******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. In the Matter of Amendment of Part 90 of the ) Commission's Rules To Provide ) for the Use of the 220-222 MHz Band ) PR Docket No. 89-552 by the Private Land Mobile ) RM-8506 Radio Service ) Implementation of Sections 3(n) and 332) of the Communications Act ) GN Docket No. 93-252 ) Regulatory Treatment of Mobile Services) Implementation of Section 309(j) of the) Communications Act -- Competitive ) PP Docket No. 93-253 Bidding ) THIRD REPORT AND ORDER; FIFTH NOTICE OF PROPOSED RULEMAKING Adopted: February 19, 1997 Released: March 12, 1997 Comments Due: April 15, 1997 Reply Comments Due: April 30, 1997 By the Commission: Chairman Hundt approving in part, dissenting in part, and issuing a statement; Commissioners Ness and Chong issuing separate statements. Table of Contents Paragraph THIRD REPORT AND ORDER I. INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . .1 II. EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . .5 A. Nationwide Licensing . . . . . . . . . . . . . . . . . .6 B. Non-Nationwide Licensing . . . . . . . . . . . . . . . .7 C. Paging Operations; Channel Aggregation . . . . . . . . .7 D. Other Licensing Issues . . . . . . . . . . . . . . . . .8 E. Competitive Bidding Rules . . . . . . . . . . . . . . . 10 F. Use of Spectrum for Particular Services . . . . . . . 19 III. BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . 20 A. The 220-222 MHz Service . . . . . . . . . . . . . . . . 20 B. Legislative and Commission Actions Pursuant to Budget Act 23 C. 220 MHz Third Notice . . . . . . . . . . . . . . . . . 29 IV. DISCUSSION . . . . . . . . . . . . . . . . . . . . . . . 30 A. Overview . . . . . . . . . . . . . . . . . . . . . . . 30 B. Channel Assignment and Service Area Rules . . . . . . . 31 1. Nationwide Licensing . . . . . . . . . . . . . . . . 32 a. Background . . . . . . . . . . . . . . . . . . . . 32 b. In General . . . . . . . . . . . . . . . . . . . . 34 c. Non-Commercial Channel Set-Aside . . . . . . . . . 37 d. Assignment of Nationwide Channels . . . . . . . . 43 (1) Channel Assignment Method . . . . . . . . . . . 43 (2) Channel Block Sizes . . . . . . . . . . . . . . 48 (3) Limit on Nationwide Authorizations . . . . . . 51 (4) License Terms . . . . . . . . . . . . . . . . . 54 (5) Aggregation . . . . . . . . . . . . . . . . . . 55 2. Non-Nationwide Licensing . . . . . . . . . . . . . . 58 a. Background . . . . . . . . . . . . . . . . . . . . 58 b. Assignment and Permissible Uses of Channels 161-200 59 (1) Assignment of Public Safety Service Channels (Channels 161-170) . . . . . . . . . . . . . . . 59 (2) Assignment of EMRS Channels (Channels 181-185) 64 (3) Data-Only Channels (Channels 186-200) . . . . . 73 c. Assignment of the Remaining 125 Non-Nationwide Channels 75 (1) Initiation of Phase II Licensing . . . . . . . 76 (2) Eligibility . . . . . . . . . . . . . . . . . . 77 (3) Licensing Areas . . . . . . . . . . . . . . . . 78 (4) Channel Allocation Plan . . . . . . . . . . . . 82 (a) Proposed Band Plan . . . . . . . . . . . . . 82 (b) Adopted Band Plan . . . . . . . . . . . . . 85 (i) Number of EA and Regional Channels . . . 85 (ii) Contiguous Channel Assignments . . . . 87 (iii) Paging on a Primary Basis . . . . . . . 92 (iv) Aggregation of 5 KHz Channels . . . . . 96 (c) Features of the Band Plan . . . . . . . . .104 (5) Spectrum Efficiency Standard . . . . . . . . .110 (6) Emission Mask . . . . . . . . . . . . . . . . .120 d. Procedures for Assignment of Non-Nationwide Channels 123 (1) In General . . . . . . . . . . . . . . . . . .123 (2) Public Safety and EMRS Entities . . . . . . . .125 (3) Federal Government Users . . . . . . . . . . .130 (4) License Term . . . . . . . . . . . . . . . . .133 C. Technical and Operational Rules . . . . . . . . . . . .134 1. Fixed Operations . . . . . . . . . . . . . . . . . .134 2. Secondary, Fixed Operations . . . . . . . . . . . .140 3. Paging Operations . . . . . . . . . . . . . . . . .147 4. Other Technical Considerations . . . . . . . . . . .152 5. Construction Requirements . . . . . . . . . . . . .154 a. Nationwide Licensees . . . . . . . . . . . . . . .154 b. EA and Regional Licensees . . . . . . . . . . . .160 c. Licensees on Public Safety and EMRS Channels . . .166 d. General Construction Requirements Policy . . . . .167 6. Protection of Phase I Licensees . . . . . . . . . .169 7. Field Strength Limit at EA and Regional Border . . .180 D. Application Procedures. . . . . . . . . . . . . . . . .183 1. Pending Applications for 220 MHz Channels . . . . .183 2. Other Applications Issues . . . . . . . . . . . . .207 a. Initial Applications . . . . . . . . . . . . . . .208 b. Amendment of Applications and Modification of Authorizations 209 c. Special Temporary Authority . . . . . . . . . . .210 d. Renewal Expectancy . . . . . . . . . . . . . . . .213 E. Auction Rules . . . . . . . . . . . . . . . . . . . . .216 1. Competitive Bidding Design . . . . . . . . . . . . .216 2. Bidding Procedures . . . . . . . . . . . . . . . . .219 a. License Grouping . . . . . . . . . . . . . . . . .219 b. Bid Increments and Tie Bids . . . . . . . . . . .222 c. Stopping Rules . . . . . . . . . . . . . . . . . .226 d. Activity Rules . . . . . . . . . . . . . . . . . .231 e. Duration of Bidding Rounds . . . . . . . . . . . .239 3. Procedural and Payment Issues . . . . . . . . . . .242 a. Pre-Auction Application Procedures . . . . . . . .242 b. Short-Form Applications . . . . . . . . . . . . .247 c. Short-Form Application Amendments and Modifications 250 d. Upfront Payments . . . . . . . . . . . . . . . . .253 e. Down Payments and Full Payments . . . . . . . . .257 f. Bid Withdrawal, Default, and Disqualification . .261 g. Long-Form Applications . . . . . . . . . . . . . .267 h. Petitions to Deny and Limitations on Settlements .270 4. Regulatory Safeguards . . . . . . . . . . . . . . .273 a. Anti-Collusion Rules . . . . . . . . . . . . . . .273 b. Transfer Disclosure Requirements . . . . . . . . .276 5. Treatment of Designated Entities . . . . . . . . . .279 a. Overview and Objectives . . . . . . . . . . . . .279 b. Small Businesses . . . . . . . . . . . . . . . . .281 c. Minority- and Women-Owned Businesses . . . . . . .284 d. Small Business Definition . . . . . . . . . . . .289 e. Bidding Credits . . . . . . . . . . . . . . . . .296 f. Installment Payments, Upfront Payments, and Down Payments 299 g. Partitioning . . . . . . . . . . . . . . . . . . .306 h. Transfer Restrictions and Unjust Enrichment Provisions 312 i. Spectrum Set-Asides . . . . . . . . . . . . . . .317 FIFTH NOTICE OF PROPOSED RULEMAKING V. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . .320 VI. DISCUSSION . . . . . . . . . . . . . . . . . . . . . . .322 A. Partitioning and Disaggregation for 220 MHz Service . .322 B. Available License Area . . . . . . . . . . . . . . . .324 C. Minimum or Maximum Disaggregation Standards . . . . . .326 D. Combined Partitioning and Disaggregation . . . . . . .327 E. Construction Requirements . . . . . . . . . . . . . . .328 F. License Term . . . . . . . . . . . . . . . . . . . . .341 G. Competitive Bidding Issues . . . . . . . . . . . . . .343 H. Licensing Issues . . . . . . . . . . . . . . . . . . .345 VII. PROCEDURAL MATTERS . . . . . . . . . . . . . . . . . . .346 VIII. ORDERING CLAUSES . . . . . . . . . . . . . . . . . . . .350 APPENDICES A. Final Regulatory Flexibility Act Analysis B. Revisions to Commission Rules C. List of Parties Filing Comments and Reply Comments D. Codes and Names for Economic Areas (EAs) E. Regional Economic Area Groupings (REAGs) F. Initial Regulatory Flexibility Act Analysis THIRD REPORT AND ORDER I. INTRODUCTION 1. By this Third Report and Order, we adopt rules to govern the future operation and licensing of the 220-222 MHz band (220 MHz service). This action is taken as part of our continuing implementation of the regulatory framework for mobile radio services enacted by Congress in Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, which amended Sections 3(n) and 332 of the Communications Act of 1934. As part of the implementation of the Budget Act, we initiated a series of rulemaking proceedings to provide guidelines for the regulation of commercial and private mobile radio services, including the 220 MHz service, consistent with the policy of regulatory symmetry as reflected in the revisions to Section 332 of the Act. 2. One of our actions resulting from these proceedings, the CMRS Third Report and Order in GN Docket No. 93-252, addressed a variety of issues relating to the licensing of the 220 MHz service, but deferred a detailed examination of that service to a separate rulemaking proceeding. That proceeding was initiated by the adoption of the Second Memorandum Opinion and Order and Third Notice of Proposed Rulemaking in PR Docket No. 89-552 (Third Notice), where we proposed a new licensing plan for 220 MHz service. The Third Report and Order adopted today generally establishes that proposal for the Phase II licensing of the 220-222 MHz band, with some modifications that we discuss in the following sections. 3. As stated in the Third Notice, our goal is to establish a flexible regulatory framework that will allow for the efficient licensing of the 220-222 MHz band, eliminate unnecessary regulatory burdens on both Phase I and Phase II licensees, and enhance the competitive potential of the 220 MHz service in the mobile services marketplace. We believe that the adoption of the rules set forth in today's Order will enable us to continue to promote the development of advanced radio technologies, while making the widest variety of mobile communications services available to the American public. 4. In the Fifth Notice of Proposed Rulemaking, we propose to permit Phase I nationwide licensees to partition their licenses. We also seek comment on whether to permit and how to implement spectrum disaggregation for both Phase I and Phase II licensees. II. EXECUTIVE SUMMARY 5. The following is a summary of the rules adopted in this Order for Phase II licensing of the 220-222 MHz band: A. Nationwide Licensing 6. We will return the pending, mutually exclusive applications for the four non- commercial, Phase I nationwide licenses and adopt a new licensing procedure for the 30 channels associated with these licenses. The Phase II licensing of these channels will be governed by the following rules: þ The 30 channels will be licensed on a nationwide basis to all applicants -- i.e., applicants that intend to use the channels to offer commercial services as well as applicants that intend to use the channels for their private, internal use. þ The channels will be assigned, in the form of three 10-channel authorizations, through competitive bidding, based upon our conclusion that the principal use of the spectrum will be for the provision of for-profit, subscriber-based services. B. Non-Nationwide Licensing 7. We will assign Phase II, non-nationwide 220 MHz channels in the following manner: þ Fifty channels in 175 geographic areas defined as Economic Areas by the Bureau of Economic Analysis, Department of Commerce (``EA licenses'') and 75 channels in the geographic areas defined by six ``Regional Economic Area Groupings'' (``Regional licenses'') as follows: NON-NATIONWIDE 220 MHz CHANNEL ALLOCATION PLAN EA BLOCK CHANNELS A: Channel Groups 2, 13 10 B: Channel Groups 3, 16 10 C: Channel Groups 5, 18 10 D: Channel Groups 8, 19 10 E: Channels 171-180 10 TOTAL 50 REGIONAL BLOCK CHANNELS F: Channel Groups 1, 6, 11 15 G: Channel Groups 4, 9, 14 15 H: Channel Groups 7, 12, 17 15 I: Channel Groups 10, 15, 20 15 J: Channels 186-200 15 TOTAL 75 þ We make these channels available to all eligible applicants, and we resolve mutually exclusive applications for these channels through competitive bidding. þ We permit EA and Regional licensees to operate stations anywhere within their geographic borders, provided that their transmissions do not exceed a predicted field strength of 38 dBuV/m at their border, and they protect the base stations of Phase I licensees in accordance with the existing co-channel separation criteria for 220 MHz stations. þ We provide a 10-year license term for EA and Regional licensees, and we require EA and Regional licensees to meet five- and ten-year construction benchmarks. þ We continue to assign, on a single-station basis, 10 channels to applicants eligible in the Public Safety Radio Services (PSRS) and five channels to applicants eligible in the Emergency Medical Radio Service (EMRS) to meet internal communications needs. þ We assign five of the 10 PSRS channel pairs on a shared basis to all public safety eligibles. In so doing, we enable public safety licensees within a particular geographic area to share these channels and coordinate the location and operation of base stations on these channels, which will enable them to communicate more effectively with each other during emergencies. þ We assign channels in the PSRS and EMRS pools on a first-come, first-served basis and resolve mutually exclusive applications by random selection procedures. C. Paging Operations; Channel Aggregation þ We allow Phase I and Phase II, nationwide and non-nationwide 220 MHz licensees to operate paging systems without the requirement that such use be on an ancillary basis to land mobile operations. þ We allow Phase I and Phase II, nationwide and non-nationwide 220 MHz licensees, to aggregate any of their contiguous 5 kHz channels and operate on channels wider than 5 kHz, so long as they comply with the prescribed spectrum efficiency standard. D. Other Issues 1. Technical and Operational Matters 8. We modify our existing 220 MHz rules with regard to certain technical and operational matters as follows: þ We allow Phase I and Phase II, nationwide and non-nationwide, non-CMRS 220 MHz licensees to operate fixed stations without the requirement that such use be on an ancillary basis to land mobile operations. þ We allow licensees using the 220-222 MHz band for geophysical telemetry operations to operate fixed stations on a temporary basis, without the requirement that such use be ancillary to land mobile operations, and on a secondary basis to Phase I and Phase II licensees authorized to operate on 220 MHz channels on a primary basis. 2. Application Procedures 9. We adopt the following procedures and definitions for initial applications, amended applications, applications to modify authorizations, and renewal of authorizations: þ We define initial applications for 220 MHz licenses as applications for the nationwide, EA, and Regional licenses to be assigned in Phase II. þ We adopt the same procedures for amending applications and modifying authorizations for Phase II 220 MHz licenses that are established for other Part 90 Commercial Mobile Radio Services (CMRS). þ We adopt the same procedures for obtaining grants of Special Temporary Authority (STA) for Phase II 220 MHz licenses that are established for other Part 90 CMRS services. þ We adopt for all 220 MHz licensees the renewal standards adopted in the CMRS Third Report and Order for Part 90 CMRS services. E. Competitive Bidding Rules 1. Competitive Bidding Design 10. We will award a total of three nationwide, 30 Regional, and 875 EA licenses in the Phase II 220 MHz service. We will use a single simultaneous multiple round auction to award these licenses. Both incumbents and new entrants are eligible to bid for all nationwide, Regional, and EA licenses. 