******************************************************** 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 theFederal Communications Commission Washington, D.C. In the Matter of ) ) Rulemaking To Amend Parts 1, 2, 21, and 25) CC Docket No. 92-297 Of the Commission's Rules to Redesignate) The 27.5-29.5 GHz Frequency Band, To) Reallocate the 29.5-30.0 GHz Frequency) Band, To Establish Rules and Policies for) Local Multipoint Distribution Service) And for Fixed Satellite Services) ) Petitions for Reconsideration of the) Denial of Applications for Waiver of the) Commission's Common Carrier Point-to-) Point Microwave Radio Service Rules) ) Suite 12 Group Petition for ) PP-22 Pioneer Preference ) Second Report and Order, Order on Reconsideration, and Fifth Notice of Proposed Rulemaking Adopted: March 11, 1997 Released: March 13, 1997 Comment Date: April 21, 1997 Reply Comment Date: May 6, 1997 By the Commission: Commissioners Quello and Ness issuing separate statements; Commissioner Chong approving in part, dissenting in part, and issuing a statement. Table of Contents Paragraph I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . .1 A. Overview . . . . . . . . . . . . . . . . . . . . . . . . .1 B. Background . . . . . . . . . . . . . . . . . . . . . . . .5 C. Summary of Decision . . . . . . . . . . . . . . . . . . 13 1. LMDS Service Rules and Related Decisions. . . . . . . 13 2. Competitive Bidding Rules and Procedures. . . . . . . 14 II. LOCAL MULTIPOINT DISTRIBUTION SERVICE . . . . . . . . . . 15 A. Designation of Spectrum in 31 GHz Band . . . . . . . . . 15 1. Background . . . . . . . . . . . . . . . . . . . . . 15 2. Comments . . . . . . . . . . . . . . . . . . . . . . 20 3. Decision . . . . . . . . . . . . . . . . . . . . . . 35 a. Summary . . . . . . . . . . . . . . . . . . . . . . 35 b. Need and Usefulness of 31 GHz Spectrum for LMDS . . 38 c. Extent of Incumbent Licenses and Services in 31 GHz Band 44 (1) Number of Licensees . . . . . . . . . . . . . . 44 (2) Scope of Existing 31 GHz Services . . . . . . . 52 (3) Traffic Control Systems . . . . . . . . . . . . 57 d. Basis for Redesignation: Protection Status of Incumbents and Public Interest . . . . . . . . . . 63 e. Incumbent Accommodation Alternatives . . . . . . . 69 (1) Co-Existence with LMDS . . . . . . . . . . . . . 69 (2) Relocation to 23 GHz Band . . . . . . . . . . . 72 (3) Proposed Band-Sharing Plans . . . . . . . . . . 74 f. Spectrum Sharing Plan . . . . . . . . . . . . . . . 79 (1) Segmentation . . . . . . . . . . . . . . . . . . 80 (2) LMDS Use and Protection . . . . . . . . . . . . 85 (3) Incumbent Licensee Use and Protection . . . . . 88 (4) Relocation and Modification Procedures . . . . . 91 (5) Applications for New Authorizations and for Modifications or Renewals of Existing Licenses . 94 (6) Rules . . . . . . . . . . . . . . . . . . . . .104 g. Application of NEPA . . . . . . . . . . . . . . . .106 B. Licensing of Spectrum . . . . . . . . . . . . . . . . .116 1. Number of Licenses per Geographic Area . . . . . . .116 a. Background; Comments. . . . . . . . . . . . . . . .116 b. Decision . . . . . . . . . . . . . . . . . . . . .125 2. Size of Geographic Service Areas . . . . . . . . . .132 a. Background; Comments . . . . . . . . . . . . . . .132 b. Decision . . . . . . . . . . . . . . . . . . . . .135 3. Spectrum Disaggregation and Geographic Partitioning .140 a. Background; Comments . . . . . . . . . . . . . . .140 b. Decision . . . . . . . . . . . . . . . . . . . . .144 4. Eligibility . . . . . . . . . . . . . . . . . . . . .146 a. Background . . . . . . . . . . . . . . . . . . . .146 (1) NPRMs . . . . . . . . . . . . . . . . . . . . .146 (2) Comments . . . . . . . . . . . . . . . . . . .152 b. Decision . . . . . . . . . . . . . . . . . . . . .157 (1) Basis for Eligibility Restrictions . . . . . . .157 (2) Effects of LEC and Cable Company Eligibility on Competition: 1,150 Megahertz Licenses . . . . .162 (a) Market Structure for Local Exchange Telephony and MVPD . . . . . . . . . . . . . . . . . . . . .163 (b) LMDS As a Source of Competition . . . . . . .170 (c) Usefulness of Short-Term Eligibility Restrictions 176 (3) Effects of LEC and Cable Company Eligibility on Competition: 150 Megahertz Licenses . . . . . 182 (4) Effects of CMRS and MMDS Eligibility on Competition 183 c. Eligibility Rules.. . . . . . . . . . . . . . . . .185 5. Flexible Service and Framework for Licensing . . . .200 a. Scope of Services . . . . . . . . . . . . . . . . .200 (1) Background; Comments . . . . . . . . . . . . . .200 (2) Decision . . . . . . . . . . . . . . . . . . . .205 (a) Flexible Service Definition . . . . . . . . .205 (b) Telecommunications Services . . . . . . . . .210 (c) Video Programming Distribution and Other Non-Common Carrier Services . . . . . .213 b. Regulatory Framework for Licensing LMDS . . . . . .218 (1) Background; Comments . . . . . . . . . . . . . .218 (2) Decision . . . . . . . . . . . . . . . . . . . .221 6. Application and Operating Rules and Procedures for LMDS228 a. Background; Decision. . . . . . . . . . . . . . . .228 b. Application Forms . . . . . . . . . . . . . . . . .231 c. Public Notice . . . . . . . . . . . . . . . . . . .236 d. Foreign Ownership Restrictions. . . . . . . . . . .240 e. Initial Applications. . . . . . . . . . . . . . . .244 f. Changing Regulatory Status. . . . . . . . . . . . .245 (1) Amendments to Pending Applications . . . . . . .246 (2) Modification Applications. . . . . . . . . . . .248 g. Discontinuance, Reduction, or Impairment of Service252 h. Fees. . . . . . . . . . . . . . . . . . . . . . . .256 i. Equal Employment Opportunity. . . . . . . . . . . .258 j. License Terms . . . . . . . . . . . . . . . . . . .259 k. Renewal Expectancy. . . . . . . . . . . . . . . . .260 l. Construction Requirements . . . . . . . . . . . . .263 (1) Background; Comments . . . . . . . . . . . . . .263 (2) Decision . . . . . . . . . . . . . . . . . . . .266 C. Technical Rules and Requirements.. . . . . . . . . . . .273 1. Frequency Coordination . . . . . . . . . . . . . . .273 a. Background; Comments . . . . . . . . . . . . . . .273 b. Decision . . . . . . . . . . . . . . . . . . . . .277 2. Polarization . . . . . . . . . . . . . . . . . . . .282 a. Background; Comments . . . . . . . . . . . . . . .282 b. Decision . . . . . . . . . . . . . . . . . . . . .284 3. Equivalent Isotropically Radiated Power . . . . . . .285 a. Background; Comments . . . . . . . . . . . . . . .285 b. Decision . . . . . . . . . . . . . . . . . . . . .289 4. RF Emissions . . . . . . . . . . . . . . . . . . . .292 5. Spectral Efficiency . . . . . . . . . . . . . . . . .297 a. Background; Comments . . . . . . . . . . . . . . .297 b. Decision . . . . . . . . . . . . . . . . . . . . .301 D. Competitive Bidding Rules and Procedures . . . . . . . .302 1. Use of Competitive Bidding . . . . . . . . . . . . .302 a. Background; Comments . . . . . . . . . . . . . . .302 b. Decision . . . . . . . . . . . . . . . . . . . . .304 2. Competitive Bidding Issues . . . . . . . . . . . . .307 a. Competitive Bidding Design for LMDS Licenses . . .307 (1) Background; Comments . . . . . . . . . . . . . .307 (2) Decision . . . . . . . . . . . . . . . . . . . .309 b. LMDS Bidding Procedures . . . . . . . . . . . . . .311 (1) Bid Increments and Tie Bids . . . . . . . . . .312 (2) Stopping Rules . . . . . . . . . . . . . . . . .315 (3) Duration of Bidding Rounds . . . . . . . . . . .317 (4) Bid Withdrawals . . . . . . . . . . . . . . . .318 (5) Activity Rules . . . . . . . . . . . . . . . . .319 c. Procedural and Payment Issues . . . . . . . . . . .327 (1) Upfront Payments . . . . . . . . . . . . . . . .328 (2) Down Payments, Long-Form Applications, and Payment in Full 331 (3) Bid Withdrawal, Default, and Disqualification Payments333 d. Regulatory Safeguards . . . . . . . . . . . . . . .337 (1) Transfer Disclosure . . . . . . . . . . . . . .337 (2) Anti-Collusion Rules . . . . . . . . . . . . . .338 e. Treatment of Designated Entities . . . . . . . . .340 (1) Overview . . . . . . . . . . . . . . . . . . . .340 (2) Installment Payments, Upfront Payments, Down Payments, and Unjust Enrichment . . . . . . . .344 (3) Bidding Credits and Unjust Enrichment . . . . .355 (4) Rural Telephone Companies . . . . . . . . . . .362 E. Preemption . . . . . . . . . . . . . . . . . . . . . . .364 1. Background; Comments. . . . . . . . . . . . . . . . .364 2. Decision . . . . . . . . . . . . . . . . . . . . . .370 a. Non-Common Carrier Services and Video Programming .374 (1) General Standards . . . . . . . . . . . . . . .374 (2) Over-the-Air Reception Devices for Video Programming 376 b. Common Carrier Services and Telecommunications Services 378 (1) General Standards . . . . . . . . . . . . . . .378 (2) Personal Wireless Service Facilities . . . . . .381 III. ORDER ON RECONSIDERATION OF WAIVER APPLICATION DENIALS . . . . . . . . . . . . . . . . . . .383 A. Background; Pleadings . . . . . . . . . . . . . . . . .383 B. Decision . . . . . . . . . . . . . . . . . . . . . . . .388 1. Effect on Assigned Users . . . . . . . . . . . . . .391 2. Evaluation of Public Interest Arguments . . . . . . .397 3. Claims Regarding Nature of Services and Types of Applicants 402 IV. FIFTH NOTICE OF PROPOSED RULEMAKING . . . . . . . . . . .407 A. Introduction . . . . . . . . . . . . . . . . . . . . . .407 B. Discussion . . . . . . . . . . . . . . . . . . . . . . .410 1. In General . . . . . . . . . . . . . . . . . . . . .410 2. Available License Area . . . . . . . . . . . . . . .412 3. Minimum or Maximum Disaggregation Standards . . . . .414 4. Combined Partitioning and Disaggregation . . . . . .415 5. Construction Requirements . . . . . . . . . . . . . .416 6. License Term . . . . . . . . . . . . . . . . . . . .418 7. Competitive Bidding Issues . . . . . . . . . . . . .420 8. Licensing Issues . . . . . . . . . . . . . . . . . .423 V. PROCEDURAL MATTERS . . . . . . . . . . . . . . . . . . . .425 A. Regulatory Flexibility Analyses . . . . . . . . . . . .425 B. Paperwork Reduction Analyses . . . . . . . . . . . . . .428 C. Ex Parte Presentations . . . . . . . . . . . . . . . . .433 D. Pleading Dates . . . . . . . . . . . . . . . . . . . . .434 E. Further Information . . . . . . . . . . . . . . . . . .435 VI. ORDERING CLAUSES . . . . . . . . . . . . . . . . . . . . .436 APPENDIX A: Final Rules APPENDIX B: List of Existing Governmental and Private Business 31 GHz Licensees APPENDIX C: Initial Regulatory Flexibility Analysis APPENDIX D: Final Regulatory Flexibility Analysis APPENDIX E: List of Pleadings I. INTRODUCTION A. Overview 1. This is the Second Report and Order in the Commission's ongoing proceeding to establish and license Local Multipoint Distribution Service (LMDS), a fixed broadband point-to- multipoint microwave service, in the 27.5-29.5 GHz band (28 GHz band). We adopt, in part, service rules proposed in the First NPRM and Third NPRM to govern the licensing and operations of LMDS. We adopt, in part, competitive bidding rules proposed in the Third NPRMto select among mutually exclusive applications for LMDS. We also adopt, in part, proposals in the Fourth NPRM to redesignate spectrum in the 31.0-31.3 GHz band (31 GHz band) for LMDS and to impose eligibility restrictions on certain potential applicants. We rule on petitions for reconsideration of the Commission's dismissal of waiver applications in the First NPRM. We also adopt a Fifth Notice of Proposed Rulemaking proposing specific procedural, operational, and administrative rules for the partitioning and disaggregation of LMDS licenses. 2. Our decision today will open the door for a new broadband wireless service. The technology developed for use in this frequency band provides very high subscriber capacity for two-way video telecommunications. There is sufficient capacity in the proposed LMDS system designs to provide wireless competition to both local exchange carriers (LECs) and cable television systems, even in urban areas. In addition, based on the interest generated in LMDS by entrepreneurs in the United States, LMDS has attracted attention and support from both developed and developing countries around the world. LMDS developers offer the prospect of modern wireless telephone systems, video distribution, and other communications services to developing countries that do not have a wireline or cable infrastructure. 3. We defer issuing a final Order on our Tentative Decision and Supplemental Tentative Decision in the Third NPRM regarding CellularVision's pioneer preference request in the First NPRM, and, instead, order the Wireless Telecommunications Bureau and the Office of Engineering and Technology to initiate a peer review process. Pursuant to Section 1.402(h) of the Commission's Rules, the Chief, Office of Engineering and Technology, will select a panel of experts to review CellularVision's technology and recommend whether the request should be granted. The Commission will establish, conduct, and seek the consensus of the panel pursuant to the Federal Advisory Committee Act, and will evaluate its recommendations in light of all the submissions and comments in the record. In addition, panelists will have the authority to seek further information pertaining to preference requests and to perform field evaluations, as appropriate. 4. 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. B. Background 5. In January 1991, the Commission granted the application of CellularVision's predecessor-in-interest, Hye Crest Management, Inc., for a license to provide LMDS in the 27.5- 28.5 GHz frequency band covering the New York City Primary Metropolitan Statistical Area (NYPMSA). The application was granted pursuant to waiver of the point-to-point rules in Part 21 in order to allow a fixed cellular point-to-multipoint operation for video distribution (wireless cable). The licensee was granted waivers of Sections 21.108 (directionalization and bandwidth requirements) and 21.700 (status eligibility). 6. CellularVision is currently providing competitive video distribution service within its assigned service area. The licensee is also planning to implement telecommunications service. Approximately 975 applications similar to Hye Crest's were filed between February, 1991 and October, 1992 requesting waiver of the point-to-point rules so that point-to-multipoint service could be offered. The Commission implemented a freeze on the acceptance of applications for common carrier point-to-point microwave service in the 28 GHz band in an order released October 29, 1992, to stop the filing of additional waiver applications. 7. This rulemaking proceeding was initiated by three petitions for rulemaking concerning the 28 GHz band. Harris filed a petition for rulemaking requesting that the Commission channelize the 28 GHz band so that manufacturers of point-to-point equipment could standardize their systems. CellularVision filed a petition for rulemaking to change the point-to-point rules in a manner consistent with its waiver so that point-to-multipoint video distribution service could be offered on a regular basis in the band. In response to CellularVision's petition, Video/Phone filed a petition for rulemaking proposing a broadband, on-demand video telecommunications service. 