NEWSReport No. DC 95-85 ACTION IN DOCKET CASE June 15, 1995 IMPROVED MDS FILING PROCEDURES ADOPTED; SIMULTANEOUS MULTIPLE ROUND BIDDING AUCTION METHOD ADOPTED (MM DOCKET 94-131; PP DOCKET 93-253) As part of its continuing effort to facilitate the development and rapid deployment of wireless cable services, the Commission today adopted new filing procedures to improve the application processes for the Multipoint Distribution Service (MDS). MDS is a service that uses microwave signals to deliver video programming to subscribers. Because it is a subscription video programming service that appears similar, at the consumer level, to cable television, it is often referred to as "wireless cable." As a result of previous Commission actions, wireless cable operators that use spectrum in the MDS often supplement their channel capacity with leased channels from the Instructional Television Fixed Service (ITFS) and have begun to provide a competitive alternative to wired cable and other multichannel video programming distributors. The rules adopted today will accelerate that process by establishing streamlined measures to process new applications for MDS spectrum through competitive bidding and by establishing a protected service area for MDS stations that is large enough to allow operators the flexibility they need to design viable and competitive wireless cable systems. Adoption of these rules will allow the Commission to lift the current freeze on filing new MDS applications. Specifically, the Commission adopted a licensing plan under which it will allot, through a simultaneous multiple round auction, one MDS authorization for each of the 487 Basic Trading Areas (BTAs) and six additional BTA-like geographic areas. Current rules license MDS on a site-specific basis. A BTA authorization holder will be able to construct facilities to provide wireless cable service over any usable MDS channels within the BTA, and will have preferred rights to the available ITFS frequencies and ITFS lease agreements within the BTA. Under the new rules, the signals of a BTA authorization holder cannot interfere with those of any other BTA authorization holder. Recognizing, however, that BTA lines do not always track desired service areas, the rules permit BTA authorization holders to negotiate interference protection rights and their service area boundaries. In addition, the new rules require BTA authorization holders to honor the protected service areas of existing MDS licensees, conditional licensees and applicants within their BTAs. (over) - 2 - By a 3-2 vote, the Commission decided to resolve pending MDS applications by lottery rather than auction. The partial dissenting statements of Chairman Hundt and Commissioner Ness are attached. The separate statements of Commissioners Quello and Barrett are also attached. In a companion order adopted today, the Commission expanded, to a circle with a 35-mile radius, the protected service areas of existing MDS licensees, conditional licensees and applicants. In order to facilitate the development of successful wireless cable systems, the rules permit BTA authorization holders to assign or transfer their entire BTAs, or partitioned portions of it, to existing MDS operators or other parties. The rules also permit the aggregation of existing and new MDS and ITFS channels within a BTA. The Commission also adopted a variety of measures to streamline the application and implementation processes. It authorized the use of electronic filing and fee payments on a voluntary basis and adopted computerized interference studies utilizing new data elements to be included in a revised MDS application form. In adopting simultaneous multiple round bidding for MDS auctions, it provided for installment payments, reduced upfront payments and bidding credits for small businesses. The Commission made clear that interference disputes are to be resolved, in the first instance, through private negotiations, with the Commission to serve only as last resort. Action by the Commission June 15, 1995, by Report and Order and Further Notice of Proposed Rulemaking (FCC 95-85). Commissioners Quello, Barrett and Chong, with Chairman Hundt and Commissioner Ness concurring in part and dissenting in part. Chairman Hundt, Commissioners Quello, Barrett and Ness issuing separate statements. - FCC - News Media contacts: Audrey Spivack and Rosemary Kimball at (202) 418-0500. Mass Media Bureau contacts: Sharon Bertelsen at (202) 416-0892; Keith Larson at (202) 418-1640; and Jerianne Timmerman at (202) 416-0881. Statement of Chairman Reed E. Hundt, Concurring in Part and Dissenting in Part Amendments of Parts 21 and 74 of the Commission's Rules with Regard to Filing Procedures in the Multipoint Distribution Service and in the Instructional Television Fixed Service and Implementation of Section 309(j) of the Communications Act - Competitive Bidding (MM Docket No. 94-131 and PP Docket No. 93-253) For too many years, the MDS -- or wireless cable -- service has been plagued by backlogs, delays and outright fraud. One reason