplished by  xtransmitting a signaling channel from the feeder link earth station, through the spacecraft and to the  xindividual DARS receivers, and would be necessary for satellite DARS licensees to be able to operate in  xany portion of the allocated DARS frequency band. It would also be necessary to facilitate sharing among  x\the different satellite systems according to our band sharing proposal. Applicants would therefore be  xrequired to demonstrate how they would implement the forward signalling command through the space  xstation for receivers to select and tune to any center frequency in the allocated bandwidth and demonstrate how the channelling plan seen by the end user would be affected. x  Sp- ` x251.` ` We seek comment on the issue of receiver interoperability standards for satellite and  xterrestrial DARS. Commenters should provide specific proposals that take note of the diverse modulation  xand channelling techniques of the satellite DARS applications before us and that the technology for  xterrestrial DARS is still being developed. We also encourage satellite DARS proponents to continue to  xparticipate actively in standards setting organizations such as the National Radio Systems Committee  x[(NRSC) and the Electronics Industry Association (EIA). This will facilitate design of individual satellite DARS receivers according to stateoftheart standards. xd. Data Rates  S- ` `x352.` ` The four current satellite DARS applicants propose different digital signal coding rates  xwhich range from 128 to 384 kbps to produce near compact disc (CD) quality audio. Two satellite DARS  S- xapplicants assert that CD quality audio is possible using a 128 kbps data rate.3B yO-  {ԍXxDSBC Application, Appendix I at 10. CD Radio maintains that the technical feasibility of CD quality delivery at 128 kbps has been confirmed. CD Radio Opposition to Deny and Response at 37.(# One applicant questions  xwhether a data rate of 128 kbps is sufficient to provide the high level of signal quality needed to  S@- xdifferentiate digital sound broadcasting from other sound broadcasting media.M4@ B yO-ԍxPrimosphere Comments at 11. M National Public Radio  xmaintains that if acceptable audio quality is obtained at a bit rate of 128 kbps, then proposals using higher  xybit rates make inefficient use of the spectrum. It asserts further that if the lower bit rates are unworkable  xLfor high quality audio, however, then proposals employing them do not offer significant advantages over  S-analog radio.C5B yO-ԍxNPR Comments at 3.C  SP- ` x453.` ` Moreover, some satellite DARS applicants propose to use variable data rates to transmit  S(- xMa mix of audio formats.6(@B yO"-ԍXxAMRC Application at 5, Primosphere Application, Appendix 1 at 1; DSBC Application, Appendix I at 3.(#Ɯ The bandwidth necessary to produce one CD quality channel, for example,  xwould be used to provide several high quality channels at data rates which are lower than those necessary  S-to produce CD quality.7B yOH%-  ԍXxThese high quality channels would be comparable to FM stereo or FM monaural and could be used to provide less demanding radio formats such as talk radio, sports and news.(# Use of variable data rates would promote efficient use of the spectrum.  S- ` x554.` ` We believe that DARS system licensees should be permitted to implement a mix of audio  xjformats at variable data rates. We therefore do not propose to limit the licensees to a single standard for"`( 7 +))88"  xdigital audio coding. We propose, instead, that satellite DARS applicants be required to identify which  xcoding scheme and coding rate(s) they plan to implement on their satellite DARS systems and require  xthose satellite DARS systems which intend to offer audio formats other than CD quality to be capable of  xtransmitting lower quality audio at lower data rates. An applicant that intends to implement variable data  xrates, therefore, would be required to demonstrate how its space station will deliver signals at variable  xMrates and how its individual satellite DARS receivers would be capable of adjusting the coding rate to  xprovide less than CD quality audio channel selections to the end user. We propose to refrain from  xrequiring a particular level of audio quality or other quality for satellite DARS. We seek comment on this conclusion. xe. Terrestrial Gap Fillers  S - ` x655.` ` As previously discussed, signal blockage and multipath interference can affect the service  xlink margin of a satellite DARS system. It is important for the satellite DARS systems to maintain  xMsufficient service link margin to reproduce the original information transmitted by the satellite. Some  xsatellite DARS applicants indicate that they intend to implement, as they find necessary, terrestrial  xrepeaters, or "gapfillers", in urban canyons and other areas where it may be difficult to receive DARS  xjsignals transmitted by a satellite. These terrestrial gapfillers would retransmit the information from the  xsatellite to overcome the effects of signal blockage and multipath interference. None of the satellite DARS  x<applicants, however, provided the necessary technical information in their applications to demonstrate how  xKthese complementary terrestrial repeater networks would be implemented. The proposed rules for satellite  xDARS provided in the supplemental comments include a number of provisions for complementary terrestrial networks, however.  S@- ` 3 x756.` ` We are not proposing rules to govern complementary terrestrial gapfillers at this time  xbecause we do not have sufficient information. We request comment on whether separate applications  xfor complementary terrestrial DARS authorization should be required to identify the number and locations  xof these terrestrial repeaters and also their operating frequencies. We request comment on whether, if a  x/large number of gap fillers is required, there comes a point at which the service becomes essentially a  xzterrestrial rather than a satellite service. We also request comment on other specifics of operation that  xwould have to be identified. This would include whether the gapfillers would require a bandwidth the  xsame as the satellite's and whether the gapfillers use the same frequencies as the satellite transmitters.  xIf other frequencies would be used, what would they be? How would the end user tune the receiver to  xjreceive the signal, or would this be done automatically by the receiver according to signal strength? Until  x.such information is available and applicants demonstrate how these complementary terrestrial networks  xywould be implemented in the overall satellite system design, we cannot determine if terrestrial gapfillers  xshould be permitted and what rules should govern their use. Because gapfillers are complementary to  x-the satellite service, we propose to prohibit their operation except in conjunction with an operating satellite DARS system. xf. Cross Polarized Emissions  Sp#- ` `x857.` ` Cross polarized signals are orthogonal signals as seen by the receiver.8p#B yO%-  ԍXxTwo signals which are orthogonal can occupy the same frequency. The cross polarization isolation achievable between two signals determines the practicality of two signals occupying the same bandwidth.(# This technique  xis used extensively in the fixed-satellite service because it facilitates reuse of frequencies to accommodate  xmultiple signals. It is proposed by the two parties filing Supplemental Comments that each licensee with" % 8 +))88&"  xjan operational system may employ cross polarization within its frequency assignment and may transmit  xcross polarized signals in another licensee's frequency assignment under mutual agreement with that licensee.  S`- ` Qx958.` ` Parties in this proceeding, however, disagree on the feasibility of cross polarization for  xLmultiple entry in a mobile environment. CD Radio maintains that sufficient crosspolarization isolation  S- x?can be attained to permit use of cross polarization as a service enhancement for satellite DARS.9XB yOx-  [ԍXxCD Radio Response, Technical Response at 12. CD Radio notes that its antenna manufacturer states a 24.8   dB cross polarization isolation level. CD Radio maintains further that an occasional reflection causing the cross polarization isolation to fall from 20 dB to 9 dB causes only a 0.5 dB reduction in Eb/No.(#Ɛ  xLHowever, AMRC contends that cross-polarization will not be effective for transmission to mobile users  xsince mobile receivers typically will not be able to discriminate cross-polarized signals after the  S-polarization reversal effects of multipath reflections.:B yO -  ԍXxAMRC Reply Comments, Technical Appendix at 4. AMRC maintains that in a shadowing and multipath    environment, crosspolar isolation levels can be expected to be only 1112 dB which is significantly less   mthan the traditionally accepted allowable limit of 20 dB for intersystem interference. See AMRC  yOx-  Application at 8 citing Propagation Effects for Land Mobile Satellite Systems: Overview of Experimental  yO@-and Modeling Results, Goldhirsh and Vogel, NASA Reference Publication 1274.(#ƈ  SH - ` x:59.` ` The record is insufficient for us to analyze the benefits of potential capacity increases, if  xany, that may result from use of cross-polarized transmissions. It is not clear whether optimum cross x/polarization isolation would be available to allow use of this technique for multiple entry in a mobile  xenvironment. However, licensees may be able to use this technique as a means of increasing system  S - xcapacity. ;  B yO-  ԍXxWe note that two of the pending applicants propose a frequency diversity system. If the available   mbandwidth is equally divided and licensed to the four pending satellite DARS applicants, it would be   necessary for the two licensees implementing a frequency diversity system to reach mutual agreement with other satellite DARS licensees to operate on crosspolarized frequencies in those licensees' band segments.(#  We therefore propose that satellite DARS licensees, pursuant to mutual agreement with other  xLsatellite DARS licensees, may transmit on cross polarized frequencies in frequency assignments of other  SX- xlicensees.<X B yOx-ԍXxSee proposed section 25.214, Technical requirements for space stations in the digital audio radio service.