11. The Wireless Telecommunications Bureau will, by Public Notice prior to the auction, announce guidelines for bid increments, i.e., the amount or percentage by which the bid must be raised above the previous round's high bid in order to be accepted as a valid bid in the current bidding round. We will use a simultaneous stopping rule and the Milgrom-Wilson activity rule for this auction. The timing and duration of auction rounds will be determined by the Wireless Telecommunications Bureau and announced by Public Notice or by announcement during the auction. We will use bid withdrawal and default rules for this auction similar to those used in the broadband PCS auctions. 2. Procedural and Payment Rules 12. Applicants will apply for the Phase II 220 MHz auction by filing a short-form application (FCC Form 175), indicating the markets and spectrum blocks for which they seek to apply, and paying an upfront payment. The Wireless Telecommunications Bureau will set the amount of the upfront payment taking into account such factors as the population in each geographic license area and the value of similar spectrum. 13. At the conclusion of the auction, winning bidders must submit their down payments and file their long-form applications (FCC Form 600). The down payments required of all winning bidders will be 20 percent of their winning bids. 3. Regulatory Safeguards 14. The Phase II 220 MHz auction will be subject to regulatory safeguards to prevent applicants from colluding during the auction or obtaining unjust enrichment from subsequent transfers of their licenses. 4. Designated Entities 15. We will not establish an entrepreneurs' block for the 220 MHz band. Instead small businesses will be eligible for bidding credits and an installment payment plan. For purposes of determining small business status, we will attribute the gross revenues of all controlling principals in the small business applicant as well as the gross revenues of affiliates of the applicant. We define two categories of small businesses: (1) a small business is an entity that, together with affiliates and controlling principals, has average gross revenues that are not more than $15 million for the preceding three years; and (2) a very small business is an entity that, together with affiliates and controlling principals, has average gross revenues that are not more than $3 million for the preceding three years. 16. Very small businesses meeting the not more than $3 million benchmark are eligible for a 25 percent bidding credit on any Phase II 220 MHz license; small businesses meeting the not more than $15 million benchmark are eligible for a ten percent bidding credit on any Phase II 220 MHz license. Licensees who qualify as small businesses or very small businesses in 220 MHz auctions will be eligible to pay their winning bid amount in quarterly installments over the term of the license with interest charges to be fixed at the time of licensing at a rate equal to the rate for ten-year U.S. Treasury obligations plus 2.5 percent. These licensees may make interest- only payments for the first two years of the license term. We do not adopt reduced upfront payments or reduced down payments for small businesses in the Phase II 220 MHz service. 17. We will adopt unjust enrichment provisions similar to those adopted for narrowband PCS and the 900 MHz SMR service. If a licensee that qualifies for bidding credits and installment payments seeks to assign or transfer control of its license during its term to an entity that does not meet the small business or very small business definition, we will require payment of all or a portion of the bidding credit, remaining principal and any interest accrued through the date of assignment as a condition of the license assignment or transfer. 5. Partitioning and Disaggregation 18. We will permit any holder of a Phase II 220 MHz license to partition portions of its authorization and enter into contracts with eligible parties, allowing such parties to file long-form applications for the usable channels within the partitioned area. We will not at this time authorize spectrum disaggregation for the Phase II 220 MHz service. F. Use of Spectrum for Particular Services 19. The Commission makes no warranties about the use of this spectrum for particular services. Applicants should be aware that a Commission auction represents an opportunity to become a Commission licensee in this service, subject to certain conditions and regulations. A Commission auction does not constitute an endorsement by the Commission of any particular services, technologies, or products, nor does a Commission license constitute a guarantee of business success. Applicants should perform their individual due diligence before proceeding as they would with any new business venture. III. BACKGROUND A. The 220-222 MHz Service 20. In 1988, the Commission adopted the 220 MHz Allocation Order, reallocating the 220-222 MHz band from the Amateur Radio service to private and Federal Government land mobile use. In so doing, we dedicated this spectrum for the development of spectrally-efficient narrowband technology to afford this technology an opportunity to gain acceptance in the marketplace. The 220 MHz service was then established in 1991 with the adoption of the 220 MHz Report and Order. It is regulated under Subpart T of Part 90 of our Rules. 21. In the 220 MHz Report and Order, the Commission adopted service rules for the assignment of 200 five kilohertz (kHz) channel pairs in the 220-222 MHz band to both Federal Government and private land mobile users. We authorized 60 of the 200 channel pairs for nationwide licensing, with 10 of these designated for assignment to Federal Government entities. The remaining 50 nationwide channel pairs were reserved for non-Government users, with 20 channel pairs designated for ``commercial'' use and 30 channel pairs designated for ``non- commercial'' use. The 20 commercial channel pairs were divided into four five-channel blocks and the 30 non-commercial channel pairs were divided into two 10-channel and two five-channel blocks. We allocated the remaining 140 channel pairs for non-nationwide use by both Government and non-Government licensees. We also decided that all applications for 220 MHz channels would be granted on a first-come, first-served basis and that mutually exclusive applications would be assigned through random selection procedures. 22. On May 1, 1991, the Commission began accepting applications for nationwide and non-nationwide licenses in the 220-222 MHz band. We received more than 59,000 applications, and on May 24, 1991, the Private Radio Bureau imposed a freeze on the filing of all applications, which included initial and modification applications, for the 220 MHz service. In 1992 and 1993 we conducted random selection proceedings to resolve mutually exclusive non- nationwide and nationwide applications, respectively, and issued nearly 3,800 authorizations for non-nationwide stations and four licenses for nationwide, commercial systems. On July 30, 1992, certain aspects of the Commission's procedures for the filing and acceptance of 220 MHz license applications were appealed to the United States Court of Appeals for the District of Columbia. In light of that appeal, the Private Radio Bureau announced that the construction deadline for all non-nationwide 220 MHz stations would be 120 days after the disposition of the Evans v. FCC case. Following the settlement of the case in March 1994, the deadline for licensees to construct their systems and place them in operation has been extended on five separate occasions to allow licensees sufficient time to construct their systems. In addition, as a consequence of the freeze, licensees wishing to relocate their authorized facilities through license modifications were unable to do so. Because of the freeze on 220 MHz applications, licensees relied on grants of Special Temporary Authority to modify their authorizations. On January 26, 1996, we adopted the 220 MHz Second Report and Order. In that proceeding, we re-opened the filing window for non-nationwide 220 MHz licensees who sought to obtain modification of the authorizations to relocate their base stations. B. Legislative and Commission Actions Pursuant to Budget Act 23. On August 10, 1993, Congress enacted the Budget Act, in which it, inter alia, amended Section 332 of the Communications Act of 1934 to replace the existing land mobile radio regulatory scheme with two newly defined categories of mobile services: commercial mobile radio service (CMRS) and private mobile radio service (PMRS). CMRS is defined as ``any mobile service (as defined in section 3 [of the Communications Act]) that is provided for profit and makes interconnected service available (A) to the public or (B) to such classes of eligible users as to be effectively available to a substantial portion of the public.'' PMRS is defined as ``any mobile service (as defined in section 3) that is not a commercial mobile service or the functional equivalent of a commercial mobile service, as specified by regulation by the Commission.'' 24. The statute directed the Commission to implement these classifications in its regulations and to provide for comparable regulation of substantially similar CMRS services. Accordingly, we initiated our CMRS proceeding in GN Docket No. 93-252 and began the process of implementing the Budget Act in the CMRS Second Report and Order released on March 7, 1994. In the CMRS Second Report and Order, we determined that our private land mobile service rules with respect to Specialized Mobile Radio (SMR), Business Radio, 220-222 MHz, and private paging allow, but do not require, licensees to offer for-profit, interconnected service to the public, thus meeting the CMRS definition. We found that, to the extent that 220- 222 MHz channels are used to offer for-profit and interconnected service, the channels fall within the definition of CMRS. We also adopted a timetable for transition to the new regulatory structure for reclassified CMRS licensees as set forth in the Budget Act. Licensees authorized before enactment of the Act on August 10, 1993, and reclassified as CMRS continued to be regulated as private service providers for a three-year period, until August 10, 1996. 25. In addition, the Budget Act granted the Commission the authority to use competitive bidding to choose among mutually exclusive applications for initial licenses. Under Section 309(j)(2) of the Communications Act, the Commission may use competitive bidding if it finds that the principal use of the spectrum is reasonably likely to involve the offering of service to subscribers in return for compensation for such service. Also, Section 309(j)(2) requires the Commission to find that competitive bidding will promote the objectives described in Section 309(j)(3). 26. On April 20, 1994, we adopted the CMRS Further Notice, in which we proposed revisions to our technical, operational, and licensing rules and procedures for reclassified CMRS services. The Budget Act required that we determine if a reclassified private land mobile service is ``substantially similar'' to a common carrier service and, if so, the extent to which it is ``necessary and practical'' to modify our rules to ensure that the two services are subject to ``comparable'' technical requirements. 27. On August 9, 1994, we adopted the CMRS Third Report and Order. We noted therein that a substantial majority of commenters addressing the 220 MHz service contended that, for technical reasons, 220 MHz service is not substantially similar to any Part 22 service. We concluded, however, that most commenters had taken a relatively narrow view of the range and scope of CMRS competition, and that, for purposes of determining whether CMRS services are substantially similar, 220 MHz offerings have the potential to compete with other commercial mobile offerings as technology evolves and the offerings begin to gain commercial acceptance. 28. After reviewing the pleadings, we decided to defer consideration of a new licensing plan for the 220 MHz service based on different-sized channel blocks or service areas to a separate proceeding, where a more comprehensive record could be developed. While adopting the use of competitive bidding procedures to resolve competing CMRS applications, we specifically deferred the adoption of new application filing and selection procedures for the 220 MHz service to the instant proceeding. We also deferred any decision regarding the definition of initial applications, amendments to applications, and license modifications for the service to this proceeding. C. 220 MHz Third Notice 29. On July 28, 1995, the Commission adopted the 220 MHz Third Notice, which proposed a new framework for the operation and licensing of the 220-222 MHz band. In that proceeding, we proposed that: (1) Phase II 220 MHz spectrum be authorized through a combination of nationwide and regional licensing; (2) 220 MHz licensees be permitted to offer certain, currently unauthorized communications services on a primary basis, (e.g., paging, and fixed operations); (3) we would preserve allocations of 220 MHz spectrum for eligibles in the Public Safety Radio Services and the Emergency Medical Radio Service (EMRS); and (4) mutually exclusive applications for all Phase II channels, with the exception of the channels allocated for public safety and EMRS entities, would be assigned through competitive bidding. IV. DISCUSSION A. Overview 30. Based on our review of the comments in the CMRS Further Notice, the CMRS Third Report and Order, and related CMRS decisions, and the status of the 220 MHz service under the current regulations, we decided, in the 220 MHz Third Notice, to propose a revised regulatory scheme for the 220 MHz service. The proposed rules would govern all Phase II applicants and licensees in the 220 MHz service, as well as certain existing Phase I licensees. Our plan was to retain the basic framework of the technical and operational rules consistent with the original service goals, but to revise them to permit more flexible operations consistent with the goals of the Budget Act for reclassified CMRS licensees. We received 33 comments and 15 reply comments, from a broad segment of interested parties, in response to the various proposals we made in the Third Notice. A list of commenters is found in Appendix C. B. Channel Assignment and Service Area Rules 31. In the Third Notice, we indicated that by providing both nationwide and non- nationwide 220 MHz channels, we would enable a variety of services to be made available to the public. We therefore proposed that both nationwide and non-nationwide assignments continue to be made available in Phase II in the 220 MHz service. We now conclude that in Phase II licensing of the 220 MHz band, we should provide for both nationwide and non-nationwide channels. The channel assignment and service rules that we are adopting for nationwide and non-nationwide licensing of the 220 MHz band are discussed in the following sections. 