8. The First NPRM was released on January 11, 1993. In it, the Commission considered the three petitions for rulemaking. The Commission tentatively concluded that redesignation of the fixed point-to-point use of the band to fixed point-to-multipoint could stimulate greater use of the 28 GHz band, and proposed detailed service rules (other than technical requirements) for implementation of LMDS. The Commission did not specify what type of service would have to be offered, indicating that the marketplace would best decide the use of this spectrum. 9. The Commission proposed two blocks of 1,000 megahertz each for LMDS. This proposal was based on CellularVision's existing technology. However, because the 28 GHz band is allocated on a co-primary basis with the Fixed Satellite Service (FSS) for uplinks, the Commission also requested comment from satellite entities regarding the effect of redesignation and the proposed rules on any proposed satellite use of the band. 10. In response to the First NPRM, a number of different uses were proposed for terrestrial and satellite licensing. The Commission considered various proposals for the 28 GHz band and released the Second Notice of Proposed Rulemaking (Second NPRM) on February 14, 1994. In it, the Commission found that the majority of parties supported the Commission's finding of widespread interest in point-to-multipoint uses of the 28 GHz band, but also found significant interest in the band on the part of the satellite industry. Accordingly, the Commission tentatively concluded that the public interest would be served by allowing both terrestrial and satellite providers to co-exist in the 28 GHz band, and decided to begin a negotiated rulemaking procedure to develop technical rules for sharing the band. As a result, the Commission established the LMDS/FSS 28 GHz Band Negotiated Rulemaking Committee (NRMC). 11. The NRMC met between July 26, 1994, and September 23, 1994; the Report of the Committee, dated September 23, 1994, was presented to the Commission and is included in the docket of this proceeding. The results of the work of the NRMC indicated that LMDS and FSS service uplinks (i.e., the ubiquitous subscriber transceivers) are not technically able at this time to share the same spectrum, and that LMDS and feeder links to non-geostationary satellites operating in the Mobile Satellite Service (MSS) could share the same spectrum, subject to feasible sharing criteria. The Commission released the Third NPRM on July 28, 1995, that proposed to segment the 28 GHz band to permit both LMDS and FSS systems to operate and to accommodate feeder links for certain MSS systems in the band. We also proposed service and technical rules revised from the First NPRM and competitive bidding procedures to choose among mutually exclusive applications. 12. In the First Report and Order and Fourth NPRM, we adopted our proposal to designate band segments in the 28 GHz band for several types of wireless systems and cleared the way for our consideration in this Report and Order of the proposed, outstanding service and technical rules in order to implement LMDS. We proposed to designate the 31 GHz band for LMDS use on a primary protected basis. We sought comment on whether the Commission should adopt LMDS eligibility or use restrictions for incumbent LECs and cable operators within their respective geographic service areas. Those issues are resolved in this Order. C. Summary of Decision 1. LMDS Service Rules and Related Decisions 13. Following is a summary of our actions with respect to LMDS service rules and related issues: þ Spectrum at 31.0-31.3 GHz is designated for LMDS, and incumbent licensees, other than Local Television Transmission Service (LTTS) licensees, are protected from harmful interference in the segments at 31.0-31.075 and 31.225-31.300 GHz. þ The LMDS spectrum (27.5-28.35 GHz, 29.1-29.25 GHz, and 31.0-31.3 GHz) will be licensed by the 493 Basic Trading Areas (BTAs) for a total of 1,300 GHz of spectrum per BTA. þ Two licenses, for 1150 megahertz and for 150 megahertz, will be awarded for each BTA, for a total of 986 LMDS licenses. þ All licensees will be permitted to disaggregate and partition their licenses pursuant to our general Part 101 assignment and transfer rules. þ There are no restrictions on the number of licenses a given entity may acquire. þ Incumbent LECs and cable companies may not obtain in-region 1,150 megahertz licenses for three years. þ LMDS includes both common carrier and non-common carrier services, and an applicant may request authorization in a license on a common carrier basis, a non-common carrier basis, or on both a common carrier and a non-common carrier basis in a single license. þ LMDS licensees will be subject to liberal construction requirements. þ All petitions for reconsideration of our decision to dismiss the waiver applications made by entities seeking a license under Hye Crest Management are denied. þ As noted, we direct the Chief, Office of Engineering and Technology, to select a panel of experts to review CellularVision's technology and recommend whether its pioneer preference request should be granted. 2. Competitive Bidding Rules and Procedures 14. Following is a summary of our actions with respect to LMDS competitive bidding procedures: þ We will use simultaneous multiple round auctions for LMDS. þ We will announce by Public Notice prior to the LMDS auction the general guidelines for bid increments; we will use a simultaneous stopping rule; we will reserve the discretion to vary the duration of the bidding rounds or the interval at which bids are accepted; and we will use the Milgrom-Wilson activity rule with some variations. þ We delegate authority to the Chief, Wireless Telecommunications Bureau, to determine an appropriate calculation for the upfront payment, which the Bureau will announce by Public Notice. þ Winning bidders must supplement their upfront payments with a down payment sufficient to bring their total deposits up to 20 percent of their winning bid(s). þ There will be a substantial payment assessed if bidders withdraw a high bid, are found not be qualified to hold licenses after submitting a high bid, or default on payment of a balance due. þ We adopt installment payments and bidding credits for small entities participating in LMDS auctions. II. LOCAL MULTIPOINT DISTRIBUTION SERVICE A. Designation of Spectrum in 31 GHz Band 1. Background 15. In the First Report and Order and Fourth NPRM, we adopted a band plan that designated the spectrum in the 27.5-30.0 GHz band (28 GHz band plan) for LMDS systems. However, we required that LMDS licensees restrict their operations to hub-to-subscriber trans- mission in the 29.1-29.25 GHz segment. Thus, LMDS licensees would not have 1,000 mega- hertz of unencumbered spectrum. We proposed to designate the 31.0-31.3 GHz (31 GHz) band for LMDS on a primary protected basis, in order to ensure that there is adequate two-way interactive capacity for the various proposed LMDS systems. We requested comment on our proposal to designate LMDS as a primary ``protected'' use at 31 GHz, which means that LMDS providers would be entitled to interference protection from any other current authorized primary user of the band. We requested comment on any technical issues that LMDS operators might encounter and possible measures for overcoming such technical difficulties associated with LMDS use. 16. We addressed the extent to which the 31 GHz band is encumbered by existing ser- vices and the possible impact of our proposal on these services. We found that existing use is light and concentrated in only a few areas, and that the majority of the licensees are local govern- ments using the band to monitor and control traffic light facilities. We concluded that our pro- posal to make LMDS a protected service presupposes that incumbent licensees would continue to operate on an unprotected basis as secondary to LMDS. We found that overlaying LMDS oper- ations in those areas where there are existing users raises potential interference problems that could degrade the utility of such systems, as well as adversely affect the new LMDS operations. 17. Consequently, we proposed a number of alternatives for accommodating incumbent licensees without limiting the usefulness of the band for LMDS. We pointed out that in adopting the 31 GHz rules, we had directed entities that could not operate where there is a potential for harmful interference to operate instead in other bands where protection is provided. We stated that the 31 GHz services are permitted in the 23 GHz band and requested comment on the reloca- tion of incumbent 31 GHz systems to that band. We asked whether incumbents should be enti- tled to any recovery for reasonable relocation costs and, if so, if LMDS applicants should be required to contribute to the recovery of such reasonable costs. 18. Alternatively, we requested comment on whether there are any methods by which the incumbent services could be accommodated without delaying, causing interference to, or limiting the usefulness of LMDS at 31 GHz. We pointed out that although incumbent licensees have assumed all the risks of receiving interference, we nevertheless encouraged cooperation among the LMDS providers and existing licensees in exploring any methods that would allow the services to coexist without placing any economic or technical burdens on the LMDS providers. We also asked if there are existing mechanisms that will permit all of these services to share the entire band. Finally, we requested comment on whether we should accept any new applications, modifications, or renewal applications in the 31 GHz services in light of the proposal to establish a secondary status for these services. 19. The following sections, in reviewing the record and presenting our decisions, address several broad issues. First, is there a need for 1,000 megahertz of unencumbered spectrum for LMDS and, if so, does the 31 GHz band offer the best means of achieving this in combination with spectrum at 28 GHz that we have already assigned to LMDS? Second, if we utilize spectrum at 31 GHz for LMDS, what is the nature of incumbent operations that will be affected and what is the level of incumbent usage? Third, how should we weigh the utility of these uses as compared to LMDS? Fourth, in making spectrum at 31 GHz available for LMDS, should incumbents be relocated to other bands, or should some form of sharing the 31 GHz spectrum be developed that balances the needs of incumbents and LMDS providers in a way that best serves the public interest? 2. Comments 20. Support for our proposal to redesignate, on a primary protected basis, the 31 GHz band for LMDS is expressed by a variety of proponents of LMDS. This includes satellite systems represented by GE, Hughes, LMC, and Motorola, which argue that allocating an additional 300 megahertz of spectrum for LMDS use is important to satisfy their spectrum requirements and promote innovative satellite networks with a wealth of high-speed, broadband, interactive services on demand within the United States and around the globe. They state that the additional unencumbered spectrum for LMDS will solve concerns created by the First Report and Order, in which we provided that 150 of the 1,000 megahertz in 28 GHz would be shared on a co-primary basis with NGSO/MSS feeder links. 21. Support also is filed in comments of various groups and associations on behalf of their members, including PTV, Ad Hoc RTG, and WCA. PTV generally supports the availability of the proposed spectrum for use by its public television station members. Ad Hoc RTG argues that we should designate 300 megahertz because of significant demand for the two- way interactive services that LMDS can provide and that rural telephone companies seek to pro- mote. WCA points out that we correctly found that wireless cable operators, which it represents, could use the additional spectrum for two-way LMDS services to provide local telephone services in competition with local telephone companies. 22. Support for allocating an additional 300 megahertz for LMDS also was filed in comments by HP, RioVision, and WebCel, which argue that the extra capacity is needed to ensure the economic viability of an interactive LMDS system and accommodate the two-way and symmetric broadband LMDS uses that are expected to compete with incumbent cable and telephony services. 23. CellularVision submits extensive comments in support of our proposal, which it argues is an essential element of its efforts since 1991 to establish LMDS on sufficient spectrum to develop the multiple potential uses for LMDS that are not yet ascertained. CellularVision initiated LMDS under the Pioneer's Preference authorized in the First NPRM, and anticipates offering consumers the full range of two-way services intended by designating additional spectrum for LMDS. Its affiliate, CVTT, states that it developed the multi-faceted high-tech LMDS technology and urges we promptly designate 31 GHz for LMDS so that industry will develop the new equipment and applications to create commercially viable uses with the 28 GHz spectrum. Other developers of LMDS that submit comments in support are Endgate, M/A- COM, TI, and Titan. They urge us to promptly designate the additional spectrum in 31 GHz to provide the technology sector with the assurance to develop and implement the services intended for LMDS. 24. In response to our request for comments on the technical adaptability of the band, ComTech states that equipment costs would be higher if the 31 GHz band is used rather than 1 gigahertz of contiguous spectrum, because multiple antennas would be required rather than only one. RioVision is concerned as to what additional equipment may be required for two-way transmissions in 31 GHz and how much the additional equipment will cost. However, CellularVision and CVTT assert that leading LMDS manufacturers, such as Philips, Titan, and M/A-COM, are expected promptly to develop commercially viable applications and equipment for use of the 31 GHz band in conjunction with their equipment for the 28 GHz band. However, they request that LMDS licensees be given the flexibility to deploy services that can use the 31 GHz spectrum until the technology is developed for LMDS uses. M/A-COM and Titan confirm that they intend to commit research and development resources to develop com- mercially viable hardware to be used in connection with the 28 GHz LMDS systems. Endgate asserts that the technical solution for antennas and active electronics is more difficult to design and produce if the return link is within the 31 GHz band, but that solutions can be readily developed once we designate the spectrum. 25. In response to our request for comments on proposals for accommodating incumbent services authorized under the existing 31 GHz services, several of the comments argue that no alternative provisions for protecting them from interference are warranted because incumbent licenses are issued on a non-protected basis and thus they are secondary to any other service that may operate on the band. ComTech contends that if these licensees cannot operate on a non- interference basis, it is their legal and financial responsibility to correct that interference. GE argues that they should be required to terminate operations or move to another band if it is technically infeasible for current systems to coexist with LMDS. 26. CellularVision and TI argue that the licensees knowingly accepted such non- protected licenses and have no legitimate expectation of protection in the face of harmful inter- ference from LMDS. Hughes argues that our proposal does not alter the legal standing of in- cumbent licensees. ComTech, RioVision, and TI object to any compensation if such licensees are relocated, inasmuch as they are secondary users that must bear the impact of any interference problems, and to any applications for licensing of such services or, as TI further argues, any grandfathering of existing licensees. 