(#Ʃ We seek comment on whether any mutual agreements to share cross polarized frequencies  S0- xshould be subject to a spectrum cap should one be adopted.`=0B yO-ԍxSee discussion, supra at para 39. ` Licensees who come to mutual agreement  xon the use of crosspolarized transmissions would be required to notify the Commission and demonstrate  xthat crosspolarization sharing is feasible under shadowing and multipath conditions. The parties who  xNachieve mutual agreement would also be required to apply to the Commission for approval of the agreement. Approval would be conditioned on the outcome of coordination with other administrations. xg. Interservice Sharing  S- ` x;60.` ` The issues related to interservice sharing and, specifically, international coordination, are  xrelevant regardless of the licensing option the Commission chooses to adopt, including an auction of  x<spectrum. Satellite DARS licensees are required to coordinate with other Administrations over that portion  x[of the 2310 2360 MHz band they are exclusively licensed to operate. Licensees may also reach mutual"x= +))88"  xagreements with other licensees to maximize efficient use of the spectrum. Licensees would be required  xLto submit their agreement to the Commission for authorization and would be required to coordinate their  x.exclusive frequency assignments. We seek comment on any of the proposed requirements which follow  xand any additional requirements that would be necessary to facilitate international coordination in the most efficient manner, under any licensing approach.  S-x` `  i.  Domestic  S- ` x<61.` ` The Commission noted in the Allocation Order that by allocating the 2310 2360 MHz  xband to satellite DARS, it would be necessary to accommodate aeronautical telemetry services now  xoperating in the 2310 2390 MHz band in the upper portion of the band from 2360 2390 MHz. The  SH - xaeronautical telemetry community supported this reaccommodation.b>H B yO -ԍXxAllocation Order, supra n. 1 at 13.(#b Footnote US328 was therefore  xadded to Section 2.106 of our rules which allocated satellite DARS in the 2310 2360 MHz band on a  xprimary basis. Continued use of the 23102360 MHz band by aeronautical telemetry and radiolocation  S - xusers will be on a secondary basis only.l?x XB yO-  ԍXxFootnote US328 states "In the band 2310 2360 MHz, the mobile and radiolocation services are allocated   >on a primary basis until January 1, 1997 or until a broadcastingsatellite (sound) service has been brought   Ninto use in such a manner as to affect or be affected by the mobile and radiolocation services in those   kservice areas, whichever is later. The broadcastingsatellite (sound) service during implementation should   also take cognizance of the expendable and reusable launch vehicle frequencies 2312.5, 2332.5, and 2352.5  yO-  MHz, to minimize the impact on this mobile service use to the extent possible." See Report and Order, GEN Docket No. 90357, Released January 18, 1995, at 18.(#l There is no need, therefore, to develop specific rules or  xcoordination provisions for interservice sharing between satellite DARS and existing users of the 2310 2360 MHz band in the U.S. x` `  ii. International  S- ` Bx=62.` ` Both Canada and Mexico are allocated the 1452 1492 MHz frequency band (L-band)  x.for satellite and/or terrestrial DARS. Since U.S. satellite DARS systems will operate in the 2310 2360  x.MHz frequency band (Sband), coordination between U.S. satellite DARS and satellite and/or terrestrial  x[DARS systems of adjacent countries is not necessary. Canada does, as we describe below, operate fixed  xjterrestrial pointtopoint microwave and mobile aeronautical telemetry systems in the 2310 2360 MHz  xband and the U.S. satellite DARS systems will be required to coordinate with these systems. We also note  xthat the U.S. government uses the 14521492 MHz band extensively for mobile aeronautical telemetry  xjoperations and coordination of Canadian satellite and/or terrestrial DARS could be extremely difficult for  xLU.S. government systems. This difficult coordination at 14521492 MHz between Canadian DARS and  xU.S. government systems could impact the coordination of U.S. satellite DARS systems with Canadian systems at 23102360 MHz.  S- ` x>63.` ` CD Radio conducted an independent study which analyzes the coordination of U.S.  S- xsatellite DARS systems with Canadian terrestrial systems in Sband and submitted it to the Commission.@B yO&-  ԍXxLetter to Chief, Satellite Radio Branch regarding the Coordination of 23102360 MHz with Canada (Coordination Study), dated February 14, 1994.(#  xNThis study identifies that the 23102350 MHz band is allocated, in Canada, for Fixed Service and" @ +))88"  S- xjMultipoint Communications Systems. The 2350 2360 MHz band is allocated for Mobile Telemetry.IAB yOh-ԍxCoordination Study at 3.I  xThe majority of Canadian fixed terrestrial systems operate in the lower 10 MHz of the 2310 2360 MHz  S- xband.hBXXB yO-  jԍXxAccording to the Coordination Study, 186 of 213 Canadian terrestrial stations operate between 2310 2320   MHz. The remaining terrestrial networks are distributed relatively evenly across the 2320 2360 MHz  yO8-band. See Coordination Study at 14.(#h It is also noted that 11 aeronautical telemetry base stations operate in the 2350 2360 MHz band.  xMThe majority of these base stations are located at high latitudes, however, where reduced power flux xzdensity, the measured power of the satellite transmission in a specified area and bandwidth, would be  S8-received at the Earth's surface from the U.S. DARS satellite.C8xB yOP -  ԍXxCoordination Study at 7. We note, however, that the Coordination Study is based on CD Radio's operating   kparameters and design. CD Radio does not propose to serve high latitude areas, such as Alaska, where pfd   /levels at the Earth's surface as high as those necessary to provide satellite DARS to the CONUS would be    required. CD Radio's design therefore allows for a reduced pfd level at the Earth's surface in high latitude areas and the potential for harmful interference to Canadian terrestrial systems would be minimized.(#Ə  S- ` `x?64.` ` CD Radio also argues that coordination of satellite DARS systems would be facilitated  xif all systems were required to meet a power fluxdensity (pfd) level at the Earth's surface of 139  S- x>dB(W/m2/4kHz). It maintains further that the failure to meet this limit by any of the satellite DARS  xoperators would lead to delays in service initiation by all licensees. DSBC disagrees with CD Radio  x[regarding its proposal to require pfd limits on satellite DARS downlink transmissions. It adds that there  xjis no pfd limit in the international Radio Regulations or the Commission's Rules for the 23102360 MHz band.  S - ` x@65.` ` DSBC is correct that there is no pfd limit or threshold level to trigger coordination  x\specified in the international Radio Regulations or in the Commission's Rules. We do not propose to  xrequire limits here. Further, our band sharing proposal could allow coordination of U.S. satellite DARS  xsystems to proceed independently if necessary. It is therefore not likely that one satellite DARS operator  xwould delay the coordination and implementation of other satellite DARS systems in the event the pfd  S- xzat the Earth's surface is greater than 139 dB(W/m2/4kHz) for each system. Applicants are reminded,  x\however, that they are required to identify in their satellite DARS system applications the pfd at the Earth's surface from their spacecraft according to Section 25.114 (c)(11) of the Commission's Rules.  S@- ` xA66.` ` To alleviate the potentially difficult and lengthy coordination with other administrations,  xespecially Canada, we propose to consider only spectrum above 2320 MHz for initial U.S. satellite DARS  S- xsystems unless we decide to auction this spectrum.DX( B yO!-  MԍXxSee discussion supra at paras 94111. We note that CD Radio also suggests the potential for interference   to a large majority of Canadian terrestrial systems could be avoided if the lower portion of the 2310 2360  yOH#-MHz band is not implemented. See Coordination Study at 4.(#Ɛ We believe our proposal will equitably distribute the  xLallocated satellite DARS spectrum. We further note that the Supplemental Comments propose that the  xfirst satellite DARS licensee(s) assigned spectrum would be authorized use of the uppermost available  xfrequency assignment. It appears from the Coordination Study and the Supplemental Comments filed that  xthe Canadian aeronautical base stations located in the upper portion of the 2310 2360 MHz band could  xbe less difficult to coordinate than the fixed terrestrial stations located in the lower portion of the band. We request specific comment on whether our conclusions are correct. "H D +))88z"Ԍ S- ` ԙxB67.` ` Our proposal is to require that each satellite DARS licensee coordinate with other  xAdministrations over that portion of the 2310 2360 MHz band they are exclusively licensed to operate.  xSince we propose to allow satellite DARS operators under mutual agreement with other licensees to  xjtransmit on cross polarized frequencies, we propose that licensees who come to mutual agreement apply  x-to the Commission for approval of the agreement before coordination is initiated with other administrations  xby the licensee of the exclusive frequency assignment. The coordination process would begin after the  x.systems' pertinent information is provided to the Commission for the advance publication, coordination  x[and notification of frequency assignments pursuant to the international Radio Regulations as required by  xSection 25.111(b) of our Rules. We request comment on whether these proposals would require change if the proceeding is reopened and spectrum is auctioned. x` `  iii. Adjacent Band Services  S - ` xC68.` ` Space Research has a primary allocation in Region 2 for deep space operations in the  x2290-2300 MHz band. This radiocommunication service uses spacecraft or other objects located two  xmillion kilometers or more from Earth for scientific or technological research purposes. As AMRC  x\maintains, it is important that this service remain protected from emissions that may be produced by operating satellite DARS transponders in the 23102360 MHz band.  S- ` xD69.