1. Nationwide Licensing a. Background 32. We decided, in our 220 MHz Report and Order, to authorize 60 of the 200 channel pairs in the 220-222 MHz band for nationwide licensing. Ten of these channel pairs were for assignment to Federal Government entities and of the remaining 50 channel pairs reserved for non-Government users, 20 were designated for ``commercial'' use and 30 were designated for ``non-commercial'' use. The 20 commercial channel pairs were divided into four five-channel blocks (Channels 21-25, 26-30, 151-155, and 156-160). The 30 non-commercial channel pairs were divided into two 10-channel blocks (Channels 51-60 and 141-150), and two five-channel blocks (Channels 81-85 and 86-90). On May 1, 1991, we received 140 applications for the four commercial licenses. We also received 14 applications for the two 10-channel non-commercial licenses and 20 applications for the two five-channel non-commercial licenses. 33. The rules adopted in the 220 MHz Report and Order provided that applicants for nationwide authorizations would have to submit additional information to satisfy specified entry criteria and financial requirements. Applicants were not required to file this information at the time they filed their applications, but rather were to be notified in a public notice when this information should be submitted. In our 220 MHz Memorandum Opinion and Order, released July 16, 1992, we modified the entry criteria and financial requirements for nationwide authorizations. Subsequently, a petition was filed seeking reconsideration of certain of these modifications relating to the licensing of nationwide, non-commercial systems. Consequently, the Private Radio Bureau announced, in a September 29, 1992, Public Notice, that it would require the amending application information from nationwide commercial applicants by November 19, 1992, but that it would not accept filings from non-commercial applicants until the adoption of an order addressing the petition for reconsideration of the 220 MHz Memorandum Opinion and Order. Following the receipt of the filings from the commercial applicants, the Bureau conducted a lottery on March 31, 1993, that led to the assignment of the four nationwide commercial licenses. In the 220 MHz Second Reconsideration Order, released June 21, 1993, we addressed the matters relating to non- commercial nationwide licensing raised on reconsideration. However, following the adoption of the 220 MHz Second Reconsideration Order, we received three additional petitions seeking reconsideration of certain decisions in that Order. With this proceeding not yet terminated, we have not solicited the amending application information from the applicants for non-commercial licenses. b. In General (1) Proposal 34. In the Third Notice we found, citing the experience in the nationwide narrowband PCS auction, that there was an apparent demand in the mobile communications marketplace for nationwide licenses. We also found nationwide licenses would increase competition among nationwide wireless communications providers and would help meet future customer demand for nationwide service. We tentatively concluded that the 30 channels originally designated for nationwide, non-commercial use should continue to be designated for nationwide operations. We sought comment on whether these channels should be so designated or whether they should be made available for some form of non-nationwide operations. (2) Comments 35. No commenters argue against a designation for nationwide channels. Metricom, in supporting a nationwide channel designation, argues that, without a nationwide designation, carriers seeking to offer nationwide services would be forced to acquire five regional licenses or more than 150 EA licenses. Pagenet favors nationwide licensing because, in its view, there clearly is consumer demand for nationwide services. (3) Decision 36. We conclude that, recognizing the consumer demand for nationwide services, the 30 channels originally designated for nationwide use should continue to be allotted for nationwide operations. Nationwide licenses will alleviate the problem of licensees having to aggregate smaller licensed service areas in order to provide their customers with nationwide service. Also, since potential competitive services have designations for nationwide service, a nationwide designation in this service will lead to increased competition among those services. Licensees authorized on these channels will be permitted to construct stations and place them in operation anywhere in the Nation so long as licensees ensure that: (1) they operate their stations in accordance with the provisions of Sections 1.1301 through 1.1319 of our Rules (Procedures Implementing the National Environmental Policy Act of 1969); (2) they operate their stations in compliance with their air safety responsibilities, as outlined in Part 17.6 of our Rules; and (3) they are in compliance with all applicable international agreements (e.g., Section 90.715 relating to operation in U.S./Mexican border areas). c. Non-Commercial Channel Set-Aside (1) Proposal 37. In the Third Notice, we noted that we previously did not decide to set aside spectrum for nationwide, non-commercial operations to satisfy some perceived demand on the part of the public for the use of such spectrum. Rather, we were concerned with implementing rules that would encourage the development of 5 kHz technology, and thus concluded that a combination of commercial and non-commercial nationwide channels would ``promote the widest variety of advanced narrowband development.'' With our Phase I authorization of 3,800 non-nationwide licenses, which will be used for both commercial and non-commercial purposes, we believed that we had taken steps to promote the development of narrowband technology, as envisioned in the 220 MHz Report and Order. We tentatively concluded, therefore, that there should be no set- aside for non-commercial channels in Phase II licensing, and that nationwide channels should be made available equally to all applicants. We sought comment on this tentative conclusion. (2) Comments 38. Several commenters urge the Commission to maintain a non-commercial set-aside for the 220 MHz service. Global, 360, and Airborne argue that the Commission originally designated a non-commercial set-aside based on perceived demand on the part of large companies to meet their internal communication needs. Several commenters argue that there is a continuing demand for a non-commercial set-aside in this service. Some commenters contend that the fact that there are 33 applications for the nationwide, non-commercial licenses proves this demand still exists. Several commenters reason that these companies would not have spent their time and funds applying for these licenses if they had no need for them. AMTA states that companies still need these non-commercial licenses to meet their critical internal communication needs. Airborne, Fleet, UTC, and Columbia state in their comments that, if they are awarded one of these licenses, they will use the license to meet internal communication needs. 39. Several commenters argue that, for reasons such as cost, high demand for commercial services, and inability to meet companies' technical requirements, commercial services are not able adequately to fulfill their internal communications needs. Ericsson contends that the pending applications illustrate that the primary use of these 220 MHz spectrum licenses will not be commercial. ITA argues that the Commission has the authority to require additional information from the applicants to ensure that potential licensees will use the spectrum internally. Furthermore, Comtech also argues that narrowband technology still needs to be promoted and that a non-commercial set aside will spur growth in this area. 40. Other commenters argue that there should not be a set-aside for non-commercial nationwide use in the 220 MHz service. Pagenet contends that, with the advances that have been made in efficient use of the spectrum, it is hard to envision any business with internal communication needs which will require the total spectrum allotted for each 220 MHz authorization. U.S. Mobilcomm contends that, since the Commission's rules allow for the leasing of excess capacity, there is already a de facto commercial allotment of this spectrum. Pagenet alleges that a non-commercial set-aside will do nothing to encourage the development and efficient use of the 220 MHz band. U.S. Mobilcomm and Pagenet argue that, if the spectrum is redesignated, marketplace economics will ensure that licensees will use the spectrum to the fullest possible extent. Metricom contends that redesignating this spectrum for commercial use will open the nationwide spectrum to a myriad of uses that would provide a variety of services to consumers. Pagenet points out that wide-area or nationwide service needs of individual companies can be met by commercial operators. 41. Several commenters point out that the original reason for the non-commercial set- aside was to encourage development of 5 kHz technology, and not to satisfy perceived demand for non-commercial use. Metricom argues that this goal has been achieved through the authorization of 3,800 licenses for 220 MHz services. SMR and U.S. Mobilcomm state that narrowband technology has been widely developed and employed. (3) Decision 42. We find that it would be in the public interest to also allow commercial operations on the channels formerly designated solely for non-commercial operations. Our decision is based in part upon our conclusion that making the spectrum available for both commercial and non- commercial use is an effective means of promoting efficient use of the spectrum. First, the parties in this proceeding demonstrate apparent demand for nationwide spectrum for the provision of commercial services to the public. Second, we think that allowing Phase II 220 MHz nationwide licensees to partition their licenses and, in addition, proposing to permit them to disaggregate their spectrum should also help to meet the needs of non-commercial users. Third, we believe that companies may be able to meet some of their internal communications needs through the purchase of service from a commercial provider. Fourth, we are not precluding a nationwide licensee from using some or all of its spectrum for internal communications. Thus, an applicant that is committed to the use of spectrum for non- commercial purposes will have the opportunity to acquire a license for the spectrum at auction, just as they might purchase a license from an existing licensee in the secondary market. Also, if the highest value for this spectrum (as determined by the marketplace) is internal communications, then the auction winner will use the spectrum for that use. d. Assignment of Nationwide Channels (1) Channel Assignment Method (a) Proposal 43. In deciding the assignment methodology for resolving mutually exclusive applications for the Phase II nationwide channels, we are instructed by Section 309(j) of the Communications Act and the Competitive Bidding Second Report and Order to determine the principal use of the spectrum. In proposing to make the 30 Phase II nationwide licenses available for both commercial and non-commercial use, we indicated in the Third Notice that we could not determine with absolute certainty, in advance of authorization, whether the primary use of this spectrum would be for licensees' internal use or for the provision of for-profit, subscriber- based services. Based on a review of our records, we tentatively concluded that the vast majority of the 59,000 applicants for 220 MHz non-nationwide stations intended to use their authorized spectrum to provide services to subscribers on a for-profit basis. 44. Although we recognized that the projected use of 220 MHz channels for non- nationwide operations may not necessarily parallel the planned use of the channels by nationwide licensees, we believed that the fact that most non-nationwide applicants apparently intended to use the channels for commercial use was a strong indication that this will also likely be the principal use of the spectrum by prospective nationwide licensees. We thus tentatively concluded that the principal use of the 30 channels allocated for nationwide use is most likely to be for the transmission or reception of communications signals to subscribers for compensation and, therefore, in accordance with Section 309(j)(2)(A) of the Communications Act, mutually exclusive applications for initial licensing of these channels should be assigned by competitive bidding. (b) Comments 45. Pagenet notes that there is no doubt that once this spectrum is awarded licensees in fact will use the spectrum for commercial, for-profit activities. ITA, UTC, and Ericsson argue, however, that there is no evidence to indicate that the current applicants for these channels would offer commercial services. UTC also notes that even if the Commission concludes that the current applicants would be likely to offer subscriber-based service, the auction statute does not compel the Commission to use competitive bidding. (c) Decision 46. Based on our analysis in the Third Notice, we adopt our proposal to assign mutually exclusive applications for nationwide licenses through competitive bidding. In the Competitive Bidding Second Report and Order, we found that the Commission must look to the service rather than the individual licenses to determine whether the principal use of the spectrum is reasonably likely to meet the criteria set forth in Section 309(j). The three commenters who maintain that the use of this spectrum will be for non-commercial purposes do so on the basis of the most likely principal use by current 220 MHz applicants. Even if we were to agree arguendo with the claims made by these commenters, we do not believe it would be reasonable or prudent to base our analysis concerning the principal use of this spectrum solely on the likely principal use by current applicants. These applicants applied for non-commercial licenses; potential licensees who want to use this spectrum for commercial purposes would not have applied for these licenses during the original filing period because the licenses were designated for non- commercial use. 47. There is no evidence in the record which contradicts our tentative conclusion in the Third Notice that, if the 30 Phase II nationwide channels are available to all prospective applicants, then the principal use of the spectrum is most likely to be for the transmission or reception of communications signals to subscribers for compensation. In reaching the decision that this spectrum should be auctioned, we find that assigning this spectrum through competitive bidding will promote achievement of our legislative mandate to ensure an ``efficient . . . Nation- wide . . . radio communication service with adequate facilities at reasonable charges . . . .'' We