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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 the Matter of ) ) Amendment of the Commission's Rules) PR Docket No. 92-257 Concerning Maritime Communications) RM-7956, 8031, 8352 THIRD REPORT AND ORDER AND MEMORANDUM OPINION AND ORDER Adopted: July 6, 1998 Released: July 9, 1998 By the Commission: TABLE OF CONTENTS Paragraph I. INTRODUCTION AND EXECUTIVE SUMMARY . . . . . . . . . . . . 1 II. BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . . 3 III. DISCUSSION . . . . . . . . . . . . . . . . . . . . . . . 8 A. VHF Public Coast Station Spectrum. . . . . . . . . . 8 1. Geographic area licensing . . . . . . . . . . . 9 2. Service areas . . . . . . . . . . . . . . . . 12 3. Treatment of incumbent licensees . . . . . . 17 4. Licensing . . . . . . . . . . . . . . . . . . . 24 5. Coverage requirements . . . . . . . . . . . . . 33 6. Partitioning and disaggregation . . . . . . . . 37 7. Technical flexibility . . . . . . . . . . . . . 44 8. Operational flexibility . . . . . . . . . . . . 51 9. Regulatory status . . . . . . . . . . . . . . . 53 10. Safety watch. . . . . . . . . . . . . . . . . . 54 B. Competitive Bidding Procedures for the Public Coast Service 59 1. Use of Competitive Bidding. . . . . . . . . . . 59 2. Competitive Bidding Issues. . . . . . . . . . . 62 IV. PROCEDURAL MATTERS. . . . . . . . . . . . . . . . . . . . 74 A. Suspension of Acceptance and Processing of Applications74 B. Additional Matters . . . . . . . . . . . . . . . . . 77 C. Regulatory Flexibility Act . . . . . . . . . . . . . 78 D. Paperwork Reduction Act of 1995 Analysis . . . . . . 79 E. Ordering Clauses . . . . . . . . . . . . . . . . . . 80 F. Contact for Information. . . . . . . . . . . . . . . 89 Page APPENDICES . . . . . . . . . . . . . . . . . . . . . . . . . . 38 APPENDIX A - LIST OF COMMENTERS . . . . . . . . . . . . . 38 APPENDIX B - FINAL REGULATORY FLEXIBILITY ANALYSIS. . . . 39 APPENDIX C - VHF COAST STATION INFORMATION. . . . . . . . 41 APPENDIX D - VHF PUBLIC COAST AREA (VPC) INFORMATION. . . 42 APPENDIX E - PUBLIC SAFETY SET-ASIDE. . . . . . . . . . . 45 APPENDIX F - FINAL RULES. . . . . . . . . . . . . . . . . 47 I. INTRODUCTION AND EXECUTIVE SUMMARY 1. In the Second Report and Order in this proceeding the Commission adopted rules to promote operational, technical, and regulatory flexibility in the Maritime Services. In the Second Further Notice of Proposed Rulemaking in this proceeding the Commission sought comment on proposals to simplify the licensing process for very high frequency (VHF) public coast stations. In this Third Report and Order and Memorandum Opinion and Order, we address the petition for reconsideration of our decisions in the Second Report and Order filed by WJG MariTEL (MariTEL). We also adopt rules aimed at streamlining our licensing process for VHF public coast stations. We conclude that the public interest would be served by providing licensees more flexibility in the use of maritime spectrum, while preserving this internationally- allocated radio service's core purpose of promoting the safety of life and property at sea. Moreover, we believe that these changes will (1) increase competition in the provision of telecommunications services; (2) increase the types of telecommunications services available to vessel operators; (3) promote more efficient use of maritime spectrum; (4) reduce regulatory and economic burdens on coast station licensees; and (5) allow maritime commercial mobile radio service (CMRS) providers to more quickly respond to market demand. The major rule changes we adopt today are summarized below.  We modify our rules to adopt a geographic area licensing approach for VHF public coast stations. We designate nine licensing regions near major waterways (defined as maritime VHF Public Coast areas (VPCs)), based roughly on U.S. Coast Guard Districts, and thirty- three inland licensing regions (defined as inland VPCs), based on Economic Areas. We authorize a single licensee for all currently unassigned VHF public correspondence channels in each licensing region in lieu of the site-based approach presently used.  We permit the continued operation of incumbent VHF public coast station licensees and private land mobile radio (PLMR) licensees sharing maritime spectrum in inland areas. Additionally, we require incumbents and geographic licensees to afford each other interference protection.  We adopt a substantial service construction requirement for VHF public coast station licenses and permit partitioning and disaggregation of those licenses.  We clarify the safety watch requirements of VHF public coast station licensees.  We adopt competitive bidding procedures to resolve mutually exclusive initial applications for VHF public coast station licenses, pursuant to Section 309(j) of the Communications Act. 2. Our decisions in this Third Report and Order and Memorandum Opinion and Order further our goal to improve maritime communications. In developing these new rules we are guided by several broad policy initiatives. First, we seek to establish a flexible regulatory framework that will (1) provide opportunities for continued development of competitive new services using maritime spectrum, (2) expedite market entry through streamlined licensing procedures, (3) promote technological innovation, and (4) eliminate unnecessary regulatory burdens. Second, we seek to enhance regulatory symmetry between maritime CMRS providers and other CMRS providers to ensure that market forces, and not regulatory forces, shape the development of the CMRS marketplace. Finally, we take into account the unique nature of the Maritime Services. Specifically, we note that (1) the frequencies are allocated internationally to facilitate interoperability; (2) use of maritime spectrum is subject to various statutes, treaties, and agreements; and (3) the primary purpose of these services is to provide for the safety of life and property at sea. II. BACKGROUND 3. The Maritime Services provide for the unique distress, operational, and personal communications needs of vessels at sea and on inland waterways. Maritime frequencies are allocated internationally by the International Telecommunication Union (ITU) to facilitate interoperable radio communications among vessels of all nations and stations on land worldwide. Public coast stations, which are CMRS providers that allow ships at sea to send and receive messages and to interconnect with the public switched network, use VHF band frequencies to serve a port or coastal area. 4. In November 1992, the Commission released a Notice of Proposed Rule Making and Notice of Inquiry in this proceeding to examine the expanding communications needs of the maritime community. Based on the comments received, it released a First Report and Order in May 1995, adopting rules that, inter alia, allowed the use of maritime VHF (156-162 MHz) band public correspondence frequencies by eligible entities in the Industrial and Land Transportation (I/LT) Radio Services away from navigable waterways. Additionally, the Commission released a Further Notice of Proposed Rule Making in response to commenters' requests for more flexible regulatory treatment of public coast stations and enhancements in marine communications equipment. 5. On June 26, 1997, the Commission released a Second Report and Order and Second Further Notice of Proposed Rule Making, in which it adopted rules to, inter alia, permit the automated operation of public coast stations, reduce congestion through intra-service frequency sharing and inter-service frequency sharing with PLMR licensees, and permit the use of innovative technologies (such as automatic link establishment and the expanded use of narrow-band direct-printing (NB-DP) frequencies). The Commission also proposed rules for geographic area licensing of VHF public coast stations, and sought comment on various proposals -- including permitting partitioning and disaggregation of geographic licenses, and allowing incumbent VHF public coast station licensees and PLMR licensees sharing marine spectrum in inland regions to operate indefinitely. In addition, it proposed competitive bidding rules for public coast stations. Seventeen comments and eight reply comments to the Second Further Notice were received. 6. On August 5, 1997, shortly before the comment period for the Second Further Notice closed, President Clinton signed into law the Balanced Budget Act of 1997 (Balanced Budget Act). Section 309(j)(2) of the Communications Act formerly stated that mutually exclusive applications for initial licenses or construction permits were auctionable if the principal use of the spectrum was for subscriber-based services, and competitive bidding would promote the expressed objectives of the Act. We concluded under former Section 309(j)(2) that, because public coast stations are CMRS providers, mutually exclusive initial applications were auctionable. This conclusion is unchanged by the Balanced Budget Act, which expanded the Commission's auction authority by amending Section 309(j) to provide that all mutually exclusive applications for initial licenses or construction permits shall be auctioned, with certain limited exceptions. 7. While our actions in this proceeding are designed to improve maritime telecommunications, applicants should be aware that an FCC auction represents an opportunity to become an FCC licensee in this service, subject to certain conditions and regulations. The FCC does not endorse any particular services, technologies, or products, and grant of an FCC license does not guarantee business success. Applicants should perform their individual due diligence before proceeding in an auction, as they would with any new business venture. III. DISCUSSION A. VHF Public Coast Station Spectrum 8. There are only nine channel pairs in the 157.1875-157.4500 MHz (ship transmit) and 161.775- 162.0125 MHz (coast transmit) bands assignable to VHF public coast stations for public correspondence. Along the Canadian border, even fewer channel pairs are available for U.S. stations. Currently, these channel pairs also are assignable to I/LT users in areas removed from public coast stations and navigable waterways. 1. Geographic area licensing 9. Proposal. Under our current rules, the service area for VHF public coast stations is applicant- defined based on predicted signal strength over the waterway to be served. The size of each station's service area also determines the mileage separation between co-channel assignments. Using a conservative estimate, service areas for VHF band public coast stations extend 20 to 30 miles from the transmitter. In order to establish a comprehensive and consistent regulatory approach that enhances maritime communications, in the Second Further Notice the Commission proposed a transition from site-specific "service area"-based licensing to licensing based on FCC-defined geographic areas. 10. Decision. We conclude that the public interest will best be served by a transition to geographic area licensing for VHF public coast station spectrum. This approach will facilitate the development of wide-area, multi-channel automated maritime communications systems. It also will promote regulatory symmetry between maritime licensees and other CMRS providers where geographic licensing has been introduced, consistent with the congressional directive set forth in the Omnibus Budget Reconciliation Act of 1993. We disagree with Mobile Marine Radio, Inc. (MMR), an MF, HF, and VHF public coast station licensee, that our pursuit of this objective is futile due to the limited amount of available VHF public coast station spectrum. We believe that CMRS licensees should be afforded regulatory symmetry wherever feasible, regardless of the amount of spectrum designated for specific CMRS uses. In addition, we agree with MariTEL, a VHF public coast station licensee, that changing our current licensing approach in favor of geographic licensing will enable public coast station licensees to be more competitive with other CMRS providers and better serve the public. Further, we disagree with the contentions of MMR that geographic area licensing will undermine the essential purposes of the Maritime Services, so should be employed only in those areas where PLMR sharing is permitted. As we indicated in the Second Further Notice, our goal in this proceeding is to improve maritime radio in ways that take into account the unique nature of the Maritime Services, including its primary purpose of providing for safety of life and property at sea. We believe that the geographic licensing approach will enhance maritime communications by expediting the assignment of the remaining channel pairs and facilitating development of automated coastal systems. 11. Moreover, we are not persuaded by the concerns of UTC, the Telecommunications Association (UTC), which represents utility and pipeline companies, and the Industrial Telecommunications Association and the Council of Independent Communications Suppliers (ITA/CICS), which represent PLMR users, that geographic licensing will adversely affect PLMR incumbents' operations and access to this spectrum. As discussed below, incumbents' operations will be protected under the new licensing approach. In addition, partitioning and disaggregation will be permitted, which will allow PLMR users to obtain spectrum through partitioning and disaggregation arrangements in areas beyond those in which Section 90.283 of our Rules currently allows them to be licensed. Thus, this action will potentially increase their access to this spectrum. 2. Service areas 12. Proposal. The Commission proposed in the Second Further Notice to divide the nation -- coastline and interior -- into nine regions, based on U.S. Coast Guard Districts, as listed below: Proposed Regions (Coast Guard District) Northern Atlantic (1st ) Gulf of Mexico (8th) Mid-Atlantic (5th) Northern Pacific (13th) Southern Atlantic (7th) Southern Pacific (11th) Great Lakes (9th) Alaska (17th) Hawaii (14th) The Commission sought comment on whether U.S. Coast Guard Districts provide an appropriate basis for defining service areas for the VHF public coast service, and asked commenters to discuss alternative service area definitions. 13. Decision. After reviewing the record in this proceeding and our initial proposals, we believe that the best service area definition for VHF public coast station spectrum deviates slightly from our initial approach. We conclude that regions analogous to U.S. Coast Guard Districts should be the licensing areas near major waterways, but not elsewhere. We partially agree with the suggestion that we use smaller units than U.S. Coast Guard Districts, such as Rand McNally's Basic Trading Areas (BTAs) or the Commerce Department's Economic Areas (EAs), in order to permit smaller entities to participate in auctions without having to bid for territory far exceeding their operating needs. When we converted from site-based licensing to geographic licensing of 220-222 MHz band frequencies (the frequency band designated for auction that most closely approximates public coast VHF spectrum), we used different-sized licensing areas in order to afford licensees the opportunity to provide different types of service offerings. The smallest licensing area we used was the EA because we believed that it best approximated the smallest area desired by the typical user. Similarly, we find that EAs, as defined in Section 27.6 of our Rules, are appropriate licensing areas for the VHF public coast spectrum in inland areas, because they reflect urban, suburban, and rural traffic patterns, and thus approximate the smallest area desired by a typical user. 14. Yet one of our principal reasons for converting to geographic licensing is that our current licensing approach has "ma[d]e it extremely difficult for a single entity to obtain enough geographically and spectrally contiguous stations to develop an automated coastal system." We believe that using licensing areas smaller than U.S. Coast Guard Districts in maritime areas would similarly impede the development of such systems. Thus, we conclude that using areas analogous to U.S. Coast Guard Districts in the maritime areas is the most appropriate alternative, because, as MariTEL notes, coast station operators are required to coordinate safety communications services with the Coast Guard, and because the U.S. Coast Guard Districts reflect vessel movement patterns. Thus, geographic licensees will be able to provide appropriate wide-area services to vessels, and to better compete with other CMRS providers. 