` ` Satellite DARS licensees must suppress emissions outside of the 23102360 MHz band  xto an acceptable level according to Section 25.202(f) of our rules. Techniques such as spectral shaping,  S- xMcoding, offset quadraphase modulation and filtering, we believe, will minimize these emissions.FEXB yO -  LԍXxCD Radio contends that by employing these techniques, they can operate their transponders and achieve the   outofband emission requirements specified by Section 25.202(f) of our rules. CD Radio Motion to Accept Additional Pleading at 3.(#F We  xMsolicit specific comment, however, on the levels of outofband emissions from satellite DARS space  xZstations necessary to protect deep space operations and other radiocommunication services operating below  xthe 23102360 MHz band and U.S. aeronautical telemetry systems which are to operate in the 23602390 MHz band.  S- x` ` h. Feeder Links  Sx- ` 3xE70.` ` In addition to the service links from the space station to the mobile, portable and fixed  xDARS receivers, one, or possibly more, feeder uplink earth stations in each satellite DARS system are  xrequired to transmit the audio programming information to be received by the end user. The feeder link  xportion of the satellite DARS network is essential to deliver service to the end user and ample contiguous spectrum is necessary to implement a viable satellite DARS service.  S- ` oxF71.` ` We do not propose a separate allocation of spectrum specifically for DARS feeder link  xuse, however. Satellite DARS feeder link earth stations will operate at fixed locations and therefore are  xto be operated within fixedsatellite service (FSS) allocations. We propose not to permit, for DARS feeder  xlinks, use of the conventional FSS 4/6 GHz (Cband) and 12/14 GHz (Kuband) frequency bands already  S - xused for U.S. fixedsatellite services.F  B yOp&-  ԍXxThe FSS frequency bands 37004200 MHz / 59256425 MHz (Cband) and 11.712.2 GHz / 14.014.5 GHz   ](Kuband) are heavily used for domestic and separate international system FSS operations and are not   available for satellite DARS feeder link operations. As a matter of licensing policy, we determined that   MSS feeder link and similarly RDSS feeder links, should be at frequency bands other than those already"(E +))88("  yO-used by domestic fixed satellites. See Mobile Satellite Service, 4 FCC Rcd. 604, 6050 (1989).(#Ʒ We do not believe that satellite DARS feeder links operating in" XF +))88V""  xthe conventional Cband and Kuband FSS frequencies at orbital locations between 60 to 145 degrees west  xlongitude would be an efficient use of the geostationary orbit and FSS spectrum. The DARS space  xstations do not require the entire 500 MHz of spectrum allocated to the FSS in these conventional bands.  x/Use of these frequency bands for satellite DARS feeder links would therefore preclude an FSS space  xstation from using those particular orbital locations and spectrum for conventional FSS services and inhibit the fungibility of these orbit locations for future domestic FSS assignments.  S- ` PxG72.` ` The satellite DARS applicants propose feeder link operations in FSS bands other than the  S- xkconventional 4/6 and 12/14 GHz bandsGXB yO -  \ԍXxPrimosphere proposes use of 50 MHz in the 70257075 MHz frequency band, AMRC proposes use of 10   MHz in the 65306545 MHz frequency band, DSBC proposes use of 355 MHz in the 65006855 MHz   frequency band and CD Radio proposes use of 20 MHz in the 7035 7055 MHz band. Primosphere   .Application, Appendix 1 at 2, AMRC application at 12, DSBC application, Appendix I at 34, and CD Radio Application at 23.(# and comments were received on these proposals. Broadcast  xauxiliary users at 7 GHz generally agree that the portions of the satellite DARS applications which pertain  Sp- xto feeder link operations in the 7 GHz band should be denied.aHpB yO-ԍxComments of Society of Broadcast Engineers at 3.a They contend that the broadcast auxiliary  x[bands are heavily used for electronic news gathering, intercity relays and studiototransmitter links and  S - x=that use of the 7 GHz band for satellite DARS feeder link operations would not be feasible.I B yOX-ԍXxAssociation for Maximum Television at 2, NPR Further Comments at 8; SBE Informal Objections at 2.(#ƚ There has  xbeen no indication from the satellite DARS applicants which propose to use the 7 GHz band for feeder  xlinks whether mobile Electronic News Gathering (ENG) equipment would cause interference to satellite receivers. We request comment on this matter.  SX- ` xH73.` ` We note, however, that satellite DARS feeder link earth stations would undoubtedly  xemploy highly directive antennas at high elevation angles. It is likely that satellite DARS feeder links in  xthe 70257075 MHz band could be coordinated to operate compatibly with fixed pointtopoint terrestrial  xTV broadcast auxiliary microwave stations. We also recognize that the mobile nature of ENG operations  xin the 7 GHz band could make coordination difficult in areas where ENG is heavily used. We therefore  xbelieve that in those markets where TV broadcast auxiliary stations are fixed links and light ENG use is  xpresently conducted at 7 GHz, a carefully engineered and coordinated satellite DARS uplink may well be able to coexist with pointtopoint terrestrial TV broadcast auxiliary microwave stations.  S- ` pxI74.` ` We propose not to delay the licensing and implementation of the space segment for  xsatellite DARS. We are encouraged that sufficient noncongested FSS frequency bands will be available  xfor use for satellite DARS feeder link operations. We also recognize that, in light of our proposed band  xsharing plan, feeder link requirements for each satellite DARS system may change. To this end, we are  xplacing the satellite DARS applicants on notice that the bands which have been indicated in their initial  xsatellite DARS applications for feeder link operations may not be available and they may consequently  x[be required to modify their system designs. Applicants should identify in their amended satellite DARS  xjapplications which noncongested FSS frequency band it proposes for feeder link operations, and should  xidentify alternative noncongested FSS frequency bands that would be suitable for its feeder link operations. "`( I +))88"Ԍ S- ` `xJ75.` ` In addition, we will act on the space station and earth station filings for satellite DARS  x!separately. Choice of earth station sites and frequencies is typically provided in an earth station  S- xapplication as well as analyses to determine the impact on existing users of the frequency bands.JB yO-ԍXxSee Section 25.130 of the Commission's Rules, Filing requirements for transmitting earth stations.(#ơ  xSatellite DARS applicants that propose to use the 7 GHz band for feeder link operations, for example,  xwould be required in their earth station filing to demonstrate that no mutually unacceptable interference  S8- xexists with broadcast auxiliary and mobile ENG users in the band.K8XB yO0-  ԍXxSatellite DARS licensees shall take whatever steps necessary to avoid mutual interference with broadcast auxiliary and mobile ENG users in the 7 GHz band according to Section 74.604 of the Commission's Rules.(# Satellite DARS applicants are also  xcautioned that feeder link operations for nongeostationary MSS networks are proposed in noncongested  S- xLFSS frequency bands.L B yO8 -  =ԍXxConsiderable work, both domestic and international, has been completed to determine the feasibility of non   geostationary MSS feeder link operations using reverse band working in certain FSS bands below 17 GHz.   FCC proposals for WRC95 reflect the outcome of ITURS Task Groups 4/5 and 8/3 which studied this  yO-issue. See Second Notice of Inquiry, ___ FCC Rcd ____, 60 Fed. Reg. 8894 (Feb. 16, 1995).(# In this regard we invite comment on the feasibility of satellite DARS feeder link  xnetworks and nongeostationary MSS feeder link networks operating compatibly in the same frequency bands. x2. Rules Applicable to a Licensing Approach Based on the Four Current Applicants  S - ` xK76.` ` In addition to the generic technical proposals that would apply to any satellite DARS  xyapplicant, we also propose several specific rules and licensee qualifications that will allow prompt action on the four current applications if the Commission chooses not to reopen the processing group. xa. Intra Service Sharing x  S- ` _xL77.` ` The four pending satellite DARS applications, as originally filed, have combined spectrum  xrequirements which exceed the 50 MHz of spectrum allocated for satellite DARS. The four applicants  xalso propose system designs which differ in channelling plans, modulation schemes, and multiple entry  S- x.techniques.8MB yO-  >ԍXxCD Radio, Primosphere and AMRC, for example, propose to time division multiplex a number of signals   |into a composite channel but DSBC proposes use of orthogonal code division multiplexing (spread    spectrum). CD Radio, Primosphere, and DSBC propose use of cross polarization to provide for multiple   ksystems in the 50 MHz of allocated spectrum. AMRC, however, asserts that use of cross polarization for multiple entry would not be feasible.(#8 The applicants have made efforts, however, to demonstrate that their applications are not  x-mutually exclusive and, as a result, two of the applicants have submitted proposed rules for satellite DARS  xintraservice sharing. On November 9, 1994, CD Radio filed supplemental comments including, among  x.other proposals, a plan that would permit each of the four applicants to share the available spectrum on  S- xan equal basis.NH B yO$-ԍXxThese Supplemental Comments are being considered as a petition for rulemaking. See RM 8610.(#ƛ CD Radio filed the proposed rules on behalf of itself but stated that they were a result  xzof negotiations among the parties. It stated that no final agreement was reached on all of the rules but  xthat, to CD Radio's knowledge, no controversy among the applicants exists over spectrum sharing.  