also conclude that use of competitive bidding to assign this spectrum contributes to our statutory obligation to seek to promote the development of new technologies and service to benefit the public, and to seek to promote efficient and intensive use of the spectrum. (2) Channel Block Sizes (a) Proposal 48. In the 220 MHz Report and Order, we assigned the 30 nationwide, non-commercial channels in two five-channel and two 10-channel blocks. In the Third Notice we proposed to allow future 220 MHz licensees to offer a wider variety of communications services than are currently permitted in the 220 MHz service. We noted that, in order to provide these services, nationwide licensees may require more spectrum than would be available in an authorization consisting of only five 5 kHz channels. We therefore proposed to assign the 30 nationwide channels in Phase II in three 10-channel blocks (Channels 51-60, 81-90, and 141-150) of 5 kHz channels. We sought comment on this proposed channel assignment plan, as well as any alternative channel assignment proposals. (b) Comments 49. The only parties addressing this issue, Metricom and Pagenet, support the proposed channel assignment plan. Metricom notes that many of the new services being proposed will require far greater bandwidth than a five-channel block. Pagenet believes that the assignment of 10-channel blocks will allow licensees to compete in the CMRS marketplace by offering a variety of PCS type, one-way, two-way, data, and other services. (c) Decision 50. We agree with the commenters that the Commission's proposal to expand the permitted uses in the 220 MHz band requires that we reexamine our original channel block sizes. In order to accommodate these new services, many of which will require more spectrum than would be available in a five-channel block, we will adopt our proposal to assign the 30 nationwide channels in Phase II in three 10-channel blocks (Channels 51-60, 81-90, and 141- 150). We believe that this plan will increase the economic viability of the 220 MHz systems, thus allowing the licensees to more fully serve the needs of the public. We also conclude that our decision to license 220 MHz nationwide licenses in 10-channel blocks, along with our other decisions in this Order, will promote the purposes specified in Section 1 and Section 309(j)(3) of the Communications Act. For example, granting licensees the flexibility associated with larger spectrum blocks should help to promote technical innovation by providing licensees with additional flexibility to take advantage of new technology. At the same time, we believe that these 10-channel licenses will be small enough to provide an opportunity for small businesses. As stated above, we believe this plan will increase the economic viability of 220 MHz licenses, and thus promote competition in the CMRS marketplace. (3) Limit on Nationwide Authorizations (a) Proposal 51. In the Third Notice we noted that restricting the number of nationwide authorizations any single 220 MHz licensee may acquire may lead to greater competition among Phase II licensees. If, however, such licensees are in competition with other CMRS providers, we tentatively concluded that a restriction on the number of authorizations a single 220 MHz licensee may hold may not be necessary or appropriate. We therefore asked for comment on whether a limit should be placed on the number of Phase II nationwide authorizations that may be obtained by a single licensee. (b) Comments 52. Metricom states that 220 MHz licensees will face substantial competition from other services and therefore favors allowing one licensee to acquire multiple nationwide licenses. Pagenet argues that limiting the number of licenses that can be held by any 220 MHz licensee will also limit a licensee's ability to offer unique services, therefore, the Commission would be manipulating the future CMRS marketplace without knowing the types of services that would ultimately be provided on the 220 MHz spectrum. (c) Decision 53. We agree with the commenters that 220 MHz licensees will not simply be in competition with other 220 MHz licensees but will also face competition from other services such as, cellular, PCS, and SMR. Since the 220 MHz licensees will be in competition with other CMRS providers, we conclude that there is no reasonable basis to fear that any threat to competition will arise as a result of allowing one 220 MHz service licensee to acquire multiple nationwide channel blocks. (4) License Terms 54. We proposed in the Third Notice to establish a 10-year license term for nationwide 220 MHz licenses. We received no comments on this proposal. We have previously adopted a uniform 10-year licensing term for all CMRS licenses, including narrowband and broadband PCS services and the 900 MHz SMR service. By adopting our proposal for a 10-year license term for nationwide 220 MHz authorizations, all of these services will have 10-year license terms. In addition, we believe that a 10-year license term will provide sufficient time for 220 MHz nationwide licensees to complete construction of their systems. We therefore adopt a 10- year license term for nationwide 220 MHz licensees. (5) Aggregation (a) Proposal 55. In the Third Notice we proposed that both Phase I and Phase II licensees be permitted to aggregate their contiguous channels to create wider bandwidth channels. We expressed the belief that our existing 5 kHz-wide channels unnecessarily restrict the types of services that can be provided in the 220 MHz band and prevent other, perhaps equally spectrally efficient, technologies from being employed in the band. In drawing our tentative conclusion, we acknowledged that allowing 220 MHz licensees to aggregate their channels is a significant departure from our initial decision not to allow 220 MHz licensees to group narrowband channels. (b) Comments 56. Several commenters, primarily manufacturers of 5 kHz equipment, assert that there are many other spectrum bands, where digital and other technologies are being used but that only in the 220 MHz band is 5 kHz, narrowband technology employed and, therefore, they disagree with our proposal to allow 220 MHz to aggregate contiguous channels. These commenters, believe that, if we adopt this proposal, we would be abandoning our commitment to the implementation of narrowband technologies and would severely jeopardize their ability to continue to develop and market that technology. Other commenters, however, support the proposal to allow the aggregation of channels, arguing that this type of flexibility will allow 220 MHz licensees to offer a wider variety of communications services and more effectively compete in the wireless marketplace. (c) Decision 57. For the reasons set forth in Section IV.B.2.c(4)(b)(iv), infra, with regard to the licensing of non-nationwide 220 MHz spectrum, we conclude that Phase I and Phase II nationwide licensees should be permitted to aggregate their contiguous 5 kHz channels and operate on channels wider than 5 kHz. In doing so, however, licensees will be required to comply with the spectrum efficiency standard set forth in Section IV.B.2.c(5), infra. 2. Non-Nationwide Licensing a. Background 58. In the 220 MHz Report and Order, we allocated 140 of the 200 channel pairs in the 220 MHz service for non-nationwide use by both Government and non-Government licensees. The non-Government users eligible for authorization on these channels are those entities eligible for assignment under Subparts B, C, D, and E of Part 90 of our rules as well as those entities who intend to use the spectrum to provide commercial services. Forty of the 140 non- nationwide channels (Channels 161-200) were assigned for ``individual, non-trunked local use,'' with the remaining 100 channels assigned in the form of 20 five-channel blocks designated for trunked operation. Ten of the 40 individual, non-trunked channels (Channels 161-170) were reserved exclusively for applicants eligible in the Public Safety Radio Services, five channels (Channels 181-185) were to be used exclusively by applicants eligible in the Emergency Medical Radio Service (EMRS), and 15 channels (Channels 186-200) were designated for ``data-only'' use. The only restrictions on the remaining channels (Channels 171-180) are that they be licensed individually and that they be used for non-trunked operation. The current allocation of non-nationwide channels is described in the following Table: The Existing (Phase I) Band Plan EXISTING 220-222 MHz CHANNEL ALLOCATION PLAN NON-NATIONWIDE CHANNELS Twenty 5-Channel Trunked Groups Group No. 1: Channels 1, 31, 61, 91 and 121 Group No. 2: Channels 2, 32, 62, 92, and 122 . . . Group No. 20: Channels 20, 50, 80, 110 and 140 Ten Public Safety Channels Channels 161-170 Ten Non-Trunked Channels Channels 171-180 Five EMRS Channels Channels 181-185 Fifteen Data-Only Channels Channels 186-200 TOTAL 140 CHANNELS b. Assignment and Permissible Uses of Channels 161-200 (1) Assignment of Public Safety Service Channels (Channels 161-170) (a) Proposal 59. In the Third Notice, we proposed to continue to set aside Channels 161-170 for Public Safety Radio Service entities. We indicated that we should continue this allocation because it would provide public safety eligibles with needed spectrum to coordinate their responses to various types of emergencies. We also sought comment as to whether use of five of the ten Public Safety Channels (Channels 161-165) for base station operations should be shared among all Public Safety eligibles. We indicated that under such an assignment scheme, all Public Safety eligibles in a given area would be able to construct base stations operating on these channels to better maximize interoperability among licensees. We noted that our current licensing scheme does not provide for such interoperability because an individual Public Safety licensee could obtain base station authorization for the exclusive use of all of the 10 available channels in a particular area. (b) Comments 60. Several commenters favor the continued allocation of spectrum for pubic safety eligibles. For example, APCO ``strongly supports the Commission's proposal to retain the current 10-channel allocation for the Public Safety Radio Services and the 5-channel allocation for the EMRS in the 220-222 MHz band.'' AMTA, while endorsing the proposal, suggests that ``[s]hould it be determined at some future date that these channels are not useful for [Public Safety and EMRS purposes, it] assumes the FCC will revisit that allocation.'' Comtech and Johnson also favor the proposal, but Comtech believes that public safety licensees should be prohibited from reselling excess capacity on their systems. In support of its position, Comtech states that, ``[t]o the extent that remaining 220 MHz spectrum will be subject to auction, public safety licensees should not be permitted to offer services on spectrum that they obtain for free in competition with entities that are required to pay for spectrum.'' (c) Decision 61. We believe that it is in the public interest to continue to allocate ten 220 MHz non- nationwide channel pairs for the exclusive use of Public Safety eligibles. No commenters oppose this decision. Although Public Safety eligibles may obtain a license on any of the 220 MHz non- nationwide channels, we believe that it is reasonable at this time to dedicate 10 channels exclusively to Public Safety eligibles. This decision is not intended to prejudice the comprehensive examination of the spectrum needs of Public Safety eligibles that we have recently undertaken. Our current decision maintains the status quo with respect to the number of channels available exclusively for public safety. In addition, our decision implements one of the Commission's statutory mandates under the Communications Act of ``promoting safety of life and property through use of wire and radio communication.'' Because we are designating these 10 channels for use by Public Safety eligibles only, these channels will not be subject to competitive bidding. The Commission's authority to use competitive bidding to select among mutually exclusive applications does not extend to these public safety channels because the principal use of the spectrum will not be for the provision of services to subscribers in exchange for a fee. 62. In the 220 MHz Report and Order we indicated that, after five years, we would ``assess public safety use of this limited set-aside with a view to reassigning this spectrum if it is underutilized.'' Due to the freeze on the acceptance of initial 220 MHz applications, in effect since May 24, 1991, it has not been possible to accurately evaluate use of these channels by the public safety community. We shall therefore conduct the assessment of the use of these channels at the end of the three-year period following the effective date of the rules adopted in this proceeding, and if we determine that these channels are underutilized, then we will initiate a proceeding to address designation of the channels for other uses. With regard to Comtech's recommendation that public safety licensees be prohibited from reselling excess capacity on their systems, we conclude that it would be best, at this time, to defer this issue to our upcoming proceeding that will deal broadly with matters relating to Public Safety. 63. Under the rules adopted in the 220 MHz Report and Order, all 10 of the public safety mobile frequency channels may be used by public safety eligibles for mobile or portable use on a shared basis. Authorizations for base/mobile and base/portable operations on the public safety channel pairs, however, are assigned on an exclusive basis. We believe that the possibility of allowing a single licensee within a particular geographic area to exercise exclusive control over all of the available channels in that area would defeat the purpose of our allocation of these channels for mutual aid use. We therefore will assign five of the 10 channel pairs, Channels 161- 165, on a non-exclusive, i.e., shared basis, to all public safety eligibles. Licensees operating on these channels in a given geographic area will coordinate amongst themselves to locate base stations to maximize interoperability. Under this allocation scheme, the public safety licensees within a particular geographic area will be able to share Channels 161-165 and coordinate the location and operation of base stations on these channels, which will enable them to communicate more effectively with each other during emergencies. We will assign the remaining base station five-channel pairs -- Channels 166-170 -- to individual licensees on an exclusive basis, with licensees on such frequencies authorized to construct a base station for base/mobile and base/portable operations. Procedures for the assignment of these channels are contained in Section IV.B.2.d(2), infra. In addition, the existing requirement, under Section 90.713(d), that an applicant for authorization on the public safety/mutual aid channels may not have an interest in more than one pending application for public safety/mutual aid channels in the same geographic area will apply only to applicants seeking authorization on Channels 166-170. Finally, in accordance with the provisions of Section 90.720(a), we will continue to permit operation, without separate authorization, on all 10 public safety/mutual aid channels, by public safety eligibles using the channels in mobile or portable radios and, in accordance with Section 90.720(b), we will continue to require base/mobile and base/portable operations on all 10 channels to be on a secondary basis to the emergency communications that are identified in that section. (2) Assignment of EMRS Channels (Channels 181-185) (a) Proposal 64. In the Third Notice we proposed to continue to allocate five non-nationwide channels (Channels 181-185) for use by eligibles in the Emergency Medical Radio Service (EMRS), ``in order to provide spectrum for licensees involved in the delivery of emergency medical services.'' We also asked for comment regarding whether we should combine the 10 Public Safety channels and five EMRS channels into a single 15-channel allocation and allow EMRS and all other Public Safety entities to be eligible for these 15 channels. If we were to adopt a single, 15-channel allocation for both EMRS and Public Safety eligibles, we asked further if we should modify our existing allocation scheme to designate Channels 171-180 as the Public Safety channels so that these channels would be contiguous with the EMRS channels. 