15. Therefore, licensing areas identical to EAs shall be used in inland regions, but licensing areas analogous to U.S. Coast Guard Districts shall be used in maritime areas. We will distinguish between EAs that are near one or more major waterways, referred to herein as maritime EAs, and those EAs no part of which is within one hundred miles of a major waterway, referred to herein as inland EAs. Each inland EA will constitute a separate licensing area, or VHF Public Coast area (VPC), and VPCs consisting of a single inland EA will be known as inland VPCs. This approach will more closely mirror the current nature of this service away from waterways, and will help differentiate between water and inland areas. Parties interested in bidding for new geographic area licenses will be able to choose between geographic areas near water and those that are on land. Each inland VPC shall be referred to by the name of the EA it comprises. 16. Maritime EAs, on the other hand, shall be grouped into larger VPCs, known as maritime VPCs. The maritime VPC boundaries will correspond roughly to U.S. Coast Guard District boundaries, thus providing, along major waterways, the benefits of wide-area licensing by U.S. Coast Guard District. In addition, maritime EAs straddling U.S. Coast Guard District boundaries have been assigned to the most appropriate maritime VPC. We note that each maritime VPC includes the adjacent waters under the jurisdiction of the United States, because public coast service is marine-based, without distinct markets for land and marine customers. The maritime VPCs will be referred to by the titles set forth in the table above (see paragraph 12), except that the maritime VPC analogous to the Eighth Coast Guard District shall be referred to as the Mississippi River VPC. 3. Treatment of incumbent licensees 17. Proposal. The Commission proposed in the Second Further Notice that each incumbent maritime licensee, including PLMR licensees, be permitted to continue operating pursuant to its current station license. It proposed to require the new geographic area licensees to afford interference protection in accord with Section 80.773 of our Rules. Section 80.773 specifies a 12 dB ratio of desired to undesired signal strength within the incumbent's service area as the criterion for VHF public coast station co-channel interference protection. In turn, the Commission proposed to allow each incumbent licensee to renew, transfer, assign, or modify its license only to the extent that it did not extend its service area or spectrum allotment. Finally, it proposed that modifications that would extend an incumbent's service area or use additional frequencies would be contingent upon an agreement with each affected geographic area licensee. The Commission sought comment from both the maritime and PLMR communities concerning the general treatment of incumbent licensees, the appropriate interference protection criteria, and whether mobile-to-mobile communications should be permitted. 18. Decision. We conclude that allowing incumbent licensees (including I/LT users and other PLMR licensees operating on this spectrum pursuant to waivers) to continue operating under the terms of their current station licenses will further the public interest by avoiding interruption of the services they provide. We agree, however, with the commenters that oppose using Section 80.773 for all types of incumbent. Therefore, we will require geographic area licensees to afford incumbent coast station licensees co-channel interference protection in accord with Section 80.773 of our Rules, but co-channel interference protection for I/LT and other PLMR incumbents shall be based on the standard for SMR services in the 220-222 MHz band. This alternative resembles the proposal of ITA/CICS and UTC that the Commission afford incumbent PLMR users the interference protection provided for in the rules applicable to the PLMR users' various services. That precise proposal cannot be adopted, however, because PLMR licensees use these frequencies only on a shared basis, so no protection standard currently exists. With respect to the particular standard, then, we conclude that the same 12 dB desired to undesired signal strength standard as Section 80.773 provides for VHF public coast stations should be used for incumbent public coast station operations, while incumbent PLMR operations will receive at least 10 dB protection to their 38 dBu contours. 19. While we will not require that incumbents provide a map of their coverage areas in order to be entitled to interference protection, as proposed by MariTEL, we nonetheless note that the protection afforded to incumbent licensees will be dependent upon the technical information on file with the Commission, from which the geographic area licensees will be able to determine the appropriate level of co-channel interference protection. We encourage incumbents to verify the information in our database concerning their operations in advance of the auction to ensure that their existing operations are in accordance with their station authorizations. 20. We also conclude that incumbents should be prohibited from renewing, transferring, assigning, or modifying their licenses in any manner that extends their service area or results in their acquiring additional frequencies, without the consent of each affected geographic area licensee. We reject MMR's proposal to allow incumbent public coast station licensees to expand their systems, both geographically and by additional frequencies, before the commencement of geographic area licensing. Similarly, we disagree with MariTEL's suggestion that we permit such expansion by incumbents on the condition that such operations cease if the incumbent does not acquire the geographic area license including the subject service area, or make suitable arrangements with the geographic area licensee. We believe that permitting such incumbent expansion, whether permanently or conditionally, would undermine implementation of and a smooth transition to the geographic licensing approach we adopt today. In addition, conditional expansion would not be in the public interest because users would not have certainty as to whether service would continue. Moreover, our treatment of incumbents here is consistent with our approach in other CMRS contexts where we have transitioned to geographic area licensing. 21. We also disagree with MariTEL's assertion that existing licensees providing contiguous coverage on a given channel pair should be permitted to obtain a combined authorization for that coverage area, which would enable an incumbent to relocate its facilities within its combined coverage area for that channel pair without making arrangements with the geographic area licensee. The proposal, which is based on a similar provision for 800 MHz Specialized Mobile Radio (SMR) incumbents, is unsuited to the public coast service. Unlike 800 MHz SMR, public coast station licensees with contiguous stations do not use the same channel pairs at each site, so the proposal would require the issuance of a different combined license for each channel pair. Also, unlike SMR systems, which serve land areas, public coast station systems are unlikely to have "dead spots" completely surrounded by facilities licensed to the same operator on the same frequency, so a primary reason for granting such licenses to SMR operators is not present in the public coast service. Finally, we already have granted MariTEL the siting flexibility it seeks: incumbents will have the right to renew, transfer, assign, or modify a license in a manner that does not extend the licensee's service area or acquire additional frequencies. Thus, even without the procedure requested by MariTEL, incumbents may add, modify, relocate, or eliminate facilities within their combined contour for a given channel pair, provided they do not expand their current service areas or obtain additional frequencies. 22. We nevertheless recognize that maintaining records for a large number of separate call signs for one regional system can be burdensome. For example, multiple call signs can require multiple modification requests and staggered renewal applications. We have granted waivers to consolidate multiple facilities within a single system under a single license with a single call sign in the past, and we will, after the close of the auction for geographic area licenses, entertain modification requests to this effect from incumbents. To avoid manipulation and evasion of construction and renewal requirements, such consolidated licenses ordinarily will expire on the expiration date of the earliest-to-expire site license. 23. Finally, we are not persuaded that MariTEL's proposal to permit mobile-to-mobile communications in coastal areas is appropriate at this time, because the record contains insufficient information regarding channel capacity and co-channel interference protection. We also are concerned that permitting mobile-to-mobile communication may impair the Maritime Services' safety functions. 4. Licensing 24. Proposal. The Commission proposed in the Second Further Notice to authorize a single licensee to operate on all unassigned VHF public correspondence frequencies within a geographic area for a ten-year license term. It also proposed to permit each geographic area licensee to place stations anywhere within its geographic area to serve vessels or units on land, so long as marine-originating traffic is given priority and incumbent operations are protected. The Commission proposed that, with certain exceptions, base stations and land units be blanket licensed under the geographic area license. It also proposed that the spectrum authorized to an incumbent that fails to construct, discontinues operations, or otherwise has its license terminated by the Commission would automatically revert to the geographic licensee, and that the Commission would presume a negotiated assignment or transfer of an incumbent station to a geographic area licensee to be in the public interest. Finally, the Commission proposed to use the current rules regarding VHF public coast operations to define a licensee's permissible field strength at its service area boundaries; and to authorize the use of VHF public coast spectrum in waterways near Canada pursuant to coordination with Industry Canada, as outlined in the Canada/U.S.A. channel agreements. The Commission also sought comment on whether to take any steps to facilitate use of this spectrum by public safety entities. 25. Decision. We conclude that authorizing a single geographic area licensee to operate on all unassigned VHF public correspondence frequencies within the defined service areas for a ten-year license term will further the public interest and the goals underlying this proceeding. Contrary to Murray Cohen's contention, we believe that multiple public coast station licensees in the same area are not necessary to foster competition, because, as MariTEL notes, vessel operators operating along the coast already have a variety of CMRS providers from which to select. Thus, we conclude that the level of competition will not be adversely affected by authorizing a single geographic licensee. In fact, we believe that competition in the maritime market will be fostered because such licensee will be better able to expand its service offerings and establish an automated system. Each geographic licensee will be permitted to place stations anywhere within its region, on land or water, and to serve vessels or units on land provided that marine-originating traffic is given priority and incumbent operations are protected. This increased flexibility will enable licensees to serve additional markets and will promote the delivery of innovative telecommunications services, while preserving service that protects the safety of life and property at sea. 26. We also conclude that the geographic license will constitute a blanket authorization for both base stations and land units. However, geographic area licensees will be required to individually license any base station that requires an Environmental Assessment pursuant to Section 1.1307 of the Commission's Rules or international coordination, or would affect the radio frequency quiet zones described in Section 80.21 of the Commission's Rules. This simplified approach toward initial licensing and subsequent system modification is consistent with the approach we have taken for geographic area licensing in other wireless services. In addition, we believe that such an approach will increase operational flexibility (resulting in faster, more responsive service to the public) while reducing administrative burdens on both licensees and the Commission. If an incumbent fails to construct, discontinues operations, or otherwise has its license terminated by the Commission, the spectrum covered by the incumbent's authorization will automatically revert to the geographic area licensee (even in a geographic area partitioned by the licensee, unless the partitioning agreement provides otherwise), except for spectrum set aside for public safety use. If a licensee negotiates to acquire an incumbent station by assignment or transfer, the assignment or transfer will be presumed to be in the public interest. This will assist geographic licensees in consolidating spectrum, and give them greater flexibility in managing the spectrum and establishing coastal and wide-area systems. 27. MariTEL, in its petition for reconsideration of the Second Report and Order, proposes that VHF public coast station and Automated Maritime Telecommunications System (AMTS) coast station licensees and applicants intending to serve units on land be required to submit plans demonstrating how they will afford priority to maritime communications. We agree with Fred Daniel d/b/a Orion Telecom (Orion), an AMTS station licensee, that such a requirement is not needed. We believe that licensees will comply with the requirements of Section 80.123(b) of our Rules, which requires public coast stations serving stations on land to afford priority to marine-originating communications through any appropriate electrical or mechanical means. If, however, our experience shows us otherwise, we reserve the right to revisit this issue. 28. Geographic licensees and incumbents will be prohibited from exceeding a field strength of +5 dBu (decibels referenced to one microvolt per meter) at their service area boundaries (unless the bordering licensee agrees to a higher field strength). Rather than extending precise VPC boundaries into the oceans, we expect adjacent VPC licensees (or their partitionees) to coordinate water-based site selection to avoid harmful interference. This approach provides licensees the ability to operate their systems up to the borders of their service areas, while also providing protection to adjacent licensees. The use of VHF public coast spectrum in areas along the Great Lakes, St. Lawrence Seaway, and the coastal waters of Washington will be authorized pursuant to coordination with Industry Canada, as outlined in the Canada/U.S.A. channel agreements set forth in Section 80.57 of the Commission's Rules. 