27. CellularVision, Endgate, and HP support our suggestion for cooperation among LMDS interests and incumbent 31 GHz licensees to explore methods for allowing both tech- nologies to coexist on the 31 GHz band. HP is concerned about displacing existing services, particularly local municipalities using the spectrum for traffic control, and suggests alternatives that include splitting 31 GHz into two bands, establishing criteria for sharing that eliminates potential interference, and relocating traffic signal systems to 28 GHz. On reply, Cel- lularVision submits a plan for sharing the band with incumbent users. Endgate submits another plan based on different segmentation for sharing the band with incumbents. 28. Opponents of our proposal to redesignate 31 GHz spectrum for LMDS include a vari- ety of proponents of existing 31 GHz services, as identified below. As a general matter, parties opposing our proposal argue that we underestimated the extent and importance of the incumbent 31 GHz services and licensees, in particular those governmental entities using the spectrum for traffic and air pollution control. They argue that the impact of LMDS operations as proposed would undermine all existing operations and be contrary to the public interest. Most oppose any alternative that requires them to leave the 31 GHz band and subjects them to interference from LMDS. Most request that a plan be developed that allows them to continue existing services at least in part of the band while providing LMDS with the spectrum needed. 29. Several governmental entities submit comments in support of the continued use of 31 GHz for traffic control systems. The municipalities include the Cities of Palm Springs, San Die- go, and Topeka, which are licensees, and the City of Long Beach and the City and County of Honolulu, which are not licensees. They all have purchased and installed 31 GHz radio links to interconnect signalized intersections with a Traffic Management Center in systems that manage traffic incidents, congestions, and synchronization. They intend to extend the systems into growing areas. They argue that their 31 GHz microwave systems are cost- effective and inexpensive to install and maintain. They request that we maintain their ability to use the frequency for their traffic control systems and that we not permit LMDS to interfere with such services, which would create undue hardships. Many of the systems are part of Intelligent Transportation Systems (ITS) promoted under Federal transportation goals. 30. Comments also were filed on behalf of the State of California (by MSAPRC) and by Nevada DOT. MSAPRC argues that it has funded signal synchronization projects in 31 GHz along heavily traveled, multijurisdictional arterial highways in Southern California as a specific air pollution reduction strategy. Nevada DOT is replacing an outdated traffic system throughout the metropolitan Las Vegas Area, for which applications are pending, with a system that relies on 31 GHz channels for surveillance. MSAPRC and Nevada DOT argue that the harmful interfer- ence from LMDS would seriously impair such systems and they request we adopt a plan that per- mits 31 GHz systems to continue to operate and grow. 31. Comments also were filed by USDOT, through its ITS Joint Program Office, and by SBA. USDOT asserts that it and area governments are making major investments in new tech- nologies to alleviate traffic congestion and that 31 GHz point-to-point microwave links are a sig- nificant tool. SBA argues that in the Initial Regulatory Flexibility Analysis (IRFA) in the Fourth NPRM, we underestimated the number of small entities to be affected by our proposed rede- signation of 31 GHz and failed to consider alternatives to displacing incumbent licensees. They oppose our proposal to redesignate the entire 31 GHz band exclusively to LMDS as against the public interest and Federal goals promoting traffic management systems and clean air. 32. IMSA is an organization that promotes the development and use of electrical signaling and communications systems for public safety. Its members include many governmen- tal agencies. IMSA submits extensive comments opposing the factual and legal basis of our proposal. ITE is an organization of transportation professionals that argues that our proposal would adversely impact the development of ITS being promoted by USDOT as an alternative traffic management tool. IMSA and ITE request that we consider alternatives to displacing 31 GHz services and argue that continued access to the band is in the public interest. 33. Four developers and sellers of equipment submit comments opposing our proposal. Sierra is the leading developer and supplier of 31 GHz technology. It submits extensive com- ments to demonstrate that our proposal is against the public interest and urging that 31 GHz services be continued. Comstat states that it recently installed three systems supplied by Sierra and has invested in spare radio systems. Sunnyvale specializes in traffic control equipment and asserts that Sierra just completed development for it of a microwave unit that is now available in the market to meet demands for 31 GHz technology. They argue that our proposed redesig- nation would render their equipment useless, because of the harmful interference from LMDS, and urge us to permit 31 GHz services to continue. ICE-G develops systems operating at 28 GHz and 40 GHz, and opposes designation of 31 GHz for LMDS on the grounds that 40 GHz is better suited because of the equipment it has developed. 34. In response to our proposals for alternatives and for cooperation to achieve some methods for coexisting, most comments request that we adopt a band-sharing plan that preserves a part of the band for continuation of 31 GHz services. On reply, Sierra submits a band-sharing plan based on different segmentation and provisions than that of CellularVision. The plan is supported by IMSA, ITE, SBA, Sunnyvale, and USDOT. 3. Decision a. Summary 35. We conclude that it is in the public interest to protect incumbent licensees insofar as it is possible to maintain the status quo in their existing operations, while allowing LMDS access to the entire spectrum to initiate new communications service with wide-ranging advanced tech- nologies. We achieve this public interest objective through the following actions, findings, and decisions in the succeeding sections of this Order. 36. First, we designate 300 megahertz of spectrum in the 31 GHz band to LMDS. Sec- ond, we conclude that incumbent licensees in the 31 GHz band do not presently use the spectrum intensively, but that certain uses by State and local government agencies provide important ser- vices to the public. Third, we find that we must carefully balance these incumbent uses and the potential value of LMDS in deciding upon the best means of resolving issues in this proceeding in the public interest. Fourth, we adopt a plan for use of the spectrum that includes features of plans suggested in the record. We find that incumbents cannot co-exist in the 31 GHz band with- out protection from LMDS, and that relocation to the 23 GHz band or any other band is neither practical nor suitable. Most commenters support a band-sharing plan that accords incumbents some protection from LMDS, while allowing LMDS to be designated to use the spectrum. 37. Fifth, although LMDS is accorded protection throughout the spectrum as we pro- posed, we impose on LMDS the requirement to protect incumbent licensees from harmful inter- ference in the two 75 megahertz bands at each end. Incumbent and LMDS operators in the two outer bands will negotiate to establish the necessary protections for each other. Sixth, incum- bents in the middle 150 megahertz, except those with temporary authorizations, may relocate to the outer bands by modifying their licenses within 15 days after the effective date of rules adopted in this Order, or pursue alternative service options. Finally, we do not permit new applications to be filed under our current 31 GHz licensing rules, and pending applications are dismissed. Incumbent licensees may continue their operations within the terms of their licenses, as long as they do not expand or increase services. While they may renew their licenses, they are limited in their modifications. b. Need and Usefulness of 31 GHz Spectrum for LMDS 38. Sierra argues that our proposed designation of 31 GHz for LMDS is both excessive and premature. It contends that LMDS proponents have not justified a present need for 300 megahertz at 31 GHz nor the technical suitability for the band. It asserts that the 1,000 mega- hertz allotted on a primary or co-primary basis in the 28 GHz band is ample for LMDS at this early stage of its development. Sierra contends that wireless cable and local exchange services must compete with highly advanced systems, and that the likelihood of success for LMDS entry in these markets, as well as other proposed LMDS uses, is too conjectural to warrant taking 31 GHz spectrum away from its current users. Sierra requests that we continue our efforts described in the First Report and Order to acquire access to spectrum below 27.5 GHz for LMDS. ICE- G requests that we also reconsider designating LMDS at 40 GHz, which it argues is well suited for LMDS uses. 39. In the First Report and Order, we concluded that additional spectrum was needed outside the 28 GHz band for LMDS because the comprehensive 28 GHz band plan we adopted did not provide the 1 gigahertz of unencumbered spectrum as originally proposed. As CellularVision states in its comments, the LMDS proponents consistently have demonstrated throughout this proceeding that each LMDS operator must have at least 1 gigahertz of unen- cumbered spectrum. This is necessary to ensure LMDS can provide a competitive broadband alternative to local exchange services offered by local telephone companies and to video pro- gramming services provided by wireline cable operators. 40. We summarize in paragraphs 20 through 23, supra, all the LMDS proponents that support our proposal, and they emphasize the necessity of acquiring additional unencumbered spectrum because 150 megahertz of spectrum in the 1,000 megahertz block originally proposed has been limited to downstream communications. They describe the experimentation and advancements in two-way services that require the 300 megahertz and that achieves our goal for the full range of telecommunications and video services intended. We conclude that it has been sufficiently demonstrated that LMDS has greater potential in the marketplace if we provide the additional spectrum we proposed for its licensing. 41. The comments do not reflect any technical problems that are obstacles to use of the 31 GHz band by LMDS operators, nor the need for any measures to facilitate their deployment of services in the band. While LMDS proponents acknowledge that no LMDS equipment has been specifically designed for the band, equipment manufacturers claim they are committed to devel- oping the necessary hardware once we designate the 31 GHz band for LMDS use. In addition, HP contends that non-contiguous spectrum will enable interactive broadband services without the need for costly diplexers and filters in the customer premises equipment. Contrary to Sierra's contentions, we find that 31 GHz is suitable for LMDS and can readily be used for LMDS to compete with the full range of telecommunications and video programming services if we provide the necessary spectrum. 42. Several commenters support an alternative allocation of adjacent spectrum below 27.5 GHz for LMDS to provide a single contiguous band. We considered this in the First Report and Order where we directed Commission staff to continue discussions with NTIA to explore the feasibility of shared use or reallocation of some portion of this band from the Government for commercial usage. No further developments have occurred since that time to make the requested spectrum available to us for designation for LMDS use. We believe that it would not be in the public interest to delay the licensing of LMDS and the development of LMDS equipment while we explore potentially speculative options for additional spectrum. However, we continue to support these efforts to explore the availability of additional spectrum. 43. As for the 40 GHz band, we considered the viability of the band for LMDS in the First Report and Order and concluded that, while its immediate use was not established, we would address possible long term uses in a pending proceeding that is reviewing frequencies above 40 GHz. No commenter has presented compelling reasons for us to revisit the issue. Insofar as other bands apart from 31 GHz are available at this time to assign to LMDS, we find, based on our assessment of possible alternatives and based upon the record established in this proceeding, that no adequate alternatives presently exist that would suffice for the expeditious development of services contemplated for LMDS. Sierra and other commenters opposing our proposed approach have failed to identify any alternative sources of spectrum that could reasonably be considered sufficient to meet our stated objectives in licensing LMDS. c. Extent of Incumbent Licenses and Services in 31 GHz Band (1) Number of Licensees 44. In the Fourth NPRM, we concluded that existing usage in the 31 GHz band appears to be relatively light, geographically concentrated, and principally engaged in traffic signal communications. In providing a description and estimate in the IRFA of the small entities that might be affected by our proposals, we concluded that the majority would be small entities that are municipalities or other local governmental entities. We stated that there are 27 such incumbent licensees in the band and we estimated that 25 or 26 were small entities based on the SBA definition of small municipalities, which have populations less than 50,000. Sierra, IMSA, SBA, and other commenters opposing our proposed redesignation of 31 GHz argue that we have significantly underestimated the number of licensees, as well as the volume and extent of the current 31 GHz services nationwide. 45. Specifically, Sierra states that we overlooked several licensees in the list of licensees that were mailed copies of the Fourth NPRM and argues that our data base appears to be incom- plete. IMSA submits a list of a number of current 31 GHz licensees that reflects 70 rows of names, generated from the Commission's data base, and asserts that there actually may be more. Sunnyvale submits a list of more than 40 electronic traffic control modules it has installed, and another list of more than 40 locations where a larger number of installations are in process. It further argues that the license count does not reflect the inherent time delay in applying the technology to the traffic control environment. ITE and USDOT assert that about 40 communities have installed, or are installing, 31 GHz traffic control systems. SBA asserts that it was informed by Sierra that there may be as many as 100 incumbent licensees, both public and private, in this band. SBA submits a list prepared by Sierra of 27 dealers and resellers of Sierra's equipment, which is used by incumbent licensees. 