65. We also indicated in the Third Notice that, before accepting applications for the Public Safety and EMRS channels, we would act on a Petition for Reconsideration of our 1993EMRS Report and Order establishing the Emergency Medical Radio Service. This petition, filed by Dr. Michael Trahos (Trahos), asked that we allow certain entities authorized in the Special Emergency Radio Service (SERS) under Part 90 of our rules (e.g., physicians, disaster relief organizations, etc.) to be eligible to operate on the 10 Public Safety channels. 66. Finally, we also noted in the Third Notice that the American National Red Cross (Red Cross) had filed a petition for rulemaking seeking eligibility for disaster relief organizations to use the 220 MHz Public Safety channels, and also requesting further modification of our rules to expand the ways in which disaster relief organizations could use the Public Safety channels. Specifically, the Red Cross asked that disaster relief organizations be permitted to use the Public Safety channels, inter alia, for the establishment and maintenance of temporary relief facilities, and for limited training exercises incidental to emergency communications plans. Further, the Red Cross proposes that, due to its view that the public safety channels have been underutilized by public safety entities, disaster relief organizations should be given exclusive authority to use such channels. In the alternative, the Red Cross asks that, if use of the public safety channels is to be shared among disaster relief organizations and other public safety eligibles, then the disaster relief organizations should be permitted to ``pre-empt'' use of the frequencies ``at the locations of disaster relief efforts'' or that 10 channels in another band, such as the 800 MHz band, be allotted for disaster relief organizations. We asked for comment on the Petition for Rulemaking of the Red Cross. (b) Decision 67. There were no comments discussing our proposal to continue to designate Channels 181-185 for use by EMRS eligibles, or our request for comment on making these channels available to all Public Safety eligibles. We will therefore continue to designate channels 181-185 for the exclusive use of EMRS eligibles. As explained above with respect to Public Safety channels, we believe that it is in the public interest to continue to reserve five channels for use by EMRS eligibles, without requiring EMRS applicants to compete with applicants wishing to use the spectrum for commercial offerings. This decision will further the Commission's mandate under the Communications Act to ``promote safety of life and property through use of wire and radio communication.'' As currently provided in Section 90.713(d) of our rules with regard to applicants for other categories of non-nationwide channels (e.g., trunked, data-only, public safety/mutual aid), we will require that no applicant may have an interest in more than one pending application for authorization on EMRS channels within a particular geographic area. Also, there were no comments with regard to our proposal to assign the EMRS and Public Safety channels contiguously (i.e., on Channels 171-185). We believe that there are two advantages to maintaining the current channel assignment scheme: þ Existing, Phase I licensees currently operating mobile or portable radios on these channels will be able to communicate with Phase II licensees. þ Equipment manufacturers that have built mobile or portable units on these channels for Phase I licensees will be able to assemble these units for Phase II licensees without having to employ a different set of frequencies. Based upon these considerations, we conclude that we should continue to assign the Public Safety channels on Channels 161-170. 68. With regard to the Trahos Petition, we note that we adopted an Order dealing with the various petitions for reconsideration of the EMRS Report and Order on January 18, 1996. In that proceeding, we granted the Trahos petition, and modified Section 90.720(a) of the Commission's Rules to permit individuals eligible to be licensed under Sections 90.35 (medical services), 90.37 (rescue organizations), 90.41 (disaster relief organizations), and 90.45 (beach patrols) to be authorized to operate mobile and portable units on the 10 public safety channels, without separate authorization, and modified Section 90.720(b) of the Commission's Rules to allow such individuals to obtain authorization for base/mobile and base/portable operations on these channels. 69. With regard to the Red Cross Petition, we decided in the EMRS Reconsideration Order, as discussed above, that Public Safety eligibles and certain licensees eligible in the Special Emergency Radio Services (SERS), including disaster relief organizations, should be permitted, under Section 90.720(a) of the Commission's Rules, to operate mobile and portable radios on the 220 MHz public safety channels, without the need for separate authorization, to transmit communications: (1) relating to the immediate safety of life; or (2) to facilitate interoperability among public safety and the designated SERS entities. We recognize, however, that disaster relief organizations have unique requirements. We will therefore amend Section 90.720(a) to allow disaster relief organizations to employ the 220 MHz public safety channels in the various non-emergency situations the Red Cross has identified. 70. We will not, however, confer on disaster relief organizations exclusive authority to operate on these channels or the authority to preempt other public safety users at the locations of disaster relief efforts. The 220 MHz public safety channels were intended to be used for interoperability by all entities involved in responding to emergencies, and we therefore do not believe that it would be appropriate to permit only one such entity to have exclusive use of the channels during emergencies. We disagree with the Red Cross's assertion that because only a limited number of public safety eligibles applied for base station authorizations on the public safety channels, this indicates that public safety entities will not have a need for these channels, especially in times of emergency. As explained above, public safety licensees are permitted to use the channels for mobile and portable communications without the need for separate authorization. Thus, the need by public safety entities for the 220 MHz Public Safety channels cannot necessarily be measured by the number of applications received for base and mobile or base and portable authorizations when such applications were accepted in 1991. We therefore conclude that all licensees eligible to use the 220 MHz public safety channels under Section 90.720, as amended, will be required to share the use of the channels. 71. Finally, we turn to the suggestion made by the Red Cross that we consider the allocation of channels in a different band to create a nationwide allotment of 10 channels for use by disaster relief organizations. We have concluded that there is not a sufficient basis on the current record to adopt the approach advanced by Red Cross. We therefore deny this part of the Red Cross Petition, for the following reasons. First, the Red Cross, in advancing its proposal, has not provided sufficient criteria with which to weigh the merits of competing claims for spectrum allocations in the bands identified in the Red Cross Petition. We do not believe that this proceeding, with its focus on licensing and service rules for services in the 220 MHz band, is an appropriate forum in which to examine and decide allocation issues affecting the utilization of other spectrum bands by incumbent or future service providers. Our conclusion in this regard has been reinforced by the fact that no party has commented on the Red Cross' suggestion that we expand this proceeding to identify additional spectrum to address the concerns raised by the Red Cross in its petition. 72. Second, we believe that by authorizing disaster relief organizations to operate on the 220 MHz Public Safety channels on a shared basis with other members of the public safety community, we have satisfactorily addressed the emergency communications needs of such organizations. Further, by permitting use of the channels for the various non-emergency situations identified by the Red Cross, we enable disaster relief organizations to satisfy their unique communications requirements. (3) Data-Only Channels (Channels 186-200) (a) Proposal 73. In the Third Notice, we proposed to eliminate the ``data-only'' designation for Channels 186-200. As indicated in the 220 MHz Report and Order, this designation includes ``analog non-voice transmissions'' or ``any digital transmission, voice or non-voice.'' We also stated our belief that it is not necessary to continue to mandate ``data-only'' operations by the approximately 300 Phase I licensees authorized on these channels, and we therefore proposed that Phase I licensees authorized on these channels be permitted to construct non-``data only'' systems. (b) Decision 74. Currently, there are no rules that restrict 220 MHz licensees from transmitting ``data- only'' signals on 220 MHz channels in general, but licensees are required to transmit ``data-only'' signals on certain 220 MHz channels. The comments favor elimination of the ``data-only'' transmission requirement on these channels. As stated in the Third Notice, we believe that in today's communications marketplace there will be sufficient demand for non-voice communications and services using digital modulation for voice communications, and therefore it is not necessary for us to allocate channels exclusively for data and digital operations. Thus, in Phase II licensing of the 220 MHz service, we will no longer reserve channels for data-only use. Furthermore, upon the effective date of the rules adopted in this proceeding, we will not require Phase I licensees authorized on Channels 186-195 to operate ``data-only'' systems. Phase I licensees currently authorized to operate on Channels 186-195 and who wish to operate non-data- only systems will therefore, upon the effective date of the rules adopted in this proceeding, be permitted to do so. Such licensees, however, will still be required to meet their deadline to construct their base station and place it in operation, or commence service, as prescribed in the 220 MHz Second Report and Order. c. Assignment of the Remaining 125 Non-Nationwide Channels 75. Having adopted rules for the Phase II licensing of the Public Safety and EMRS channels, we now turn to the licensing of the remaining 125 non-nationwide channels (i.e., the 100 channels currently allocated for five-channel trunked operations, Channels 171-180, and Channels 186-200). (1) Initiation of Phase II Licensing 76. In the Third Notice, we addressed the appropriateness of proceeding at this time with Phase II licensing of the 220-222 MHz band. We noted that some of the comments in response to the CMRS Further Notice contended that we should not proceed with the next phase of licensing the non-nationwide 220 MHz channels until the operation of our existing licensing approach could be adequately assessed. We believed, however, that we should not delay the acceptance of new applications for 220 MHz spectrum while we evaluated the utility of our existing licensing scheme. We therefore tentatively concluded that we should initiate the second phase of licensing of the non-nationwide channels. There were no comments on this issue in response to the Third Notice. We conclude, therefore, that we should proceed in this Order with the initiation of Phase II licensing of the 220-222 MHz band. As stated in the Third Notice, this action will enable ``more widespread and varied services'' to be made available to the public. (2) Eligibility 77. Currently, the 125 non-nationwide 220 MHz channels are available to applicants intending to provide subscriber-based services as well as applicants intending to use spectrum for their internal use. In the Third Notice, we proposed to continue to make these channels available in the second phase of licensing on an equal basis to all such applicants. AMTA supports the licensing of the 125 channels for ``either commercial or non-commercial operations . . . .'' We conclude that applicants intending to provide subscriber-based services as well applicants intending to use spectrum for their internal use should be eligible to obtain authorizations on licenses associated with the 125 channels. All licensees authorized on these channels will also be permitted, but not required to provide interconnected service. (3) Licensing Areas (a) Proposal 78. Under our existing rules non-nationwide 220 MHz licensees are authorized on a site- by-site basis. In the Third Notice, however, we likened the Phase II 220 MHz service to other CMRS services (e.g., narrowband PCS and 900 MHz SMR) and noted our tentative view that the 220 MHz service should be licensed within defined, geographic areas, rather than the current single-station approach. We therefore proposed that Phase II licensees authorized on the 125 non-nationwide channels be permitted to provide service within prescribed, Commission-defined geographic areas. These areas are: (1) the 172 geographic areas defined as ``Economic Areas'' (``EAs'') by the Bureau of Economic Analysis (BEA), Department of Commerce (``EA licenses''); and (2) the geographic areas defined by five geographic regions described in the Third Notice (``Regional licenses''). (b) Comments 79. Commenters generally favor our proposal to license the 220 MHz band in EAs and Regions. AMTA endorses licensing over these ``two distinct geographic areas,'' stating that it favors the use of EAs over MTAs and BTAs