29. Regarding whether we should take steps to facilitate use of this spectrum by public safety entities, the Association of Public-Safety Communications Officials-International, Inc. (APCO), the frequency coordinator for the Part 90 Police, Local Government, and 800 MHz Public Safety Pool channel, and the Forestry-Conservation Communications Association (FCCA), the frequency coordinator for the Forestry- Conservation Radio Service, propose that public safety users be afforded a reasonable opportunity to seek any currently unused frequencies before any geographic area licenses are auctioned; and that extra channel pairs be excluded from auctions and be made available only to public safety entities for at least five years thereafter. They state that public coast VHF spectrum is ideal for many public safety and forestry- conservation operations because it permits wide-area coverage with fewer sites than higher frequency bands. In addition, this spectrum would be fully interoperable with existing public safety and forestry-conservation VHF channels. We note that public safety and forestry-conservation agencies need additional spectrum, but in many areas no VHF public safety or forestry-conservation spectrum is available. APCO states that giving public safety entities a priority to obtain vacant public coast VHF channels would accord with longstanding Commission policy and with the Balanced Budget Act, which requires the Commission, under certain conditions, to waive any requirement of the Communications Act or the regulations thereunder (except regulations regarding harmful interference) to permit a public safety entity to use unassigned frequencies. 30. Other commenters oppose APCO's proposal, on the grounds that these frequencies are not well-suited for use by public safety entities, because most of the available channels are in rural areas while the greatest public safety needs are in urban areas. In this connection, they note that 24 MHz in the 746-806 MHz band have been reallocated for public safety entities. They also contend that setting maritime spectrum aside for public safety is not necessary or warranted because public coast station licensees already provide emergency communication services. 31. We conclude that designating two contiguous channel pairs for public safety users in each inland VPC, but not in the maritime VPCs, will best further the public interest. We believe that such a set- aside is not likely to adversely affect the development of new systems in these regions. We also find that allotting fewer channel pairs would be of little utility to public safety, while allotting more could leave the licensee with too little spectrum to be useful. Designating the channels in advance, and not holding any other channels aside, also avoids unnecessary delay of the auction for public coast spectrum and allows prospective bidders to have a clearer understanding of what spectrum is vacant and available. The ultimate use for these reserved frequencies, and the procedures for licensing this spectrum, shall be decided as part of our pending public safety proceeding. We decline to set aside channel pairs in any of the larger VPCs because, due to the scarcity of spectrum, such an action, as noted by MariTEL, would make the development of wide-area coastal systems very difficult. Moreover, we believe that the public coast spectrum that we are setting aside for public safety use will sufficiently accommodate public safety needs in this band without undermining the goals underlying this proceeding and the new licensing approach we adopt today. 5. Coverage requirements 32. Proposal. In the Second Further Notice, the Commission solicited comment on an appropriate construction requirement for VHF public coast geographic area licensees. One option suggested was to require provision of "substantial service" to their service areas within ten years. Alternatively, the Commission requested comment on subjecting geographic area licensees to the current eight-month construction requirement for public coast stations or establishing a different construction requirement, such as requiring coverage of at least twenty percent of the population or fifty percent of navigable waterways in the service area within five years. 33. Decision. We conclude that requiring provision of substantial service to the geographic area licensees' service areas within ten years, as proposed in the Second Further Notice, would not achieve our goals of promoting efficient use of the spectrum; encouraging the provision of service to rural, remote, and insular areas; and preventing the warehousing of spectrum. We remain convinced, however, that the current eight- month construction requirement, unmodified, would impose an unreasonable burden on geographic area licensees. We therefore believe it necessary to establish a construction requirement that will encourage construction and prevent spectrum warehousing while providing geographic licensees with sufficient flexibility to meet market demands for service. We agree with MMR and MariTEL that, because of the importance of public coast stations to maritime safety, the construction requirement should not be too loose, particularly along coastlines and other "navigable waterways." In light of the maturity of the Maritime Services along the busiest waterways, however, we do not believe that requirements as strict as they suggest are necessary. We shall instead require substantial service within five and ten years, as described below. In addition, geographic area licensees shall be afforded a renewal expectancy when their license terms expire, provided that they demonstrate that they (1) have provided substantial service during their license term; and (2) have complied with applicable Commission rules and policies, and the Communications Act. 34. We will require maritime VPC licensees to provide substantial service within five years of initial authorization, which can be satisfied by a demonstration of coverage to one-third of the maritime VPC's major waterway(s); and again within ten years, which can be satisfied by a demonstration of continuous coverage to two-thirds of the major waterway(s). To satisfy the requirement along a river or the Gulf Intracoastal Waterway, service should be provided across the entire width. To satisfy the requirement on other waterways, coverage should extend out 20 nautical miles (unless limited to a smaller area by an international or VPC border) from the coastline or, where applicable, from the line established by the Coast Guard to divide inland waters from territorial seas. In maritime VPCs with more than one major waterway, the coverage refers to the total length of all major waterways; coverage need not necessarily be provided to every major waterway, or to any minimum percentage of each major waterway. These "safe-harbor" examples are intended to provide licensees a degree of certainty regarding how to comply with the substantial service requirement. The requirement can be met in other ways, which will vary depending on the market served, and we will review licensees' showings on a case-by-case basis. 35. MMR proposes to require construction of sufficient transmitters to provide service on all authorized frequencies simultaneously rather than using a frequency-agile transmitter (which MMR contends is merely a channel-warehousing device). However, we agree with BR Communications (BRC), a developer of HF radio systems, which says that such a requirement "would prevent licensees from using modern broadband antennas and radio amplifiers, locking them instead into outdated, 1960's-era architecture. Moreover, it would increase dramatically the costs of placing a new coast station into service and, as a result, would undermine the development of competition in the maritime service." We endeavor to adopt technology-neutral policies, so licensees can choose the equipment best suited to their needs. We also note that no such requirement is imposed on other CMRS providers. 36. We also will require inland VPC licensees to provide substantial service within five and ten years. For inland VPC licensees, substantial service can be satisfied by a demonstration of coverage to at least one-third of the population of the VPC within five years of initial authorization and at least two-thirds of the population within ten years. This is similar to the approach we adopted for geographic area licensees in the 220 MHz Service. As is the case with the maritime VPC safe-harbor examples, these safe-harbor examples are intended to provide licensees a degree of certainty regarding how to comply with the substantial service requirement. The requirement can be met in other ways, and we will review licensees' showings case by case if they rely on a different basis. Service need not be provided to waterways in the inland VPC, but if waterways are served, public coast stations' maritime obligations (e.g., safety watch and priority to marine- originating traffic) shall apply. We decline to adopt the proposal of ITA/CICS that the Commission prevent warehousing of inland spectrum by "permit[ting] the continued licensing of I/LT radio systems in the areas away from the navigable waters -- even if only on a secondary basis." We also decline to adopt their proposal that after a period of time equal to the original construction period, PLMR users licensed on a secondary basis be converted to primary status. We believe that the construction requirement is sufficient to prevent spectrum warehousing and, thus, such measures are not necessary. 6. Partitioning and disaggregation 37. Proposal. The Commission proposed in the Second Further Notice to permit partitioning and disaggregation by geographic area licensees, and that such transactions would be governed by the Commission's current partial assignment procedures. The Commission proposed to allow geographic area licensees to partition and/or disaggregate geographic area and any amount of spectrum at any time to any entity eligible in the Maritime Services. It also proposed to permit combined partitioning and disaggregation. In addition, the Commission proposed that partitionees and disaggregatees hold their licenses for the remainder of the original licensee's term and be entitled to establish a renewal expectancy. Finally, it proposed to apply unjust enrichment payments, including accelerated payment of any bidding credit we adopt for small businesses, as a condition for approving partitioning and disaggregation arrangements involving a complete or partial transfer of a license owned by a qualified small business to an entity that does not qualify as a small business. the Commission sought comment on these tentative conclusions, and on the respective obligations of the parties to a partitioning or disaggregation arrangement. 38. Decision. We conclude that public coast geographic area licensees should be permitted to partition any portion of their geographic service area, and to disaggregate any amount of spectrum, at any time to any entity eligible for a public coast station license. This approach will afford parties flexibility to pursue a variety of competitive service offerings, facilitate new market entrants, and promote delivery of quality service to the public. Moreover, contrary to Murray Cohen's assertion, such approach is consistent with our action in other CMRS contexts. In addition, partitionees and disaggregatees shall hold their licenses for the remainder of the original licensee's license term, and be able to qualify for a renewal expectancy, provided that they provide substantial service and comply with the Commission's rules and policies and the Communications Act. We believe that these requirements are necessary in order to prevent licensees from using partitioning and disaggregation to circumvent our rules governing license term and construction requirements, and to ensure that there will be maximum incentive for parties to pursue available spectrum as quickly as practicable. 39. Public coast station licensees will be permitted to acquire partitioned and/or disaggregated licenses in either of two ways: (1) they may form bidding consortia to participate in auctions, and then partition or disaggregate the licenses won among consortia participants after grant; or (2) they may acquire partitioned or disaggregated licenses from other licensees through private negotiation and agreement either before or after the auction. A licensee planning to partition or disaggregate its license must file an assignment application. We consider partitioning and disaggregation to be assignments of license, which will, therefore, require prior approval by the Commission. In authorizing partitioning and disaggregation arrangements, we will follow existing assignment procedures. Under our current rules, the licensee must file FCC Form 1046, Assignment of Authorization, signed by both the licensee and the qualifying entity, and the qualifying entity also must file FCC Form 503, Application for Land Radio Station License in the Maritime Services. We will require that a licensee disaggregate by frequency pairs. This requirement is necessary for administrative purposes: updates to the database necessary to track authorizations could otherwise become delayed or prone to error. 40. MariTEL argues that geographic area licensees that partition and/or disaggregate should remain ultimately responsible for satisfying their coverage requirements. We have determined that the public interest will be served by following the approach we have taken in other geographic licensing contexts; i.e. permitting licensees to negotiate which party will be responsible for meeting the applicable construction requirements. Our goal is to ensure that licensees have the flexibility to structure their business plans, while ensuring that partitioning and disaggregation not be used as a vehicle for circumventing the applicable construction requirements. 41. We will allow parties to partitioning agreements to choose between two options for satisfying the construction requirements: (a) the parties may either agree to meet the construction requirements for their respective portions of the service area; or (b) the original licensee may certify that it has met or will meet the construction requirements for the entire market. Under the first option, the partitionor and partitionee would each certify that they will independently satisfy the substantial service requirement for their respective partitioned areas. If either licensee failed to meet its substantial service showing requirement, only the non- performing licensee's renewal application would be subject to forfeiture at renewal. Under the second option, the partitionor certifies that it has met or will meet the substantial service requirement for the entire market. If the partitionor fails to meet the substantial service standard, however, only its renewal application would be subject to forfeiture at renewal. The partitionee's license would not be affected by that failure. 42. We will establish two options for disaggregating licensees. We believe that it is appropriate for the disaggregator or the disaggregatee to assume full responsibility for construction within the shared service area, because service would be offered over the relevant population, even if not on the entire spectrum. Under the first option, the disaggregator and disaggregatee would certify that they each will share responsibility for meeting the substantial service requirement for the geographic service area. If parties choose this option and either party fails to do so, both licenses would be subject to forfeiture at renewal. The second option would allow the parties to agree that either the disaggregator or the disaggregatee would be responsible for meeting the substantial service requirement for the geographic service area. If parties choose this option, and the party responsible for meeting the construction requirement fails to do so, only the license of the nonperforming party would be subject to forfeiture at renewal. 43. We no longer need to establish a separate unjust enrichment requirement for approving partitioning and disaggregation in the public coast service, because we have in another proceeding adopted a uniform requirement in Part 1 of our Rules for all services. The unjust enrichment provisions adopted therein will also apply to VHF public coast geographic licensees that are afforded a bidding credit and later elect to partition or disaggregate their licenses. 