46. We agree with Sierra and the other commenters that the number of licensees we included in the IRFA of the Fourth NPRM did not reflect the total number of current licensees under the existing 31 GHz rules. Based on a review of our current data base, we find a total of 86 licensees operating at 122 stations. We note that the list of licensees submitted by IMSA is similar, but out-of-date and does not identify many of the licensees. Moreover, the list duplicates several licensees by identifying each application and counting it separately. 47. We clarify that, in the IRFA, we were considering the number of incumbent licensees that are small governmental entities that would be affected by our proposal to designate 31 GHz for LMDS, rather than all of the incumbent licensees that might be small entities. A review of our current database reveals that existing licenses have been issued for three categories of 31 GHz services, as follows: þ LTTS provided by a variety of telephone and other communications companies. þ Governmental services including traffic control provided by municipalities, counties, and States. þ Private business uses provided by a variety of businesses and groups. In the IRFA, we stated that 27 incumbent licensees were governmental entities. However, we correct that number under our current database that reflects that, of the total 86 licensees, 19 are governmental entities and that 14 of them are municipalities of various sizes. As for the remain- ing number of licensees, our database reflects that 59 are LTTS licensees and 8 are private busi- ness users. 48. Sunnyvale identifies approximately 40 municipalities in which it has installed traffic control devices. However, we can find only approximately 12 on the list that are licensees and are in our database. Although it also submits the names of more than 50 governmental entities where it has installations on contract and awaiting completion, we do not know how many of those localities, if any, would become licensees. Although ITE and USDOT also assert that 40 communities are using 31 GHz traffic systems, we note above that our database reflects a total of 14 licensed municipalities and we cannot otherwise verify commenters' figures. It could be the listings identify unlicensed users of the spectrum, a fact that may have escaped our monitoring and enforcement efforts. If users of 31 GHz spectrum have failed to apply for a license and are not operating lawfully, they cannot expect to be included in our considerations here. 49. As for the list submitted by SBA identifying 27 dealers of Sierra's equipment, the list does not indicate if any of them are licensees or if the equipment they sell is used by licensed 31 GHz services. However, we note that Comstat is listed, and it filed comments. Comstat states it has installed three systems supplied by Sierra to carry critical information from facility to facility and that were appropriately licensed through the Commission. It claims that the customers would have to move to other frequencies if we designated 31 GHz for LMDS as proposed and that, as a result, the systems would be useless and its spare radio systems would be a total loss. 50. We realize that manufacturers of equipment used for existing 31 GHz services would be affected by our proposal, which could require them to modify such equipment for other spectrum or develop new equipment for other uses, such as LMDS. Nevertheless, these manufacturers are not included in the proposed rule changes, and they are neither subject to our existing 31 GHz rules nor the proposed changes to the licensing of that band. SBA argues that over a dozen of Sierra's resellers appear to be small businesses, but since it appears they are not licensees and the impact of this rulemaking is unclear and indirect at best, we do not alter our figures to include them in the number of existing services impacted by our proposed designation for LMDS nor consider how alternatives could minimize such an impact if it did exist. 51. We also clarify for Sierra that the licensees listed for mailing the Fourth NPRM omits the LTTS licensees, but includes all the remaining licensees. We find their omission from the mailing list has no material effect on our considerations of our proposed designation. In the Fourth NPRM, we sought comment from all interested parties and discussed all incumbent licensees, noting that 31 GHz spectrum is used as a radio link by broadcasters. In this Report and Order, we are considering all incumbent licensees and interests in determining whether our proposal is in the public interest. (2) Scope of Existing 31 GHz Services 52. IMSA, Sierra, and Sunnyvale argue that we also underestimated the locations and extent of all incumbent uses of 31 GHz spectrum when we stated in the Fourth NPRM that usage appears light and geographically concentrated in a few areas of the Nation. Sierra presents a variety of arguments in support of its contentions, as follows. It asserts that the traffic control systems are used by more than 30 State, county, and city governments spread over at least 10 States and that many of them are large cities, counties, or States. It contends that uses are not limited to traffic lights and local area networks, and that non-governmental users are similarly dispersed and provide an assortment of wireless voice, video, and data communication services for private and common carrier applications. 53. Sierra also asserts that our proposal to designate the 31 GHz band for primary use by LMDS ignores our goals when we adopted the service rules for 31 GHz in 1985 to meet commu- nications needs unfilled by traditional service categories. Sierra states that it provides the major- ity of 31 GHz transmitters currently in use, that it is shipping 75 percent more equipment in 1996 than in 1995, and that it expects to ship four times more equipment in 1997 than in 1996. It con- tends that the market for private network equipment continues to double every two years and that the wireless solution for short-range transmissions in 31 GHz is particularly economical and preferable. 54. In addressing these arguments, we first seek to clarify the nature and scope of the ser- vices that we authorized for 31 GHz in the Spectrum Utilization Second Report and Order. As we stated in the Fourth NPRM, we made the spectrum at 31 GHz available to satisfy various short-range, fixed and mobile communications needs pursuant to reduced licensing and coordina- tion requirements. The examples included a common carrier using the band to establish a temporary radio link to bypass an existing cable facility that has been disrupted or a broadcaster establishing a radio link between a television camera and a mobile relay station needed by broad- casters or cable operators. To encourage expanded use of the band, we authorized operations on a co-equal, non-protected basis. Applicants specify whether operations are to be licensed on a point-to-point basis or within an area of operation defined by a point and radius. The rules im- plementing the 31 GHz services are currently located in Part 101 for the private operational fixed and LTTS microwave services, in Part 74 for auxiliary broadcasting services, in Part 78 for cable television relay services, and in Part 95 for general mobile radio services. The 31 GHz band is one of several bands identified in the rules that are available for these services. 55. Our designation of the 31 GHz band for these services was part of an ongoing pro- ceeding to establish a spectrum utilization policy for the use of certain bands between 947 MHz and 40 GHz by fixed and mobile services. However, just as we did in that docket, we have a responsibility to revisit spectrum use to determine whether it is being put to the most efficient and effective use in the public interest. We have noted that our database reveals that current li- censees fall into three categories of users, and all of them are regulated under Part 101. Most are LTTS licensees. Unlike the other two categories of users, LTTS is licensed on a broad area basis to provide temporary service for less than six months on an isolated, as-needed basis. Service may be offered only if licensees are able to clear their channels for use. Thus, reliance on 31 GHz spectrum to meet these immediate needs is tenuous, since licensees must have alternative services available if interference-free 31 GHz spectrum is not available. Only eight licenses are issued for private business uses, which are limited in scope to internal business uses. As for the remaining 19 governmental licensees, they provide traffic control services that all of the com- ments address and that we discuss below. 56. Thus, although licensees may be dispersed nationwide and services scattered among many States, most of those licenses are for services with no fixed location that are only tempo- rary and secondary in nature. All of the services are limited to very short range microwave ser- vices that consist of simplified communication functions, which are not licensed only on the 31 GHz band. We do not dispute the importance that some State and local governmental agencies place on their utilization of 31 GHz for traffic control and other functions. However, they are limited to approximately 19 licensees and their operations are confined to localized services scattered among seven States. Based on an assessment of the nationwide availability of the spectrum, it is apparent that the number of entities operating under the existing rules for 31 GHz services is small and the locations are very few and confined. (3) Traffic Control Systems 57. Most of the comments opposing our proposed designation of 31 GHz argue that the band is being used by public safety entities to provide important traffic control services that are being developed in furtherance of national traffic and air pollution control goals. As indicated, there are 19 licensees that are governmental entities and that are authorized to engage in such services. IMSA, ITE, Nevada DOT, SBA, Sierra, Sunnyvale, and USDOT argue that our pro- posal fails to take into account the importance of the traffic control technology and systems in 31 GHz to public safety and pollution control. Specifically, IMSA and Sierra argue that the technology is becoming increasingly popular for effective traffic control systems which involve video, voice, and other communications devices and that are significantly less costly than traditional method of interconnecting signals using underground cable. Sunnyvale recently completed development of traffic control equipment with Sierra that is being promoted on the market and that is in demand. 58. ITE argues that transportation professionals are involved in ITS programs funded by USDOT, which use different technologies to improve transportation and promote more efficient use of existing infrastructure by avoiding new highway construction costs. ITE argues that 31 GHz traffic systems are used for ITS and that we should not change the use of the band without making USDOT a partner in the decision making process. USDOT asserts that use of point-to- point microwave links has become a significant tool in the surveillance and control of the roads by providing a data and video pipeline for traffic managers. It asserts that the Federal and local governments are making major investments in new technologies to alleviate traffic congestion and urges that we protect existing and in-progress investments by allowing 31 GHz service to continue on at least a portion of the spectrum. SBA emphasizes the importance of our consid- eration of the impact of our proposal on local governmental entities, which it contends are ex- pected to grow significantly now that Sunnyvale's traffic control technology is available. 59. Of the governmental entities that are licensed to use the spectrum for such traffic control systems, MSAPRC indicates that it is funding such systems in Southern California. Ne- vada DOT established a traffic signal control system for the Las Vegas metropolitan area, which has over 1 million population. It has received authorization to operate in the 13 GHz and 18 GHz bands to transport video images in the system, and is awaiting authorization in the 31 GHz band to extend the system around the control center. The system will cost approximately $11 million and is expected to reduce air pollution and save costs over existing management systems. It argues that the video surveillance signals will be degraded without deployment of the 31 GHz technology and the viability of the new network would be threatened. 60. Of the municipalities, Palm Springs states it has licensed and installed 31 GHz radios for the past two years involving 35 signals, with a plan for an additional 20 signals to be added in the next year and for a total of 70 when the project is completed in three years. It argues that the systems are affordable, important to the public safety, and reduce exhaust emissions. San Diego recently completed installation of a signal system using 31 GHz to coordinate data between 13 intersections and a master traffic control system. It argues that design and installation costs are substantially reduced, maintenance costs are less, and the interconnect system is more effective than others. 61. Topeka operates 42 radio links in the 31 GHz band as part of a system that controls traffic lights throughout the city. It asserts that it invested $165,000 in the system. Although Honolulu and Long Beach do not hold licenses, Lone Beach claims it has spend over $1.5 million to purchase 31 GHz radios that link 37 intersections to the Traffic Management Center (TMC). Honolulu asserts that it depends on the 31 GHz bandwidth for communications between its TMC and various signal sites, and that it is expanding its system into freeway and other programs. All the entities argue that adoption of our proposed designation would require them to modify or replace equipment in order to use other technologies, at great expense to taxpayers. 62. We find that commenters have demonstrated that the traffic control systems currently using 31 GHz spectrum are an important category of incumbent services. We recognized in the Fourth NPRM that traffic signal communication is the most extensive incumbent use of 31 GHz, which commenters confirm. These systems are used increasingly by state and local gov- ernments to reduce congestion at busy intersections and combat air pollution by controlling vehicle emissions under standards and goals established by the Federal Government. In the following sections we balance these incumbent interests with the interests that we believe make it important for us to designate spectrum for new LMDS operations. d. Basis for Redesignation: Protection Status of Incumbents and Public Interest 63. In the Fourth NPRM, we sought comment regarding whether incumbents should be relocated to another band where interference protection is provided by our rules, such as the 23 GHz frequency band, or whether incumbents could be accommodated by other methods without affecting LMDS in the same band despite the fact that incumbents have assumed all the risks of receiving interference. IMSA, SBA, Sierra, and Sunnyvale argue that our reliance on the present lack of interference protection at 31 GHz is no basis to displace the incumbent services from 31 GHz and subject them to interference, for the first time, that would effectively eliminate their services. IMSA argues that we ignored in the Fourth NPRM both our intent in originally allocating the 31 GHz band and the practical reality of 31 GHz operations under currently applicable technical rules. Sierra points out that, although 31 GHz users may have no legal protection against interfering co-users, they are afforded effective protection against interference by the technical rules. 