xKIndeed, DSBC replied to CD Radio's supplemental comments and submitted its own proposals, stating that  xany differences between its proposals and CD Radio's proposals can be harmonized and should not block"PN +))88"  S- xithe development of an NPRM._OXB yOh-  ԍXxDSBC suggested somewhat different rules for financial qualifications, the authorization duration and time   .of frequency assignments, and authorization of interim frequency assignments but it did propose a spectrum sharing plan consistent with CD Radio's plan. (#_ The Supplemental Comments propose a band segment approach for intra xzservice sharing to avoid imposing complex sharing arrangements on satellite DARS licensees that may  xresult from the wide diversity in satellite DARS system designs. We propose to use this approach as a  x/basis for our proposed rules and intraservice sharing arrangement if we determine to license the four  xicurrent applicants and do not accept additional applications. Applicants would be permitted to amend their applications to conform with the sharing approach, if adopted.  S- ` xM78.` ` Based on preliminary technical analysis, we believe that the four pending applicants should  xbe able to operate over 40 MHz of the available spectrum, with each assigned to a minimum spectrum  xblock of 10 MHz. We base this on the coding schemes and channeling plans presented in the originally  x-filed applications. It is also based on the provision in our proposed rules that licensees would be permitted  x\to operate on the cross polarized frequencies of other licensees' assignments under mutual agreement.  xThis approach would accommodate the pending applicants, even assuming that the lower 10 MHz of the  xallocated DARS spectrum is not readily available for DARS licensing because of interference constraints.  xWe request comment on whether our tentative conclusion is correct that exclusive assignment of 10 MHz of spectrum is sufficient for each proposed satellite DARS system. x` `  i. Band Segments  S- ` AxN79.` ` The Supplemental Comments identify the term "usable bandwidth". Both DSBC and CD  xRadio define the term as that portion of the 23102360 MHz band that is usable by satellite DARS  xlicensees. DSBC more specifically defines the usable bandwidth as the 23102360 MHz band, and  xMindicates that this may be changed by the Commission or by mutual agreement of the satellite DARS  xlicensees. Nevertheless, it was proposed that the usable bandwidth be divided into four frequency  x<assignments and that these frequency assignments be distributed equally among the four pending applicants  x.from the initial processing group. Should any system license be cancelled, it is proposed that the usable bandwidth be redivided, prorata, among the remaining licensees.  S- ` xO80.` ` We propose a similar band sharing approach but based specifically on 10 MHz band  xassignments. As discussed elsewhere in this NPRM in further detail, due to the number of Canadian fixed  xpointtopoint microwave facilities in the lower 10 MHz (23102320 MHz) portion of the band, a satellite  xDARS licensee assigned these frequencies would experience relatively greater coordination difficulties with  S- x[Canadian terrestrial services than those licensees assigned to the upper 40 MHz (23202360 MHz).PB yO -ԍXxSee discussion on interservice sharing with Canadian terrestrial systems, supra at paras 6267.(#ƫ It  xtherefore appears that the proposals submitted in the Supplemental Comments could lead to an inequitable  x.coordination burden for the licensee assigned the lower 10 MHz of the DARS band. If we decide not to  xaccept additional applications, we propose to divide the 2310-2360 MHz band into five equal 10 MHz  xbands and to assign each satellite DARS licensee a minimum of 10 MHz of exclusive spectrum located  x{in one of the four 10 MHz bands above 2320 MHz. The term "usable bandwidth" defined by the  xapplicants would therefore be considered as the 23202360 MHz band in our proposal. We also propose  xto allow licensees to use the channelling plans, modulation schemes, and multiple entry techniques of their  xchoice in their exclusive frequency assignments as proposed in the Supplemental Comments. In addition,"!xP +))88F#"  S- xjsubject to any applicable legal restrictions,XQB yOh-ԍXxE.g., 47 U.S.C.  310.(#X we propose that licensees be permitted to acquire additional spectrum from other licensees. x  S- ` xP81.` ` We request comment on whether this sharing arrangement furthers the public interest in  xefficient use of spectrum and in maximizing competition in this market. Commenters addressing this issue  xshould also indicate whether this proposed 10 MHz band segment approach would render the current  xapplications mutually exclusive by limiting the amount of spectrum assigned to such an extent that viable  x>service is not possible and all four applicants can not be accommodated. We propose to auction any  xkadditional spectrum that becomes available if any of the four current applicants fails to implement its  xMproposal and we receive mutually exclusive applications for that spectrum. Also, if the Commission  xultimately adopts the 10 MHz band segment approach, what uses for the lower 10 MHz of spectrum would  xbe appropriate and how should it be licensed? Could a similar band segment approach be implemented if the Commission chose to assign only part of the usable bandwidth such as a total of 25 MHz?  S - ` SxQ82.` ` We request overall comment on our band sharing proposal for licensing the four  x?applicants, including whether the four applicants can be accommodated in 40 MHz, and on other  xalternative spectrum sharing approaches that could accommodate multiple entry in this service. If the  xrecord in response to this Notice clearly reveals that assignment of the lower 10 MHz would not result  xin an inequitable coordination burden among the licensees, we would reconsider defining the usable  xbandwidth as 23102360 MHz and the four 12.5 MHz band segment approach. We also request comment  xLon how our band sharing proposal would impact individual satellite DARS receiver designs including the  x=incorporation of the command signalling channels necessary for the satellite DARS operator to remotely tune the receivers to operate at various center frequencies.  S@- ` xR83.` ` Specific comment is also sought on how our band sharing approach would affect the  xlocation of telemetry beacons. The Supplemental comments suggest that each system operator reduce its  xbandwidth occupancy by 0.1 MHz to create two 0.2 MHz assignments adjacent to the edge of the usable  xbandwidth for location of telemetry beacons. In light of our proposed band sharing plan, however, we  x/request comment on how location of telemetry beacons would be impacted if unlicensed spectrum is  x[assigned to other licensees and a center frequency shift is necessary for each satellite DARS system. An  xalternative might be to locate all telemetry beacons at the lower edge of the 2310 2360 MHz band.  xThough this would put less of a constraint on the use of the upper 40 MHz of spectrum, an added  xconstraint would be placed on any future licensee of the lower 10 MHz band. We request comment on this alternative and the appropriate location for telemetry beacons. x` `  ii. Frequency Assignments  S8- ` %xS84.` ` CD Radio proposes in its Supplemental Comments that, unless the licensees agree  xotherwise, each licensee shall be assigned the highest frequency assignment available on the date of launch  x=of its first spacecraft. It further proposes that each licensee must notify the Commission of the specific  xfrequency assignment it is using at the same time it certifies to the Commission it has met the milestone  xLand launched its first spacecraft. DSBC asserts that the frequency assignment should be assigned on the date the applicant is authorized to commence construction.  S %- ` xT85.` ` The coordination process with Canada and Mexico will need to begin long before the first  xsatellite DARS licensee certifies to the Commission that it has met the milestone requiring launch of its"%XQ +))88'"  S- xspacecraft.RB yOh-  zԍ XxAlthough we specifically mention coordination with Canada and Mexico, we may need to coordinate with other countries depending on the final configurations of the satellite systems.(# CD Radio's approach would therefore require satellite DARS licensees to begin coordination  x.with Canada across the entire 2310 2360 MHz band since each licensee would not know in the interim  xwhich exclusive frequency assignment it must coordinate. This approach, we believe, would be overly  xburdensome for both the Commission and the licensees. We propose to authorize specific satellite DARS  xfrequency assignments upon grant of satellite DARS licenses to begin construction. We propose to assign  xfrequencies on the basis that, pursuant to our band sharing plan, each assignment is equally suitable for  xLservice. This approach would expedite the U.S./Canada coordination process and the implementation of U.S. satellite DARS systems. We request comment on our proposal to assign frequencies. x` `  iii. Interim Frequency Assignments  SH - ` nxU86.` ` CD Radio proposes in its Supplemental Comments that a satellite DARS system operator  xbe permitted temporarily to occupy frequency assignments other than its own provided its transmissions  xcan be reconfigured to use only its own frequency assignment upon launch of the satellite operated by the  x=licensee assigned to the frequency. DSBC objects to this proposal in its reply comments. It asserts that  xwhile temporary use by the first operator(s) might avoid having frequencies lie fallow for a short time,  xprescribing temporary use may be disruptive and contrary to the public interest because the temporary  xoperator could be faced with reducing its services, discontinuing its service to its customers, or seeking  xto utilize frequencies that are rightfully assigned to another licensee once the temporary spectrum is no  S-longer available for use.jS B yO-ԍXxDSBC Reply to Supplemental Comments at 4, fn. 9. (#j  S- ` xV87.` ` It is unclear whether an interim assignment would be necessary to implement a satellite  xDARS system. We expect that the coordination of the individual satellite DARS licensed systems will  xproceed simultaneously according to our proposed milestone requirements and spectrum would not lie  x fallow during the coordination process. Also, in the event that one or more licensed systems are not  x[implemented, and remaining spectrum is assigned to other licensees, we agree with DSBC that an interim  x.assignment may be disruptive and contrary to public interest because of possible service interruption or  xreduction. We therefore propose not to authorize interim frequency assignments to satellite DARS licensees but request comment on this issue. xb. Financial Qualifications/Milestone Requirements  S- ` ~xW88.