is sadly no secret. The Commission's policy of licensing MDS spectrum by lottery was an utter failure. As Congress explained when it granted the Commission auction authority, "[l]otteries engendered rampant speculation, undermined the integrity of the FCC's licensing process and, more importantly, frequently resulted in unqualified persons winning an FCC license." The lottery policy did as much to stymie competition in the cable market as to foster it, and it denied the public the revenues to which it is entitled for use of the spectrum. The Report and Order we adopt today marks a significant break from that past. Taking advantage of the authority granted by the Omnibus Budget Reconciliation Act of 1993 (the "Budget Act"), the Report and Order announces that MDS spectrum will henceforth be distributed by auction. That policy change and others described in the Report and Order replace the old lottery system with a market-based approach that encourages aggregation of channels by licensees who value them the most, who are most likely to construct wireless cable systems, and who are most likely to do so rapidly. The Commission has long held out the promise that wireless cable could emerge as an effective competitor in the video marketplace, leading to more consumer choice, better service and reduced prices. The portions of the order that set rules for new MDS applications will help keep that promise, and I am happy to vote to approve those new rules. Regrettably, the Report and Order in one respect preserves the failed policy of the Commission's past. Although the Budget Act gives the Commission the authority to auction applications filed before July 26, 1993, a majority of the Commission has decided to resolve pending MDS applications by lottery. Because I think this giveaway cannot be reconciled with the public interest that the Communications Act requires our policies to serve, I dissent from that portion of the Report and Order. Although this is only the second time I have dissented, in whole or in part, from a Commission decision, it is not the first time I have dissented from a decision choosing lotteries over auctions. See Implementation of Section 309(j) of the Communications Act - Competitive Bidding, Memorandum Opinion and Order, PP Docket No. 93-253 (released July 14, 1994) (lotteries for unserved cellular areas) (Commissioners Ness and Chong not participating). I dissent again because the decision to use lotteries here is even less justifiable than in the context of unserved cellular areas. First, lotteries will result in windfalls to the successful applicants, who will receive licenses for sites that are 500 percent larger and far more valuable than the ones they applied for. The FCC is not supposed to be the Federal Christmas Present Commission -- particularly in June. Second, lotteries of licenses for small specific sites undermine the Commission's new and commendable policy of awarding authorizations for large geographical areas. That policy is designed to reduce roadblocks to the aggregation of MDS channels within boundaries that the market selects, so that wireless cable operators can put together truly competitive systems. I dissent again on the issue of auctions vs. lotteries for another reason. While any single decision to use lotteries instead of auctions may seem in isolation not to be terribly costly, those decisions in the aggregate inflict serious harm on the public interest. Today's decision is particularly disheartening in light of the eminently sensible alternative that is available. The Commission should recognize that pending MDS applications were filed to provide a service that no longer exists and that the public interest is best served by applying the new MDS rules to pending applicants as well as new ones. The Commission should, accordingly, dismiss all pending applications, allowing applicants who desire to provide the new MDS service to participate in the auction for Basic Trading Area (BTA) authorizations. * * * * * It is not an oversimplification to say that the Commission's extensive experience with lotteries and its recent experience with auctions leads to two straightforward principles that should be the starting point for our thinking about all licensing decisions: Auctions are good. And lotteries are bad. There is no longer any serious dispute that sound public policy requires auctioning spectrum licenses except where there are clear and compelling public interest reasons to the contrary. Auctions put licenses into the hands of those who value them most highly, and who are therefore most likely to provide service the public desires and to do so quickly and efficiently. Auctions also permit the U.S. Treasury to recover for the public a portion of the value of the public's spectrum. Lotteries, meanwhile, do nothing to ensure that the licensee is the person or business most likely to use the spectrum for the public good. They do nothing to ensure that the licensee will actually use the spectrum to provide any service, much less do so quickly. As