7. Technical flexibility 44. Proposal. As the Commission noted in the Second Further Notice, the basic channelization for VHF public coast spectrum is set forth in the ITU Radio Regulations as 25 kHz. However, AMTS coast stations (216-220 MHz) are permitted the flexibility to use narrowband technologies in addition to the 25 kHz channel plan set forth in our rules. The Commission proposed in the Second Further Notice that each geographic area licensee, as well as incumbent licensees, be authorized to use narrowband technologies in the same manner as AMTS coast stations. 45. Decision. We conclude that public coast licensees should be permitted to use frequencies offset 12.5 kHz from the marine VHF band (156-162 MHz) public correspondence channels where they are authorized on both adjacent frequencies, and, as suggested by Murray Cohen, where the licensee on the other side of the offset frequency consents to such use. After the close of the comment period in this proceeding, the 1997 World Radiocommunication Conference (WRC-97) authorized the use of 12.5 kHz narrowband channels to reduce local congestion, so we adopt that narrowband channelization plan, in lieu of our proposal to not specify a plan. The WRC-97 action also resolves the objections of the Coast Guard and Ross Engineering (Ross), a manufacturer of marine radio equipment and provider of VHF radio services, against authorizing narrowband technology without an international consensus. Those commenters also oppose the use of offset channels because, among other reasons, they see no need for the additional channels, and no Part 80 12.5 kHz equipment has been type accepted. We agree with MariTEL and MMR that additional channels are needed because without narrowband channel pairs, public coast licensees will be hampered in their efforts to compete effectively with other CMRS providers. We also are not persuaded that the lack of type accepted equipment is a sufficient reason not to adopt our proposal. In fact, the Commission has previously adopted regulations permitting the use of equipment for which there is not yet type acceptance. 46. In addition to commenting on our proposal in the Second Further Notice, the Coast Guard filed a petition for rulemaking, which we elected to treat as a comment in this proceeding. The Coast Guard requests that we amend Part 80 of our Rules to set aside duplex channel pairs offset 12.5 kHz from the marine VHF band public correspondence channels, and marine VHF Channel 228B (162.0125 MHz). In those areas where Channel 88 is available to maritime users, Channel 228B is a VHF public correspondence narrowband frequency; in other areas, Channel 228B is a federal government frequency. The Coast Guard proposes that these channels be used for Automatic Identification Systems (AIS) and related safety systems, in support of its Ports and Waterways Safety System (PAWSS) project, which will provide Vessel Traffic Services (VTS) to facilitate the safe and efficient transit of vessel traffic to prevent collisions, groundings, and environmental damage associated with maritime accidents. Specifically, the Coast Guard, supported by Ross and others, proposes that the channels be used on a shared, need-determined basis with VHF public coast stations, and that at least two of the eight offset channels available nationwide, plus Channel 228B, be reserved in any given geographic area for such use. MariTEL proposes awarding the offset frequencies to VHF public coast spectrum licensees initially, but on the condition that the Commission can later designate such channels for AIS use. 47. We believe that three subsequent developments must be considered in connection with the Coast Guard's proposal. First, the Department of Transportation appropriation for fiscal year 1998 contains funding for the PAWSS project, with both houses of Congress expressing strong support for the Coast Guard's efforts. As the House report stated, [AIS] technology should be the foundation o[f] any future VTS system. The AIS technology employs on-board transponders, electronic charts, and Differential Global Positioning System technology to provide direct, vessel-to-vessel, voiceless electronic data communications. The Committee strongly believes that this technology will significantly improve navigational safety, not just in select VTS target ports, but throughout the navigable waters of the United States. The Committee encourages the Coast Guard to continue working with its PAWSS stakeholders, during the development and implementation of this national system, to ensure that it provides the greatest amount of navigational and environmental safety for the broadest geographical area at the lowest cost to the American taxpayers. Second, the Interdepartment Radio Advisory Committee (IRAC) approved the Coast Guard's request to use Channel 228B in those areas where it is allocated to the federal government. Finally, WRC-97 set aside Channels 87B (161.975 MHz) and 88B (162.025 MHz) for AIS, but provided that, where those frequencies are unavailable, other frequencies may be used. Channel 87 (including Channel 87B) is currently allocated to VHF public correspondence, and Channel 88B is allocated to Government non-military agencies. 48. We conclude that the Coast Guard request should be granted, and two channel pairs (plus Channel 228B, where it is a maritime frequency) should be set aside in each maritime VPC for AIS. We believe that setting aside these frequencies for this purpose will enhance the safety of life and property on vessels in United States waters by reducing collisions, groundings, and environmental harm, further effectuating our regulatory goal of fostering the protection of life and property at sea through the use of maritime radio spectrum. While we considered setting aside Channel 87B as one of the AIS channels, we conclude that the public interest benefits flowing from such an approach are minimal as compared to the potential adverse impact on our licensing of public coast stations. First, setting aside Channel 87B as an AIS channel would require relocation of the thirty-four public coast stations currently authorized to use Channel 87. Second, we believe that setting aside one broadband channel and one narrowband channel for AIS might complicate AIS implementation or raise the cost of the necessary equipment. Third, this approach would encumber one broadband channel and three narrowband channels, instead of encumbering two narrowband channels as proposed by the Coast Guard, because setting aside Channel 87B would leave the surrounding narrowband channels unavailable. Finally, setting aside Channel 87B would harm maritime VPC licensees' ability to construct wide-area systems by leaving most with no more than eight broadband channels. Thus, we will not designate Channel 87B as an AIS channel. 49. Instead of selecting the channel pairs for an AIS set-aside, we believe the most prudent course of action in furtherance of the public interest would be for the Coast Guard to negotiate with each individual maritime VPC licensee to select narrowband frequencies for AIS use. Within six months of the conclusion of the auction, we will require that the Coast Guard and each maritime VPC licensee begin to negotiate a plan specifying narrowband duplex channel pairs within the maritime VPC (including areas beyond the major waterways). The Coast Guard proposal should specify which frequencies, up to two, the Coast Guard seeks. We note the possibility that the channels need not be the same throughout the maritime VPC. If the maritime VPC licensee objects to the Coast Guard proposal, it shall make a counterproposal within three months of receipt of the Coast Guard's plan. The final agreement shall set aside up to two channel pairs throughout the maritime VPC, or implement whatever other arrangement is amenable to both parties (e.g., more than two channel pairs in some places, and one or no channel pairs elsewhere). If good faith negotiations yield no agreement within one year of the date the Coast Guard submitted its initial proposal, the Coast Guard may ask the Commission to revisit this issue and select the channels and locations. We prefer this procedure to setting channels aside in advance because we believe that it will allow the Coast Guard time to develop its AIS plans fully and coordinate AIS frequencies with neighboring countries. We also believe that such approach will enhance each maritime VPC licensee's ability to pursue its own business plan and allow the parties to determine how many channels are needed in each location. In addition, this approach avoids the problems associated with uniformly setting aside Channel 87B, discussed above. 50. Finally, in its petition for reconsideration of the Second Report and Order, MariTEL contends that the Commission erred in declining to adopt rules regarding maritime sharing of land mobile frequencies, and argues that such rules could be adopted now and held in abeyance pending developments in other proceedings. However, the continued validity of one of the premises of that sharing proposal -- that few PLMR licensees operate within 80 kilometers of the United States coastline -- is questionable in light of our decision to consolidate the PLMR services in an effort to introduce more flexibility. Moreover, we believe that going forward with a sharing proposal could impede the orderly and effective resolution of the issues in our pending proceeding concerning the introduction of market-based incentives for PLMR spectrum. MariTEL has not convinced us that the public interest would be served by our making a decision on sharing before reaching a final decision in that proceeding; thus, we decline to do so. 8. Operational flexibility 51. Proposal. The Commission noted in the Second Further Notice its conclusion in another proceeding that broadband and narrowband CMRS licensees should have operational flexibility to provide fixed, mobile, or hybrid services, and sought comment on whether to afford such flexibility to public coast stations. 52. Decision. We agree with MariTEL that allowing VHF public coast stations to provide fixed, mobile, or hybrid CMRS services on a co-primary basis with mobile services will be beneficial. We believe that affording public coast station licensees operational flexibility will enhance their ability to meet customer requirements and demand, and promote regulatory symmetry between maritime CMRS providers and other CMRS providers. We further believe that this approach, combined with our enforcement of the construction requirements adopted today, will address MariTEL's concern about preserving the distress and safety features of the Maritime Services, particularly along waterways. 9. Regulatory status 53. Proposal. The Commission noted in the Second Further Notice that allowing geographic area licensees, partitionees, or disaggregatees to use their spectrum to provide a variety of commercial or private mobile communications would make it difficult to determine the regulatory status of each licensee. The Commission proposed to establish a presumption that geographic area licensees are telecommunications carriers, or, in the alternative, to rely on applicants to specify the type of service(s) they intend to provide in sufficient detail to enable the Commission to determine whether the particular licensee will be a CMRS or a PMRS provider, i.e., whether the licensee offers a mobile service that is provided for profit, interconnected with the public switched network, and is available to the public or a substantial portion of the public. It also proposed to allow any interested party to challenge the regulatory status originally granted to a geographic area licensee. The Commission sought comment on this approach and on the most efficient manner in which to administer the requirements of the Communications Act with respect to public coast station licensees. 54. Decision. We conclude that, as a general matter, geographic area licensees should be subject to a presumption that they are telecommunications carriers under the Communications Act, because this is the current nature of the public coast service. We note, however, that this presumption can be rebutted by specifically identifying the type of service or services the licensee intends to provide in sufficient detail to enable the Commission to determine whether the nature of the service will be CMRS or PMRS, common carrier or non-common carrier. As in other licensing contexts, we intend to rely primarily upon applicants' representations regarding their regulatory status while affording interested parties the opportunity to demonstrate that a licensee has not rebutted our presumption, provided these parties present specific allegations of fact supported by an affidavit of a person or persons with personal knowledge. If a public coast station licensee who is authorized to provide only PMRS or non-common carrier service actually provides CMRS or common carrier service under that license, it will be subject to appropriate enforcement action. This approach will allow us to carry out our regulatory responsibilities without imposing a hardship upon licensees. 55. In addition, we disagree with MariTEL's suggestion that we should forbear from imposing common carrier requirements on public coast stations pursuant to Section 10 of the Communications Act, which regulation MariTEL contends is "unnecessary and not in the public interest." MariTEL's request cannot be granted because it is too vague, both as to the specific provisions from which we should forbear from enforcing, and as to why forbearance would be in the public interest. We note, however, that we already forbear from enforcing some common carrier requirements against CMRS operators, and that further forbearance is under consideration. 10. Safety watch 56. Proposal. Public coast stations serving rivers, bays, and inland lakes must maintain a continuous safety watch on marine VHF Channel 16 (156.800 MHz). Presently, public coast licensees may request an exemption from this requirement upon demonstrating that federal, state, or local governments maintain a continuous watch over ninety-five percent of the station's service area. The Commission proposed in the Second Further Notice to relieve public coast stations of the Channel 16 watch requirement by rule in cases where federal, state, or local governments already maintain the requisite coverage. 57. Decision. We adopt our safety watch proposal, with some modifications requested by the Coast Guard. Specifically, a coast station where federal, state, or local governments maintain a continuous watch over ninety-five percent of the station's service area will not be required to maintain a safety watch, provided that the licensee (1) determines that the "ninety-five percent" criteria is met, (2) is responsible for notifying the appropriate Coast Guard district office thirty days prior to discontinuing the watch, and (3) is responsible for resuming the watch at the request of the Coast Guard or Commission. We nonetheless note that the Coast Guard may require a public coast licensee to continue or resume its safety watch temporarily during a system outage or until a replacement Coast Guard system is in place, or permanently. Notwithstanding our decision here, all coast stations shall, if required by the Coast Guard, remain capable of either immediately resuming the watch, or of providing the Coast Guard direct dial-up access to the necessary Channel 16 transceiver at no charge, so the Coast Guard can maintain the watch. In this connection, we note the Coast Guard's description of the shortcomings of its VHF National Distress System, which is aging and has many coverage gaps. Consequently, we reject MMR's suggestion that the safety watch requirement be eliminated because we conclude that its continuation is in the public interest in that it promotes safety at sea. In addition, as MariTEL and Orion note, MMR incorrectly compares other CMRS providers, who have no safety watch requirement, to the Maritime Services, failing to take into account that other services are intended to be fully automated, and that they emerged in a different context from the Maritime Services, with their public safety component. 