` ` The Commission has historically imposed financial qualifications on applicants seeking  x>to provide satellite based services. The huge costs involved in implementing satellite proposals have  xproven to be a significant obstacle to new entrants and have often led to unsuccessful and prolonged  xattempts to obtain financing while service to the public is delayed and other qualified applicants are  S`-precluded from participating.T `B yO$-   ԍXxSee, e.g., National Exchange Satellite, Inc., 7 FCC Rcd 1990, (Com. Car. Bur. 1992), recon. 8 FCC Rcd   3 (1993); Rainbow Satellite Inc., Mimeo No. 2584 (Com. Car. Bur., released Feb. 14, 1985); United States   NSatellite Systems, Inc., Mimeo No. 2583 ( Com. Car. Bur., released Feb. 14, 1985) (domestic satellite licenses declared null and void for failure to begin implementation as required by license). (# "8T +))88 "Ԍ S- ` 3xX89.` ` Two DARS applicants suggested financial qualification rules. CD Radio suggests that  x>applicants be required to demonstrate their financial ability to proceed with construction, launch and  xoperation of their proposed systems in accordance with an established schedule of milestones. While CD  xRadio suggests that each applicant submit the same financial information as that required from domestic  xfixedsatellite applicants, it is not clear at what point in the construction process that CD Radio intends  xto require satellite DARS licensees to obtain full financing. DSBC urges the Commission to adopt a  xjfinancial qualification standard based on due diligence requirements identical to the one used in the Direct  S- xBroadcast Service.VUB yOP-ԍ x See 47 C.F.R.  100.19(b).V DSBC argues that such a relaxed standard is appropriate because DARS is a new hightechnology, high risk, capital intensive venture where it may be difficult to attract financial support.  Sp- ` xY90.` ` Although we appreciate DBSC's concerns about the difficulty in obtaining financing for  xnew, unproven ventures, our experience in licensing satellite system applicants that have not been able to  xzraise sufficient funds to implement their systems makes us wary of adopting a standard that does not  xensure that the public will be offered service in a timely fashion. We also believe that DARS applicants  xshould not be held to the stricter standard imposed on applicants in the domestic fixedsatellite service.  x.Because it appears that all pending applications can be granted if the Commission chooses to license the  xcurrent applicants and not reopen the processing group, and that one licensee's pursuit of financial  xresources will not preclude another applicant from implementing its system, we see no need to require  x>applicants to demonstrate full funding before we will award licenses. Rather, we propose to adopt a  xLstandard that will give applicants an additional year to arrange financing but will nonetheless assure that  S- xlimited frequencies do not remain unused.VXB yO-ԍxSee e.g. Radiodetermination Satellite Service, 104 F.C.C. 2d 650 (1986) at paras 2225; 47 CFR 25.141. Pursuant to this standard, applicants may demonstrate  xfinancial qualifications in stages. In order to receive a license, we propose to require applicants to provide  xevidence of financial capability, through a balance sheet showing the funding, a commitment from a  xcorporate parent if the applicant is relying on the parent for the funds, or showing estimated income or revenues anticipated from proposed operations.  S- ` xZ91.` ` In addition, we propose to require each satellite DARS licensee to show that, within one  xyear of grant and in conjunction with its showing that it has commenced construction of its first satellite,  xit has firmly committed resources sufficient to cover the cost of construction, launch and one year's  xoperation of its proposed system. This second demonstration is to be made in the same manner as that  x=required of domestic fixedsatellite licensees. This will provide DARS licensees with a year to complete  xfinancing arrangements once they have a license in hand. In addition, the public interest will be served by bringing DARS service to consumers in a timely manner.  S- ` x[92.` ` In addition to financial qualifications, strict adherence to milestones will assure that  xLlicensees are proceeding expeditiously with their plans and that scarce spectrum resources do not remain  xunused. Applicants filing supplemental comments, CD Radio and DSBC, suggest that licensees be  xrequired to begin construction of the first satellite within one year of license grant, begin construction of  x[the second satellite, if applied for, within two years and have at least one satellite in operation within six  xyears of grant. We are concerned that the final operational milestone of six years suggested by the  xapplicants will not provide the Commission with sufficient control over the prompt implementation of  xsatellite DARS systems. After a contract has been signed, the typical time required to complete  xconstruction of a space station is three years. Thus, if a licensee is actively pursuing its plans, its first  xsatellite should be ready to launch within four years of license grant. Therefore, in addition to requiring"H$V +))88%"  xthat licensees begin construction of their first satellite within one year, we propose a rule requiring launch  xand operation of the first satellite within four years of license grant and full operation of an entire satellite  xysystem comprised of more than one satellite within six years of grant. Such a schedule, together with the  xfinancial showing proposed, will allow careful monitoring of licensees' progress. We request comment  xon whether this tighter milestone schedule is appropriate. DARS licenses will be conditioned on meeting  x/these milestones, licensees will be required to notify the Commission when they have met them, and failure to conform to this schedule will render the licenses null and void.  S- ` x\93.` ` Under an auctionbased procedure, given the substantial upfront payments expected, we  xLassume that financial qualifications and construction milestones for licensees would be unnecessary. We  xseek comments on this assumption. The Commission's statutory authority directs it to include in auction  xLrules performance requirements necessary to ensure that service is implemented promptly and spectrum  S - xis not warehoused._W B yO -ԍXxSee 47 U.S.C.  309(j)(4)(B).(#_ Raising additional capital necessary to prevail in an auction creates additional  xkpressure from investors to use licenses efficiently and intensively. We seek comment on whether the  x]auctionbased assignment procedure should include less stringent administrative requirements and  xsupervision of progress in system implementation than do the other licensing options. We seek further  xcomment on appropriate performance requirements for the auctionbased option, and antiwarehousing and antitrafficking rules appropriate in an auction environment. x3. Rules Applicable to a Licensing Approach Based on Auctions Procedures  S- ` $x]94.` ` If the Commission chooses to reopen the application cutoff window and if additional  xapplications are filed that create a mutually exclusive situation, competitive bidding auctions would be a  xpossible selection method. Section 309( j) of the Communications Act gives the Commission the authority  xyto employ competitive bidding procedures to select licensees if certain factors are present. These factors  x-include: 1) mutual exclusivity between applicants, 2) the principal use of the spectrum would be to provide  S- xsubscription services, and 3) the use of auctions would further certain public interest objectives.XXB yO-  .ԍXx47 U.S.C.  309 (j). Implementation of Section 309 9(j) of the Communications Act Competitive Bidding, 9 FCC Rcd 2348 (1994) (Second Report and Order). (# In this  xNPRM we propose rules that would enable us to use auctions as a licensing method for satellite DARS if that decision appears warranted.  SP- ` x^95.` ` In order to employ auctions in any given service, the Commission must determine if  xmutual exclusivity exists between applications. Although it does not appear on the existing record that  S- xthe four current applicants are mutually exclusive,gYB yOP!-ԍxSee discussion supra at paras 7983.g if additional entities file, given the limited amount  S- xkof spectrum available, i.e. 50 MHz, all applicants' proposals might not be able to be accommodated.  xMWe seek comment on whether, if the processing group were reopened, new applicants would file and  S-whether these applications would result in a mutually exclusive situation.Z@B yOh%-  /ԍXxSee Second Report and Order, supra n. 88 at para. 19 where we stated that it was premature to determine whether mutual exclusivity will occur in the satellite DARS proceeding.(#  S8-x_96.` ` In addition, the Commission must determine if " Z +))88!"Ԍ ` XxX` ` ...the principal use of such spectrum will involve, or is likely to involve, the licensee  ` receiving compensation from subscribers in return for which the licensee (i) enables those  ` Qsubscribers to receive communications signals that are transmitted utilizing frequencies  ` on which the licensee is licensed to operate; or (ii) enables those subscribers to transmit  ` directly communications signals utilizing frequencies on which the licensee is licensed to  S8-operate...N[8B yO-ԍx47 U.S.C.  309 (j)(2)(A).N(#`  xjThe Commission has previously decided that auctions were authorized if at least a majority of the use of  xthe spectrum would be for service to subscribers and in making this determination, we decided to look  S- xyto classes of licenses and permits rather than at individual licenses.e\XB yO -ԍxSecond Report and Order, supra, n. 88 at 2354.e With respect to satellite DARS, we  xtentatively conclude it is likely that the principal use of the spectrum will be to provide subscription based  SH - x.services.]H B yO-  ԍXxSee First Report and Order and Second Notice of Proposed Rule Making in ET Docket No. 9432, FCC 9547, 10 FCC Rcd. 4769 (1995).(# We base this tentative conclusion on the proposals by the four current applicants, three out  xjof four of whom propose subscription service. We request comment on this issue, including information from any potential applicants on the type of service they contemplate offering.  