Commissioner Ness points out, hundreds and hundreds of MDS licenses granted by lottery were eventually forfeited for failure to construct MDS stations. Under a lottery system, it is only by freakish accident that a spectrum license lands in the hands of those who will use it most productively. Lotteries not only fail to further the public interest, they actually harm it. As the North American Securities Administrators Association and the Council of Better Business Bureaus have concluded, "[w]hen the federal government holds a lottery, con artists are among those who profit the most." Nothing proves that more than the Commission's unhappy experience with MDS lotteries. As numerous newspaper articles and federal and state investigations have demonstrated, the Commission's wireless cable lotteries have done "more to enrich con artists than to grant ordinary citizens entree into the cable business." A. Crenshaw, "No Jackpot in This Lottery," Washington Post, Apr. 19, 1992. The mechanism for the con is the "application mill." The Commission's MDS lotteries have led to an "explosion in abusive application mills that seek to reel in unwary small investors with the lure of the latest in high tech and the promises of quick riches." Investor Alert, p. 1. This is not to say that there are no legitimate applications that arrive through application mills. But there is no doubting that application mills have left many victims in their wake. Victims of application-mill scams include not only unlucky investors but the public as well. The public is harmed both because it is denied fair compensation for use of the public spectrum, and also because applications from application mills, even when granted, too often do not result in the construction of wireless cable facilities. The public is thus denied access to a competitor to wired cable and to the improved service and lower prices we can expect to accompany such competition. Unfortunately, this discussion of application mills is highly relevant to the question before the Commission. Of the roughly 100 mutually exclusive applications for five sites that the Commission today commits to resolving by lottery, virtually all come through application mills with which the Mass Media Bureau is all too familiar. A single mill, Applied Telemedia Engineering and Management, Inc., is associated with 83 of the applications. That company was the target of a Federal Trade Commission investigation that resulted in the settlement of a federal-court complaint alleging deceptive conduct in connection with MDS applications. While the company denied wrongdoing, it nonetheless agreed, among other things, to the issuance of an injunction requiring that it pay $100,000 to the FTC for consumer redress and that it refrain from deceptive activities. Each of the 83 pending MDS applications involving Applied Telemedia was filed before entry of that federal injunction, and most were filed before the FTC action was initiated. In view of those facts, it strikes me as impossible to reconcile the majority's decision to award pending applications by random selection with one of Congress's main reasons for granting the Commission auction authority in the first place: deep dissatisfaction with lotteries. "[L]otteries have been characterized by `get rich quick' appeals by firms that would submit an application for a fee, so-called `licensing mills,' and by licenses landing in the hands of those ill equipped to build or operate a service properly utilizing radio spectrum." House Report, p. 248. The majority offers equitable considerations and administrative costs as its reasons for choosing lotteries over auctions. Those were the arguments offered in the context of pending applications for unserved cellular areas. They were unpersuasive then. They are even less persuasive now. With respect to equitable considerations, the majority ignores the critical fact: that the service for which pending applicants applied no longer exists. The Commission today significantly expands the protected service area for MDS licensees. Pending MDS applicants sought licenses to provide wireless cable service throughout a 710 square mile area. Lottery winners will receive far more valuable licenses to provide wireless cable service throughout a 3848 square mile area, an area five times as large. This extraordinary windfall is entirely undeserved. It is highly unlikely that many pending applicants for lotteries invested a significant amount of time or money in developing detailed business plans. Why should they when their chances of obtaining a license were those associated with a lottery? And, at least as a general rule, bona fide businesses forced to apply for a lottery would prefer an auction even now, because competitive bidding is far more likely than random selection actually to reward investment and innovation. While it is true that application mill applicants may have been convinced to "invest" unfortunate sums of money in a chance to win a lottery, that is hardly the kind of investment that sound public policy should reward. The majority tries to make much of the long (and certainly regrettable) delays experienced by many applicants, but I simply do not see how that justifies the windfall the majority awards them. The majority also mentions the application fees submitted by applicants, but it does not explain how a fee on the order of $150 justifies free commercial use of the spectrum or the public-interest costs associated with selecting licensees by lottery. A serious analysis of the equities would have to consider not only the equitable claims of pending applicants, but the equitable claims of others. The majority never considers, however, whether its decision is fair to those who chose not to apply for a small service area, but who would have applied for the larger and more valuable area that will now be given away. Nor does the majority ask whether its decision is fair to residents of the affected areas, who are now less likely to receive the benefits of competition, or to the American public as a whole, which will now be denied compensation for commercial use of the spectrum. With respect to administrative costs, the only issue the majority raises is a trivial one: that an auction would require applicants to update their applications. That strikes me as a cost easily worth bearing given the benefits of competitive bidding. Missing from the majority's analysis is any mention of the "public interest." The concept makes a brief appearance, perhaps, in the majority's statement that "there is no evidence before us that [application mill] applicants, if awarded an MDS station license by lottery, do not intend to construct and operate an MDS station." But surely the majority has it backwards. In light of the congressional finding (amply supported by Commission experience) that lotteries place licenses "in the hands of those ill equipped to build or operate a service properly utilizing radio spectrum," House Report, p. 248, lotteries should be spurned absent, at least, clear evidence that lottery applicants will actually construct and operate MDS stations. The Commission, it seems to me, is obliged to engage in a more extensive analysis of the public interest before choosing lotteries over auctions. While the Budget Act does give the Commission the discretion to reject auctions for applications pending before July 26, 1993, proper exercise of that discretion requires considering the public interest factors Congress deemed important enough to place in the Budget Act itself. The decision to resolve pending MDS applications by lottery cannot be squared with those factors. First, the majority's decision to distribute pending MDS applications by lottery will not promote "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." 47 U.S.C. 309(j)(3)(A). We can confidently infer from experience that the lottery winner is unlikely on its own to construct an MDS facility within one year, as required, at which point the spectrum will return to the Commission and have to be redistributed. Second, the majority's decision to distribute pending MDS applications by lottery will not promote "economic opportunity and competition" and will not ensure that new and innovative technologies are readily accessible to the public by encouraging small businesses, rural telephone companies, and businesses owned by minorities and women to become licensees. 47 U.S.C. 309(j)(3)(B). Random distribution of licenses is the antithesis of a Commission policy to ensure the diversity of licensees, and a spectrum licensing method that we know from experience to be inconsistent with a rapid build out ensures neither economic opportunity nor the ready accessibility of new technologies. Third, the majority's decision to distribute pending MDS applications by lottery obviously does not promote the "recovery for the public of a portion of the value of the public spectrum resource made available for commercial use and avoidance of unjust enrichment through the methods employed to award uses of that resource." 47 U.S.C. 309(j)(3)(C). It is hard to predict the revenue that the U.S. Treasury will be denied as a result of the majority's decision, particularly when the universe of sites subject to lottery may expand if the Commission does not dismiss as-yet reviewed applications or if the court reinstates applications that have been dismissed. We can be certain, however, that a lottery will generate no revenue at all, and that whatever amounts an auction would generate would be very warmly received by Congress and the Treasury. Finally, the majority's decision to distribute pending MDS applications by lottery is utterly inconsistent with the Commission's obligation to promote "efficient and intensive use of the electromagnetic spectrum." 