because ``EAs more closely approximate the coverage required by a typical consumer of a traditional two-way radio system than do either MTAs or BTAs.'' Pagenet asserts that EA and Regional licensing would be a ``complement to nationwide'' licensing, and would allow ``participation by small, medium and large carriers in which local to nationwide service will be provided by a number of different licensees in each marketplace.'' Both AMTA and Comtech also request that no limit be placed on the number of channels a licensee may obtain within an EA or Region through the auction procedures. (c) Decision 80. In proposing these different-sized licensing areas, we indicated that these geographic areas would provide Phase II licensees with the opportunity to provide different types of service offerings, which would help them compete effectively with licensees in other communications services. We continue to believe that such a licensing approach will provide for the widest variety of communications services and, as Pagenet indicated, would allow for different-sized carriers to enter the 220 MHz marketplace. The participation in this marketplace by a variety of entities will also promote one of the objective's of Section 309(j) of the Act -- that of disseminating licenses among a wide variety of applicants. We will therefore license Phase II 220 MHz channels in EAs and Regions. As indicated in the Third Notice, under this licensing approach, Phase II licensees authorized in these geographic areas will be permitted to operate any number of base stations within their authorized area without being required to obtain a separate authorization for each station. However, in an effort to ensure that EA and Regional licensees and co-channel Phase I licensees will be able to co-exist, we will require 220 MHz EA and Regional licensees -- as we required for 800 MHz SMR EA licensees -- to provide us with notification, on a Form 600, of the technical parameters of all base stations and fixed stations. EA and Regional licensees will also be required to notify us if such stations are added, removed, relocated, or otherwise modified. If such notification is provided within 30 days of station addition, removal, relocation or modification, no filing fee will be required. EA and Regional licensees must also ensure that: (1) they operate their stations in accordance with the provisions of Sections 1.1301 through 1.1319 of our Rules (Procedures Implementing the National Environmental Policy Act of 1969); (2) they operate their stations in compliance with their air safety responsibilities, as outlined in Part 17.6 of our Rules; and (3) they comply with all applicable international agreements (e.g., Section 90.715 relating to operation in U.S./Mexican border areas). We also clarify that -- as we similarly provided in the 800 MHz SMR Report and Order with regard to the channels of incumbent 800 MHz SMR licensees -- if any channels of a Phase I licensee authorized in a particular EA or Region are recovered by the Commission, such channels will automatically revert to the EA or Regional licensee authorized on the channels in that EA or Region. Finally, as we indicated in the context of nationwide licensing, we believe that because 220 MHz licensees will be in competition with other communications services, such as narrowband PCS and SMR, we should allow them to obtain multiple authorizations in their EA or Region. 81. We provide a list of the codes and names for the Economic Areas in Appendix D. In response to a request by Puerto Rico Telephone Company in its comments in this proceeding, asking that we provide EA-like areas for U.S. territories, we add three additional EA-like licensing areas for the 220 MHz service: EA 173 (Guam and the Northern Mariana Islands); EA 174 (Puerto Rico and the U.S. Virgin Islands); and EA 175 (American Samoa). Finally, while commenters did not address our proposed definitions for Regional licenses, we have examined our original proposal and have decided to create six Regions, rather than the five Regions proposed in the Third Notice. We believe that the six Regions identified in Appendix E are more closely aligned with major areas of economic interest than the proposed five Regions. Also, licensing in six Regions instead of five Regions will potentially enable more providers to enter the 220 MHz service marketplace. (4) Channel Allocation Plan (a) Proposed Band Plan 82. In the Third Notice, we proposed the following band plan for non-nationwide Phase II licensing: NON-NATIONWIDE 220 MHz CHANNEL ALLOCATION PLAN EA BLOCK CHANNELS Channels 61-70 10 Channels 71-80 10 Channels 91-100 10 Channels 101-110 10 Channels 121-125 5 Channels 126-130 5 Channels 131-135 5 Channels 136-140 5 TOTAL 60 REGIONAL BLOCK CHANNELS Channels 171-180 10 Channels 186-200 15 Channels 1-10 10 Channels 11-20 10 Channels 31-50 20 TOTAL 65 83. In proposing this band plan, we sought to provide sufficient spectrum for all types of EA and Regional licensees to meet their communications needs. We also proposed a band plan that is comprised entirely of channel assignments involving contiguous channels. This proposal was a significant departure from the Phase I channel assignment scheme for the 125 non- nationwide channels, which contained only two contiguous channel blocks, i.e., Channels 171- 180 and 186-200, but provided 20 five-channel assignments consisting of channels spaced 150 kHz apart from one another. 84. In the Third Notice, we also proposed to allow both Phase I and Phase II licensees to aggregate their contiguous channels to operate on channels wider than 5 kHz, and proposed to permit Phase I and Phase II licensees to operate paging systems on a primary basis. Our review of the resulting record indicates that developing the optimal band plan must take four elements into account: providing sufficient spectrum so that licensees will have operational flexibility; assigning some amount of spectrum on contiguous channel blocks; permitting aggregation of contiguous channels; and allowing paging operations on a primary basis. In the discussion that follows, we will focus on each of these four elements and explain and analyze how our consideration of each element has led us to adopt our Phase II band plan, which differs from the band plan proposed in the Third Notice. (b) Adopted Band Plan (i) Number of EA and Regional Channels i. Proposal 85. In the Third Notice, we noted that Phase I licensees are authorized to use up to five channels, but we indicated that Phase II licensees operating in EAs, which would encompass areas larger than the areas covered by existing Phase I single stations, would likely have a requirement for more than five channels. We also observed that some Phase II licensees, particularly those intending to use the spectrum for their internal purposes, might not have a need for more than five channels, even if those channels are used in an area the size of an EA. To accommodate the spectrum requirements of all potential EA licensees, we proposed to authorize Phase II EA licenses in five- and 10-channel blocks. We also indicated that Regional licensees, who will be offering communications services to much larger geographic areas, should be authorized on a larger number of channels, and we therefore proposed that Regional licenses be assigned in 10-, 15- and 20-channel blocks. Finally, we indicated that EA and Regional licensees needing less spectrum than provided through these particular authorizations could assign channels to other licensees in accordance with our partitioning proposals. ii. Comments; Decision 86. Most commenters favor the assignment of larger numbers of channels to individual licensees than proposed. For example, Comtech opposes the use of 5-channel blocks, saying that in its experience as a non-nationwide licensee, ``[l]icensees cannot produce sufficient revenues with only five channels to justify the investment required to construct a [base station] facility,'' whereas the ``incremental costs of installing an additional five channels . . . allow for the production of sufficient revenue.'' One commenter, Pagenet, supports the proposed band plan, stating that it ``should allow . . . licensees to compete in the CMRS marketplace by offering a variety of PCS-type, one-way, two-way, data and other services.'' AMTA suggests that the EA channels should be assigned in three 15-channel blocks and two 10-channels blocks; while PCIA proposes one 5-channel block, two 10-channel blocks, one 15-channel block, and one 20- channel EA block. With regard to Regional licenses, AMTA favors the assignment of two 30- channel blocks; and PCIA proposes one 10-channel block, one 15-channel block and two 20- channel blocks. Based on the comments, we conclude that it would be best to generally provide more channels to both EA and Regional licensees than initially proposed. (ii) Contiguous Channel Blocks i. Proposal 87. In the Third Notice we addressed the matter of whether Phase II licenses should be authorized on contiguous or non-contiguous channel assignments. We noted that when we proposed the original 220-222 MHz band plan in the 220 MHz Notice, we had explored this issue, and observed that we could authorize 220 MHz channel assignments in a manner similar to the way we authorized channels in the 900 MHz band -- where we adopted a contiguous channel assignment scheme to ``provide increased flexibility to employ spectrum efficient digital systems that may become available in the near future.'' We indicated, however, that, in the 220 MHz Report and Order, we had determined that increasing spectrum efficiency was more important than providing for such flexibility, and therefore adopted a non-contiguous channel assignment scheme, which enabled spectrally efficient trunking technology to be more easily implemented. We tentatively decided in the Third Notice that ``the possible benefits that could be obtained from enabling licensees to employ contiguous channels, e.g., the ability to employ spectrum efficient digital systems, outweigh the potential technical or economic advantages of developing narrowband trunking systems,'' and we thus proposed a Phase II band plan consisting entirely of contiguous channel assignments. ii. Comments 88. Commenters are generally opposed to our proposed band plan because of our use of contiguous channel assignments. A number of commenters, for example, express concern that if we adopt the proposed band plan, Phase I licensees that wish to expand on their non-contiguous channels would have to acquire multiple Phase II assignments; and Phase II licensees that acquire contiguous channel blocks would be required to provide co-channel protection to many Phase I licensees in order to implement their systems. SEA, an equipment manufacturer, also expresses concern about the technical disadvantage of employing contiguous channels when implementing ``same-site'' systems on narrowband channels. E.F. Johnson, however, does not foresee significant problems with the production of equipment using contiguous, as opposed to interleaved, channels. It notes that there have been problems associated with the use of antenna combiners on interleaved trunked channels, but does not expect this problem to be exacerbated by the use of contiguous channels. PCIA, on the other hand, states that ``combining any number of contiguous channels together can result in significant power loss in the system using the required hybrid combiners'' and contends that this problem increases with the number of channels being combined. 89. PCIA and other commenters generally recommend that we maintain the existing band plan, which provides for 20 non-contiguous channel assignments (the current ``trunked'' channel assignments) and 10- and 15-channel contiguous assignments (the current ``non-trunked, individual'' channels on Channels 171-180 and 186-200). Similarly, AMTA urges us to retain, ``to the maximum extent possible,'' the existing channel assignment scheme. SEA, while opposed to contiguous channel assignments, proposes a compromise band plan that is derived from the current twenty 5-channel, non-contiguous 5 kHz channel assignments, and contains an assortment of EA and Regional assignments consisting of 5 kHz, 10 kHz, and 20 kHz channels. iii. Decision 90. Several commenters point out the difficulties that are likely to be encountered by both Phase I licensees and Phase II licensees if we adopt completely inconsistent Phase II and Phase I band plans. We are concerned that a Phase II licensee operating on a contiguous 10- channel block, consisting of Phase I channels assigned on a non-contiguous basis, could be required to provide co-channel protection to 10 or more Phase I licensees operating in its EA and to an even greater number of Phase I licensees in its Region. For example, a Phase II EA licensee authorized on the proposed channel block consisting of Channels 61-70 could have to protect 10 or more Phase I licensees authorized on Phase I trunked channel Group Nos. 1-10. 91. We therefore conclude that adopting a band plan consisting entirely of contiguous channel assignments could inhibit the ability of many Phase II licensees to implement their systems. We therefore find that the best resolution of this issue is to adopt a band plan patterned after the existing channeling scheme -- i.e., a combination of non-contiguous and contiguous channel assignments. We also note that in this Order we are adopting partitioning for Phase II EA, Regional and nationwide licensees and are proposing to allow all 220 MHz licensees to disaggregate their spectrum. (iii) Paging on a Primary Basis i. Proposal 92. In the Third Notice, we indicated that our current rules permit 220 MHz licensees to operate paging systems only on an ancillary basis to the licensee's primary land mobile operations, and we proposed to allow Phase I and Phase II 220 MHz licensees to provide paging communications on a primary basis. In making this proposal, we noted that in recent years we had allocated or expressed the intention of allocating increasing amounts of spectrum for regional and nationwide paging operations -- e.g., narrowband PCS spectrum -- which will likely be used for advanced paging services. Because of this, we reasoned that removing the current restriction on paging in the 220 MHz band would not have a significant adverse effect on the development of the 5 kHz industry by turning the band into one primarily used for paging services. We tentatively concluded, instead, that allowing paging operations on a primary basis in the 220 MHz band would enable 220 MHz licensees to compete more effectively in the mobile communications marketplace with wireless providers in other bands. ii. Comments 93. SEA is opposed to allowing paging in the 220 MHz band. It argues that there is no shortage of other paging spectrum and that ``[t]he higher potential for this band as originally envisioned by the Commission should not be squandered by allowing it to become just one more band for the provision of paging services.'' Other commenters generally support removing the restrictions on paging operations in the 220 MHz band. E.F Johnson, while not opposed to paging operations, is concerned that such permitted use of the 220 MHz band may ``dilute the development of narrowband trunked systems.'' Pronet does not object to our permitting Phase II licensees to provide paging on a primary basis, but opposes allowing Phase I licensees to have this flexibility. Pronet suggests that allowing Phase I licensees to provide paging on a primary basis would ``confer an enormous and unfair advantage on Phase I licensees, while inflicting substantial competitive harm on operators licensed to provide paging in the 150, 450 and 900 MHz bands.'' 