64. All three categories of current licensees were licensed under rules that require they share the frequency on a co-equal basis on a non-protected basis, without protection from harmful interference. However, as commenters assert, their operations in effect are free from interference. In the Spectrum Utilization Second Report and Order, we concluded that the proba- bility of causing or receiving harmful interference at 31 GHz would be small because of the technical requirements we imposed and the geographic diversity of use. Our goal was to provide for reduced licensing and coordination requirements for service providers utilizing the band, giving each licensee equal access and no rights to object to harmful interference being caused by any other licensed operation. 65. Thus, as IMSA argues, it would appear that incumbent 31 GHz licensees engaged in traffic control operations are not typical secondary spectrum users, inasmuch as all other catego- ries of licensees in the band are not entitled to protection. And among the current licensees, the technical rules provide them with effective protection and immunity from the other licensed operators. Moreover, current licensing is not extensive, so that licensees experience little or no impact from other 31 GHz licensees. Despite their non-protected status, incumbent licensees are not currently subject to interference and had no reason to anticipate a large degree of interference under the existing licensing scheme. 66. Sierra further argues that the fact that incumbents rely on technical rules for inter- ference protection, rather than on more explicit rules barring interfering operations, is irrelevant to the requirement that we make allocation decisions based on the public interest. IMSA and Sierra, among others, request that we consider fully the interests of the present users of 31 GHz as reflected in this record, which they argue establishes that it would be contrary to the public interest to adopt our proposal to redesignate the band for LMDS use on a primary basis. IMSA argues that although some public value is derived from the promotion of new commercial tech- nologies such as LMDS, we cannot ignore the corresponding public detriment from displacing important governmental services such as traffic signal coordination facilities in which a considerable amount of taxpayer dollars is invested. 67. The public interest underlies any decision we make in allocating spectrum. It is for this reason we sought comment on alternative methods for accommodating incumbent spectrum uses in the 31 GHz band. Although we have found that implementation of LMDS generally is in the public interest, we must weigh all the equities reflected in the record and balance any benefits against any possible harms. This applies equally to the incumbent services as to the LMDS services. As SBA points out, we are required to consider the impact of our proposed designation on existing users of the spectrum, in particular small governmental entities and small businesses, and consider alternatives that could minimize the impact of our proposals on them. We find that the traffic control systems serve important governmental services and are used to achieve Federal, State, and local goals to relieve traffic congestion and air pollution. We also find that 31 GHz licensees have existed co-equally and free from interference up until now. Licensed municipalities demonstrate they have substantial investments in signal systems using a number of 31 GHz radio links, and could require protection of these public safety operations from LMDS. 68. On the other hand, we held in the First Report and Order that LMDS is an important new technology with a wealth of innovative services to meet a nationwide demand for improved wireless telecommunications and video subscriber services. It is expected to compete with local exchange companies for telephone service and with cable carriers, greatly enhancing customer choice and facilitating the rapid dissemination of innovative communications services. We will weigh all these considerations in the following sections in determining how to designate the 31 GHz band between these competing interests. e. Incumbent Accommodation Alternatives (1) Co-Existence with LMDS 69. We requested comment regarding how incumbent licensees might co-exist with LMDS services under our proposal to designate the entire 300 megahertz in the 31 GHz band to LMDS on a primary, protected basis. For example, we asked if LMDS licensees would have suf- ficient capacity to accommodate existing licensees as customers of their services. 70. Endgate maintains that, if the entire 300 megahertz is designated for LMDS as pro- posed, incumbent users could begin to lease point-to-point spectrum from the spectrum owners. It contends that this has the advantage of guaranteeing interference-free operation. CellularVision and CVTT request that we ensure that LMDS licensees have the flexibility to deploy services utilizing the 31 GHz spectrum during the period that the technology is being de- veloped for LMDS use. CellularVision argues that the flexibility to enter into post-auction sublease agreements will ensure the most efficient use of the spectrum. ComTech, RioVision, and TI argue that existing licensees accepted their licenses with non-protected status and as such would be secondary to LMDS and not entitled to compensation or other accommodation. TI contends that incumbents could continue to use the spectrum by engineering around LMDS to resolve interference problems and notes that Topeka suggested relocating the radios it oper- ates. 71. All of the comments that were filed opposing designation of the 31 GHz band to LMDS are from parties interested in the traffic control uses of the band provided by govern- mental entities under our existing licensing rules for 31 GHz. Of these traffic control interests, none of them believes that co-existence under our proposal is possible. They argue that, if the Commission accords LMDS access to the entire 300 megahertz on a primary protected basis, any incumbent licensees are reduced to a secondary status and the interference from LMDS would essentially eliminate their 31 GHz services. They seek to avoid the costs of new or modified equipment to either accommodate the interference or move to another service band. Topeka, for example, urges that we at least make provisions to ``grandfather'' public safety entities to protect them from interference or provide compensation for equipment changes. None of the comments indicates if LMDS technology would be useful or could be modified to serve their needs. (2) Relocation to 23 GHz Band 72. We asked for comments on various aspects of the 23 GHz band, its suitability, and if incumbents should be entitled to relocation costs. No comments present reasons to support a move to the 23 GHz band. IMSA, Sierra, and Topeka oppose the proposal and argue that the band is not a suitable substitute for 31 GHz for a range of technical and financial reasons. For example, Sierra argues that the cost of modifying existing 31 GHz radios would be the same as replacing them with new, more costly 23 GHz equipment. Moreover, 23 GHz equipment must be larger than 31 GHz, so that a 23 GHz antenna with a small enough beamwidth for efficient frequency reuse is too big for existing housing and would require the development of new casings before incumbents could relocate to 23 GHz. 73. As commenters point out, moving to the 23 GHz band would impose financial hardships on incumbent licensees. This is a large burden to impose on the tax-supported municipalities and other governmental entities that use the traffic control systems in 31 GHz. It appears that the operations cannot be replicated in the 23 GHz band without considerable changes to the 31 GHz equipment. In these circumstances, we do not adopt relocation of incumbent services to 23 GHz as an alternative at this time. We will consider in the following sections the plans submitted by the various parties for sharing the 31 GHz band through compromises. (3) Proposed Band-Sharing Plans 74. CellularVision suggests that we modify our proposal to designate the entire 300 megahertz in the 31 GHz band for LMDS. Instead, it proposes that we designate a total of 50 megahertz, from 31.0-31.025 GHz and 31.275-31.3 GHz, for point-to-point use on a primary basis, and a total of 250 megahertz, from 31.025-31.275 GHz, for LMDS on a primary basis for two-way service. CellularVision suggests that LMDS licensees be given secondary access to the 50 megahertz designated on a primary basis for point-to-point use, based on its belief that LMDS technology will not interfere with current 31 GHz use. 75. CellularVision submits a technical paper to demonstrate that two 25 megahertz seg- ments are sufficient to accommodate use by the current systems and that operation on that basis is technically feasible. It argues that the paper demonstrates that the band is being used ineffi- ciently by a small number of licensees and that, with an increase in frequency stability and use of narrower channels, existing uses can be accommodated in only 50 megahertz. In reply, Sierra filed ex parte statements that address the technical requirements of incumbent traffic control services and the need for a minimum of 120 megahertz for incumbent systems to operate. 76. Sierra and Sunnyvale offer a proposal set out by Sierra for sharing 300 megahertz in the 31 GHz band. The plan would designate a total of 150 megahertz to be retained for use by existing and potential users for fixed service point-to-point microwave radios under the existing 31 GHz rules. That spectrum would consist of 75 megahertz between 31.000-31.075 GHz and 75 megahertz between 31.225-31.300 GHz. The middle 150 megahertz of the band would be designated for LMDS use on a primary protected status. The Sierra plan provides that the middle 150 megahertz would be designated for subscriber-to-hub operations to compensate for the 150 megahertz that was restricted against such operations in the 28 GHz band. Sierra and Sunnyvale claim that the plan offers equipment design benefits for LMDS because of the separation between the 29 GHz and 31 GHz bands. Although the frequency separation does make antenna design more challenging, changes would be minimal because the total difference between the upper ends and lower ends of the two bands is less than 2 gigahertz. As for incumbent ser- vices, Sierra does not anticipate harmful adjacent-band interference from LMDS use in the middle sub-band. Sierra asserts that the proposed plan should meet the technical needs of both services. 77. Under the plan, current 31 GHz services would retain the use of the upper and lower 75 megahertz sub-bands under the same conditions to which they are currently subject, on an un- protected basis and free of interference from LMDS. LMDS would not be allowed to operate there. Incumbent point-to-point users in the middle block designated for LMDS could remain on their present frequencies until they receive interference from, or cause interference to, LMDS operations. At that time, their equipment would be retuned, rather than replaced, to conform to the new frequency plan and they would henceforth operate in the upper or lower 75 megahertz bands. All new point-to-point licenses would be issued in the two outer band segments. Sierra asserts that it offers the plan after consultation with LMDS interests. 78. Endgate supports the Sierra plan as a reasonable compromise of the various compet- ing interests. It argues that we should increase the existing 50 milliwatt power limit at 31 GHz to approximately a 55 dBW limit. IMSA, ITE, Nevada DOT, SBA, and USDOT support the plan, which they contend accommodates all the parties' interests while accomplishing the policy goals of the Commission. They argue that all users of the spectrum should be adequately ac- commodated to best serve the public interest and assure equitable treatment of the public agencies involved. f. Spectrum Sharing Plan 79. Based on the considerations expressed in the record, we have decided to modify our proposal to designate the 31 GHz band on a primary protected basis for LMDS. Instead, we adopt a plan to share the 300 megahertz based on features of both the plans submitted by CellularVision and Sierra. We find that a sharing plan is supported by the principal advocates of both LMDS and incumbent 31 GHz services. Although most of the LMDS commenters generally support our proposed designation, none has filed pleadings in specific opposition to the subsequently submitted plans. As we had requested, the parties involved have cooperated and produced alternative band sharing plans that they each contend would allow the services to coex- ist without imposing economic or technical burdens on LMDS providers. These are laudable ef- forts that enable us to reach a decision that, while not relying exclusively on either proposed plan, is more equitable and balanced. (1) Segmentation 80. We adopt our proposal to designate for LMDS the 300 megahertz of spectrum in the 31 GHz band. However, rather than adopt our proposal to accord LMDS primary protected status and incumbents secondary status for the entire 300 megahertz, we segment the band as enumerated by Sierra for purposes of according protection from harmful interference, as follows: As discussed more fully below, we grant LMDS protection from harmful interference by incumbents or other LMDS licensees in the middle 150 megahertz of the 31 GHz band. We do not grant any incumbent licensees protection from harmful interference in the middle 150 megahertz. We provide that the existing operations of governmental and private business incumbent licensees in the up- per and lower 75 megahertz bands are to be protected from harmful interference from LMDS to enable them to continue existing operations. LMDS licensees in the upper and lower 75 megahertz bands will receive protection from harmful interference by other LMDS licensees and from all incumbent licensees. 81. We find that this spectrum division ensures sufficient spectrum to meet the needs of both LMDS and incumbent licensees. It has been sufficiently established that LMDS requires at a minimum an additional 150 megahertz of unencumbered spectrum in order to compensate for the 150 megahertz encumbered in the First Report and Order and to provide LMDS with the 1 gigahertz we found it needed for broadband service. Although CellularVision has proposed that LMDS be assigned 250 megahertz in the center of the band, it appears that this proposal was based on its belief that two 25 megahertz segments are sufficient for incumbent systems. However, Sierra has demonstrated that this segmentation cannot accommodate most incumbent operations. 