S - ` x`97.` ` Further, we tentatively conclude, but ask for comment on this tentative conclusion, that  xa competitive bidding procedure could further the statutory public interest objectives we are obliged to  SX-consider.L^X@B yO8-ԍx47 U.S.C. 309(j)(2)(B).L These objectives include:  S- ` }x(A)` ` the development and rapid deployment of new technologies, products, and services for the benefit of the public, including those residing in rural areas, without administrative or judicial delays:  S- ` x(B)` ` promoting economic opportunity and competition and ensuring that new and innovative  xtechnologies are readily accessible to the American people by avoiding excessive concentration of licenses  xand by disseminating licenses among a wide variety of applicants, including small businesses, rural telephone companies, and businesses owned by members of minority groups and women;  S- ` $x(C)` ` recovery for the public of a portion of the value of the public spectrum resource made  xavailable for commercial use and avoidance of unjust enrichment through the methods employed to award uses of that resource and  S(-x(D)` ` efficient and intensive use of the electromagnetic spectrum.K_(B yO#-ԍx47 U.S.C.  309 (j)(3).K  S- ` qxa98.` ` First, a competitive bidding procedure for satellite DARS could permit this new  xtechnology to be rapidly introduced, particularly to those residing in rural areas without a wide range of  xterrestrial radio choices. We ask for comment on whether auctions would be a faster licensing process  xthan other approaches such as lotteries or comparative hearings for mutually exclusive applications. "`` _ +))88"  xAlternatively, would licensing the four current applicants pursuant to rules proposed in this notice provide quicker service to the public than would auctions?  S- ` xb99.` ` Second, the statutory policy objective of promoting economic opportunity by awarding  xlicenses to a variety of entities including small businesses, and businesses owned by minorities and  xwomen, has been addressed in our auction rules in other services via bidding credits, installment payments  xand setasides. We seek comment on how to address this directive in the context of satellite DARS.  xThird, an auction also would allow the public to recover the value of the spectrum resource. Finally, it  x could encourage efficient spectrum use and force bidding applicants to develop concrete and realistic  xbusiness plans in the process of preparing bids. We note that the Commission, in its discretion under the  Sp- x=1993 Budget Act, could choose to utilize a lottery to issue satellite DARS licenses. `pB yO -  ԍxOmnibus Budget Reconciliation Act of 1993  6002 (e) (prohibiting the use of lotteries to issue licenses unless one or more applications for such license were accepted for filing before July 26, 1993).  We seek comment  xjon whether the factors that led the Commission to prefer lotteries over auctions for pending applications  xin existing services, such as concern about delay in licensing and equitable considerations in favor of  S -existing applicants, are present here.a B yO-  ԍxSee  Memorandum Opinion and Order, PP Docket 93253, 9 FCC Rcd. 7387 (1994) (determining to use lotteries to award licenses for cellular unserved areas in which applications were filed prior to July 26, 1993).  S - ` xc100.` ` If an auction is employed for satellite DARS, we anticipate conducting it pursuant to the  S - xgeneral framework adopted in the Second Report and Order,Db xB yO-ԍxSupra n. 88.D the Commission's rules,Jc B yO(-ԍx47 CFR Part 1, Subpart Q.J and consistent" c +))88."  S- xkwith other Commission proceedings where auctions have been employed.e dhB yOh-  ?ԍXxSee, Narrowband PCS Third Report and Order in PP Docket No. 93253, 9 F.C.C. Rcd. 2941 (1994)  yO0-  (establishing competitive bidding rules for narrowband Personal Communications Service), recon. Third   Memorandum Opinion and Order and Further Notice of Proposed Rule Making, 10 F.C.C. Rcd. 175 (1994).  yO-  ] See also Order on Reconsideration in PP Docket No. 93253, 9 F.C.C. Rcd. 5306 (1994). IVDS The   Fourth Report and Order, PP Docket No, 93253, 9 F.C.C. Rcd. 2330 (1994) (establishing rules for  yOP-  /Interactive Video and Data Service). Broadband PCS Fifth Report and Order in PP Docket No. 93253,   9 F.C.C. Rcd. 5532 (1994) (establishing competitive bidding rules for broadband Personal Communications  yO-  zService); See also Order on Reconsideration, PP Docket No. 93253, 9 F.C.C. Rcd. 4493 (1994); Fourth   /Memorandum Opinion and Order in PP Docket 93253, 9 F.C.C. Rcd. 6858 (1994); Fifth Memorandum   {Opinion and Order in PP Docket 93253 10 F.C.C. Rcd. 403 (1994). Second Report and Order in Gen   Docket No. 90314, 8 F.C.C. Rcd. 7700 (1993) (establishing the allocation and regulatory structure for  yO -  \Personal Communications Service), recon. Memorandum Opinion and Order, 9 F.C.C. Rcd. 4957 (1994).  yO -  {See also Order on Reconsideration in Gen Docket No. 90314, 9 F.C.C. Rcd. 4441 (1994), on further  yO -  recon. Third Memorandum Opinion and Order in Gen. Docket No. 90314, 9 F.C.C. Rcd. 6908 (1994) FCC  yOX -  94265. See also, SMRS Second Report and Order and Second Further Notice of Proposed Rule Making   in PP Docket No. 93253, FCC 95159 (released April 17, 1995) (proposing competitive bidding rules for  yO-  licensing 900 MHz Specialized Mobile Radio service). 5 GHz First Report and Order and Second Notice   of Proposed Rule Making in ET Docket No. 9432, FCC 9547, 60 Fed. Reg. 13102 (March 10, 1995)   (proposing competitive bidding rules for the 46604685 MHz frequency band); Notice of Proposed   Rulemaking in MM Docket No. 94131, 9 FCC Rcd 7665 (1994) (proposing competitive bidding rules for MMDS and ITFS).(#e We also propose certain  S-service specific parameters if we choose to auction this spectrum.TeB yOp-ԍxSee 47 U.S.C.  309(j)(4).T  S- ` xd101.` ` In addition, if the Commission chooses the auction option, we also request comment on  xjwhether there are any ways within the context of competitive bidding procedures, that the investment of  S8- xthe four current satellite DARS applicants and accompanying equities in their favor could be recognized._f8B yO`-ԍxSee discussion of Option 3, infra._  x.In designing auctions, the Commission has an obligation to enact payment schedules that prevent unjust  S- xenrichment.NgB yO-ԍx47 U.S.C.  309 (j)(4)(E).N Current DARS applicants' efforts and expenditures in the past may have lowered the cost  xkof developing DARS service and increased consumer receptivity to DARS. Assuming this is so, new  xapplicants will benefit from these efforts and expenditures. We seek comment about whether such benefits  xwould cause unjust enrichment for new applicants if this spectrum were auctioned. We request comment  xon whether current DARS applicants could be given bidding credits equal to the estimated value of the  xbenefits that they have created for new applicants or whether they could be permitted to use a system of  xinstallment payments to satisfy their commitments pursuant to an auction. We also seek comment on how  x/the value of such benefits could be measured, and on their magnitude. We request comment on these  xpossibilities and on any other procedures the Commission could employ and on the extent of our legal  xjauthority to do so. For example, we may provide a licensee up to a 15% discount and guaranteed license  xpursuant to the pioneer's preference provisions in Section 309(j)(13) if it qualifies for a preference. Below  x>we seek comment on the pending pioneer's preference requests filed by DSBC, Primosphere and CD Radio. " g +))88"Ԍ S- ` xe102.` ` We propose to auction 50 MHz of downlink frequency segmentsQhB yOh-ԍxSee  para 31, supra.Q according to a band  xplan that we choose based on comments in this proceeding and we may also limit the number of segments  S- xon which a licensee may bid successfully.ciXB yO-ԍxSee  discussion supra at para 39.c Licenses would be national in scope. We propose that our  xrules on a band plan and spectrum cap be structured to allow flexibility in DARS system design while  xalso ensuring competition among service providers. The size of the proposed spectrum blocks may be  xdifferent for the auction based approach than for the approach based on spectrum sharing between the four  S-current applicants.:jB yO -ԍxId.:  S- ` xf103.` ` In addition, we tentatively conclude to use a single, simultaneous multiple round procedure  xlto allow licensees to aggregate and/or substitute spectrum blocks. The International Bureau would  xannounce the time and place of the auction and provide additional information to bidders by future public notice.  S - ` nxg104.` ` We propose to adopt the shortform application procedures, payment requirement, public  xnotice procedures, and anticollusion rules, and default and disqualification payment requirements set forth  S - xin Subpart Q of Part 1 of the Commission's rules.k xB yO-ԍx47 C.F.R. Part 1, Subpart Q. See Second Report and Order in PP Docket 93252. We propose adoption of the standard upfront  x{payment formula of $0.02 per popMHz, based on the number of 5MHz blocks identified in the  x|applicants' Form 175. Requiring applicants to make significant financial arrangements prior to  xzparticipation helps assure that applicants take the licensing procedure seriously. In addition, upfront  xpayments provide available funds for the collection of possible bid withdrawal and default payments. The  x[formula proposed would result in an upfront payment of about twentyfive million dollars for a national  xlicense of 5MHz. We seek comment on whether this is an appropriate amount for an upfront payment  xfor an auction of Sband spectrum. We also seek comment on whether and to what extent rules on upfront  Sh- xpayments should include special consideration for the four current applicants.lhB yO-ԍxSee discussion infra at para 101 re possible auction preferences for the current applicants. We also ask whether the  S@- x\upfront payment should be reduced for small businesses.ym@B yOx-ԍxSee discussion on designated entities infra at para 107108.y Would such a large upfront fee impose a  xsignificant barrier to entry to these auctions that it would be contrary to the directives of Section 309(j)  S- xZregarding opportunities for small businesses or, as discussed below,:n( B yO!