94. In its reply comments, Comtech asks that we reject Pronet's arguments, contending that the Commission's mandate is to protect competition, not competitors. Metricom, in disagreeing with SEA's position, states that: [W]hether or not there is adequate spectrum for paging is irrelevant to the issue of whether paging should be permitted in the 220 MHz band. The real issue is whether licensees should be allowed to provide the services consumers desire. . . . [I]f adequate spectrum exists for paging, and ample paging services are being offered to the public, then there would not be a market for paging services in the 220 MHz band and licensees would have little, if any incentive to offer such services. In arguing against Pronet's position, Metricom contends that no unique windfall will accrue to Phase I licensees, and that such licensees would receive no more windfall than licensees who provide paging on other spectrum that was not auctioned. iii. Decision 95. Commenters are divided on the issue of whether we should allow 220 MHz licensees to operate paging systems on a primary basis. SEA, for example, is concerned that if we were to permit paging on a primary basis, the 220-222 MHz band could become merely an additional band for the provision of paging services. Other commenters favor paging operations in the band because they believe that it will provide consumers with additional options in meeting their paging needs. Pronet is concerned that it would be unfair to existing paging licensees in other bands to permit existing licensees on the 220 MHz band potentially to provide paging services. In proposing to eliminate the restriction on primary paging operations in the 220 MHz band, we expressed a desire to provide additional spectrum for a rapidly growing communications service, and to enable 220 MHz licensees to compete more effectively in the wireless marketplace. We continue to believe that it is appropriate to allow the marketplace to determine the services offered to consumers, and therefore we will permit Phase I and Phase II licensees to operate paging systems on a primary basis. We believe that if there is sufficient consumer demand for paging services, both Phase I and Phase II licensees should have the opportunity to provide these services. We disagree with Pronet's argument that we should not permit Phase I licensees, in general, to operate paging systems because they acquired their spectrum through lottery at a time when paging was prohibited on a primary basis in the 220 MHz band. We agree with Metricom's assertion that 220 MHz licensees would be receiving no more ``windfall'' in this regard than 150 MHz, 450 MHz and 900 MHz paging licensees that, too, acquired spectrum that was not auctioned, and therefore conclude that permitting paging on a primary basis by both Phase I nationwide and non-nationwide licensees is appropriate. (iv) Aggregation of 5 kHz Channels i. Proposal 96. In the Third Notice we addressed the question of whether it was necessary to continue to require that 5 kHz technology be utilized in the 220 MHz band to the exclusion of other technologies. We expressed the belief that our use of five kHz channels unnecessarily restricts the array of services that can be provided in the 220 MHz band and prevents other, perhaps equally spectrally efficient, technologies from being employed. We noted, for example, that time-division technology used in cellular and SMR bands may be at least as spectrally efficient as 5 kHz channels. We therefore tentatively concluded that we should remove the required use of 5 kHz channels in the 220 MHz band, and allow licensees to aggregate their authorized frequencies to create wider bandwidth channels. We observed that removing this restriction would, for example, allow a Phase II licensee authorized on one of the proposed 10- channel blocks to create a single 50 kHz block. 97. In drawing this tentative conclusion, we acknowledged that allowing 220 MHz licensees to aggregate their channels would be a departure from our initial decision not to allow 220 MHz licensees to ``group narrowband channels to create a wideband voice channel.'' We noted, however, that in the 900 MHz Allocation Order, allocating the 900 MHz private land mobile frequencies, we had decided to adopt a contiguous channel assignment scheme to ``provide increased flexibility to employ spectrum efficient digital systems'' and to allow 900 MHz licensees to ``combine contiguous channels;'' and we tentatively concluded that the flexibility we had sought for licensees in the 900 MHz band also should be available to licensees in the 220 MHz band. Enabling licensees to aggregate their 5 kHz channels, we tentatively concluded, would allow them to use their limited amount of spectrum to employ the widest variety of technologies to best meet the communications requirements of consumers. ii. Comments 98. Several commenters disagree with our proposal to allow 220 MHz licensees to aggregate their contiguous channels, arguing that there are many other spectrum bands, such as PCS, cellular, 800 MHz SMR, and 900 MHz SMR, where digital and other technologies can and are being used, but that only in the 220-222 MHz band must 5 kHz, narrowband technology be employed. These commenters, especially manufacturers of 5 kHz equipment, assert that, if we adopt this proposal, we would be abandoning our commitment to the implementation of narrowband technologies and would severely jeopardize their ability to continue to develop and market that technology. Other commenters, however, support the proposal to allow the aggregation of channels, arguing that this type of flexibility will allow 220 MHz licensees to offer a wider variety of communications services and more effectively compete in the wireless marketplace. iii. Decision 99. We find that there is some merit to the arguments of commenters opposed to our proposal to allow licensees to aggregate their channels. There are several other spectrum bands where wider channels -- e.g., 12.5 kHz, 25 kHz, 30 kHz, and 50 kHz channels -- are currently employed, and within which a variety of analog and digital technologies are being used. The 220-222 MHz band, however, is the only spectrum band where users must employ 5 kHz, narrowband technology. 100. In the 220 MHz Allocation Order, we allocated this spectrum for land mobile use as a means for promoting spectrum efficient technologies, and then adopted a 5 kHz channelization plan in the 220 MHz Report and Order. We now conclude that we should continue to support the ongoing development and implementation of narrowband, 5 kHz systems, and reaffirm our commitment to make the 220-222 MHz band a home for spectrally efficient technology. We do not believe, however, that to do this requires that we devote the entire two megahertz of spectrum in this band exclusively to narrowband technology. As discussed supra, we believe that some distribution of both contiguous and non-contiguous channel assignments in the Phase II band plan is appropriate. In order to allow the 220-222 MHz band to continue to be used to foster the development of narrowband technology, we now conclude that we should adopt a distribution of non-nationwide channel assignments consisting of more non-contiguous than contiguous channel assignments. 101. Under such a channel plan, we will allow Phase I and Phase II licensees operating on the 125 non-nationwide channels to aggregate any of their contiguous channels. A licensee authorized on non-contiguous channel assignments may aggregate contiguous channels by either acquiring several such non-contiguous channel assignments or, in the future, by possibly acquiring ``disaggregated'' channels. Thus, applicants for Phase II licenses on these channels will be able to seek the type of spectrum authorization that will best meet their needs -- i.e., prospective licensees intending to employ a particular technology or provide a particular service that may require channels greater than 5 kHz will be able to seek one of the available contiguous channel blocks and will be able to aggregate such channels, and use them subject to our spectrum efficiency standard. Applicants who intend to construct systems using narrowband technology would have the option of obtaining either a non-contiguous channel assignment or a contiguous channel block. By allowing licensees to aggregate channels, the marketplace will determine the viability of 5 kHz technology, while retaining our commitment to spectrum efficiency. That is, if prospective licensees believe that implementing two-way dispatch systems on narrowband channels will be a successful business venture, then they will likely attempt to acquire the available non-contiguous channel blocks and use their authorized ten or fifteen 5 kHz channels discretely. Conversely, if prospective licensees believe that there is greater potential in operating a spectrally efficient system on contiguous channels, they will likely attempt to acquire contiguous channel authorizations and aggregate their channels. 102. Additionally, we conclude that licensees authorized to operate on the contiguously- assigned public safety/mutual aid and EMRS channels (Channels 161-170 and Channels 181- 185, respectively) should not be permitted to aggregate their channels. As explained above, these channels were allocated, in part, to enable public safety entities to communicate with one another in emergencies. To permit licensees to aggregate their channels could result in some licensees employing 5 kHz technology, while others employ non-5 kHz technologies, and this could limit the interoperability we seek to achieve on these channels. 103. Based on the various considerations discussed in the preceding paragraphs, we adopt the following Phase II band plan for non-nationwide channels: (c) Features of the Band Plan NON-NATIONWIDE 220 MHz CHANNEL ALLOCATION PLAN EA BLOCK CHANNELS A: Channel Groups 2, 13 10 B: Channel Groups 3, 16 10 C: Channel Groups 5, 18 10 D: Channel Groups 8, 19 10 E: Channels 171-180 10 TOTAL 50 REGIONAL BLOCK CHANNELS F: Channel Groups 1, 6, 11 15 G: Channel Groups 4, 9, 14 15 H: Channel Groups 7, 12, 17 15 I: Channel Groups 10, 15, 20 15 J: Channels 186-200 15 TOTAL 75 104. This band plan contains a number of features that we believe will, to the extent possible, satisfy the concerns and meet the needs of most, if not all, of the parties in this proceeding. First, we authorize assignments of no less than 10 channels. This addresses the concerns of commenters who believe that more than 5 channels will be needed to enable Phase II licensees to serve their areas of operation adequately. While we believe that 10 channels are the minimum necessary to provide satisfactory service in EAs and Regions, we remain convinced that 5 channels are sufficient for Phase I licensees operating on single stations. 105. Second, we address the concerns of commenters who have observed that, under our original proposal, Phase I licensees authorized on the 5-channel, non-contiguous trunked assignments would have to acquire at least five separate Phase II authorizations in order to expand geographically on their channels. The reason that Phase I licensees would have faced this problem under our proposed band plan is that, for example, a licensee authorized on trunked channel Group No. 1 -- which includes Channels 1, 31, 61, 91, and 121 -- would have to have obtained Phase II authorizations on Channel Blocks 1-10, 31-50, 61-70, 91-100, and 121-125 in order to expand on its channels. However, under the band plan we are adopting in this Order, the EA and Regional assignments derived from the 5-channel, non-contiguous Phase I assignments are composed of groupings of two or three of these assignments (e.g., EA Assignments A, B, C, and D -- each of which are composed of two 5-channel non-contiguous Phase I assignments; and Regional Assignments F, G, H, and I -- each of which are composed of three 5-channel non- contiguous Phase I assignments). Thus, Phase I licensees authorized on Group Nos. 1-20 will be able to expand on all of their channels by obtaining authorization on a single Phase II assignment (e.g., a Phase I licensee authorized on Group No. 1 would, by acquiring Assignment F, be able to expand on all five of its existing channels). 106. Third, by authorizing assignments derived from the Phase I trunked groups, we address commenters' concerns about the need of Phase II licensees to provide co-channel protection to many Phase I licensees. Under our proposed band plan, a Phase II licensee authorized on a contiguous 10- or 20-channel block derived from the Phase I trunked channels (e.g., the proposed EA block consisting of Channels 61-70, or the proposed Regional block consisting of Channels 31-50) would have had to potentially provide protection to a large number of Phase I licensees in their particular area of operation (e.g., a Phase II licensee authorized on the EA block consisting of Channels 61-70 would have had to protect Phase I licensees authorized on channel Groups Nos. 1 through 10, if such licensees were operating in its EA or in an adjoining EA; and the Phase II licensee authorized on the Regional block consisting of Channels 31-50 would have had to protect Phase I licensees authorized on all twenty of the trunked channel groups, if such licensees were operating in its Region or in an adjoining Region). Under the plan we are adopting, however, Phase II licensees will potentially have to protect far fewer Phase I licensees -- e.g., EA licensees will only have to protect Phase I licensees in their EA, or in an adjoining EA, operating on the two channel groups that comprise their 10- channel system; and Regional licensees will only have to protect Phase I licensees in their Region, or in an adjoining Region, operating on the three channel groups that comprise their 15- channel system. 107. Fourth, we continue to allocate the 100 non-contiguous Phase I channels in the form of 5 kHz, non-contiguous channel assignments (Assignments A-D, and F-I). This will provide a number of assignments to those licensees who wish to operate 5 kHz, narrowband trunked systems and prefer to operate on channels spaced apart from each other. Licensees authorized on one of the two channel blocks consisting of contiguous channels (Assignments E and J), however, will not be precluded from operating on the individual 5 kHz channels that comprise these blocks (e.g., licensees authorized on Assignment J could operate on 15 discrete 5 kHz channels instead of a single 75 kHz block), and will thus have the option of employing eithernarrowband technology or aggregating their channels to employ other technologies or to provide services that may be more easily accommodated on wider channels, consistent with our spectrum efficiency standard. 