58. In the Second Report and Order, we authorized automated interconnection and therefore eliminated the requirement that each radiotelephone public coast station have a licensed radiotelephone operator at the station's control point. MariTEL argues in its petition for reconsideration that we should have retained a requirement that there always be an operator on duty somewhere in the system (though not necessarily at the nearest control point) with whom a vessel can communicate during an emergency. Orion opposes any such requirement for AMTS stations, on the grounds that such stations are intended to be fully automated. We are not persuaded that the continued existence of public coast stations being required to maintain a safety watch justifies the reinstatement and expansion of the operator requirement for other stations. The Coast Guard did not contend that eliminating the operator requirement would jeopardize safety at sea, though it notes that the MariTEL proposal would be one means of maintaining an exempt station's ability to resume a safety watch upon request. Amending the operator requirement in the manner proposed by MariTEL would amount to reinstating that requirement for individual, non-integrated stations, and to creating a new requirement for AMTS stations and automated multi-station systems, which already were exempt from the operator requirement, and MariTEL has not shown that it's proposal would produce a benefit commensurate with such a burden. Thus, we decline to adopt MariTEL's proposal. B. Competitive Bidding Procedures 1. Use of Competitive Bidding 59. Proposal. The Commission, in the CMRS Second Report and Order, classified the public coast service, including VHF, high seas, and AMTS public coast stations, as a CMRS. Subsequently, in the Competitive Bidding Second Report and Order, the Commission determined that mutually exclusive applications for public coast station licenses would be resolved through competitive bidding. It therefore proposed in the Second Further Notice to prescribe competitive bidding rules and designated entity provisions for auctioning public coast spectrum. 60. Following release of the Second Further Notice, Congress passed the Balanced Budget Act of 1997, which expanded and extended the Commission's auction authority. Section 309(j)(2) of the Communications Act formerly stated that mutually exclusive applications for initial licenses or construction permits were auctionable if the principal use of the spectrum was for subscription-based services and competitive bidding would promote the expressed objectives of the Act. As amended by the Balanced Budget Act, Section 309(j) of the Communications Act provides that, "If . . . mutually exclusive applications are accepted for any initial license or construction permit, then, except as provided in paragraph (2) the Commission shall grant the license or permit to a qualified applicant through a system of competitive bidding that meets the requirements of this subsection." 61. Decision. Several commenters support the use of competitive bidding. While some parties oppose the use of competitive bidding to grant licenses for the public coast spectrum, their contentions are inconsistent with our earlier conclusion that the public coast service is subject to competitive bidding, which conclusion is unchanged by the Balanced Budget Act. As noted, the Balanced Budget Act provides that all licenses and construction permits for which mutually exclusive applications are accepted, with certain exceptions not relevant here, shall be granted by means of competitive bidding. We therefore believe that we lack discretion to resolve mutually exclusive public coast license applications by any means other than competitive bidding. Similarly, the Balanced Budget Act expressly provides that competitive bidding shall not be used for public safety radio services, so the inland VPC channel pairs set aside for public safety use shall be distributed by other means, to be decided as part of our pending public safety proceeding. Therefore, we reiterate that we shall employ competitive bidding procedures to resolve mutually exclusive public coast station applications. 2. Competitive Bidding Issues 62. Proposal. The Second Further Notice was released shortly after the Part 1 Order and Notice of Proposed Rulemaking that adopted certain rules to streamline auction procedures and proposed uniform competitive bidding rules that would apply generally to all auctionable services. Pending the adoption of final uniform competitive bidding rules, however, the Commission proposed to adopt service-specific rules to govern public coast auctions. In addition, it sought comment in the Second Further Notice on the establishment of a "small business" definition for public coast spectrum, noting our intention, as iterated in the Second Memorandum Opinion and Order in the competitive bidding docket, of establishing definitions for "small business" on a service-by-service basis. Specifically, the Commission sought comment on whether we should apply one of the existing "small business" definitions to public coast stations or adopt a new definition, and comment on what small business provisions and terms should be offered to public coast small business licensees. The Commission tentatively concluded that, for purposes of determining small business status of public coast applicants, it would attribute the gross revenues of all the applicants' affiliates, its controlling principals, and their affiliates, and that the definition of affiliate in the public coast context should include an exception for Indian tribes, Alaska Region, and Village Corporations. The Commission also tentatively decided against providing special consideration in the competitive bidding procedures for incumbent licensees. 63. In authorizing the Commission to use competitive bidding, Congress mandated that we "ensure that small businesses, rural telephone companies, and businesses owned by members of minority groups and women are given the opportunity to participate in the provision of spectrum-based services." Congress further provided that, in establishing eligibility criteria and bidding methodologies, the Commission shall promote "economic opportunity and competition . . . by avoiding excessive concentration of licenses and by disseminating licenses among a wide variety of applicants, including small businesses, rural telephone companies, and businesses owned by members of minority groups and women." The Commission therefore sought comment in the Second Further Notice on whether small business provisions are sufficient to promote participation by businesses owned by minorities and women and rural telephone companies. To the extent that commenters proposed additional provisions to ensure participation by minority- and women-owned businesses, they were invited also to address how such provisions should be crafted to meet the relevant standards of judicial review. 64. Decision. Recently, we adopted the Part 1 Third Report and Order, which establishes a uniform set of provisions, based on our experience with auctions to date, and allows us to conduct future auctions in a more consistent, efficient, and effective manner. Therefore, we will follow the uniform provisions adopted in the Part 1 Third Report and Order for most of the competitive bidding issues raised in the Second Further Notice, and the uniform competitive bidding rules found in Subpart Q of Part 1 of the Commission's rules will apply to the auction of public coast spectrum. Consistent with this approach, matters such as the appropriate competitive bidding design for the auction of public coast spectrum, as well as minimum opening bids or reserve prices and maximum bid increments, will be determined by the Wireless Telecommunications Bureau pursuant to its delegated authority. In this Third Report and Order and Memorandum Opinion and Order, however, we adopt service-specific provisions applicable to designated entities bidding in the public coast spectrum auctions. We note, however, that we may seek comment in a future proceeding regarding whether these provisions should be modified for auctions of spectrum allocated to the high seas and AMTS services. 65. As we noted in the Second Further Notice, our goal in adopting special small business provisions is to promote and facilitate the participation of small businesses in the public coast auctions and in the provision of service. For purposes of public coast auctions, we will define "small" businesses as entities that, together with controlling interests and affiliates, have average gross revenues for the preceding three years not to exceed fifteen million dollars. We will define "very small" businesses as entities that, together with controlling interests and affiliates, have average gross revenues for the preceding three years not to exceed three million dollars. MariTEL proposes that small businesses be defined as those with gross revenues not exceeding three million dollars (averaged over the past three years), because the Commission has employed this standard elsewhere and it represents the level of income a small business in the Maritime Services today can expect to produce, while a higher level would allow larger companies to compete with the same bidding credits as current public coast licensees. However, we share the concern of Orion and Murray Cohen that a single definition of small business could effectively exclude from participation a number of current licensees that are too small to compete with large well-capitalized entities unless they are made eligible for additional bidding credits. Also, we note that all of the services MariTEL cited as precedent for using a three million dollar standard also featured a second tier with a threshold of not more than fifteen million dollars in gross revenues. Thus, we believe that two tiers of bidding credits will allow current public coast licensees to compete favorably with larger entities, without denying entities with relatively small gross revenues the opportunity to participate meaningfully in the auctions. 66. We decided in the Part 1 Third Report and Order to continue to define small businesses as we have in the past, based on the characteristics and capital requirements of the specific service, rather than, as suggested by MariTEL, on the prospective and likely applicants' assets. This approach has afforded us desirable flexibility to benefit small businesses, and is consistent with the Small Business Administration's practice of approving small business size standards on a service-by-service basis. We determined in the Part 1 Third Report and Order that our service-specific small business definitions thenceforth would be expressed in terms of average gross revenues, which we believe provides an accurate, equitable, and easily ascertainable measure of business size. Assets, being potentially fluid and subject to inconsistent valuation (e.g., intangibles), are generally much less ascertainable than gross revenues or numbers of employees. Although we have adopted an asset test for eligibility for particular blocks of licenses in broadband PCS auctions, we have never before employed an asset test for eligibility for small business size standards. We also note that the Small Business Administration, the rules of which have formed the basis for much of our own consideration of small business provisions, presently does not employ asset tests in its business size standards except in the context of national and commercial banks, savings institutions, and credit unions. Nor does the Small Business Act's statutory definition of small business size use a total assets test. Consistent with the Part 1 Third Report and Order, we therefore reject MariTEL's suggestion and will not adopt an asset test for the auction of public coast licenses. 67. Since we received no comments to the contrary, we also adopt, with a slight modification, our tentative conclusion to attribute the gross revenues of the applicant, its controlling principals and their affiliates. Specifically, we refer to "controlling interests" rather than "controlling principals." In addition, we provide a definition of "controlling interest" to clarify the application of the attribution rule in determining whether an entity qualifies to bid as a small business. In calculating gross revenues for purposes of small business eligibility, applicants will be required to count the gross revenues of the controlling interests of the applicant and their affiliates. This approach is consistent with our proposal in the Part 1 Second Further Notice, and is similar to the attribution rules we have employed for the recent LMDS and 800 MHz SMR auction proceedings. 68. A "controlling interest" includes individuals or entities with de jure and de facto control of the applicant. De jure control is 50.1% of the voting stock of a corporation or, in the case of a partnership, the general partners. De facto control is determined on a case-by-case basis, and includes the criteria set forth in Ellis Thompson. We recently sought comment in the Part 1 Second Further Notice on whether we should impose a minimum equity requirement (e.g., fifteen percent) on any person or entity identified as a controlling interest. The "controlling interest" definition also provides specific guidance on calculation of various types of ownership interests. For purposes of calculating equity held in an applicant, the definition provides for full dilution of certain stock interests, warrants, and convertible debentures. In addition, the definition provides for attribution of partnership and other ownership interests including stock interests held in trust, non-voting stock, and indirect ownership through intervening corporations. Once principals or entities with a controlling interest are determined under the definition, only the revenues of those principals or entities and their affiliates will be counted for small business eligibility. 69. When an applicant cannot identify controlling interests under the definition, the revenues of all interest holders in the applicant and their affiliates will be counted. For example, if a company is owned by four entities, each of which has twenty-five percent voting equity and no shareholders' agreement or voting trust gives any one of them control of the company, the revenues of all four entities must be counted. Treating such a corporation in this way is similar to our treatment of a general partnership all general partners are considered to have a controlling interest. This rule, we believe, looks to substance over form in assessing eligibility for small business status. 70. We note that our intent here is to provide flexibility that will enable legitimate small businesses to attract passive financing in a highly competitive and evolving telecommunications marketplace. We believe that this controlling interest threshold will function effectively to ensure that only those entities truly meriting small business status are eligible for small business provisions. In particular, we believe that the de jure and de facto concepts of control used to determine controlling interest in an applicant and the application of our affiliation rules will effectively prevent larger firms from illegitimately seeking status as a small business. Moreover, as we discussed in the Part 1 Third Report and Order, we believe that requiring detailed ownership information will ensure that applicants claiming small business status qualify for such status, and ensure compliance by all applicants with spectrum caps and other ownership limits. Therefore, we emphasize that bidders will be subject to the ownership disclosure requirements set forth in Section 1.2112 of our rules. 