82. According to Sierra, even major equipment modifications would not make sufficient capacity available to manage certain kinds of inputs that are important to municipal licensees that use their equipment for video monitoring. It appears that an assignment of only 50 megahertz to incumbents would make it difficult to avoid intra-system interference in certain system configurations. Sierra points out that a typical major intersection sends and receives data in four directions, consisting of both directions along each street. Thus, at least four frequency pairs are required to allow proper frequency coordination to prevent individual radio links at the intersec- tion from interfering with each other. We conclude that CellularVision's segmentation plan would be inadequate for important incumbent services. 83. Sierra has stated that the 200 megahertz requirement for existing, four-frequency pair traffic control installation equipment could be modified to accommodate four frequency pairs within 150 megahertz, at a price accessible to existing municipal licensees. Although Sierra has indicated that it could modify its equipment to accommodate existing operations within 125 megahertz (with 62.5 megahertz at each end of the band), this would not be as satisfactory as providing 75 megahertz at each end. On balance, we find that the segmentation proposal advanced by Sierra meets the needs of LMDS, while providing most incumbent licensees with the spectrum needed to continue their important operations. 84. Sunnyvale requests that, if no compromise designation of spectrum is approved, we initiate a negotiated rulemaking under Section 1.18 of the Commission's Rules. Inasmuch as we adopt a band sharing plan that reflects the segmentation requested by Sierra and provides the protection that Sunnyvale seeks for incumbent licensees, we deny the request. As a result, we need not address Sunnyvale's argument that adoption of our original proposal to authorize 300 megahertz in the 31 GHz band would constitute a modification of the existing licenses in the band by removing them from a co-equal status among approved users to a secondary status with new users. The band sharing plan we adopt allows incumbent licensees engaged in traffic con- trol services, which Sunnyvale addresses, to continue operating in the amount of spectrum they require without harmful interference from LMDS, thus preserving their status. (2) LMDS Use and Protection 85. We decline to adopt Sierra's proposal with respect to the limitations it seeks to im- pose on LMDS access to the entire band. We are adopting our proposal to designate the entire 300 megahertz for LMDS use, rather than designating only the 150 megahertz in the middle segment, as Sierra requests. There is no need to exclude LMDS from the outer 150 megahertz. LMDS is required to protect governmental and private business incumbent licensees in the outer bands from harmful interference, which is to ensure that they are able to continue their existing operations. In the case of such incumbent licensees that are licensed on a point-to-radius basis, LMDS licensees shall be subject to this protection requirement in the case of existing links operated by such incumbents and in the case of links added by such incumbents in the future in accordance with the terms of their point-to-radius licenses. For example, an LMDS licensee may not initiate operations within the point-to-radius area licensed to an incumbent, even if the incumbent has not initiated operations to the fullest extent of the license. An LMDS licensee, however, may initiate operations at the border of the incumbent's license area without prior coordination if the LMDS licensee's operations would not cause harmful interference to an incumbent's existing operations. In the future, the incumbent may add additional stations within its license area and would need to coordinate if its new operations might cause harmful interference to the existing operations of the LMDS licensee. 86. We also adopt our proposal to provide LMDS with protected status in the entire 300 megahertz, rather than limiting it to only a primary protected status in the middle segment. Although LMDS may operate in the middle 150 megahertz without concern to the interference it may be creating, it is to be concerned to a certain extent about interference in the outer bands in order to protect governmental and private business incumbent licensees. However, we require those incumbent licensees in the outer bands to also protect LMDS from harmful interference. This does not diminish their protection from LMDS, but does require both sets of licensees to negotiate and arrive at mutually acceptable solutions to interference in the outer bands. 87. We reject Sierra's proposal to limit LMDS operations in the middle segment to only subscriber-to-hub service. This limitation would be inconsistent with our goal to provide LMDS with the middle 150 megahertz on a primary protected basis to ensure that, when it joins this band with the unencumbered 850 megahertz in the 28 GHz band, it has the spectrum required for interactive communications and full development of LMDS technology and service. Because of the secondary status of incumbents in this middle portion, we find that limits on LMDS opera- tions there would not necessarily help incumbents (without upgrading their status), but would very likely thwart our goals for LMDS. We therefore adopt no restriction in the 31 GHz band with regard to the direction of permissible LMDS transmissions. LMDS operators thus are permitted to transfer information from hub-to-hub, hub-to-subscriber, and subscriber-to-hub. (3) Incumbent Licensee Use and Protection 88. We have determined that a plan to share the 31 GHz band better meets the needs of incumbents, rather than relocation of incumbents to another band. All incumbents are permitted to continue operating in the entire 300 megahertz of spectrum. In addition, our rules do not preclude an incumbent licensee from obtaining an LMDS license. We decline to adopt CellularVision's proposal to exclude incumbents altogether from the middle segment that is assigned to LMDS. That serves no purpose under the plan we adopt, which provides LMDS with primary status in the middle segment. Thus, LMDS has the protection it needs from harm- ful interference to ensure an unencumbered segment of 150 megahertz, and the continued operations of incumbents in this segment is of negligible impact. 89. As for the two outer bands of 75 megahertz each, we do not include LTTS incumbent licensees for protection from harmful interference from LMDS as we do for the remaining incumbent licensees. As discussed previously, our database reveals that 59 of the total 86 licensees under 31 GHz rules are LTTS, while the remaining 19 are governmental entities and 8 are private businesses. Essentially all of the comments seek protection for the traffic control systems established by the municipal licensees, while no comments address LTTS. As we noted, LTTS is unlike the other two categories of users because of the temporary, secondary nature of the service. We leave the status of LTTS licensees unchanged for several reasons. Unlike the municipal and other private business incumbent licensees, they provide short-term services on a temporary basis and do not have the same type of permanent facilities or systems that we have found should be protected. Moreover, they currently operate on a secondary basis to any perma- nent facilities wherever their temporary operations are set up. Finally, they have broad authori- zation that provides access to the entire band and would make it difficult to limit their protection to a small geographic area. 90. All incumbents in the middle segment, and LTTS in the entire band, will be second- ary to LMDS and may continue to operate within the existing parameters of their licenses. How- ever, should frequency conflicts arise with an LMDS system, all incumbents have several possi- ble options for resolving the conflict. The incumbent can modify its system to eliminate any in- terference to LMDS systems, acquire the use of spectrum from the LMDS licensee through geographic partitioning, transfer its operations to a different transmission medium, or lease ser- vice or transmission capacity from a common carrier. (4) Relocation and Modification Procedures 91. We seek to accommodate non-LTTS incumbents in the middle 150 megahertz seg- ment that cannot alter their systems satisfactorily or are otherwise concerned about their second- ary status to LMDS providers in that segment. We provide an option for them to relocate to the blocks of 75 megahertz at each end of the band in order to take advantage of the protection we have provided non-LTTS licensees in those segments from harmful interference by LMDS li- censees. This relocation option will be available for a 15-day period following the effective date of the rules adopted in this Report and Order, as set forth in paragraph 440, infra. Because of the fact that the rules adopted in this Report and Order will not take effect before the end of the 60- day period following their publication in the Federal Register, we believe that incumbent licensees will have sufficient time to determine whether to file license modifications in order to relocate to the blocks of 75 megahertz at each end of the band. 92. Relocation from the middle 150 megahertz segment requires that the non-LTTS incumbent apply for a modification of its license under the relocation procedure we adopt in this Order. Modification applications are to be filed by the end of the 15-day period commencing on the effective date of the rules adopted in this Order. Modification applications are filed in accordance with the existing rules that govern the incumbent 31 GHz licensees in Part 101 of the Commission's Rules. Under our current rules, any such licensee filing a modification application in accordance with this Report and Order will be required to implement any license changes granted by the Commission not later than 18 months after the date of such grant. Because the incumbents are not authorized to provide service on a common carriage basis, their modification applications are not subject to the public notice and petition to deny requirements of Section 101.37 of the Commission's Rules. Thus, applications for modification of an incumbent's license under the relocation procedure would be expedited. 93. We conclude that the relocation option and the license modification procedure we adopt provide incumbent governmental and private business licensees in the middle 150 mega- hertz segment with a reasonable opportunity to continue their operations in a manner that is not unduly disruptive. We note that Sierra proposed that incumbent licensees in this segment could retune their equipment, rather than replace the equipment, to conform to the segmentation plan we adopt and operate in the two 75 megahertz bands. Our relocation option provides them with this opportunity. Sierra further requests that, as a matter of equity, we require LMDS li- censees to pay for the retuning or other costs that might be incurred by incumbent licensees from relocating within the band. We adopted the segmentation plan based in part on Sierra's comments that the costs of adjusting equipment for a move within the band to these 75 megahertz segments would not be significant. Moreover, relocation to another spectrum band is an option. We will not require any compensation for relocation costs. (5) Applications for New Authorizations and for Modifications or Renewals of Existing Licenses 94. We sought comment on whether we should accept any applications for new licenses or for modification and renewal of existing licenses under the existing 31 GHz rules, in light of the secondary nature of the protected status of incumbent licensees to LMDS. In Sierra's pro- posed band-sharing plan, the incumbent services would be entirely preserved in the segments of 75 megahertz at each end of the band and future growth would be permitted under the existing rules. All comments from proponents of 31 GHz, which are the traffic control interests, support Sierra's proposal and seek continued use of the band to expand existing operations or establish new services under the existing rules. 95. ITE and USDOT argue that 31 GHz radio links are being used in the development of ITS programs, which are expected to meet Federal traffic management goals at reduced costs over the next 20 years. They urge that we allow the continued use of these services and adopt the Sierra plan, which serves the public interest by protecting public agencies that have invested public funds in this technology and by promoting public safety. Sunnyvale asserts that it developed 31 GHz equipment with Sierra over six years that is now available for traffic control systems to be used in ITS programs in furtherance of this Federal policy for improved traffic management. It argues that this equipment is becoming popular, as endorsed by Topeka. Nevada DOT plans to implement a large traffic system in the Las Vegas area of 1 million population using 31 GHz equipment that it has funded. Palm Springs, San Diego, and Topeka plan to expand outside existing areas, as do Long Beach and Honolulu. 96. IMSA and Sierra argue that, regardless of the outcome of this Report and Order, we should continue to accept new applications for 31 GHz licenses and, where LMDS is accorded primary protected status, new licenses could be subject to the risk of interference. IMSA, and Topeka as well, argue that we should grandfather incumbent licensees to provide protection and allow them to renew or modify their licenses to preserve the value of their investments in 31 GHz facilities. Sierra argues that a freeze on applications is not supported by most LMDS proponents and would serve no purpose, and argues that we should at least permit users to squeeze what remaining value they can from their investments by renewing, modifying, expand- ing, or constructing new systems subject to LMDS interference in that case. 97. On the other hand, TI requests that we cease licensing new users in the 31 GHz band and that we do not grandfather existing users, inasmuch as they are secondary users that should not be elevated in status. RioVision agrees. ComTech contends that applications could be al- lowed if we have accorded LMDS primary protected status and ensured that no interference will ensue, but is concerned that resources could be strained by trying to deal with the interference caused to LMDS by these operations. HP asserts that further licensing could create confusion in the band. 98. We have carefully considered the advantages and disadvantages of allowing applica- tions for new and expanded 31 GHz services under the existing rules, but conclude that any further growth and development of these services is inconsistent with the band-sharing plan we adopt. We have determined to designate all 300 megahertz for LMDS as necessary to fully accommodate the development and deployment of LMDS, based on comments. As TI and WebCel confirm, the promise of LMDS is its significant broadband potential and any reductions in the proposed spectrum block would delay the development of important equipment and limit the ability of LMDS providers to offer very high bandwidth services. Incumbents have acknowledged the inherent incompatibility of their services with LMDS, which is likely to deter interest in new services that have to share spectrum with such expanding and powerful systems. Expansion of 31 GHz services would likely have a chilling effect on the efforts of LMDS pro- viders to establish and expand their services in response to consumer demand, seriously jeopar- dizing our objectives in designating the band for LMDS. 99. Under the band-sharing plan we adopt, government and private business incumbent licensees are protected to the fullest extent possible in order to preserve their existing operations. Taxpayer investments and the public benefits being derived from these described systems should not be jeopardized or diminished. While many of the comments address specific or general plans for future growth of traffic control systems, that cannot be accommodated under the plan because of the uncertainties of such plans in the face of the need for LMDS to develop and utilize the spectrum. As Nevada DOT and USDOT indicate, traffic control systems are being developed for a variety of bands and the technology is improving or changing rapidly. It cannot be predicted that 31 GHz would continue to offer the best technology, or that LMDS technology would not be developed to suit some of these incumbent services. Moreover, LMDS supporters indicated a desire to accord access to their spectrum, either through leasing or other means through which similar traffic control systems could grow. On balance, we find the benefits of allowing the expansion of incumbent licensees are outweighed by the harms to LMDS licensees of any future growth of existing 31 GHz services. 