47 U.S.C. 309(j)(3)(D). An auction winner would have an economic incentive to design and build its system to offer low-cost service to the public by, among other things, using spectrum-efficient technology that minimizes the need for future upgrades of its facilities to accommodate spectrum shortages. By contrast, a lottery winner, if it actually did build out its system, would be more likely to construct a system using relatively inexpensive, spectrum-inefficient technology, to allow for the sale of its license as soon as our rules permit. Three alternatives to lotteries present themselves. The Commission could require pending applicants to bid for the specific sites for which they applied. While better than a lottery, that is ultimately an unsatisfactory alternative given the likelihood that pending lottery applicants -- the bulk of which, again, came through application mills -- are not prepared to construct MDS stations and provide wireless cable service. The Commission could reopen the filing window and then subject those specific sites to competitive bidding. But that would leave the Commission in the business of licensing small specific sites, when the rest of today's Report and Order rejects that approach in favor of one that primarily relies on authorizations to rationalize wireless cable service within a large geographical area. The order quite persuasively explains the substantial public policy benefits of such an approach, with which, again, the majority's decision is inconsistent. Plainly, the preferred alternative flows from recognizing that licensing additional MDS stations on a small site-specific basis, as proposed in the pending applications, would frustrate the important public policy goals that the Commission's new approach to MDS furthers. The new rules, which require (among other things) that applications may be filed and granted only on a BTA basis, should apply to all pending applications for new MDS stations. Because pending applications are not consistent with the new rules, they should be dismissed, with applicants who desire to reapply and participate in the BTA auctions free to do so. It would not be the first time that the Commission has dismissed pending applications that were inconsistent with new Commission rules. See Private Operational-Fixed Microwave Service, 48 Fed. Reg. 32,578 (1983), aff'd, Affiliated Communications Corp. v. FCC, No. 83-1686, unpublished judgment (D.C. Cir. May 8, 1985); see also Dissenting Statement of Commissioner Ness (providing other examples). But it is hard to believe that there has been an occasion when such an approach was more justified. Separate Statement of Commissioner James H. Quello June 15, 1995 Re: Amendment of Parts 21 and 74 of the Commission's Rules with Regard to Filing Procedures in the Multipoint Distribution Service and in the Instructional Television Fixed Service (MM Docket No. 94-131) and Implementation of Section 309(j) of the Communications Act -- Competitive Bidding (PP Docket No. 93-253) I would like to make a few brief comments today on the issue of auctions versus lotteries for pending applications. Before I do so, I want to congratulate Barbara Kreisman and her staff for their diligence and hard work in reducing the backlog of MDS applications. This Commission unanimously agrees that the three items today will go a long way toward making this service a reality, which will benefit the American public by bringing a wireless competitor to cable television. Where we disagree is on the decision of how to treat pending applications during a time of transition from one licensing methodology, lotteries, to another, auctions. I will not belabor the relative problems or benefits of lotteries or auctions because this should not be a philosophical debate. We have before us approximately 100 applications for five sites that were filed many years before this Commission received auction authority. Such auction authority, I might note, was received during my tenure as Chairman. We were specifically granted discretion at that time, however, to determine how to process what I will call "pre-filed and accepted" applications for various communications services. But for our own administrative inability to process thousands of MDS applications in a timely manner we would not be faced with the problem of what to do with these applications that have been languishing in regulatory "Limbo" for over four years. The record does not evince any mal fides or intent to deceive by not constructing on the part of the applicants. We must therefore conclude that these applications were filed in good faith with the expectation that they would be processed under the rules in existence at the time of filing. Even though we have decided to modify the service somewhat we should not punish those applicants who were caught in the transition through no fault of their own. I believe that they have a significant vested equitable interest in having the applications that they paid fees to file processed in accordance with their expectations and our rules at that time. As this Commission has faced this issue in other services, such as Cellular Unserved for example, I have consistently maintained -- and will continue to conclude -- that unless directed otherwise by Congress, we should exercise the discretion we have been given to treat pending applicants