-ԍxId.: should a substantial upfront payment  xLbe imposed to ensure that applicants are financially qualified to acquire a DARS license and to construct and operate a DARS system?  SP- ` xh105.` ` Section 309(j) of the Communications Act also provides that, when promulgating  x>competitive bidding regulations, the Commission must "ensure that small businesses, rural telephone  xycompanies, and businesses owned by members of minority groups and women are given the opportunity"! n +))88"  S- xMto participate in the provision of spectrum-based services."toB yOh-ԍx 47 U.S.C.  309(j)(4)(D);   309(j)(3)(B), (j)(4)(A). t To implement the statute's provisions  xkconcerning these "designated entities," the Commission specified several possible measures, including  x0installment payments, bidding credits and spectrum set-asides, to choose from when establishing  S-competitive bidding procedures for particular services. {pXB yO-ԍxSee Second Report and Order, supra. n. 88 at paras. 227288. {  S8- ` xi106.` ` In the Competitive Bidding Second Report and Order, we also indicated that special  xmeasures for such entities may not be appropriate in all circumstances. For example, we stated that  xinstallment payments should not be available for all spectrum auctions. Rather, in order to match such  S- xmeasures with eligible recipients (i.e., small businesses), installment payments would only be available  x=for certain licenses that do not involve the largest spectrum blocks and service areas. We did not want to  xdelay service to the public by encouraging undercapitalized firms to receive licenses for facilities which  SH - xthey lack the resources adequately to finance.q H B yO-  mԍXxId. at para 237, citing 47 U.S.C.  309(j)(3)(A). In addition, the legislative history explaining the   designated entity provisions of the auction statute states that "the characteristics of some services are   inherently national in scope, and are therefore illsuited for small businesses." H.R.Rep. No. 111, 103d Cong., 1st Sess. 254 (1993). (#  In addition to installment payments, we also indicated  x=that, in servicespecific rules, we may determine that bidding credits are necessary to provide designated  xentities the opportunity to bid successfully for a license. This determination, we stated, would "rest in  x>whole or in part on our assessment of the available opportunities in, and characteristics of, a specific  S -spectrumbased service." jr B yO-ԍxSecond Report and Order, supra. n. 88 at para. 242.j  SX- ` Axj107.` ` We note further that, as discussed above, Section 309(j)(3) also requires the Commission  xto promote economic opportunity and competition and ensure that new and innovative technologies are  xreadily accessible to the American people by avoiding excessive concentration of licenses and by  S- xdisseminating licenses among a wide variety of applicants, including designated entities.Ls` B yO-ԍx47 U.S.C.  309(j)(3)(B)L The statute,  xhowever, directs the Commission, in specifying auction procedures, to pursue other objectives: "the  x\development and rapid deployment of new technologies, products, and services for the benefit of the  xjpublic, including those residing in rural areas, without administrative or judicial delays" and of promoting  S@-"efficient and intensive use of the electromagnetic spectrum." Rt@ B yO -ԍxId.  309(j)(3)(A), (D).R  S- ` xk108.` ` In light of the above discussion and the Commission's previous determination in another  S- xsatellite service,u B yO$-  ?ԍXxSee Rules and Policies Pertaining to a Mobile Satellite Service in the 1610-1626.5/2483.5-2500 Mhz Frequency Bands, Report and Order, CC Docket 92166, 9 FCC Rcd 5936, 596970 (1994).(# we seek comment on how the Commission can strike a proper balance in the public  xzinterest among the statutory objectives if competitive bidding is used for licensing satellite DARS. In  xparticular, we seek comment on what, if any, special measures for designated entities are necessary in this  x[service to achieve each of the statute's objectives. In this regard, parties should comment on appropriate"P"u +))88"  xeligibility criteria for such measures. Specifically, if installment payments are adopted for small  xLbusinesses, we invite comment on the appropriate definition of "small business," taking into account the  S- xklikely capital requirements for DARS licensees and the other characteristics of the service.XvB yO-ԍxSee 47 C.F.R.  1.2110(b)(1). X  We also  xrequest comment on whether to implement a bidding credit program for satellite DARS. In connection  xwith any measures for designated entities, commenters should also address means of preventing unjust  S8-enrichment through trafficking of licenses.Xw8XB yO0-ԍxSee 47 U.S.C.  309(j)(4)(E). X   S- ` xl109.` ` We propose that each applicant would be required to specify on its Form 175 its status  xas a designated entity (if applicable), the frequency blocks applied for, and the persons authorized to place  x=or withdraw bids. Applicants would have to identify any arrangements or agreements with other parties  xrelating to the licenses that are subject to auction. The timing and duration of auction rounds would be  xdetermined by the International Bureau and announced by public notice. This notice would include  xinformation on the size of bid increments, activity rule, and stopping rules, and the proposed end of an auction after a specified number of rounds.  S - ` xm110.` ` We propose to employ bid withdrawal and default rules similar to prior auctions. At the  xLconclusion of the auction, winning bidders would be required to supplement their upfront payments and  SX- xfile their longform applications pursuant to our rules on satellite applications.YxXB yO-ԍXxSee 47 C.F.R.  25.114.(#Y Applicants would have  x30 days to file their long form applications and when these are filed, the International Bureau would issue a public notice announcing the acceptance of the applications for filing.  S- ` `xn111.` ` Finally, recognizing that we have not yet identified specific frequencies for feeder links  S- xLin this service,ry@B yOp-ԍxSee discussion, supra re feeder links at paras 7075.r we request comment on whether auctionable satellite DARS spectrum segments should  Sh- xinclude accompanying feeder link spectrum.!z hB yO-  ԍXxIn our Competitive Bidding NPRM, the Commission proposed to use auctions for mutually exclusive license   applications in FSS bands and also proposed that licenses for frequencies used as "intermediate links" for   the provision of a continuous, endtoend service to subscribers would be subject to competitive bidding.  yO0-See Notice of Proposed Rulemaking, PP Docket No. 93253, 8 FCC Rcd. 7635, 7661, 7639 (1993).(#! The Commission has previously concluded that service  xused as part of endtoend subscriber based offerings would meet the statutory criteria for auctions. While  xthe Commission decided in its Second Report and Order in the Competitive Bidding rulemaking  S- xproceeding, not to auction intermediate links, including feeder links in the Mobile Satellite Services  x(MSS), it appears that this determination was based not on the failure of such services to meet the  xkprincipal use test, but on the finding that auctions for intermediate links would not achieve the public  Sx- xinterest objectives in 309(j)(3).{ x B yO%-  ԍXxSee Second Report and Order, PP Docket No. 93253, 9 FCC Rcd 2348, 235556 n. 30 (1994); 47 C.F.R.   1.2102(b)(4). While the Commission's auction rules do not specifically indicate if FSS spectrum, whether   \used for feeder links or for subscriberbased services, may be auctioned, it can reasonably be inferred from   Nthe determination regarding MSS feeder links, and intermediate links in general, that the Commission"((z +))88U(" intended that FSS spectrum used for feeder links would not be subject to auctions.(#Ƥ We tentatively conclude, however, that mutually exclusive applications"x#X{ +))88"  xfor feeder link spectrum for satellite DARS would satisfy the principal use test and the public interest  xobjectives in the competitive bidding statute. We seek comment on this tentative conclusion and whether  xfeeder link spectrum should be auctioned separately or in conjunction with the Sband frequencies. We  x>also seek comment on whether auctions would apply to feeder links for satellite DARS if a mutually  xexclusive situation arises with other users of this spectrum, for example fixed satellite services or broadcast  xauxiliary services. Commenters should also take into consideration our previous discussion of feeder links in this NPRM. x4. Pioneer's Preference Requests  Sp- ` _xo112.` ` DSBC, Primosphere and CD Radio each have pending satellite DARS pioneer's preference  x requests in GEN Docket No. 90357. CD Radio's request, filed July 30, 1991, and its supplemental  xrequest, filed January 23, 1992, were placed on public notice January 31, 1992 and assigned file number  xPP24. CD Radio's second supplemental request and the requests of DSBC and Primosphere, each of  xwhich were filed June 2, 1993, were not placed on public notice. We are associating CD Radio's second  xysupplemental request with file number PP24 and are assigning file number PP86 to DSBC's request and file number PP87 to Primosphere's request, all in GEN Docket No. 90357.  S0- ` #xp113.` ` In the Notice of Proposed Rulemaking and Further Notice of Inquiry in GEN Docket No.  S- x90357,U|XB yO-ԍ x7 FCC Rcd. 7776, 7781 n. 15 (1992).U we deferred consideration of pioneer's preference requests because we found that DARS  S- xtechnology was rapidly evolving, but was not yet fully developed. In the Allocation Order,^}B yOh-ԍ xAllocation Order, supra. n. 1 at n. 8.^ we  xcontinued to defer action on pioneer's preference requests because we were conducting a review of the  xpioneer's preference rules in ET Docket No. 93-266 to assess the preference program following the  Sh- xenactment of competitive bidding authority.~ hxB yO-  kԍ XxSee Notice of Proposed Rule Making, ET Docket No. 93266, 8 FCC Rcd. 7692 (1993); First Report and   >Order, ET Docket No. 93266, 9 FCC Rcd. 605 (1994) (deferring decision whether to apply our existing   or new pioneer's preference rules in proceedings where tentative pioneer's preference decisions had not been  yO-issued), recon. denied, 9 FCC Rcd. 6837 (1994).