100. Given these considerations, we conclude that it is in the public interest, and in the interest of all of the parties, to dismiss any pending applications. A review of our database re- flects that there are several pending applications, all of which were filed after the release date of the Fourth NPRM and by new applicants not currently licensed. Thus, these applicants were on notice that the Commission was considering a change in our rules for the 31 GHz band. Three of the pending applicants with several applications are the State of Nevada and the Cities of Las Vegas and North Las Vegas. Although Sierra submits a list identifying 13 large installations that it claims are pending, only the Las Vegas installations are included in our records as having applications. 101. In its comments, Nevada DOT has demonstrated that these pending applications are for radio links that are an integral part of its traffic signal control system for the large metropoli- tan area around Las Vegas, which has been underway for several months. We recognize that our dismissal may create unexpected disruptions and expenses with respect to implementing this plan and achieving its traffic management goals for the area. On the other hand, these consequences would be less than the impact of expanding LMDS operations over such a system after it were fully implemented. Our obligation is to allocate the Nation's natural resource of its spectrum for the most effective and efficient use. It has been demonstrated that, in comparison with the technology and demand for the kinds of services in LMDS, the extent to which the incumbent 31 GHz services have used this nationwide spectrum over the past 12 years in which it has been available is minimal. Given the rapidly changing marketplace and technology, Nevada DOT may well have access to other technologies that equally suit its needs, while it has been spared the unnecessary expense of implementing a system for which the future is at best uncertain. 102. We permit incumbent licensees to renew their licenses in order to maintain their operations. We also permit them to continue to plan and conduct their operations to the full ex- tent permitted under the current terms of their licenses, so long as they do not expand or increase these operations. Non-LTTS incumbent licensees are licensed either on a point-to-radius basis, which establishes a radius of operations, or a point-to-point basis, which is linear. To stay within their existing service parameters, the radius licensees may add links within the outer bands, as long as they do not go outside the radius. The point-to-point licensees are engaged in fixed operations provided by radio links between two points. They may not add additional links and are limited to whatever frequency pairs now exist. With regard to LTTS licensees, we have pointed out that LTTS is authorized nationwide without any designation of points to serve short- term immediate needs. LTTS operations in existence on or after the date our rules take effect may continue those services, as well, but may not expand those services nor initiate new operations. 103. In these circumstances, we find that the kind of modifications that incumbent li- censees may make to their licenses must be limited to ensure that they do not expand their operations. Accordingly, we will not allow the filing of applications to modify under Sections 101.57 and 101.59, because the modifications listed there include changing power, sites, and other service aspects that could alter operations considerably and create additional problems for LMDS. Section 101.61 provides for modifications that do not require prior authorization and allow for the replacing of equipment, as well as other changes, that would provide incumbents with the flexibility to manage existing operations without expanding. We amend Section 101.57 to exclude incumbents. (6) Rules 104. We modify the rules for the licensing of 31 GHz services in order to eliminate future licensing and provide for the continuation of existing services under the band-sharing plan we have adopted. As we have indicated, all incumbent licensees are governed by Part 101 of our rules. Inasmuch as no licensees are authorized under Parts 74, 78, and 95, we delete the provisions at Sections 74.602(h), 78.18(a)(5), and 95.1(b) that authorize the assignment of the 31 GHz band for the services in those Parts, and make any other conforming amendments to those Parts. 105. As for Part 101, we amend the separate rules in Subpart J for LTTS by deleting the 31 GHz band as a band available for assignment in Sections 101.803(a), 101.803(d), and 101.803(e). The technical rules for Part 101 that establish frequency availability, coordination procedures, tolerances, bandwidth, transmitter power limitations, and frequency assignments are further amended to delete the 31 GHz band as available for assignment and to preserve for all incumbent licensees their access to the entire band, subject to renewal. The amendments provide for the sharing plan for 31 GHz by placing all incumbent licensees in a secondary status to LMDS in the middle 150 megahertz band. As for the outer segments of 75 megahertz, LTTS incumbent licensees remain in a secondary status to LMDS while non-LTTS incumbent licensees and LMDS licensees are equally protected from harmful interference. g. Application of NEPA 106. Both Sunnyvale and IMSA also contend that the National Environmental Policy Act of 1969 (NEPA) and Section 1.1307(c) of the Commission's Rules, require that we prepare an Environmental Impact Statement (EIS) prior to making a decision on the 31 GHz spectrum proposal set forth in the Fourth NPRM. They argue that the 31 GHz band is currently used by governmental licensees for traffic video cameras and traffic signal controls, in part, to reduce automobile idling time and consequent air pollution, and that these uses must be preserved in order to facilitate these entities' compliance with Congressionally-mandated air quality standards. These commenters claim that our proposal to designate the 31 GHz spectrum for LMDS, will have a ``significant impact on the quality of the human environment,'' requiring an evaluation of that impact and consideration of alternative proposals, pursuant to Section 102 of NEPA and Section 1.1307(c) of the Commission's Rules. 107. We believe that the LMDS licensing plan, as modified and adopted in this Order, does not constitute a major Federal action that will significantly affect the quality of the human environment, and thus does not require the preparation of an EIS under Section 102 of NEPA. We have been persuaded by the comments that traffic control systems are an important category of incumbent services, and thus we have taken several measures to mitigate the impact of our 31 GHz plan on such services. Specifically, we have declined to adopt the proposal in the Fourth NPRM for use of the 31 GHz band, which gave rise to the concerns expressed by Sunnyvale and IMSA. Instead, we have permitted the continued operation of traffic monitoring and control systems by incumbent licensees in this band. We thus believe that the adopted LMDS licensing plan does not trigger NEPA, in that the licensing plan (1) maintains the status quo by allowing governmental and private business incumbent licensees to expand their operations to the full extent permitted under the terms of their present licenses and to renew those licenses, according to their original terms and parameters, in order to maintain their operations; and (2) does not alter or further impact the environment in any way. Furthermore, as detailed below, alternative measures and technologies exist that will enable the expansion of current operations by governmental entities that hold existing licenses, as well as allow the introduction of such systems by other governmental entities. 108. We have considered alternative band sharing plans developed by several parties, which they contend will allow LMDS and incumbent services to coexist, and we have adopted some of the principal components of these plans. We rejected CellularVision's proposal to allocate two 25 megahertz segments in the 31 GHz band for incumbent use because we were convinced by Sierra that such a plan would have allocated insufficient spectrum to avoid intra- system interference in certain traffic control systems. Under the 31 GHz plan adopted, all incumbent licensees retain the use of the 31 GHz band, while the governmental and private business licensees additionally are accorded protection in the two outer 75 megahertz segments from harmful interference from LMDS. The governmental and private business incumbent licensees presently operating in the middle 150 megahertz segment of the band and accorded secondary status with respect to LMDS in that segment have the option of relocating to the 75 megahertz segments where they, too, will be entitled to protection from harmful interference from LMDS. We believe that, under this plan, the traffic monitoring and traffic signal control functions that Sunnyvale and others contend are vital to the environment can be maintained in the band at their current levels, while allowing us to designate additional spectrum for LMDS. 109. The action we are taking allows the governmental and private business incumbent licensees to expand their operations to the full extent permitted under the terms of their present licenses and to renew those licenses, according to their original terms and parameters, in order to maintain their operations. This plan preserves the status quo. Under our plan, incumbent governmental licensees are authorized to continue using 31 GHz spectrum to operate traffic monitoring and control systems. The viability and usefulness of these systems is thus being preserved by the rules and procedures we adopt in this Order. 110. We have considered the significance of our decision to prohibit incumbents from seeking modifications to their present licenses in order to expand their operations beyond the scope permitted by those licenses. Incumbents hold either one of two types of licenses. One type of license specifies the coordinates of both the transmitting and the receiving stations, and limits operations to those stations. The second articulates the scope of licensed operations in terms of an area of operations. Our band sharing plan will necessarily have a greater impact upon those incumbents holding point-to-point licenses. Under the terms of the plan we are adopting, incumbents with service area licenses will be permitted to add more transmitting and receiving stations to their current operations, so long as those additions do not exceed the service area boundaries, power levels, or other specifications set forth in the license. Point-to-point licensees, on the other hand, will be limited to the scope of their presently licensed operations and will not be authorized to obtain additional point-to-point licenses. 111. Although our present approach does not permit governmental licensees to expand their traffic monitoring and control operations through more extensive use of 31 GHz spectrum acquired by applications for point-to-point licenses, we emphasize that current operations are not disturbed by this limitation, such that the protection and preservation of the environment resulting from these governmental traffic systems will continue on the same basis and to the same extent as they do today. Thus, we conclude that our plan, taken as a whole, will occasion minimum disruption for most incumbent governmental operations. 112. We also note that a question exists whether there is sufficient causal connection between our LMDS licensing decision and ambient air quality to say that our actions in this proceeding could be the ``proximate cause'' of any impact on the human environment. We note that, under the present licensing scheme, an incumbent governmental licensee's expansion of its traffic monitoring systems and a new governmental applicant's ability to use the 31 GHz spectrum for such functions, are contingent upon their applying for and being granted a license. Furthermore, the removal of this opportunity cannot be said to be the proximate cause of the vehicular and other pollution factors that have precluded their attainment of ambient air quality standards established under the Clean Air Act. Our action merely limits, to some extent, a governmental entity's choice of methodologies for addressing one source of pollution and consequent non-attainment -- vehicular pollution. 113. The number of incumbent licensees engaged in traffic control operations and thus affected by this limitation on incumbent expansion is small. Traffic control operations are provided by governmental licensees, of which there are a total of 19 spread across seven States. It appears from our database that less than half of these governmental licensees are authorized on a point-to-point basis. Of these, only four are located in non-attainment areas requiring plans to improve air quality in order to comply with the standards established by the Environmental Protection Agency. 114. A number of alternatives are available to these incumbents, if they wish to expand their operations. Specifically they could bid for and purchase the smaller, significantly less costly 150 megahertz license in the competitive bidding process we are establishing in this Order. They also could acquire the use of spectrum from an LMDS licensee through spectrum disaggregation or geographic partitioning of the LMDS license. Furthermore, they could transfer their operations to a different transmission medium, lease service or transmission capacity from a common carrier, or expand their wired traffic control systems. These alternatives are also available to governmental entities that are not presently licensed in the 31 GHz band and whose applications to commence such service are barred by the action we take here today. These are significant factors when weighing the impact of a regulatory action on the environment. 115. In sum, we do not believe that the LMDS licensing plan, as modified and adopted herein, raises environmental concerns or otherwise affects incumbent governmental licensees' continued operation of traffic monitoring and control operations, or the air quality controls for which they are responsible. Current operations are not disturbed by our licensing plan, and the present level of air quality protection afforded by these operations is preserved. We believe that the impact of limiting the expansion of existing systems, and any resulting effect on air quality, is minimal -- very few governmental licensees will be affected, and most of these are not located in nonattainment areas. Furthermore, all of these licensees have recourse to some other option for monitoring and controlling traffic and minimizing air pollution. B. Licensing of Spectrum 1. Number of Licenses per Geographic Area a. Background; Comments 116. In the First NPRM, Third NPRM, and Fourth NPRM we sought comment on the number of LMDS licenses we should authorize in each geographic licensing area. In the First NPRM, we proposed to designate 1,000 megahertz in the 28 GHz band for LMDS and, based on the existing technology, proposed that the 28 GHz band be licensed in two blocks of 1,000 megahertz each to two different carriers. In the Third NPRM we proposed that 150 megahertz of the 1 gigahertz in the 28 GHz band be licensed on a co-primary basis with MSS feeder links and sought comment on the number and size of licenses to make available in light of the proposed change in designation. We had noted that LMDS may be competing in a multichannel video programming distribution market (MVPD) that is dominated by cable television, but that is poised for the entry of several alternative distribution technologies, and sought comment on whether, from a competitive standpoint, it would be advisable to authorize only one LMDS license for 1,000 megahertz in each market. We also asked whether the advent of digital technology should affect our assessment of the minimum amount of spectrum needed by a licensee to compete in the MVPD environment. We discussed alternative licensing schemes, and sought comment on the specific spectrum amounts that would be required, were we to decide to license more than one LMDS provider in each market. 117. In the First Report and Order, we adopted our proposal to designate the 1,000 megahertz in the 28 GHz band for LMDS and to require that 150 megahertz be shared on a co- primary basis with MSS feeder links. Specifically, LMDS was accorded the primary designation in the 850 megahertz located in the 27.5-28.35 GHz segment, while the segment of 150 megahertz at 29.1-29.25 GHz in the band is shared on a co-primary basis and limited to LMDS hub-to-subscriber transmissions. Because of the encumbrance of the 150 megahertz, we proposed to designate an additional 300 megahertz of spectrum on a primary protected basis in the 31 GHz band for LMDS. We sought comment on how to assign this additional spectrum and whether to treat it as a separate block or combine it with spectrum in the 28 GHz band to be assigned as a single block. We tentatively concluded to assign the proposed 31 GHz band and the designated spectrum in the 28 GHz band as a single license block. 118. The majority of parties responding to our initial inquiry in the Third NPRM argue that if LMDS providers do not receive a sufficient amount of spectrum, they cannot provide competitive services in either the MVPD marketplace or in the local telephony marketplace. Many of these commenters contend that approximately 1,000 megahertz of spectrum is the minimum amount necessary to create a commercially viable system that will enable LMDS licensees to compete with ``wired'' cable television systems and other MVPD providers. 119. Because, in the First Report and Order, 150 of the 1,000 megahertz in the 28 GHz band was allocated on a co-primary basis with MSS and LMDS subscriber-to-hub transmissions were precluded in this segment, many of these commenters and others support our proposal to designate the entire 300 megahertz in the 31 GHz band to LMDS and to auction it with the 1,000 megahertz at 28 GHz as a single license block. They reason that this will enable LMDS providers to take full advantage of technical innovation and offer the full panoply of services to respond to marketplace needs. No commenter focuses on or explains why it would be necessary to assign all 300 megahertz (rather than 150 megahertz) to a single licensee, in order to compensate for the encumbered nature of the 150 megahertz in the 28 GHz band. 120. Bell Atlantic points out that a few parties seek to use the designated spectrum in smaller blocks. It notes that some, such as Emc3, seek to use this spectrum for ``niche products,'' while others, such as NYNEX and WCA, seek to supplement their Multipoint Distribution Service (MDS) spectrum. In addition to Emc3, NYNEX, and WCA, several other parties advocate segmenting the LMDS spectrum to create smaller blocks. For example, Ad Hoc RTG, PRTC, and WCA support our proposal to designate spectrum in the 31 GHz band for LMDS but maintain that the 31 GHz block should be licensed as a separate unit in each LMDS service area. These parties contend that licensing the 31 GHz band as a separate block would facilitate market entry by a greater number of LMDS providers and would increase market competition. 121. Should the Commission decide otherwise, however, Ad Hoc RTG requests that the Commission afford rural telephone companies and other designated entities bidding credits and installment plans, as in previous auctions, as a means of facilitating market entry by a greater number of LMDS providers. WCA recommends, as an alternative, that LMDS auction winners be authorized to disaggregate their spectrum. As we have discussed, Sierra states that governmental licensees' vehicle control operations presently requiring 200 megahertz of capacity could be conducted using only 150 megahertz of spectrum, with modifications to existing equipment that would require only modest financial investments by these licensees. 122. Commenters also addressed the issue of smaller license blocks in the context of our inquiry in the Third NPRM about the relevance of impending digital technology in formulating a spectrum plan for LMDS. NYNEX and others argue that, with the advancement of digital technology, assignments of less than 1,000 megahertz of spectrum per licensee can be channelized into viable commercial operations. Emc3 argues that the 1,000 megahertz of spectrum proposed for LMDS under the Third NPRM band plan could be divided into four licenses of 212.5 megahertz each within the 27.5-28.35 GHz band, and three licenses of 50 megahertz each within the 29.1-29.25 GHz band. According to Emc3, as little as 150 megahertz of spectrum could be used to provide a commercially viable communications service by using digital technology; thus, the Commission should not support the inefficient use of spectrum for LMDS by giving access to the full amount of LMDS spectrum for analog technology. 123. GTE contends that, with the advent of digital technology, the optimum LMDS licensing structure would be two equal, unaffiliated licensees in each market, with each licensee having a primary assignment of 425 megahertz in the 27.5-28.35 GHz band and 75 megahertz of co-primary assignment in the 29.1-29.25 GHz band. WCA contends that the Commission could license three LMDS providers per geographic service area, with two 425 megahertz licenses and one 150 megahertz license. WCA opposes establishing a single LMDS licensee per market because it argues that this could effectively preclude certain services that are only economically viable if the provider can acquire authorizations for less bandwidth. 124. The majority of commenters, however, urge the Commission to refrain from basing our LMDS licensing plan on the development and impending availability of digital LMDS technology. These commenters argue that digital technology is not available in the near term, and that approximately 1,000 megahertz per licensee is thus required in order to enable an analog LMDS system to compete with incumbent MVPD providers and one-way and two-way voice and data subscriber-based service providers. Commenters also argue that even if digital LMDS, once available, becomes as efficient as other digital technologies, LMDS providers will still need at least 1,000 megahertz to compete in the cable and local telephony environments, because the use of digital technology by competitors will also increase these competitors' spectrum capacity. CellularVision argues that even if digital technology may prove ultimately to be appropriate for certain applications of LMDS, analog technology may remain most appropriate for other applications of LMDS. b. Decision 125. For the reasons discussed in the following paragraphs, we have decided that LMDS potential can be exploited most effectively by assigning the 1,300 megahertz designated for LMDS in two licensing blocks. We base this decision in part on our conclusion that LMDS spectrum promises significant versatility as a vehicle for increasing competition in the telephony and cable programming markets, and has the capacity to meet the more circumscribed needs of smaller operators and niche markets. We will issue one license for 1,150 megahertz, consisting of the 1,000 megahertz located in the 28 GHz band and 150 megahertz located in the center of the 300 megahertz segment of the 31 GHz band. We also will issue an additional, smaller license for 150 megahertz, located entirely in the 31 GHz band and consisting of the two 75 megahertz segments located at each end of the 300 megahertz block. LMDS licensees in the smaller block will have to protect certain incumbent operations that exist in some localities under the band-sharing plan we have adopted in this Report and Order. 126. As discussed later in this Report and Order, we adopt our proposal to base licensing on the 493 geographic areas known as BTAs and to simultaneously auction the two licenses in each BTA. We conclude that establishing both a 1,150 megahertz and a 150 megahertz LMDS license in each BTA is the most effective way to promote the public policy goals and objectives of this proceeding. Our principal goal in this rulemaking has been to increase the potential for more competition in the video programming and telephony markets. The promotion of competition is the surest means of serving consumers through the delivery of an array of offerings that is responsive to consumer demand for feature-rich video and telecommunications services marked by high quality and reasonable prices. 127. We agree with those commenters favoring a minimum of 1,000 megahertz of contiguous spectrum, or its equivalent, for an LMDS license and believe that the creation of a 1,150 megahertz LMDS license in each BTA achieves this goal. The addition of 150 megahertz in the 31 GHz band will compensate for the use restriction imposed on 150 megahertz in the 28 GHz band that will be licensed to both LMDS and satellite services on a co-primary basis. This increase in capacity should assist LMDS licensees in developing two-way services that will make them viable entrants in the MVPD, voice, and data telecommunications marketplaces. 128. The creation of an additional 150 megahertz license in each BTA will also provide benefits to consumers and other members of the public. One possibility would be for the 150 megahertz license to be acquired by the same entity as the 1,150 megahertz license. This would accommodate the desire of commenters advocating that the Commission should assign one 1,300 megahertz license. Alternatively, each license in a market could be acquired by a separate entity. Commenters claim that a license of smaller bandwidth would have the benefit of providing for smaller operators, development of niche markets, and provision of services that would only be economically viable under cheaper, narrower bandwidth licenses. 129. In addition to those benefits cited by commenters, we assign the spectrum for the 150 megahertz license from the outer segments of the 31 GHz band in order to reflect the band- sharing plan we have adopted for 31 GHz and ensure our objectives are achieved. The smaller license will allow us to accommodate more easily the ability of incumbent governmental and private business licensees to continue their existing operations in that spectrum segment on a protected basis, while minimizing any potential disruption to larger LMDS operations in the 1,150 megahertz block. We consider this minimization of disruptions to LMDS operations to be an important aspect of achieving our goal of increasing competition in the MVPD, voice, and data telecommunications marketplaces. Under our band-sharing plan, incumbent governmental and private business licensees presently using the 31 GHz band would have interference protection from the holder of the smaller, 150 megahertz license, but would be accorded no protection from interference by the operator holding the 1,150 LMDS license for that BTA. Moreover, the smaller license should make it easier for any incumbent licensee or entity interested in continuing to have access to the 31 GHz band for incumbent services to acquire a license for the redesignated spectrum under the LMDS licensing rules. 130. In adopting this licensing plan, we generally agree with those commenters who contend that the future development and availability of digital LMDS equipment should not be a determining factor in limiting the spectrum available to each LMDS licensee. Commenters demonstrate that digital LMDS equipment is not commercially available for LMDS operations on the 28 GHz spectrum, and is not yet developed for the 31 GHz spectrum. In designating the 31 GHz band for LMDS, we noted that, although developers of LMDS technology expect to make the 31 GHz band readily accessible for LMDS use, they seek the regulatory certainty of our authorizing implementation of LMDS before fully committing the resources necessary to develop commercially viable applications of spectrum. It would not be in the public interest to preclude LMDS licensees from using immediately available equipment by limiting too strictly the amount of spectrum available to an LMDS licensee using analog equipment. However, we believe that the advent of digital technology does provide support for creating a second, smaller license for each service area. A 150 megahertz LMDS license could provide a less costly, hence more easily accessible, forum for operators wishing to experiment with the use of digital technology in LMDS. Creating such an opportunity would encourage the development of more efficient equipment that might provide greater service to the public. We believe that our creation of two licenses