71. MariTEL and Ross contend that incumbent public coast service licensees should be given special consideration in our competitive bidding procedures, because incumbent licensees merely extending their coverage would provide service sooner than new geographic area licensees, and the public safety nature of the public coast service mandates procedures that will lead to prompter service. We agree with BRC, however, that new entrants and incumbents should have an equal opportunity to obtain spectrum. Moreover, we have never given incumbents such a benefit (which appears to be prohibited by Section 309(j)(4)(D) of the Communications Act), and any incumbents that qualify can avail themselves of the special consideration available to small businesses. 72. In addition, we note that we received no comments suggesting any particular level of bidding credits. Thus, we will conform our bidding credit levels for the public coast auctions to the schedule adopted in the Part 1 Third Report and Order. Specifically, the Part 1 Third Report and Order adopted bidding credits of thirty-five percent for entities with annual gross revenues not to exceed three million dollars, and twenty-five percent for entities with annual gross revenues not to exceed fifteen million dollars. In conformity with the small business size definitions that we adopt herein, we thus determine that entities that, together with controlling interests and affiliates, have average gross revenues for the preceding three years not to exceed three million dollars will receive a thirty-five percent bidding credit, and entities that, together with controlling interests and affiliates, have average gross revenues for the preceding three years not to exceed fifteen million dollars will receive a twenty-five percent bidding credit. In addition, in the Part 1 Third Report and Order, we held that installment payments will not be used in the immediate future as a means of financing small business participation in Commission auctions, and we received no comment in this proceeding on the use of installment payments. Thus, installment payments will not be available to public coast auction participants for the reasons discussed in the Part 1 Third Report and Order. 73. We also received no comments on whether small business provisions are sufficient to promote participation by businesses owned by minorities and women and rural telephone companies. No commenter proposed additional provisions to ensure participation by minority- and women-owned businesses, or suggested how such provisions should be crafted to meet the relevant standards of judicial review. We remain committed to meeting the statutory objectives of promoting economic opportunity and competition, of avoiding excessive concentration of licenses, and of ensuring access to new and innovative technologies by disseminating licenses among a wide variety of applicants, including small businesses, rural telephone companies, and businesses owned by members of minority groups and women. However, commenters in this proceeding have submitted no suggestions, evidence, or data to support race- or gender-based auction provisions. Therefore, we conclude that we do not have a sufficient record to support such special provisions at this time. As we noted in the Part 1 Third Report and Order, we have commenced a series of studies, and have other studies in the planning process, to examine barriers encountered by minorities and women in the auctions process and the secondary market for licenses. Once those studies are complete, we will have a more extensive record to judge our ability to provide through our auctions program economic opportunity among businesses owned by members of minority groups and women, as required in Section 309(j). We also believe that our standardization, through the Part 1 Third Report and Order, of the rules regarding definitions of eligible entities, unjust enrichment, and bidding credits will assist small, minority- and women-owned businesses because the resulting predictability will facilitate effective business planning and capital accumulation. IV. PROCEDURAL MATTERS A. Suspension of Acceptance and Processing of Applications 74. In the Second Further Notice, the Commission temporarily suspended, until March 17, 1998, acceptance of public coast station and PLMR applications for new licenses to use VHF spectrum (156-162 MHz), amendments to such applications, applications to modify existing licenses, and amendments to such modifications, except applications involving renewals, transfers, assignments, and modifications that proposed neither to (1) expand a station's service area nor (2) obtain additional public coast VHF spectrum. It also suspended the processing of public coast station applications to use VHF spectrum that were pending when the Second Further Notice was adopted, except those (1) that were not mutually exclusive with other applications as of the date the Second Further Notice was adopted, and (2) as to which the relevant period for filing competing applications had expired as of that date. On March 17, 1998, the Wireless Telecommunications Bureau extended the suspension until the effective date of the final rules adopted in this Third Report and Order and Memorandum Opinion and Order. 75. Due to the transition to geographic area licensing in this Third Report and Order and Memorandum Opinion and Order, all applications to use VHF public coast spectrum the processing of which was suspended shall be dismissed. This action is consistent with the general approach we have taken in other services where we have transitioned to geographic area licensing and auction rules. In addition, the freeze on filing new applications to use this spectrum shall remain in effect beyond the date that the final rules adopted herein become effective, and until such time as the Wireless Telecommunications Bureau begins to accept applications for the VHF public coast auction. We decline the suggestion of UTC and ITA/CICS to lift the freeze on PLMR applications proposing to share public coast VHF spectrum. They contend that such licenses present no barrier to the proposed geographic licensing process or to existing or future maritime services, but we conclude that maintaining the freeze in all areas for all applicants is necessary for the orderly and effective implementation of the decisions made in this proceeding. 76. In the Part 1 Third Report and Order, the Commission delegated to the Chief of the Wireless Telecommunications Bureau authority to prescribe and set forth procedures for individual auctions. The Wireless Telecommunications Bureau shall implement auction procedures for VHF (156-162 MHz) public coast stations, including the general design and timing of the auctions; the number and grouping of authorizations to be offered in a particular auction; the manner of submitting bids; the amount of bid increments; activity and stopping rules; and application and payment requirements, including the amount of upfront payments; and shall announce such procedures by Public Notice. B. Additional Matters 77. In the Second Report and Order, the Commission deleted the operator requirement for radiotelephone coast stations, but declined to address MMR's suggestion to delete the radiotelegraph coast station operator requirement. The Commission stated that it would request comments on the issue in the Second Further Notice, but it inadvertently failed to do so. MMR again has suggested eliminating the operator requirement for radiotelegraph coast stations, but we cannot act on the proposal because potentially affected parties have not received adequate notice. We conclude that this issue presently is not ripe for decision, but we may revisit it at a later time. C. Regulatory Flexibility Act 78. Appendix B contains a Final Regulatory Flexibility Analysis with respect to this Third Report and Order and Memorandum Opinion and Order. D. Paperwork Reduction Act of 1995 Analysis 79. This Third Report and Order and Memorandum Opinion and Order contains neither a new nor a modified information collection. E. Ordering Clauses 80. Authority for issuance of this Third Report and Order and Memorandum Opinion and Order is contained in Sections 4(i), 4(j), 7(a), 303(b), 303(f), 303(g), 303(r), 307(e), 332(a), and 332(c) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 154(j), 157(a), 303(b), 303(f), 303(g), 303(r), 307(e), 332(a), and 332(c). 81. Accordingly, IT IS ORDERED that Parts 20, 80, and 90 of the Commission's Rules, 47 C.F.R. Parts 20, 80, 90, and 95, ARE AMENDED as specified in Appendix F. 82. IT IS FURTHER ORDERED that, except for the dismissal set forth in paragraph 83 and the temporary suspension set forth in paragraph 84, this Third Report and Order and Memorandum Opinion and Order will be effective 60 days after publication in the Federal Register. 83. IT IS FURTHER ORDERED that, effective July 6, 1998, pending applications to use public coast station spectrum under Parts 80 or 90 of the Commission's Rules, 47 C.F.R. Parts 80 and 90 that were held in abeyance pursuant to the Second Report and Order and Second Further Notice of Proposed Rulemaking and Applications for Very High Frequency (VHF) Public Coast Spectrum in the 156-162 MHz Bands, Order, DA 98-522 (WTB released Mar. 17, 1998), ARE DISMISSED. 84. IT IS FURTHER ORDERED that, effective July 6, 1998, no new applications to use VHF public coast station spectrum under Parts 80 or 90 will be accepted for filing, except applications that do not propose to (1) expand a station's service area, or (2) obtain additional public coast spectrum frequencies, until the Wireless Telecommunications Bureau begins to accept applications to participate in the VHF public coast auction, which shall be announced by Public Notice. 85. IT IS FURTHER ORDERED that the Commission's Office of Public Affairs, Reference Operations Division, SHALL SEND a copy of this Third Report and Order and Memorandum Opinion and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. 86. IT IS FURTHER ORDERED, pursuant to Section 1.46(b) of the Commission's Rules, 47 C.F.R.  1.46(b), that the Motion to Accept Late-Filed Comments filed by MariTEL Corporation IS GRANTED. 87. IT IS FURTHER ORDERED that Orion Telecom's Petition to Set Aside the Coast Guard Petition for Rule Making IS DENIED. 88. IT IS FURTHER ORDERED that the Petition for Reconsideration filed by MariTEL Corporation IS DENIED. F. Contact for Information 89. For further information, contact Scot Stone of the Wireless Telecommunications Bureau, Public Safety and Private Wireless Division, Policy and Rules Branch, at (202) 418-0680 or via E-Mail to "sstone@fcc.gov"; or Anne Napoli of the Wireless Telecommunications Bureau, Auctions and Industry Analysis Division, Legal Branch, at (202) 418-0660 or via E-mail to "anapoli@fcc.gov". FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary APPENDICES APPENDIX A - LIST OF COMMENTERS Comments American Waterways Operators Association of Public-Safety Communications Officials-International, Inc. (APCO) Murray Cohen Forestry-Conservation Communications Association (FCCA) Globe Wireless Industrial Telecommunications Association and Council of Independent Communications Suppliers (ITA/CICS) WJG MariTEL Corporation (MariTEL) Mobile Marine Radio, Inc. (MMR) State of Montana National Association of Broadcasters and Association for Maximum Service Television (NAB/MSTV) National Marine Electronics Association (NMEA) Fred Daniel d/b/a Orion Telecom (Orion) Paging Systems, Inc. (PSI) Ross Engineering Company (Ross) Robert H. Sassaman United States Coast Guard (Coast Guard) UTC Reply Comments BR Communications (BRC) Globe Wireless ITA/CICS MariTEL NAB/MSTV Orion Ross Coast Guard APPENDIX B - FINAL REGULATORY FLEXIBILITY ANALYSIS As required by the Regulatory Flexibility Act (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated into the Second Further Notice of Proposed Rule Making in this proceeding (Second Further Notice). The Commission sought written public comment on the proposals in the Second Further Notice, including comment on the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA. A. Need for, and Objectives of, the Third Report and Order Our objective is to simplify our licensing process for VHF public coast stations. Specifically, this action will: (1) convert licensing of VHF public coast station spectrum from site-by-site licensing to geographic area licensing, (2) simplify and streamline the VHF public coast spectrum licensing procedures and rules, (3) increase licensee flexibility to provide communication services that are responsive to dynamic market demands, and (4) introduce market-based forces into the Maritime Services by using competitive bidding procedures (auctions) to resolve mutually exclusive applications for public coast spectrum. We find that these actions will increase the number and types of communications services available to the maritime community and improve the safety of life and property at sea, and that the potential benefits to the maritime community exceed any negative effects that may result from the promulgation of rules for this purpose. Thus, we conclude that the public interest is served by amending our rules as described above. B. Summary of Significant Issues Raised by Public Comments in Response to the IRFA No comments were submitted in response to the IRFA. In general comments on the Second Further Notice, however, some small business commenters raised issues that might affect small business entities. In particular, some small business commenters argued that geographic licensing should be used only in certain areas; or that incumbent licensees be permitted to expand their systems before any auctions are held; or that license areas should be small enough to permit smaller licensees to participate in auctions, so that small business do not have to bid for territory far exceeding their operating needs. The Commission carefully considered each of these comments in reaching the decision set forth herein. C. Description and Estimate of the Number of Small Entities to Which Rules Will Apply The rules adopted herein will apply to licensees using public coast spectrum. The Commission has not developed a definition of the term "small entity" specifically applicable to public coast station licensees. Therefore, the applicable definition of small entity is the definition under the Small Business Administration rules applicable to radiotelephone service providers. This definition provides that a small entity is any entity employing less than 1,500 persons. See 13 C.F.R.  121.201, Standard Industrial Classification (SIC) Code 4812. Since the size data provided by the Small Business Administration does not enable us to make a meaningful estimate of the number of current or prospective public coast station licensees which are small businesses, and no commenters responded to our request for information regarding the number of small entities that use or are likely to use public coast spectrum, we used the 1992 Census of Transportation, Communications, and Utilities, conducted by the Bureau of Census, which is the most recent information available. This document shows that only 12 radiotelephone firms out of a total of 1,178 such firms which operated during 1992 had 1,000 or more employees. There are over 100 public coast station licensees. Based on the proposals contained herein, it is unlikely that more than 50 licensees will be authorized in the future. Therefore, for purposes of our evaluations and conclusions in this FRFA, we estimate that there are approximately 150 public coast station licensees which are small businesses, as that term is defined by the Small Business Administration. D. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements All small businesses that choose to participate in the competitive bidding for these services will be required to demonstrate that they meet the criteria set forth to qualify as small businesses, as required under Part 1, Subpart Q of the Commission's Rules, 47 C.F.R. Part 1, Subpart Q. Any small business applicant wishing to avail itself of small business provisions will need to make the general financial disclosures necessary to establish that the business is in fact small. Prior to auction each small business applicant will be required to submit an FCC Form 175, OMB Clearance Number 3060-0600. The estimated time for filling out an FCC Form 175 is 45 minutes. In addition to filing an FCC Form 175, each applicant will have to submit information regarding the ownership of the applicant, any joint venture arrangements or bidding consortia that the applicant has entered into, and financial information demonstrating that a business wishing to qualify for installment payments and bidding credits is a small business. Applicants that do not have audited financial statements available will be permitted to certify to the validity of their financial showings. While many small businesses have chosen to employ attorneys prior to filing an application to participate in an auction, the rules are intended to enable a small business working with the information in a bidder information package to file an application on its own. When an applicant wins a license, it will be required to submit an FCC Form 494 (common carrier), which will require technical information regarding the applicant's proposals for providing service. This application will require information provided by an engineer who will have knowledge of the system's design. E. Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered The Commission in this proceeding has considered comments on ways to implement broad changes to the Maritime Services rules. In doing so, the Commission has adopted alternatives which minimize burdens placed on small entities. First, it has decided to establish a presumption that regional licensees are telecommunications carriers, avoiding the need for small telecommunications to provide detailed information about their operations. Also, it has exempted by rule from the Channel 16 safety watch requirement public coast stations whose areas are served by government stations, replacing the prior requirement that such coast stations individually request an exemption. In addition, the Commission has eased the construction requirements for VHF public coast stations. The Commission considered and rejected several significant alternatives. It rejected the alternative of licensing all VHF public coast spectrum by Coast Guard District. Instead, it will license such spectrum in areas removed from major waterways by inland VHF Public Coast Station Area (VPCs), identical to Economic Areas (EAs), allowing small entities there to participate in the auction without bidding for territory far exceeding their operating needs. The Commission rejected the alternative of delaying the auctions for the inland VPCs by holding frequencies open for public safety applications. Instead, the Commission designated public safety channels in advance. The Commission rejected the alternative of requiring each geographic area licensee to provide detailed information about the services it will offer, so the Commission could determine whether the licensee is a telecommunications carrier. Instead, the Commission established a rebuttable presumption that geographic area licensees are telecommunications carriers, so only those seeking to avoid that classification need submit such information. The Commission will send a copy of the Third Report and Order, including this FRFA, in a report to be sent to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996, see 5 U.S.C.  801(a)(1)(A). In addition, the Commission will send a copy of the Third Report and Order, including this FRFA, to the Chief Counsel for Advocacy of the Small Business. A copy of the Third Report and Order and FRFA (or summaries thereof) will also be published in the Federal Register. See 5 U.S.C.  604(b). APPENDIX C - VHF COAST STATION INFORMATION The table below lists the public correspondence frequency pairs as set forth in 47 C.F.R.  80.371(c). Channel number Carrier frequency (MHz) Ship transmit Coast transmit 24 157.200 161.800 25 157.250 161.850 26 157.300 161.900 27 157.350 161.950 28 157.400 162.000 84 157.225 161.825 85 157.275 161.875 86 157.325 161.925 87 157.375 161.975 88 157.425 162.025 APPENDIX D - VHF PUBLIC COAST STATION AREA (VPC) INFORMATION VPC 1 (Northern Atlantic) consists of EAs 1-5, and 10. VPC 2 (Mid-Atlantic) consists of EAs 9, 11-23, 25, 42, and 46. VPC 3 (Southern Atlantic) consists of EAs 24, 26-34, 37, 38, 40, 41, and 174. VPC 4 (Mississippi River) consists of EAs 35, 36, 39, 43-45, 47-53, 67-107, 113, 116-120, 122-125, 127, 130-134, and 176. VPC 5 (Great Lakes) consists of EAs 6-8, 54-66, 108, and 109. VPC 6 (Southern Pacific) consists of EAs 160-165. VPC 7 (Northern Pacific) consists of EAs 147 and 166-170. VPC 8 (Hawaii) consists of EA 172, 173, and 175. VPC 9 (Alaska) consists of EA 171. VPC 10 (Grand Forks) consists of EA 110. VPC 11 (Minot) consists of EA 111. VPC 12 (Bismarck) consists of EA 112. VPC 13 (Aberdeen) consists of EA 114. VPC 14 (Rapid City) consists of EA 115. VPC 15 (North Platte) consists of EA 121. VPC 16 (Western Oklahoma) consists of EA 126. VPC 17 (Abilene) consists of EA 128. VPC 18 (San Angelo) consists of EA 129. VPC 19 (Odessa-Midland) consists of EA 135. VPC 20 (Hobbs) consists of EA 136. VPC 21 (Lubbock) consists of EA 137. VPC 22 (Amarillo) consists of EA 138. VPC 23 (Santa Fe) consists of EA 139. VPC 24 (Pueblo) consists of EA 140. VPC 25 (Denver-Boulder-Greeley) consists of EA 141. VPC 26 (Scottsbluff) consists of EA 142. VPC 27 (Casper) consists of EA 143. VPC 28 (Billings) consists of EA 144. VPC 29 (Great Falls) consists of EA 145. VPC 30 (Missoula) consists of EA 146. VPC 31 (Idaho Falls) consists of EA 148. VPC 32 (Twin Falls) consists of EA 149. VPC 33 (Boise City) consists of EA 150. VPC 34 (Reno) consists of EA 151. VPC 35 (Salt Lake City-Ogden) consists of EA 152. VPC 36 (Las Vegas) consists of EA 153. VPC 37 (Flagstaff) consists of EA 154. VPC 38 (Farmington) consists of EA 155. VPC 39 (Albuquerque) consists of EA 156. VPC 40 (El Paso) consists of EA 157. VPC 41 (Phoenix-Mesa) consists of EA 158. VPC 42 (Tucson) consists of EA 159. APPENDIX E - PUBLIC SAFETY SET-ASIDE Inland VPC Channels Set Aside for Public Safety 10 84, 25 11 84, 25 12 84, 25 13 84, 25 14 84, 25 15 84, 25 16 25, 85 17 25, 85 18 25, 85 19 25, 85 20 25, 85 21 25, 85 22 25, 85 23 84, 25 24 84, 25 25 84, 25 26 84, 25 27 84, 25 28 84, 25 29 84, 25 30 84, 25 31 25, 85 32 25, 85 33 84, 25 34 84, 25 35 25, 85 36 84, 25 37 84, 25 38 84, 25 39 84, 25 40 25, 85 41 84, 25 42 84, 25 APPENDIX F - FINAL RULES Chapter I of Title 47 of the Code of Federal Regulations, Parts 20, 80, and 90 are amended as follows: I. Part 20 - Commercial Mobile Radio Services 1. The authority citation for Part 20 continues to read as follows: AUTHORITY: Secs. 4, 251-2, 303, and 332, 48 Stat. 1066, 1062, as amended; 47 U.S.C. 154, 251-54, 303, and 332 unless otherwise noted. 2. Section 20.9 is amended by revising paragraphs (b) and (b)(1) to read as follows:  20.9 Commercial mobile radio service. * * * * * (b) Licensees of a Personal Communications Service or applicants for a Personal Communications Service license, and Public Coast Station licensees or applicants, proposing to use any Personal Communications Service or Public Coast Station spectrum to offer service on a private mobile radio service basis must overcome the presumption that Personal Communications Service and Public Coast Stations are commercial mobile radio services. (1) The applicant or licensee (who must file an application to modify its authorization) seeking authority to dedicate a portion of the spectrum for private mobile radio service, must include a certification that it will offer Personal Communications Service or Public Coast Station service on a private mobile radio service basis. The certification must include a description of the proposed service sufficient to demonstrate that it is not within the definition of commercial mobile radio service in  20.3 of this chapter. Any application requesting to use any Personal Communications Service or Public Coast Station spectrum to offer service on a private mobile radio service basis will be placed on public notice by the Commission. * * * * * II. Part 80 - Stations in the Maritime Services 3. The authority citation for Part 80 is amended to read as follows: AUTHORITY: Secs. 4, 303, 307(e), 309, and 332, 48 Stat. 1066, 1082, as amended; 47 U.S.C. 154, 303, 307(e), 309, and 332, unless otherwise noted. Interpret or apply 48 Stat. 1064-1068, 1081-1105, as amended; 47 U.S.C. 151-155, 301-609; 3 UST 3450, 3 UST 4726, 12 UST 2377. 4. Section 80.3 is amended by revising paragraph (b) to read as follows:  80.3 Other applicable rule parts of this chapter. * * * * * (b) Part 1. This part includes rules of practice and procedure for license applications, adjudicatory proceedings, procedures for reconsideration and review of Commission actions; provisions concerning violation notices and forfeiture proceedings; and the environmental processing requirements that, if applicable, must be complied with prior to the initiation of construction. Subpart Q of Part 1 contains rules governing competitive bidding procedures for resolving mutually exclusive applications for certain initial licenses. * * * * * 5. Section 80.25 is revised to read as follows:  80.25 License term. * * * * * (b) Licenses other than ship stations in the maritime services will normally be issued for a term of five years from the date of original issuance, major modification, or renewal, except that licenses for VHF public coast stations will normally be issued for a term of ten years from the date of original issuance, major modification, or renewal. Licenses, other than Public Coast and Alaska Public Fixed stations, may be renewed up to ninety (90) days after the date the license expires. * * * * * 6. Section 80.49 is revised to read as follows: 80.49 Construction and regional service requirements. (a) Public coast stations. (1) Each VHF public coast station geographic area licensee must make a showing of substantial service within its region or service area (subpart P) within five years of the initial license grant, and again within ten years of the initial license grant, or the authorization becomes invalid and must be returned to the Commission for cancellation. "Substantial" service is defined as service which is sound, favorable, and substantially above a level of mediocre service which just might minimally warrant renewal. For site-based VHF public coast station licensees, when a new license has been issued or additional operating frequencies have been authorized, if the station or frequencies authorized have not been placed in operation within twelve months from the date of the grant, the authorization becomes invalid and must be returned to the Commission for cancellation. (2) For LF, MF, HF, and AMTS band public coast station licensees, when a new license has been issued or additional operating frequencies have been authorized, if the station or frequencies authorized have not been placed in operation within eight months from the date of the grant, the authorization becomes invalid and must be returned to the Commission for cancellation. (b) Public fixed stations. When a new license has been issued or additional operating frequencies have been authorized, if the station or frequencies authorized have not been placed in operation within twelve months from the date of the grant, the authorization becomes invalid and must be returned to the Commission for cancellation. 7. A new section 80.60 is added to read as follows:  80.60 Partitioned licenses and disaggregated spectrum. (a) Eligibility. VHF Public Coast area (VPC) licensees, see  80.371(c)(1)(B) of this part, may partition their geographic service area or disaggregate their spectrum pursuant to the procedures set forth in this section. Parties seeking approval for partitioning and disaggregation shall request an authorization for partial assignment pursuant to  1.924 of this chapter. (b) Technical standards. (1) Partitioning. In the case of partitioning, all requests for authorization for partial assignment of a license must include, as an attachment, a description of the partitioned service area. The partitioned service area shall be defined by coordinate points at every 3 degrees along the partitioned service area unless an FCC-recognized service area is utilized (e.g., Metropolitan Service Area, Rural Service Area, or Economic Area) or county lines are used. The geographic coordinates must be specified in degrees, minutes, and seconds to the nearest second of latitude and longitude, and must be based upon the 1983 North American Datum (NAD83). In a case where an FCC-recognized service area or county lines are utilized, applicants need only list the specific area(s) (through use of FCC designations or county names) that constitute the partitioned area. (2) Disaggregation. Spectrum may be disaggregated in any amount, provided acquired spectrum is disaggregated according to frequency pairs. (3) Combined partitioning and disaggregation. The Commission will consider requests for partial assignment of licenses that propose combinations of partitioning and disaggregation. (c) License term. The license term for a partitioned license area and for disaggregated spectrum shall be the remainder of the original licensee's term as provided for in  80.25 of this part. (d) Construction Requirements. (1) Partitioning. Partial assignors and assignees for license partitioning have two options to meet construction requirements. Under the first option, the partitionor and partitionee would each certify that they will independently satisfy the substantial service requirement for their respective partitioned areas. If either licensee failed to meet its substantial service showing requirement, only the non-performing licensee's renewal application would be subject to dismissal. Under the second option, the partitionor certifies that it has met or will meet the substantial service requirement for the entire market. If the partitionor fails to meet the substantial service standard, however, only its renewal application would be subject to forfeiture at renewal. (2) Disaggregation. Partial assignors and assignees for license disaggregation have two options to meet construction requirements. Under the first option, the disaggregator and disaggregatee would certify that they each will share responsibility for meeting the substantial service requirement for the geographic service area. If parties choose this option and either party fails to do so, both licenses would be subject to forfeiture at renewal. The second option would allow the parties to agree that either the disaggregator or the disaggregatee would be responsible for meeting the substantial service requirement for the geographic service area. If parties choose this option, and the party responsible for meeting the construction requirement fails to do so, only the license of the nonperforming party would be subject to forfeiture at renewal. 8. Section 80.70 is amended by adding new subsection (c) as follows:  80.70 Special provisions relative to coast station VHF facilities. * * * * * (c) A VHF (156-162 MHz) public coast station licensee initially authorized on any of the channels listed in the table in  80.371(c)(1)(A) of this part may transfer or assign its channel(s) to another entity. If the proposed transferee or assignee is the geographic area licensee for the geographic area to which the channel is allocated, such transfer or assignment will be deemed to be in the public interest. However, such presumption will be rebuttable. 9. Section 80.105 is revised to read as follows:  80.105 General obligations of coast stations. Each coast station or marine-utility station must acknowledge and receive all calls directed to it by ship or aircraft stations. Such stations are permitted to transmit safety communication to any ship or aircraft station. VHF (156-162 MHz) public coast stations may provide fixed or hybrid services on a co- primary basis with mobile operations. 10. Section 80.213 is amended by revising paragraphs (a)(2) and (d) to read as follows:  80.213 Modulation requirements. (a) * * * * * (2) When phase or frequency modulation is used in the 156-162 MHz band the peak modulation must be maintained between 75 and 100 percent. * * * * * * * * (d) Ship and coast station transmitters operating in the 156-162 MHz band must be capable of proper operation with a frequency deviation of ñ 5 kHz when using any emission authorized by  80.207 of this part. 11. Section 80.303 is amended by revising paragraph (b) to read as follows:  80.303 Watch on 156.800 MHz (Channel 16). * * * * * (b) A coast station is exempt from compliance with the watch requirement when Federal, State, or Local Government stations maintain a watch on 156.800 MHz over 95% of the coast station's service area. Each licensee exempted by rule must notify the nearest district office of the U.S. Coast Guard at least thirty days prior to discontinuing the watch, or in the case of new stations, at least thirty days prior to commencing service. The Coast Guard may require any coast station to maintain the watch temporarily or permanently. The Coast Guard may also require any coast station to remain capable of either immediately resuming the watch or providing the Coast Guard direct dial-up access to the necessary 156.800 MHz transceiver at no charge so that the Coast Guard can maintain the watch. * * * * * 12. Section 80.371 is amended by revising paragraph (c) to read as follows:  80.371 Public correspondence frequencies. * * * * * (c) Working frequencies in the marine VHF 156-162 MHz band. (1)(A) The frequency pairs listed in the table below are available for assignment to public coast stations for public correspondence communications with ship stations and units on land. * * * (B) Service areas in the marine VHF 156-162 MHz band are VHF Public Coast areas (VPCs). As listed in the table below, VPCSAs are based on, and composed of one or more of, the U.S Department of Commerce's 172 Economic Areas (EAs). See 60 FR 13114 (March 10, 1995). In addition, the Commission shall treat Guam and the Northern Mariana Islands, Puerto Rico and the United States Virgin Islands, American Samoa, and the Gulf of Mexico as EA-like areas, and has assigned them EA numbers 173-176, respectively. Maps of the EAs and VPCSAs are available for public inspection and copying at the Public Safety and Private Wireless Division, room 8010, 2025 M Street, NW, Washington, DC. Except as shown below, the frequency pairs listed in paragraph (c)(1)(A) of this section are available for assignment to a single licensee in each of the VPCs listed in the table below. In addition to the listed EAs listed in the table below, each VPC also includes the adjacent waters under the jurisdiction of the United States. VHF Public Coast areas (VPCs) VPCs EAs Frequency Pairs Not Available for Assignment 1 (Northern Atlantic) 1-5, 10 -- 2 (Mid-Atlantic) 9, 11-23, 25, 42, 46 -- 3 (Southern Atlantic) 24, 26-34, 37, 38, 40, 41, 174 -- 4 (Mississippi River) 34, 36, 39, 43-45, 47-53, 67- 107, 113, 116-120, 122-125, 127, 130-134, 176 -- 5 (Great Lakes) 6-8, 54-66, 108, 109 -- 6 (Southern Pacific) 160-165 -- 7 (Northern Pacific) 147, 166-170 -- 8 (Hawaii) 172, 173, 175 -- 9 (Alaska) 171 -- 10 (Grand Forks) 110 84, 25 11 (Minot) 111 84, 25 12 (Bismarck) 112 84, 25 13 (Aberdeen) 114 84, 25 14 (Rapid City) 115 84, 25 15 (North Platte) 121 84, 25 16 (Western Oklahoma) 126 25, 85 17 (Abilene) 128 25, 85 18 (San Angelo) 129 25, 85 19 (Odessa-Midland) 135 25, 85 20 (Hobbs) 136 25, 85 21 (Lubbock) 137 25, 85 22 (Amarillo) 138 25, 85 23 (Santa Fe) 139 84, 25 24 (Pueblo) 140 84, 25 25 (Denver-Boulder-Greeley) 141 84, 25 26 (Scottsbluff) 142 84, 25 27 (Casper) 143 84, 25 28 (Billings) 144 84, 25 29 (Great Falls) 145 84, 25 30 (Missoula) 146 84, 25 31 (Idaho Falls) 148 25, 85 32 (Twin Falls) 149 25, 85 33 (Boise City) 150 84, 25 34 (Reno) 151 84, 25 35 (Salt Lake City-Ogden) 152 25, 85 36 (Las Vegas) 153 84, 25 37 (Flagstaff) 154 84, 25 38 (Farmington) 155 84, 25 39 (Albuquerque) 156 84, 25 40 (El Paso) 157 25, 85 41 (Phoenix-Mesa) 158 84, 25 42 (Tucson) 159 84, 25 (C) Subject to paragraph (c)(3) of this section, each licensee may also operate on 12.5 kHz offset frequencies in areas where the licensee is authorized on both frequencies adjacent to the offset frequency, and in areas where the licensee on the other side of the offset frequency consents to the licensee's use of the adjacent offset frequency. (2) Any recovered channel pairs will revert automatically to the holder of the VPC license within which such channels are included, except the channel pairs listed in the table in paragraph (c)(1)(B) of this section. Those channel pairs, and any channel pairs recovered where there is no VPC licensee, will be retained by the Commission for future licensing. (3) VPC licensees may not operate on Channel 228B (162.0125 MHz), which is available for use in the Coast Guard's Ports and Waterways Safety System (PAWSS)). In addition, within six months of the conclusion of the competitive bidding procedures to determine the licensees in each VPC, the U.S. Coast Guard shall submit to each licensee of VPCs 1-9 a plan specifying up to two narrowband channel pairs offset 12.5 kHz from the channels set forth in the table in paragraph (c)(1)(A) of this section, for use in the PAWSS. The final selection of the PAWSS channel pairs can be negotiated (if the VPC licensee objects to the Coast Guard proposal, it shall make a counterproposal within three months) and established by an agreement between the parties. All parties are required to negotiate in good faith. If no agreement is reached within one year of the date the Coast Guard submitted its plan, the Coast Guard may petition the Commission to select the channel pairs. (4) Subject to the requirements of  80.21, each VPC licensee may place stations anywhere within its region without obtaining prior Commission approval provided: (A) It provides to co-channel coast station incumbent licensees, and incumbent Private Land Mobile Radio licensee authorized under part 90 of this chapter on a primary basis, protection as defined in subpart P of this part. VPC licensees that share a common border may either distribute the available frequencies upon mutual agreement or request that the Commission assign frequencies along the common border. (B) The locations and/or technical parameters of the transmitters are such that individual coordination of the channel assignment(s) with a foreign administration, under applicable international agreements and rules in this part, is not required. (C) For any construction or alteration that would exceed the requirements of  17.7 of this chapter, licensees must notify the appropriate Regional Office of the Federal Aviation Administration (FAA Form 7460-1) and file a request for antenna height clearance and obstruction marking and lighting specifications (FCC Form 854) with the FCC, Attn: Information Processing Branch, 1270 Fairfield Rd., Gettysburg, PA 17325-7245. (D) The transmitters must not have a significant environmental effect as defined by  1.1301 through 1.1319 of this chapter. * * * * * 13. Section 80.751 is amended to read as follows:  80.751 Scope. This subpart specifies receiver antenna terminal requirements in terms of power, and relates the power available at the receiver antenna terminals to transmitter power and antenna height and gain. It also sets forth the co-channel interference protection that VHF public coast station geographic area licensees must provide to incumbents. 14. Section 80.773 is amended to read as follows:  80.773 Co-channel interference protection. (a) Where a VHF public coast station geographic area licensee shares a frequency with an incumbent VHF public coast station licensee, the ratio of desired to undesired signal strengths must be at least 12 dB within the service area of the station. (b) Where a VHF public coast station geographic area licensee shares a frequency with an incumbent private land mobile radio licensee, the VHF public coast station geographic area licensee must provide at least 10 dB protection to the PLMR incumbent's predicted 38 dBu signal level contour. The PLMR incumbent's predicted 38 dBu signal level contour is calculated using the F(50, 50) field strength chart for Channels 7-13 in  73.699 (Fig. 10) of this chapter, with a 9 dB correction factor for antenna height differential, and is based on the licensee's authorized effective radiated power and antenna height- above-average-terrain. The 10 dB protection to the incumbent's predicted 38 dBu signal level contour shall be calculated using the F(50, 10) field strength chart for Channels 7-13 in  73.699 (Fig. 10a) of this chapter, with a 9 dB correction factor for antenna height differential. 15. New subpart Y is added to read as follows: Subpart Y -- Competitive Bidding Procedures  80.1251 Maritime communications services subject to competitive bidding.  80.1252 Designated entities.  80.1251 Maritime communications services subject to competitive bidding. Mutually exclusive initial applications for VPC licenses, high seas public coast station licenses, and AMTS coast station licenses are subject to competitive bidding procedures. The procedures set forth in part 1, subpart Q of this chapter will apply unless otherwise provided in this part.  80.1252 Designated entities. (a) This section addresses certain issues concerning designated entities in maritime communications services subject to competitive bidding. Issues that are not addressed in this section are governed by the designated entity provisions in part 1, subpart Q of this chapter. (b) Eligibility for small business provisions. (1) A small business is an entity that, together with its affiliates and controlling interests, has average gross revenues not to exceed $15 million for the preceding three years. (2) A very small business is an entity that, together with its affiliates and controlling interests, has average gross revenues not to exceed $3 million for the preceding three years. (3) For purposes of determining whether an entity meets either of the definitions set forth in paragraph (b)(1) or (b)(2) of this section, the gross revenues of the entity, its affiliates, and controlling interests shall be considered on a cumulative basis and aggregated. (4) Where an applicant (or licensee) cannot identify controlling interests under the standards set forth in this section, the gross revenues of all interest holders in the applicant, and their affiliates, will be attributable. (5) A consortium of small businesses (or a consortium of very small businesses) is a conglomerate organization formed as a joint venture between or among mutually independent business firms, each of which individually satisfies the definition in paragraph (b)(1) of this section (or each of which individually satisfies the definition in paragraph (b)(2) of this section). Where an applicant or licensee is a consortium of small businesses (or very small businesses), the gross revenues of each small business (or very small business) shall not be aggregated. (c) Controlling interest. (1) For purposes of this section, controlling interest includes individuals or entities with de jure and de facto control of the applicant. De jure control is greater than 50 percent of the voting stock of a corporation, or in the case of a partnership, the general partner. De facto control is determined on a case- by-case basis. An entity must disclose its equity interest and demonstrate at least the following indicia of control to establish that it retains de facto control of the applicant: (A) the entity constitutes or appoints more than 50 percent of the board of directors or management committee; (B) the entity has authority to appoint, promote, demote, and fire senior executives that control the day-to-day activities of the licensee; and (C) the entity plays an integral role in management decisions. (2) Calculation of certain interests. (A) Ownership interests shall be calculated on a fully diluted basis; all agreements such as warrants, stock options and convertible debentures will generally be treated as if the rights thereunder already have been fully exercised. (B) Partnership and other ownership interests and any stock interest equity, or outstanding stock, or outstanding voting stock shall be attributed as specified below. (C) Stock interests held in trust shall be attributed to any person who holds or shares the power to vote such stock, to any person who has the sole power to sell such stock, and, to any person who has the right to revoke the trust at will or to replace the trustee at will. If the trustee has a familial, personal, or extra-trust business relationship to the grantor or the beneficiary, the grantor or beneficiary, as appropriate, will be attributed with the stock interests held in trust. (D) Non-voting stock shall be attributed as an interest in the issuing entity. (E) Limited partnership interests shall be attributed to limited partners and shall be calculated according to both the percentage of equity paid in and the percentage of distribution of profits and losses. (F) Officers and directors of an entity shall be considered to have an attributable interest in the entity. The officers and directors of an entity that controls a licensee or applicant shall be considered to have an attributable interest in the licensee or applicant. (G) Ownership interests that are held indirectly by any party through one or more intervening corporations will be determined by successive multiplication of the ownership percentages for each link in the vertical ownership chain and application of the relevant attribution benchmark to the resulting product, except that if the ownership percentage for an interest in any link in the chain exceeds 50 percent or represents actual control, it shall be treated as if it were a 100 percent interest. (H) Any person who manages the operations of an applicant or licensee pursuant to a management agreement shall be considered to have an attributable interest in such applicant or licensee if such person, or its affiliate pursuant to  1.2110(b)(4) of this chapter, has authority to make decisions or otherwise engage in practices or activities that determine, or significantly influence (i) The nature or types of services offered by such an applicant or licensee; (ii) The terms upon which such services are offered; or (iii) The prices charged for such services. (I) Any licensee or its affiliate who enters into a joint marketing arrangement with an applicant or licensee, or its affiliate, shall be considered to have an attributable interest, if such applicant or licensee, or its affiliate, has authority to make decisions or otherwise engage in practices or activities that determine, or significantly influence, (i) The nature or types of services offered by such an applicant or licensee; (ii) The terms upon which such services are offered; or (iii) The prices charged for such services. (d) A winning bidder that qualifies as a small business or a consortium of small businesses as defined in  80.1252(b)(1) or  80.1252(b)(5) of this subpart may use the bidding credit specified in  1.2110(e)(2)(ii) of this chapter. A winning bidder that qualifies as a very small business or a consortium of very small businesses as defined in  80.1252(b)(2) or  80.1252(b)(5) of this subpart may use the bidding credit specified in  1.2110(e)(2)(i) of this chapter. III. Part 90 - Private Land Mobile Radio Services 16. The authority citation for Part 90 continues to read as follows: AUTHORITY: Secs. 4, 251-2, 303, 309, and 332, 48 Stat. 1066, 1082, as amended; 47 U.S.C. 154, 251-2, 303, 309 and 332, unless otherwise noted. 17. Section 90.283 is removed.