August 1994 BROADBAND PCS FACT SHEET What is broadband PCS? The FCC has defined the new personal communications services (PCS) broadly as a family of mobile or portable radio services which can be used to provide service to individuals and businesses, and which may be integrated with a variety of competing networks. Broadband PCS refers to the services that will be provided on spectrum allocated for these services in the 2 GHz band. The FCC cannot tell you what to use this spectrum for but it anticipates that these licenses will be used to provide a variety of new mobile services that will be provided on an entire family of new communications devices that will include small, lightweight multi-function portable phones, portable facsimile and other imaging devices, new types of multi-channel cordless phones, and advanced paging devices with two-way data capabilities. Potential of PCS These new services have the potential to increase business productivity and enhance efficient delivery of important public services. They could do this, for example, by enabling emergency medical teams at disaster scenes to communicate more information to hospital doctors, and by providing more efficient and lower cost communications to the public at large. Broadband PCS systems will be capable of interfacing with personal digital assistants, allowing subscribers to send and receive data and/or video messages without connection to a wire. Availability of PCS Licenses By the end of 1994, the FCC plans to begin auctioning the 99 available 30 MHz broadband PCS licenses for Major Trading Areas (MTAs). In 1995, the FCC plans to auction remaining 1,972 broadband PCS licenses for Basic Trading Areas (BTAs), including those in the so-called Entrepreneurs' Blocks, in which limitations on eligibility apply and where special provisions have been made to benefit small businesses, rural telephone companies and businesses owned by women and/or members of minority groups (collectively "designated entities"). Licensing areas and frequency blocks for broadband PCS The Commission has allocated 120 MHz of spectrum to broadband PCS, divided into six frequency blocks (A through F). Each license will cover either an MTA or BTA service area, which generally are based on the definitions for those areas contained in the Rand McNally Commercial Atlas and Marketing Guide. Frequency blocks A and B contain 30 MHz of spectrum and will be awarded on an MTA basis. Frequency block C also contains 30 MHz of spectrum but will be licensed on a BTA basis. Frequency blocks D, E and F each contain 10 MHz of spectrum and will be licensed on a BTA basis. Licensees will be permitted to aggregate or combine licenses so long as they do not hold interests in more than 40 MHz of spectrum in any area. The United States, including the District of Columbia, American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the United States Virgin Islands, have been divided into 51 MTAs and 493 BTAs. If you are interested in bidding for PCS You should familiarize yourself with the Commission's decisions and rules regarding the broadband PCS service before making a decision about whether to participate in the auction. These decisions contain detailed descriptions of the service, the spectrum allocations, service and auction rules, and technical and construction requirements that will apply to these licenses. You should try to attend an informational seminar held by the FCC on the auction procedures to be employed in awarding broadband PCS licenses. How do I get the information I will need to bid? The procedures, terms and conditions for participation in broadband PCS auctions, as well as information on how to complete the short-form application, can be found in the bidder information packages which are available by contacting Tradewinds International, Inc. at (202) 637-FCC1 (3221) or (202) 637-FCC2 (3222) (fax). In order to participate in the auction, you must file a short-form application on FCC Form 175. Bidders also must make an upfront payment to the FCC prior to the auction in order to be qualified to bid in a broadband PCS auction. How do I apply for a license? You should list on FCC Form 175 the market numbers and frequency blocks for each broadband PCS license on which you wish to bid. If you wish to be eligible to bid on more than five licenses, in addition to FCC Form 175, you should use FCC Form 175-S to list the additional licenses on which you may wish to bid. (If you wish to be eligible to bid on all licenses being offered in a particular auction, you should indicate this on the short-form in the space provided.) You must fill out all information required on the short-form application. For example, the FCC Form 175 requires you to create a 10-digit FCC Account Number that we will use to identify and track your application. In creating this number you must use a taxpayer ID number if you have one, or you can use your 10-digit area code and telephone number, if you don't have a taxpayer ID number. You should use this FCC account number whenever you submit additional information regarding your application, including when you submit your upfront payment. Detailed instructions on completing the FCC Form 175 can be found in the FCC Public Notice announcing the auction. How do I find out the status of my short-form application after I filed? The FCC will issue a Public Notice identifying those short-form applications that have been accepted, those that have been rejected, and those that contain minor defects that may be corrected. What are the special provisions for designated entities? In the auction for licenses in frequency blocks C and F (the Entrepreneurs' Blocks), special provisions have been adopted to benefit businesses owned by women and minorities and to small businesses. In this auction, on your FCC Form 175 short-form application you may indicate whether you are entitled to avail yourself of these provisions. Generally, eligibility to bid on these licenses will be limited to firms whose gross revenues have been less than $125 million in each of the last two years, and whose total assets do not exceed $500 million. Installment payment plans will be available to winning bidders in most cases. Businesses that are owned and controlled by women and/or minorities will be eligible for a 15 percent bidding credit (i.e., a 15 percent discount on the amount bid) when bidding on Entrepreneurs' Block licenses. Small businesses (those with average annual revenues under $40 million) will be eligible for a 10 percent bidding credit. These credits will be cumulative, so that a small business that is owned and controlled by women and/or minorities will be eligible for a 25 percent bidding credit. In addition, tax certificates will be available to initial investors in minority and women-owned firms upon sale of their interests, and to licensees who transfer their authorizations to minority and women-owned businesses. Tax certificates enable the investors or licensees to avoid recognition of any gain upon sale of their interests. How will I bid, and who will be allowed to make a bid? The FCC has not finally determined the method or methods by which bid may be submitted. Bidders will be able to be present at a prescribed location to submit their bids through a computer, and the FCC is also investigating the feasibility of allowing remote bidding via computer or telephone link. You are required to identify on FCC Form 175 all persons who will be authorized to represent you in the auction. However, only one bidder identification card, which authorizes the holder to place a bid at the auction, will be issued to each applicant. A bidder may not bid on behalf of more than one bidder for the same license. How much do I need to submit to participate? In addition to filing your short-form application, you must submit an upfront payment set by the FCC and announced in advance of the auction. Bidders should submit an upfront payment calculated at $0.02 per MHz per pop for the largest combination of MHz-pops on which the bidder wishes to bid in any single round of bidding. In other words, if you wish to win a 30 MHz license with a service area containing a maximum of 10 million persons, you should submit an upfront payment of $6,000,000 ($0.02 times 30 times 10,000,000). If you are the high bidder on a particular license but decline to accept that license, you will be subject to a bid withdrawal penalty. When do I pay? Your upfront payment must be received by the Commission's lockbox bank prior to the auctions. The exact date by which upfront payments must be made will be set in a Public Notice announcing the auction. The upfront payments of losing bidders will be refunded as soon as possible after the auction closes, generally within two weeks after the auction. How will I know if I can bid? The Commission will issue a Public Notice after short-form applications are filed indicating all applicants who have filed incomplete or defective applications. This notice will also specify the deadline for filing corrected applications. Applicants who have made minor errors will be offered an opportunity to resubmit corrected applications. However, applicants who fail to sign their applications will not be allowed to resubmit their application and will be barred from participating in the auction. After the deadline for filing corrected applications has passed, the FCC will issue further Public Notices listing all applicants who are eligible to participate in the auction. How will I know who won? Finally, after the auction has closed and the winning bidders have been identified and submitted both their 20 percent down payment and their long-form applications on FCC Form 401, the Commission will issue another Public Notice identifying the winning bidder for each license. Must I use my broadband PCS license to provide commercial service? No. For licensing and regulatory purposes, the FCC has established a presumption that all PCS spectrum will be designated for commercial mobile radio service (CMRS) offerings. If you win a license and plan to use any portion of the PCS spectrum to offer private mobile radio services, you may overcome this presumption by making a showing, including a certification, that you intend to offer PCS service on a private basis. This certification should be attached as an exhibit to your long-form application (FCC Form 401), which must be filed with the FCC no later than 10 business days after the close of the auction. This certification must include a description of the proposed service sufficient to demonstrate that it does not fall within the CMRS classification because it will not be available to the public or because it will not be interconnected to a public switched network. What will be my responsibilities as a PCS licensee? If you are a winning bidder in the auction, pay all required sums and the FCC finds that you are qualified to become a licensee, you will be granted a license for a 10-year term. Among other things, during the license term you will be required to satisfy certain construction requirements established by the Commission. If you fail to satisfy the construction requirements, your license will be cancelled. - FCC -