108. Fifth, our decision to continue to allocate the 100 non-contiguous Phase I channels in the form of 5 kHz, non-contiguous Phase II channel assignments largely addresses the concerns raised by SEA and PCIA regarding possible technical difficulties associated with the construction of base stations on contiguous channel blocks. We are allocating two Phase II assignments on contiguous channels (Assignments E and J), but the channels associated with these assignments were assigned contiguously in the 220 MHz Report and Order -- those concerns notwithstanding. Furthermore, PCIA's concern that combining up to 20 contiguous channels could result in significant power loss is alleviated to some extent by our decision to employ a maximum of only 10 and 15 contiguous channels, respectively, for Assignments E and J. 109. Finally, we conclude that our decision to license Phase II spectrum in this manner is consistent with the objectives identified in Section 309(j)(4)(C) of the Act. That is, the bandplan -- which contains both EA and Regional licenses and includes both contiguous and non- contiguous assignments -- coupled with our decision to permit paging operations on a primary basis, will enable both large and small entities to provide a wide variety of communications services to the public and promote competition in the CMRS marketplace. (5) Spectrum Efficiency Standard (a) Proposal 110. In the Third Notice, we tentatively concluded that, because we had sought to encourage the development of spectrally efficient technologies at the time we initially reallocated the 220-222 MHz band, we should require licensees choosing to aggregate channels to maintain a degree of spectrum efficiency at least equivalent to that obtained through 5 kHz channelization. We asked, alternatively, whether our proposal to license through competitive bidding would provide sufficient incentives for licensees to use their spectrum efficiently, thus obviating the need for a specific spectrum efficiency standard. (b) Comments 111. Some equipment manufacturers favor the adoption of a spectrum efficiency standard. For example, SEA states that, because we have proposed construction requirements for Phase II 220 MHz licensees and have adopted such deadlines for narrowband PCS, ``it would appear that the Commission believes that competitive bidding does not provide sufficient incentives for the timely build-out of systems.'' SEA concludes that if the Commission decides to permit channel aggregation, then ``efficiency standards will be needed to encourage spectrum efficient use,'' and thus proposes that we adopt a standard that would require one voice channel per 5 kHz (for voice communications) and a 4,800 bps data rate (for data communications). Securicor, in its reply comments, asks that, if we permit ``wide-band systems'' in the 220 MHz band, we should avoid taking ``a step backward by not requiring the deployment of spectrally efficient technology.'' Securicor therefore proposes that we provide ``one high-grade voice channel with performance equaling that of a toll quality telephone circuit and a data rate of 14.4 kbps for every 5 kHz of spectrum aggregated.'' 112. Other commenters, however, argue that an efficiency standard is not necessary or appropriate. For example, Comtech believes that ``competitive bidding will ensure that spectrum is used as intensively as possible'' and that ``licensees will have every incentive to derive as much revenue as possible from their spectrum, to offset the cost of securing the spectrum.'' Pagenet notes that ``if the Commission were to artificially limit the ability of the 220 MHz license [sic] to offer services, [it] will place 220 MHz licensees at a disadvantage in the marketplace because the other CMRS licensee [sic] are not subject to narrowband channelization spectrum efficiency requirements.'' Pagenet further observes that if the Commission were to require licensees to meet a spectrum efficiency standard, it would be limiting the number of service offerings that could be provided in the band. Metricom contends that competitive bidding and the marketplace will ``ensure that licensees utilize their spectrum in a technologically efficient manner. [Whereas,] [a]n arbitrary spectral efficiency parameter . . . will only hinder the ultimate development of the band.'' (c) Decision 113. One of our principal goals in establishing the 220-222 MHz band was to encourage the development of spectrally efficient technologies. Some commenters believe that a spectrum efficiency standard should be adopted for those licensees aggregating contiguous channels to ensure that spectrum in the band continues to be used efficiently. Other commenters, however, believe that licensees acquiring 220 MHz spectrum through competitive bidding will have sufficient incentives to use that spectrum as efficiently as possible. Still others point out that a spectrum efficiency standard could preclude the provision of certain communications services. 114. We conclude that a spectrum efficiency standard should be adopted for the 220-222 MHz band, and applied to licensees aggregating contiguous 5 kHz channels. In adopting this requirement, we note that we do not disagree with commenters that suggest that licensees acquiring 220 MHz spectrum through competitive bidding will likely have the incentive to use their spectrum efficiently. We believe, however, that our adoption of a mandatory spectrum efficiency standard at this time is an appropriate and effective means of ensuring that licensees aggregating contiguous channels will operate in an efficient manner. 115. Nor do we find it necessary to resolve the claims of those parties that assert that our adoption of a standard could prevent certain types of communications service from being provided in the 220-222 MHz band. In response to such claims, we must emphasize that our purpose in adopting a spectrum efficiency standard is not to prevent the offering of new and innovative services in the band. Rather, we believe that by adopting a spectrum efficiency standard, we will encourage the development of spectrally efficient technologies in any number of other wireless communications services that may eventually be provided in the band. Such an objective is in keeping with our adoption of 5 kHz channelization for the band in the 220 MHz Report and Order in order to stimulate the development of spectrally efficient technologies in the land mobile radio services. 116. We therefore conclude that Phase I and Phase II licensees combining contiguous 5 kHz channels to operate on channels wider than 5 kHz will be required to meet the following spectrum efficiency standard: For voice communications, a licensee must employ equipment that provides at least one voice channel per 5 kHz of channel bandwidth. For data communications, a licensee must employ equipment that operates at a data rate of at least 4,800 bits per second per 5 kHz of channel bandwidth. 117. We will implement this decision through our type acceptance process. Thus, upon the effective date of the rules adopted in this proceeding, a request by any equipment manufacturer or other party for Part 90 type acceptance of transmitters designed to operate in frequencies in the 220-222 MHz band and not designed to operate on channel bandwidths of 5 kHz or less (as currently required by our rules), must demonstrate that the equipment meets the spectrum efficiency standard we have adopted in this Order. 118. We desire to encourage new and innovative efficient technologies to benefit users of this band and the public. Therefore, as we did in our recently adopted Refarming Reconsideration Order, we will provide manufacturers with additional flexibility to design spectrally efficient transmitters. Manufacturers may obtain type acceptance for equipment that does not meet the voice or data efficiency standard if: (1) the manufacturer submits a technical analysis with its application for type acceptance demonstrating that the equipment will provide more spectral efficiency than that which would be provided by use of the voice or data efficiency standard; and (2) this technical analysis is deemed to be satisfactory by the Commission's Equipment Authorization Division. Licensees may employ equipment that does not meet the spectrum efficiency standard only if such equipment has been type accepted in this manner. 119. Finally, we believe that the spectrum efficiency standard should only remain in effect through December 31, 2001. This, we believe, will provide a fair and appropriate time period for spectrally efficient technologies to develop in the 220-222 MHz band, and will enable other innovative technologies and services to eventually be introduced into the band as well. We believe that this decision also balances our goal of stimulating the development of spectrally efficient technology with our desire to rely on market forces to spur the production of efficient technology, and to grant licensees flexibility to determine the technology that best suits their needs. We agree with commenters that our decision to use competitive bidding for Phase II licenses will encourage efficient use of the spectrum. We want to ensure, however, the availability of spectrally efficient equipment in this band. We are also confident that, by the beginning of 2002, the state-of-the-art in wireless equipment will have exceeded our standard, and there will therefore no longer be a need to mandate a standard for the 220-222 MHz band. (6) Emission Mask (a) Proposal 120. In the Third Notice, we indicated that, on channel assignments composed of contiguous channels, where licensees may aggregate their channels, licensees would no longer be required to adhere to the existing channel emission masks at the edge of each of their authorized five kHz channels. To prevent adjacent channel interference to licensees operating on channels outside their channel block, however, we proposed that licensees authorized on contiguous channel assignments be required to conform to the mask at the outer edge of their channel blocks. We also noted that allowing licensees to refrain from complying with the emission masks of each of the ``inside'' channels in their block would result in licensees transmitting stronger out-of-band signals than are currently permitted by our rules. We tentatively concluded, however, that, because licensees constructing base stations must adhere to the required co- channel separation criteria with respect to all co-channel licensees in their area, the increased strength of out-of-band signals would not result in any increased likelihood for harmful interference to co-channel licensees. (b) Comments 121. SEA favors requiring licensees to conform with the emission mask at block edges ``to ensure appropriate protection to adjacent channel neighbors,'' and agrees that ``as long as the ERP/HAAT and geographic separations are maintained as specified in the current rules, the increased signal strength between channels will not result in an increased likelihood of harmful interference to co-channel licensees.'' Metricom agrees with the proposal, and also proposes eliminating the frequency stability requirements for all inside channels, indicating that this ``will have no adverse impact on adjacent channel licensees so long as the emission mask requirements are met at the 'outside' channels.'' (c) Decision 122. We adopt our proposal to eliminate the emission mask at the edge of the ``inside'' channels for Phase I and Phase II licensees authorized on contiguous channel assignments. Such licensees will only have to comply with the emission masks at the outer edge of their channel blocks. We also adopt Metricom's proposal to eliminate the frequency stability requirements for the inside channels of licensees aggregating their channels. Finally, with regard to the issue of whether allowing licensees to refrain from complying with the emission masks of each of the ``inside'' channels in their block would result in licensees transmitting stronger out-of-band signals and thus potentially causing interference to co-channel licensees, we conclude that because licensees constructing base stations must adhere to the required co-channel separation criteria with respect to all co-channel licensees in their area, the increased strength of out-of-band signals will not result in any increased likelihood for harmful interference to co-channel licensees. d. Procedures for Assignment of Non-Nationwide Channels (1) In General (a) Proposal 123. We have decided in this Order that the 125 non-nationwide channels should be available on an equal basis to licensees using the spectrum for subscriber-based services and licensees using the spectrum to meet their internal communications needs. In the Third Notice, we indicated that we would not be able to determine in advance of authorization which of these types of licensees will acquire the spectrum, and thus we would not be able to conclude with absolute certainty the principal use of this spectrum. We also tentatively concluded that the principal use of the Phase II non-nationwide spectrum on the 125 channels is likely to be for the transmission or reception of communications signals to subscribers for compensation, based upon two factors: (1) most Phase I non-nationwide applicants appear to intend to use their spectrum for for-profit services; and (2) we proposed to continue to allow non-nationwide 220 MHz licensees using spectrum for internal communications to lease excess capacity to provide service to subscribers. We further tentatively concluded that, in accordance with Section 309(j)(2)(A) of the Communications Act, mutually exclusive applications for initial licensing of these channels should be assigned through competitive bidding, and we sought comment on this decision. (b) Decision 124. APCO raises a concern about our proposal to assign mutually exclusive applications for the 125 channels through competitive bidding. We address the issue raised by APCO in the following Section (infra at para. 128). APCO's concern notwithstanding, we conclude that, based on our analysis in the Third Notice that the principal use of the spectrum is likely to be for the transmission or reception of communications signals to subscribers for compensation, we should assign mutually exclusive applications for licenses on the 125 channels through competitive bidding. In reaching this conclusion, we find that assigning this spectrum through competitive bidding will promote Section I of the Communications Act and the objectives described in Section 309(j)(3) of the Communications Act, as discussed in the Third Notice. We also adopt our proposal to continue to allow non-nationwide 220 MHz licensees using their spectrum for internal communications to lease excess capacity of their systems, and thereby provide service to subscribers. However, to the extent such a