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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In re Applications of ) ) JOHNSON-BROCK PUBLIC SCHOOLS )File No. BPLIF-920501DF Peru, Nebraska ) ) SOUTHERN PUBLIC SCHOOL )File No. BPLIF-930415DF DISTRICT #1 ) Tecumseh, Nebraska ) ) For Construction Permit and ) License in the Instructional ) Television Fixed Service on ) Channels C1, C2, C3 and C4 ) MEMORANDUM OPINION AND ORDER Adopted: July 25, 1997Released: July 31, 1997 By the Commission: 1. The Commission has before it for consideration a petition filed by Southern Public School District #1 (Southern), seeking reconsideration of our action in which we granted the mutually exclusive application of Johnson-Brock Public Schools (Johnson-Brock) for a new Instructional Television Fixed Service (ITFS) station to operate on Channels C1-C4 in Peru, Nebraska, and denied that of Southern for a new ITFS station on the same channels in Tecumseh, Nebraska. Johnson-Brock Public Schools, 9 FCC Rcd 5300 (1994). I. BACKGROUND 2. In evaluating the applicants, pursuant to our ITFS comparative selection process, we awarded Johnson-Brock ten merits points and Southern only nine. Johnson-Brock was selected as the applicant with the highest score, with the critical distinction being the award to Johnson-Brock of one merit point under the instructional programming criterion. Under this comparative factor, one point is awarded for a proposed weekly schedule of at least 21 average hours per channel of formal educational programming or of at least 41 average hours per channel of other ITFS programming. Two points are awarded for a proposed weekly schedule of at least 41 average hours per channel of formal educational programming or at least 61 hours per channel of ITFS programming where at least 21 of those hours are formal educational programming. 47 C.F.R.  74.913(b)(4). 3. In its petition for reconsideration, Southern argues that the grant of Johnson-Brock's application was in error because the Commission failed to consider an amendment which it filed on July 20, 1993, the "B" cut-off date established for this proceeding. The July 20th amendment increased the amount of proposed formal educational programming per channel per week from an average of 20 hours to 42 hours. In accordance with 47 C.F.R.  74.913(b)(4), Southern maintains that it should have been awarded two programming merit points, which would have resulted in it having the higher score, with eleven merit points. 4. Johnson-Brock does not dispute that Southern's timely July 20th amendment was overlooked. Instead, it argues that even if the July 20th amendment had been considered, Southern still would not be entitled to comparative credit for its increased programming proposal, because Southern's excess channel capacity lease agreement with U.S.A. Wireless, Inc. (U.S.A. Wireless) does not permit Southern to use the number of programming hours specified in its amendment. According to Johnson-Brock, the "ITFS Airtime Lease Agreement" that was submitted with Southern's application as initially filed provides, in Section 3.a.ii, for a total of 168 hours weekly for Southern's use, including 20 hours for the lessor's initially scheduled ITFS programming and an additional 22 hours reserved for any expanded ITFS program needs. Johnson-Brock argues, however, that Southern's reserved air time of 22 hours is not available for the applicant's immediate use, pointing to Section 3.a.iii of the agreement, which requires Southern to provide "three months' advance notice of any revision to its schedule of the specific air time hours." II. DISCUSSION 5. Initially, we agree with Southern that its July 20, 1993 amendment was inadvertently overlooked. Under our mutually exclusive selection process, ITFS applicants are permitted to file amendments to their applications upgrading their comparative status until the "B" cut-off date. Second Report and Order, 101 FCC 2d at 74; see also Texas State Technical College, 8 FCC Rcd 664, 665, n.4 (1993). Thus, we find that Southern's amendment, which was filed on the "B" cut-off date established in this proceeding, should have been considered and would have resulted in the award to Southern of two programming merit points, bringing that applicant's point total to eleven. While Johnson-Brock now challenges such an award, we are not persuaded that Southern would be unable to effectuate fully its revised programming proposal at the time its ITFS facilities are constructed and service is commenced. The three-month advance notification provision pertains only to proposed modifications of Southern's initial programming schedule, and there is no indication that such schedule has already been presented to U.S.A. Wireless. Even if it has, however, the advance notification requirement would not be sufficient to discredit Southern's revised programming proposal. See Espanola Public Schools, 10 FCC Rcd 919 (1995). Here, the lease agreement demonstrates a total of 168 hours of air time available to Southern, which supports the provision of an average of 42 hours per channel per week as proposed in the July 20, 1993 amendment. Under these circumstances, we conclude that an award of two programming merit points to Southern is proper and that Southern is the tentative selectee. 6. As indicated, Southern has entered into an excess capacity lease with U.S.A. Wireless. However, the lease agreement does not conform in all respects with the Commission's requirements for such leases. The initial lease term is for five years, renewable for an additional five-year period. In the event that the parties are unable to reach agreement on additional renewal terms, the lease provides for the continued operation on the licensed channels by U.S.A. Wireless for a six-month period beyond the lease term. This provision is inconsistent with the Commission's maximum term for excess capacity leases. See Rock Port R-II Schools, 9 FCC Rcd 7342 (1994). In addition, another lease provision restricts Southern from assigning its license to any prospective assignee or purchaser which does not agree to assume and be bound by all of the terms and conditions of the lease agreement, as if the purchaser was the original lessor. We believe this provision places an unreasonable impediment on the assignment or transfer of the ITFS facility. See Central Cass Public School District, 10 FCC Rcd 3167 (1995). Although these provisions are inconsistent with our requirements for excess capacity leases, they neither reflect on the applicant's basic or comparative qualifications, nor preclude grant of the authorization. See Van Vleck Independent School District, 7 FCC Rcd 7231, 7233 (1992). Accordingly, Southern's authorization will be conditioned upon conformation of the lease to Commission requirements. 7. No petitions to deny or informal objections have been filed against Southern's application, and we find Southern fully qualified to be an ITFS licensee. We also conclude that grant of Southern's application would serve the public interest, convenience and necessity. 8. Accordingly, IT IS ORDERED, That Southern's petition for reconsideration IS GRANTED, that the grant of the application of Johnson-Brock Public Schools (BPLIF-920501DF) IS SET ASIDE and the application IS DENIED, and that the application of Southern Public School District #1 (BPLIF-930415DF) IS GRANTED, subject to the condition that within 30 days from the release date of this Order, Southern Public School District #1 submits to the Chief, Distribution Services Branch for approval, information demonstrating compliance with Commission requirements, including, if appropriate, an amended excess capacity lease agreement conforming in the manner discussed herein. 9. IT IS FURTHER ORDERED, That the staff of the Mass Media Bureau shall send copies of this decision to the parties by certified mail, return receipt requested. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary