Report No. DC-2613 ACTION IN DOCKET CASE June 9, 1994 FCC ADOPTS MODIFICATIONS TO PCS BAND PLAN; CREATES SIGNIFICANT BENEFITS FOR CONSUMERS AND BUSINESSES (GEN DOCKET 90-314) The Commission today unanimously modified its rules governing broadband Personal Communication Services (PCS). The modifications will result in lower prices for consumers in the form of decreased equipment and service charges, lower start-up costs for the industry and will have a significant impact in promoting a robust and competitive wireless marketplace, helping to create new jobs. Moreover, the Commission's action facilitates participation in the broadband PCS industry by small businesses, rural telephone companies, and businesses owned by women and minorities. The Commission took this action in response to 67 petitions for reconsideration or clarification of the rules and policies adopted last September in the Second Report and Order of this proceeding. Personal Communications Services are the next generation of wireless communications that will help meet our ever more mobile society's rapidly growing demands for on-the-go communications. PCS 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. These new services and devices should significantly improve the flexibility and functionality of all telecommunications networks. They will make possible the vision of communications anytime, anywhere, to anyone. (over) - 2 - While the total amount of spectrum allocated to licensed PCS services remains at 120 MHz, the Commission amended the band plan in two ways that will yield significant benefits to providers and consumers alike. First, the original plan divided the PCS spectrum between two separate frequency bands. Today, the Commission has voted to allocate all PCS spectrum within a single band. The many benefits of this move include equipment which will cost 25 percent less as the single band requires simpler handsets. The single band plan makes aggregation easier for providers wishing to acquire different amounts of spectrum, allowing providers to initiate service more rapidly and more efficiently. Relocating the spectrum from the upper band will reduce microwave relocation costs by more than $1 billion for the PCS industry. It also improves interoperability which will facilitate roaming and lower costs for consumers who wish to change providers. Finally, this move will preserve more spectrum for the emerging mobile satellite services industry to provide worldwide service and serve remote areas in the U.S. that PCS may not immediately reach. Further, the earlier band plan had two 30 MHz and one 20 MHz license on the lower band of spectrum. The Commission voted to create parity by increasing the 20 MHz block to 30 MHz. This action will create another opportunity for a strong, viable competitor to attract capital and initiate service rapidly. The increased competition in wireless services will lead to lower service prices and greater choices for consumers. The Commission reaffirmed its fundamental approach of implementing rules flexible enough to ensure that competition and market forces drive business and consumer decisions. Licensees will be free to offer any of a wide variety of services. Moreover, at this time, the Commission is not adopting technical standards because it is confident that the industry will move quickly to adopt PCS standards so that consumers can enjoy the benefits of these competitive services across the country. The Commission will continue to monitor this process. Having adopted these changes and reaffirmed its overall approach to PCS, the Commission will continue its commitment to ensuring that the benefits of PCS are brought to the American public as quickly as possible. It will proceed expeditiously toward licensing broadband PCS services. - 3 - Among its actions, the Commission: a. Adopted a modified band plan that provides for three 30- MHz licenses (Blocks A, B, and C) and three 10 MHz licenses (Blocks D, E, and F), all of which are within the 1850-1990 MHz band; b. Provided that the A and B Blocks be licensed within 51 service areas based on the Major Trading Areas (MTAs) set forth in the Rand McNally Commercial Atlas & Marketing Guide (123rd ed. 1992); c. Provided that the C, D, E, and F Blocks be licensed within 493 smaller service areas based on the Basic Trading Areas (BTAs) set forth in the Rand McNally Commercial Atlas & Marketing Guide; d. Maintained the allocation of spectrum at 1910-1930 MHz for unlicensed PCS devices, and committed to examine in the near future allocation of additional spectrum for unlicensed PCS operations. Within this band, the Commission adopted a 1.25 MHz channelization scheme for isochronous (voice) devices and eliminated channelization requirements for asynchronous (data) devices; e. Continued to permit all eligible entities, including parties who do not have attributable interests in cellular companies operating in the PCS service area, to acquire attributable interests in a maximum of 40 MHz of licensed broadband PCS spectrum; f. Retained its 5 percent equity attribution threshold for PCS licenses; g. Retained its cellular attribution threshold of 20 percent equity ownership of a cellular licensee and its service overlap test of 10 percent of the population of the relevant PCS market; h. Relaxed the eligibility rules to permit entities with attributable interests in cellular companies whose combined cellular geographic service areas overlap between 10 and 20 percent of the PCS service area population to submit bids for more than 10 MHz of PCS spectrum, provided that, prior to the auction, they commit to divest themselves of sufficient attributable cellular interests so they come into compliance with the eligibility rules within 90 days of receiving the PCS license; (over) - 4 - i. Provided that stock, partnership interests, de facto control, interlocking directorates and certain other controlling interests and relationships will be considered in determining attributable interests for purposes of spectrum caps; j. Raised from 20 to 40 percent the threshold for determining attributable cellular equity ownership for rural telephone companies, small businesses and businesses owned by minorities and women (designated entities) k. Increased from 20 to 40 percent the threshold for determining attributable cellular equity ownership to allow non- designated entities to make non-controlling investments in PCS licenses owned and controlled by minority and women owned businesses; l. Permitted entities with attributable cellular interests covering 10 or more percent of the population in a PCS service to acquire 10 MHz of PCS spectrum within the PCS service area and, after January 1, 2000 and compliance with the five year construction requirement, to acquire an additional 5 MHz for a total of 15 MHz of PCS spectrum in their cellular service areas; m. Relaxed construction requirements to require the 30 MHz broadband PCS licensees provide coverage to one-third of their service area population within five years of initial licensing and two-thirds within ten years; n. Relaxed the construction requirement to require the 10 MHz licensees to provide coverage to twenty five percent of their service area population within five years of initial licensing, or alternatively, submit a showing of equivalent or substantial service; o. Increased the maximum power level permitted for broadband PCS base stations to 1640 watts equivalent isotropically radiated power (e.i.r.p.) (equivalent to 1000 watts e.r.p); p. Retained with a minor amendment its rules to ensure compliance with minimum standards for exposure to radio frequency energy emitted by PCS devices; q. Committed to initiate a proceeding in the near future to allocate additional spectrum for mobile satellite services (MSS) domestically and to work toward having additional spectrum allocated to MSS at the World Radio Conference to be held in 1995 (WRC-95); and - 5 - r. Agreed to examine management contracts and resale agreements in a supplement to the Further Notice of Proposed Rulemaking, GEN 93-252, for the purposes of possible attribution towards the proposed CMRS spectum cap. The Commission believes that in combination these minor adjustments to original plan will result in significant improvements for consumers and industry. The item adopted today provides the foundation for the competitive communications industry of tommorow. Action by the Commission June 9, 1994, by Memorandum Opinion and Order (FCC 94-144). Chairman Hundt, Commissioners Quello, Barrett, Ness and Chong, with Commissioners Quello, Barrett and Chong issuing statements. - FCC - News Media contact: Susan Lewis Sallet at (202) 418-0500 Office of Plans and Policy contacts: Robert Pepper and Donald Gips at (202) 418-2030.