fairly which means processing their applications under the rules extant at the time of filing. In this instance, this means that we should, as I believe the majority will decide, lottery the pending 100 applications for the five MDS sites and then proceed to auction new applications. In summary, I believe that it would be inequitable and administratively burdensome to force applicants for MDS station licenses, who filed their applications many years ago in reliance upon the lottery rules then in effect, to participate in an MDS auction, which -- unlike a lottery that can be held almost immediately -- cannot be held until the end of this year, which would, yet again, delay service to the public. Long before it became fashionable to talk about "serving our customers," I have endeavored to decide the matters before us by using common sense and fairness based on the facts. I do not believe it is our function to justify desired outcomes through legal technicalities. The fact that something is legally permissible does not make it right or fair. I have uncharacteristically spoken at some length today because I want to convey my deep- seated conviction that pending applications should be treated fairly by processing them under the rules in effect at the time of filing. June 15, 1995 SEPARATE STATEMENT OF COMMISSIONER SUSAN NESS DISSENTING IN PART Re: Licensing and Service Rules and Competitive Bidding Procedures for Multipoint Distribution Service I fully support the new rules for MDS licensing that we adopt today. I am confident that the licensing of MDS on a regional basis through competitive bidding will enhance existing wireless cable systems and bring about the construction of new systems in unserved areas. However, I dissent from that portion of the decision concerning our treatment of pending applications. I believe that the public interest would have been better served by applying our new rules to the pending MDS lottery applications, resulting in their dismissal, and permitting those applicants who choose to do so to bid in future MDS auctions. I do not favor using auctions at all costs. There may be some situations where, in light of all the factors, lotteries would be in the public interest. This is not such a case. I do not believe that the approach adopted today by the majority -- to permit pending applications to be awarded under the old lottery rules, but to enable them to benefit from the expanded protected service areas of the new rules -- serves the public interest. It does not comply with Congressional intent or Commission policy to reward speculation in this manner. It will delay, rather than enhance, the construction and growth of wireless cable services. I would prefer that the pending MDS applicants be subject to the competitive bidding procedures adopted today for new MDS applicants. Congress gave the FCC the authority to auction licenses, rather than award them by lottery, where mutually exclusive applications have been filed. Congress concluded that auctions, rather than lotteries, would better ensure that spectrum licenses will be awarded to those who most value them. The Omnibus Budget Reconciliation Act of 1993 ("OBRA") gives the Commission discretion to use either competitive bidding or lotteries for applications accepted for filing prior to July 26, 1993. The MDS pending applications present us with the opportunity to exercise that discretion and to determine which approach best serves the public interest. There are over 4,000 MDS applications pending at the FCC which were submitted before July 26, 1993. A small fraction of these applications have been accepted for filing. These applications were submitted under our old, pre-OBRA rules that authorized lotteries for specific geographic sites. The beneficial effects of using auctions are perhaps most evident in services where speculation has been rampant. MDS has just such a history. Over the last 27 months, over 1100 MDS authorizations have been cancelled or forfeited for failure to construct. Why? Because lotteries attract speculators -- individuals who have no relevant experience and no serious intention to construct and operate a wireless cable system. The high level of speculation has meant delay in our efforts to foster the effective delivery of wireless cable service. Incumbent MDS operators have been unable to aggregate additional channels. Potential new entrants have been smothered by the backlog of pending applications. In February 1993, the Commission took measures to stem the increasing speculation in MDS and to prevent rewarding speculators who had already applied. One measure adopted was a prohibition on partial and full settlement agreements among MDS applicants. The Commission found that few MDS applicants entering settlement agreements had any serious intention to construct; rather, most of them wished to have their applications granted solely for the purpose of later selling their authorizations to wireless cable operators in need of spectrum. In an attempt to ensure that "speculative applicants are not rewarded," the Commission applied the new prohibition on settlement agreements to both future and pending applications. The new rules we adopt today authorizing the use of competitive bidding to award MDS authorizations will finally eliminate the problems of speculation that have plagued MDS and will ensure that licenses in the future will go to those parties who value them the most. I recognize that lotteries could be held relatively soon for the five sites where, once our processing is complete, the Mass Media Bureau predicts there will be approximately 100 acceptable mutually exclusive pending applications. But the small number of applications at issue does not relieve us of the obligation to make a policy decision that carefully weighs all of the relevant factors. The evidence is overwhelming that few, if any, of these applicants have a bona fide intention to construct and operate an MDS system. Indeed, the practical result of a lottery in this instance is very likely to be the precise result Congress sought to eliminate when it gave the FCC auction authority. Even in the improbable event that a bona fide applicant wins a lottery, the result will be one more site-specific license encumbering the BTA, further frustrating the new method of licensing that we today embrace as the best approach for the future. The bona fide MDS applicants among these pending applications that the majority seeks to protect, if they exist, may or may not succeed in an auction. However, an auction at least ensures that they will compete for a license with parties who are equally serious in their commitment to build a wireless cable system, rather than with speculators lacking any intent to construct. Moreover, the majority has failed to consider the resources required for the further processing of the pending applications required by continuing with lotteries. The public would benefit from the reduction of the administrative burden on the agency by the dismissal of over 4,000 pending applications, the majority of which will be, or have already been, dismissed for technical deficiencies. The new BTA service areas and technical and operational rules we adopt today represent a very significant change in our licensing of MDS. I am persuaded that, under these changed circumstances, applying our new rules to the pending applications would conform with Commission precedent. The Commission's authority, and its need, to apply new rules to pending applications is not new and in fact has been invoked previously in MDS. In 1993, when the Commission adopted the prohibition on settlements among MDS applicants described above, the Commission specifically addressed the issue of applying the new rule to pending applications and its authority to do so. The Commission concluded at that time that "[i]t is well-settled that the rules applicable to previously-filed applications may be amended." Indeed, the new rules to expand the protected service areas of incumbents that we adopt today will be applied to pending MDS applications as well. The Commission has applied new rules to pending applications in other cases as well. See, e.g., Amendment of the Commission's Rules to Allow the Selection from Among Mutually Exclusive Competing Cellular Applications Using Random Selection or Lotteries Instead of Comparative Hearings, 98 F.C.C.2d 175 (1984), recon., 101 F.C.C.2d 577 (1985); Request for Pioneer's Preference in Proceeding to Allocate Spectrum for Fixed and Mobile Satellite Services for Low- Earth Orbit Satellites, 7 FCC Rcd. 1625, 1628 n. 22 (1992)("the Commission by rule making may adopt threshold eligibility criteria that affect pending applications if it determines that such rules serve the public interest"); Amendment of Part 90 of the Commission's Rules to Provide for the Use of the 220-222 MHz Band by the Private Land Mobile Radio Services, 7 FCC Rcd. 4484, 4489 n. 66 (1992). In this instance, application of our new rules for competitive bidding to pending lottery applications would necessarily result in the dismissal of those applications. The Commission has previously dismissed pending applications, without prejudice to the applicants' right to re-file, as a result of a change in rules. See Private Operational-Fixed Microwave Service, 48 Fed. Reg. 32,578 (1983)(citing the administrative burdens involved in resolving the changes needed as a result of rule changes, the Commission dismissed 1,400 pending applications and opened a new filing window for applicants to apply under the new rules), aff'd, Affiliated Communications Corp. v. FCC, No. 83-1686, unpublished judgment (D.C. Cir. May 8, 1985). All interested pending MDS applicants, once dismissed, would similarly be able to participate in the auctions for MDS authorizations for any BTA under our new rules. For all these reasons, I believe that the public would be better served if the Commission had chosen to employ competitive bidding procedures for all MDS authorizations and dismissed the pending MDS lottery applications, rather than proceeding with lotteries.