(# In the Second Report and Order and Further Notice of  S@- x.Proposed Rule Making in ET Docket No. 93266,@` B yO@-ԍ XxFCC 9580, released March 1, 1995 (petition for reconsideration pending).(#ƃ we adopted new rules and procedures for pioneer's  xypreference requests, which are applicable to the pending DARS requests. We have recently amended our  xpioneer's preference rule to implement Section 309(j)(13) of the Communications Act which was added  S- xby legislation implementing the General Agreement on Tariffs and Trade (GATT). B yOX#-ԍxThird Report and Order, ET Docket No. 93266, 95 FCC 218 (released June 8, 1995). These new rules  xwill also apply to the pending satellite DARS requests. Accordingly, DSBC, Primosphere, and CD Radio  xwill be required to amend or supplement their pioneer's preference requests to bring them into compliance  SP-with the new rules.QP B yOp'-ԍxSee id. at para. 22.Q "($ +))88"Ԍ S- ` oxq114.` ` Under our revised rules adopted in the Second Report and Order in ET Docket No. 93 x266, pioneer's preference requests complying with our acceptability requirements and procedures "will be  xaccepted for filing and listed by file number in a notice of proposed rulemaking addressing the new  xservice or technology proposed in the request." 47 C.F.R. 1.402(d). Because each of the requests  x?referenced above appears to be acceptable for filing, we herein solicit comment on these requests.  xPursuant to Section 1.402(e) of the Commission's rules, 47 C.F.R.  1.402(e), parties wishing to comment  xon any of these three pioneer's preference requests should file comments separate from any comments  xLfiled on the rules proposed in this Notice and should reference both the appropriate pioneer's preference file number(s) and GEN Docket No. 90357 on the cover page of their comments. x x5. Miscellaneous Issues  S - ` xr115.` ` These issues are generally associated with our analysis of the four current applicants but  x>we seek comment on which might be applicable to licenses awarded pursuant to auctions. As a non x common carrier/subscription service, DARS licensees would not be subject to the foreign ownership  S - xrestrictions of the Communications Act.bX B yO-  ԍXx47 U.S.C. 310(b) provides that foreign ownership restrictions apply to broadcast and common carrier   licenses. DARS licensees would, of course, be subject to 310(a) restrictions that prohibit grant of a license to a representative of a foreign government.(#b However, licensees providing broadcast services would be  xcovered by these restrictions and would thus be limited in the amount of foreign investment they could  x/attract. We request comment on whether foreign ownership restrictions should apply to any DARS licensees, to all DARS licensees or only to those DARS licensees proposing broadcast services. x  S- ` xs116.` ` We propose that licenses for DARS space segment facilities would be issued for ten  S- x.years.RB yO@-ԍxSee 47 C.F.R. 25.120. R We note that Primosphere proposes to offer broadcast services. Broadcast licenses are limited  S- xkto seven years.GxB yO-ԍx47 U.S.C. 307(c).G We seek comment on whether the license term we select should differ based on the  xoperational classification of the service or on whether licenses are granted through a competitive bidding  xprocess. In addition, we propose that the license term would begin when each satellite is launched and  xput into operation. We propose that receivers would not be licensed. In addition, we propose that  xlicensees in this service will be required to file reports with the Commission on an annual basis and  xprovide information similar to that required of domestic fixedsatellite operators regarding transponder loading and general satellite operation.  SP- ` xt117.` ` The Recording Industry Association of America (RIAA) has filed comments asking the  xCommission to impose conditions on licensees requiring them to secure license agreements from copyright  xyowners of the sound recordings they intend to transmit. We do not believe that it is appropriate for this  x>Commission to address copyright issues in the context of proposing DARS service rules. We would  xjexpect, however, that DARS licensees will comply with all applicable copyright laws and if they do not,  S-copyright owners have appropriate legal remedies available to them.B yO0&-  \ԍXxSee Title 17 U.S.C. We note that Primosphere in its application pledges to comply with the intellectual property obligations applicable to broadcasters. (# x"`%`  +))88"Ԍ S- ` xu118.` ` Because the U.S. is the only country in Region 2 with an allocation of SBand  xfrequencies for DARS, licensees can only provide domestic service. As discussed above, significant  xinternational coordination issues exist in this band and thus it would be impractical to permit international service. x` `   S8- ` 4xv119.` ` National Public Radio (NPR) suggests that the Commission establish an Industry  xjAdvisory Committee (IAC) to guide the nature and continuing development of proposed DARS system  x.diversity. While there are substantial technical and regulatory issues that must be resolved as a result of  xthe differences among the four satellite DARS proposals, we do not believe an IAC is necessary in this  xinstance. We believe that we have sufficient flexibility to craft service rules that will accommodate  xdiverse satellite DARS systems. We request comment on whether an IAC would be appropriate in this proceeding if we proceed with licensing the four current applicants.  S - ` xw120.` ` As we provided in our Allocation Order, the mobile and radiolocation services are  xallocated primary use of the 23102360 MHz band until January 1, 1997 or until the first Broadcasting  xSatellite (sound) system is brought into use. After that time, mobile and radiolocation use of the band  xwould be permitted only on a secondary basis. It was also noted in the Allocation order that, of particular  ximportance, the aeronautical telemetry community supported the reaccommodation of existing aeronautical  xtelemetry users of the 23102390 MHz band to the 23602390 MHz band. The Allocation Order further  xnoted that when service rules are adopted for satellite DARS, the frequencies allocated for space telecommand in the 23102360 MHz band may also need to be reaccommodated.  S- ` xx121.` ` Modification to Part 87 (Aviation Services) of our rules therefore would be consequential  xto the licensing of satellite DARS systems in the 23102360 MHz band. Specifically, our proposal to  xmodify Part 87 can be found in Appendix II. We seek comment on this proposal and we seek comment on any additional modifications to Part 87 that may be necessary. x  S-"III. CONCLUSIONă  Sx- ` xy122.` ` Based on the considerations discussed above, we conclude that the proposals set forth in  xkthis Notice will facilitate the implementation of DARS in the United States. We seek comment on all  xaspects of these service rules and anticipate an extensive record on which to base decisions on final regulations x` `   S-IV. PROCEDURAL MATTERS ă  S`- ` xz123.` ` This is a nonrestricted notice and comment rulemaking proceeding. Ex parte  xpresentations are permitted, except during the Sunshine Agenda period, provided they are disclosed as  S - xprovided in Commission rules. See generally 47 CFR 1.1202, 1.1203, and 1.1206(a). The individual  xsatellite DARS applications and pioneer's preference proceedings are restricted proceedings, to the extent  S!- x<that any party has formally opposed an application or pioneer's preference request. Ex parte presentations  S"-concerning any formally opposed application or request are prohibited. See 47 CFR 1.1208.  SH$- ` x{124.` ` As required by Section 603 of the Regulatory Flexibility Act, the Commission has  xprepared an Initial Regulatory Flexibility Analysis (IRFA) of the expected impact on small entities of the  xyproposals suggested in this document. The IRFA is set forth in Appendix III. Written public comments  xare requested on the IRFA. These comments must be filed in accordance with the same filing deadlines  xzas comments on the rest of the Notice, but they must have a separate and distinct heading designating them as responses to the Initial Regulatory Flexibility Analysis."(& +))880*"Ԍ S- ` ԙx|125.` ` Pursuant to applicable procedures set forth in sections 1.415 and 1.419 of the  xCommission's Rules, 47 CFR  1.415 and 1.419, interested parties may file comments on or before  x!September 15, 1995 and reply comments on or before October 13, 1995. To file formally in this  xproceeding, parties must file an original and five copies of all comments, reply comments, and supporting  x=comments. If parties want each Commissioner to receive a personal copy of their comments, they must  x file an original plus nine copies. Parties should send comments and reply comments to Office of the  xlSecretary, Federal Communications Commission, Washington, D.C. 20554. Comments and reply  xcomments will be available for public inspection during regular business hours in the Reference Center  x[of the Federal Communications Commission, 1919 M Street, N.W., Washington, D.C. 20554, room 239.  xFor further information contact Rosalee Chiara or Ron Repasi at (202) 7390735. Parties filing comments  xon the pioneer's preferences requests must file comments separate from those on the rules proposed in this  xnotice and reference both the file numbers and the General Docket No. 90357. For further information on pioneer's preference requests contact Rodney Small at (202) 7761622.  S -V. ORDERING CLAUSES ă  S - ` Bx}126.` ` Accordingly, IT IS ORDERED that, pursuant to sections 1, 4(i), 4(j), 7, and 309(j) of  xthe Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i) and 154(j), 157, and 309(j),  xNOTICE IS HEREBY GIVEN of the proposed amendments to Part 25 of the Commission's Rules, 47  xCFR Part 25, in accordance with the proposals in this Notice of Proposed Rulemaking, and that COMMENT IS SOUGHT regarding such proposals.  S- ` px~127.` ` IT IS FURTHER ORDERED that the Secretary shall send a copy of this Notice of  xProposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for  xAdvocacy of the Small Business Administration in accordance with paragraph 603(a) of the Regulatory  S-Flexibility Act, Pub. L. No. 96354, 94 Stat. 1164, 5 U.S.C.  601 et seq (1981). X` (#%'0*,.8135@8: