Before the
FEDERAL COJUMUNICATIONS COMMISSION FCC 95-230 
Washington, D.C. 20554
In the Matter of )
)Amendment of Parts 21 and 74 of the )
Commission's Rules With Regard to ) MM Docket No. 94-131 
Filing Procedures in the Multipoint ) 
Distribution Service and in the ) 
Instructional Television Fixed Service )
) and )
)Implementation of Section 309(j) of the ) PP Docket No. 93-253 
Communications Act - Competitive Bidding )
REPORT AND ORDER
Adopted: June 15, 1995; Released: June 30, 1995
By the Commission: Chairman Hundt dissenting in part and issuing a statement; 
Commissioners Quello and Barrett issuing separate statements; and Commission Ness 
dissenting in part and issuing a statement.
TABLE OF CONTENTS
Paragraph
I. INTRODUCTION AND SUMMARY ........................ 1
II. BACKGROUND ..................................... 6
ffl. DISCUSSION ....................................... 12
A. FILING PROCEDURE AND SERVICE RULES ............. 12
1. Service Areas .............................. 34
2. Rights and Responsibilities of BTA Authorization Holder .... 38
a. Description of Authorization ................. 39
b. Five Year Build-out Period .................. 43
c. Assignment or Transfer of Control ............. 44
d. Partitioning ........................... 46
e. Technical Rights and Responsibilities ............ 48
3. Treatment of Incumbents ........................ 56
4. Alternative Uses of MDS Frequencies ................ 59
B. INTERFERENCE CRITERIA AND DATA ELEMENTS ........ 60
C. ELECTRONIC FILING AND ELECTRONIC FEE PAYMENTS ... 74 
D. COMPETITIVE BIDDING PROCEDURES ................ 84
1. Competitive Bidding Background ................... 84
9589
2. Auction Eligibility ............................ 86
3. Disposition of Previously Filed MDS Applications ........ 87
4. Competitive Bidding Design ...................... 96
a. General Competitive Bidding Designs ........... 97
b. MDS Competitive Bidding Design ............. 100
c. MDS Bidding Procedures .................. 109
5. Procedural and Payment Issues ................... 130
a. Pre-Auction Application Procedures ............ 130
b. Upfront Payments ...................... 135
c. Down Payments and Full Payments ............ 142
d. Bid Withdrawal, Default and Disqualification Payments 145 
e. Post-Auction Application Procedures ........... 150
f. Period of MDS Station Licenses .............. 155
6. Regulatory Safeguards ........................ 158
a. Unjust Enrichment and Anti-Trafficking Provisions . . 158 
b. Construction Build-out Requirements ........... 161
c. Rules Prohibiting Collusion ................. 164
7. Treatment of Designated Entities .................. 167
a. General Considerations ................... 167
b. Entities Eligible for Special Measures .......... 176
c. Installment Payments ..................... 182
d. Reduced Upfront Payments .................. 184
e. Bidding Credits ........................ 186
f. Eligibility for Installment Payments, Reduced Upfront
Payments and Bidding Credits ............... 190
g. Records Maintenance and Audits ............. 193
IV. ORDERING CLAUSES ................................ 196
Appendix A: List of Commenters
Appendix B: Final Regulatory Flexibility Analysis
Appendix C: Rules
Appendix D: Draft FCC Form 304
I. INTRODUCTION AND SUMMARY
1. By this action, we adopt rules to facilitate the development and rapid deployment 
of wireless cable services. 1 As a result of our actions in prior proceedings, wireless cable 
operators that use spectrum in the Multipoint Distribution Service (MDS), often
1 Wireless cable programming to subscribers resembles cable television, but instead of 
coaxial cable, wireless cable uses microwave channels. Our use of the term "wireless cable" 
does not imply that it constitutes cable television for statutory or regulatory purposes.
9590
supplemented with leased channels from the Instructional Television Fixed Service (ITFS), 
have begun to provide a competitive: alternative to wired cable and other multichannel video 
programming distributors.2 The rules we now adopt will accelerate that process by setting 
streamlined measures to distribute unused MDS spectrum through competitive bidding and by 
establishing a protected service area for MDS stations that is large enough to allow operators 
flexibility they need to design viable: and competitive wireless cable systems. Adoption of 
these rules will enable the Commission to lift the current freeze on filing new MDS 
applications.3
2. Specifically, we adopt hi this order a licensing plan under which we will allot, 
through a simultaneous multiple round bidding process, one MDS authorization for each of 
the 487 Basic Trading Areas (BTAs) and six additional BTA-like geographic areas.4 A BTA 
authorization holder will be able to construct facilities to provide wireless cable service over 
any usable MDS channels within the BTA, and will have preferred rights to the available 
ITFS frequencies and ITFS lease agreements within the BTA. A channel is usable if the 
proposed station design is hi complumce with the Commission's interference standards.
3. Under the new rules, the signals of a BTA authorization holder cannot interfere 
with those of any other BTA authorization holder. Recognizing, however, that BTA lines do 
not always track desired service areas, the rules permit BTA authorization holders to 
negotiate interference protection rights. In addition, the rules we adopt require BTA 
authorization holders to honor the protected service areas of incumbent MDS operators 
within their BTAs. In a companion order, also adopted today, the Commission expanded the 
protected service areas of existing MDS stations.5 These various licensees and applicants 
that are authorized or proposed on or before June 15, 1995, including those stations that are 
subsequently modified, renewed or reinstated, are referred to throughout this Report and 
Order as "authorized or previously proposed facilities" or "incumbents." In order to 
facilitate the development of successful wireless cable systems, the rules permit BTA 
authorization holders to assign or transfer their entire BTAs, or partitioned portions of it, to 
incumbents or other parties. (Unserved areas may be included as long as the assignment or
2 Unless otherwise indicated, "MDS" includes single channel Multipoint Distribution 
Service (MDS) and Multichannel Multipoint Distribution Service (MMDS) applications and 
authorizations collectively.
3 The Commission imposed a freeze on the filing of applications for new MDS stations 
in Notice of Proposed Rulemaking in PR Docket No. 92-80, 7 FCC Red 3266 (1992).
4 Rand McNally defined 487 BTAs in the 7992 Commercial Atlas & Marketing Guide. 
Since Rand McNally did not include a few areas, we will add them to the list as BTA-like 
geographic areas, bringing the total to 493 authorizations to be auctioned. See infra at 1 37.
5 Second Order on Reconsideration in Gen. Docket Nos. 90-54 and 80-113, FCC 95-231 
(released June 21, 1995) (Second Order on Reconsideration).
9591
transfer takes place within the five-year build-out period that the rules impose.) Because the 
BTA authorization holder may be an incumbent, the rules permit the aggregation of existing 
and new MDS and ITFS channels within a BTA.
4. The Report and Order also adopts a variety of measures to streamline the 
application and implementation processes. It authorizes, for example, the voluntary use of 
electronic filing for new MDS applications, as well as electronic fee payments. It institutes 
computerized interference studies utilizing new data elements to be included in a revised 
MDS application form. It also makes clear that interference disputes are to be resolved, in 
the first instance, through private negotiations, with the Commission to serve only as a last 
resort.
5. We understand that the wireless cable industry has made tremendous progress 
toward the transition to digital transmission.6 The rules we adopt today will facilitate that 
transition.
n. BACKGROUND
6. The origin of MDS dates back to 1970, when the Commission removed a 
limitation on the authorized bandwidth for licensees utilizing the 2150-2160 megahertz 
(MHz) frequency band.7 This action led to numerous applications which proposed to use this 
spectrum for the distribution of television programming from a central location to subscribers 
at many points. The Commission subsequently determined that the point-to-point service 
rules were not appropriate for a service that had become a point-to-multipoint service and in 
1974, adopted rules to establish the Multipoint Distribution Service.8 These rules provided 
for two MDS channels, each consisting of 6 MHz, hi the 50 largest metropolitan areas. In 
the rest of the country, though one 6 MHz channel is available, the second channel 
bandwidth is 4 MHz and it cannot be used to transmit a standard television signal, which 
requires 6 MHz of spectrum. In 1983, to satisfy a growing demand for the delivery of video 
entertainment programming to subscribers and to provide competition to wired cable systems, 
the Commission reallocated eight of the then twenty-eight ITFS channels for MDS use, and 
authorized ITFS licensees to lease the excess capacity on their systems to wireless cable
6 See, e.g., The Wireless Cable Association International, Selected Papers from the First 
Annual Wireless Cable Technical Symposium (February 4-6, 1995).
7 Memorandum Opinion and Order, In the Matter of Part 21, Section 21.703 (g) and (h) 
of the Commission's Rules, 47 FCC 2d 957 (1970).
8 Report and Order, Amendment of Parts 1, 2, 21 and 43 of the Commission's Rules to 
Provide for Licensing and Regulation of Common Carrier Radio Stations in the Multipoint 
Distribution Service, 45 FCC 2d 616 (1974), recon. denied, 57 FCC 2d 301 (1975).
9592
operators.9 That action created wireless cable as a multichannel video distribution medium, 
and in 1991, the Commission made more channels available for wireless cable services. 10 
Today, there are a maximum of thirty-three microwave channels used for wireless cable in 
each market. These include thirteen MDS channels (Channels 1, 2 or 2A, E1-E4, F1-F4 and 
H1-H3) and the excess capacity on up to twenty ITFS channels (Channels A1-A4, B1-B4, 
C1-C4, D1-D4 and G1-G4). 11
7. Wireless cable is now similar to wired cable television in the type of programming 
it provides, but differs from cable in how the programming is transmitted to subscribers. 
Generally, a wireless cable system may be described as a microwave station transmitting on a 
combination of MDS and ITFS channels to numerous receivers with antennas, such as single 
family residences, apartment complexes, hotels, educational institutions, business entities and 
governmental offices. The range of the transmission depends upon the transmitter power, the 
type of receiving antenna and the existence of a line-of-sight path between the transmitter or 
signal booster and the receiving antenna.
8. Over the past few years, ithe wireless cable industry has experienced substantial 
growth and has emerged as an effective competitor to wired cable in many locations. 12 This 
rapid growth is due, in part, to program access provisions and changes in other regulations
9 Report and Order in Gen. Docket No. 80-112 and CC Docket No. 80-116, 94 FCC 2d 
1203 (1983). Therein, the Commission also grandfathered interference protection to existing 
ITFS applicants, permittees or licensees on these eight E and F channels, resulting in twenty- 
eight ITFS channels in some locales.
10 The Commission reallocated the H group channels from the Operational Fixed Service 
to MDS and made MDS operators eligible for authorization on vacant ITFS channels with 
specified restrictions. Second Report and Order in Gen. Docket No. 90-54, 6 FCC Red 
6792, 6793-94, 6801-06 (1991), ream, denied, 7 FCC Red 5648 (1992). Last year, the 
Commission consolidated processing of MDS and ITFS applications into one organization. 
Amendment of Parts 0 and 1 of the Communication's Rules to Reflect a Reorganization of 
Multipoint and Multichannel Multipoint Distribution Services, 9 FCC Red 3661 (1994).
11 MDS channel 2A is only 4 MHz wide and lacks sufficient bandwidth to transmit a 
standard television signal. Grandfathered ITFS stations on the eight E and F channels also 
lease excess capacity to wireless cable operators.
12 See Annual Assessment of the Status of Competition in the Market for the Delivery 
of Video Programming, 9 FCC Red 7442, 7482-88 (1994). The Commission is required to 
file such reports pursuant to the Cable Television Consumer Protection and Competition Act 
of 1992, Pub. L. No. 102-385, § 628(g), 106 Stat. 1460 (amending the Communications Act 
of 1934), codified at 47 U.S.C. § 548(g). The Commission recently adopted a Notice of 
Inquiry to obtain information needed to prepare the annual assessment that will be released in 
1995, FCC 95-186 (released May 24, 1995), 60 Fed. Reg. 29,533 (June 5, 1995).
9593
that have increased access to financing. According to the Wireless Cable Association 
International, Inc. (Association), "[t]he rapid growth of the wireless cable industry has been 
fueled by recent debt and equity financing that almost certainly would not have been made 
but for investor confidence engendered by the FCC's nurturing of wireless cable."13 
Moreover, the growth of MDS has led to the continued development of ITFS. Indeed, 
wireless cable operators significantly serve the public interest by supporting and funding 
approximately 95 percent of all new ITFS applicants. This includes many small, rural school 
systems who now have, or will soon have, access to quality educational materials, which 
historically have been available only to more affluent school systems. In addition to its 
contributions to ITFS, wireless cable operators offer other public interest benefits which 
include expanding consumer choice, stimulating economic growth and providing competition 
to other multichannel video programming distributors, resulting in better service to the public 
at lower prices. Today, the Association estimates that there are 170 wireless cable systems 
in operation which serve approximately 700,000 homes, and experts predict that wireless 
cable will at least double its current subscriber base by the end of 1995. Comments of 
Association at 6-7.
9. MDS is a heavily encumbered service. Most of the thirteen MDS channels have 
already been authorized hi the largest metropolitan areas, especially for locations in the 
eastern half of the country. Thus far, MDS has developed almost entirely in large and 
medium-sized cities, though MDS systems also serve many smaller communities in the 
western states. In addition to the approximately 170 operating wireless cable systems, many 
conditional licenses have been issued to entities that, presumably, are in various stages of 
constructing their systems. Finally, the MDS landscape includes MDS systems proposed hi 
applications now being processed at the Commission.
10. On December 1, 1994, the Commission released a Notice of Proposed 
Rulemaking in this proceeding which solicited comment on proposals that would modify our 
MDS filing procedures and use competitive bidding to select from among mutually exclusive 
applicants. Notice of Proposed Rulemaking in MM Docket No. 94-131 and PP Docket No. 
93-253, 9 FCC Red 7665 (1994) (Notice). In the Notice, the Commission acknowledged that 
wireless cable operators must have access to as many available channels as possible in order 
to meet subscriber demand and compete with wired cable television systems in the same 
area. We further observed in the Notice that the expansion of the wireless cable industry has 
been stifled by an MDS licensing process that has been bogged down for a number of years 
by thousands of applications and legal protests. The majority of the applications were 
believed to be speculative and many of the protests were believed to be frivolous. Notice at 
7668-69. In 1990, the Commission adopted a one-day cut-off period, which is referred to as 
the "same calendar day rule," in an attempt to limit the opportunity for speculators to simply
13 Comments of Association at 6. The Association members include the operators of 
virtually all wireless cable systems in the United States, as well as licensees hi MDS and 
ITFS, equipment manufacturers and program suppliers.
9594
copy applications that were previously filed and resubmit them under different names. 14 
Nevertheless, speculators continued to file a large number of applications up to the time the 
Commission imposed the freeze on filing applications for new MDS stations in 1992.15 The 
backlog has been significantly reduced since the freeze was imposed, and the staff is 
continuing its efforts to eliminate the remaining backlog of pending applications, process 
other applications filed after the freeze, such as modifications, and update the MDS 
inventory. 16 The proposals set forth for consideration in this proceeding were designed to 
avoid the future accumulation of backlogged applications and legal protests that have delayed 
the deployment of MDS stations in the past.
11. In the Notice, we proposed to modify our application filing procedures and use 
competitive bidding to select from among mutually exclusive applicants. We also proposed 
to implement a mandatory electronic filing system for new MDS and ITFS applications. 17 As 
a complement to the electronic procedures, the Notice proposed that the Commission utilize 
computerized interference studies, revise the current application forms, permit the electronic 
filing of fee payments and establish a current data base with on-line viewing access to the 
public. Finally, the Notice solicited any other proposals that would allow the Commission to 
process applications for new MDS stations more efficiently. We received twenty-two 
comments and nineteen replies from commenters who include MDS licensees, wireless cable 
operators, attorneys, consulting engineers, educational institutions and other entities who are
14 47 C.F.R. § 21.914. Report and Order in Gen. Docket Nos. 90-54 and 80-113, 
5 FCC Red 6410, 6424 (1990); Order on Reconsideration, 6 FCC Red 6764 (1991), petition 
for review filed, United States Independent Microwave Television Association v. FCC and 
United States of America, No. 91-1637 (D.C. Cir. filed Dec. 20, 1991) (held in abeyance by 
Court Order of February 21, 1992, pending action on second set of reconsideration 
petitions); Second Order on Reconsideration, FCC 95-231 (released June 21, 1995).
15 Supra at n.3. In January of 1993, the Commission adopted a number of rule changes 
designed to deter abuse by speculator. Report and Order in PR Docket No. 92-80, 8 FCC 
Red 1444 (1993).
16 See, e.g., 101 Applications for Authority to Construct and Operate Multipoint 
Distribution Service Stations, 9 FCC Red 7886 (1994); 4,330 Applications for Authority 
to Construct and Operate Multipoint Distribution Service Stations at 62 Transmitter Sites, 
10 FCC Red 1335 (1994), joint notice of appeal filed, A/B Financial, Inc., et al. v. FCC, 
95-1027 (D.C. Cir. filed Jan. 9, 1995). In several orders adopted today, we uphold the 
return of an additional 731 MDS applications as unacceptable for filing.
17 The only aspect of the Notice which applied to ITFS was the electronic filing 
proposal. In a separate proceeding, ithe Commission recently adopted improvements to the 
ITFS licensing process, including a window filing procedure. Report and Order, Amendment 
of Part 74 of the Commission's Rules With Regard to the Instructional Television Fixed 
Service, MM Docket No. 93-24, 10 FCC Red 2907 (1995).
9595
interested in MDS.18 While the commenters generally support the Commission's efforts to 
streamline its processing procedures and expedite development of wireless cable services, 
they have varying proposals on how to accomplish these goals.
ra. DISCUSSION
A. FILING PROCEDURES AND SERVICE RULES
12. Proposals. In the Notice, the Commission proposed that applicants file short- 
form applications for established geographic service areas to identify mutually exclusive 
applicants for competitive bidding purposes and that the successful bidders file long-form 
applications. Notice at 7669-71. The Notice suggested the use of predetermined geographic 
areas, such as Metropolitan Statistical Areas (MSA) and Rural Service Areas (RSA) or Areas 
of Dominant Influence (ADI). 19 This proposal envisioned that we would release a public 
notice announcing auctions by geographic area, specifying the filing period for short-form 
applications (FCC Form 175)20 and the applicable bidding procedures. Mutually exclusive 
applicants would bid for all usable MDS channels in that area as a package and the auction 
winner would be permitted to file long-form applications for conditional licenses to operate 
stations anywhere throughout the service area provided the specific engineering design of 
their MDS stations meets the Commission's interference protection standards with respect to 
all authorized or previously proposed MDS and ITFS facilities. Long-form applications 
accepted for filing would be proposed for grant by a Commission public notice, announcing 
that the applications are accepted for filing and opening a thirty-day period for filing petitions 
to deny. See 47 U.S.C. § 309(b); 47 C.F.R. § 21.30. The Notice observed that these filing 
procedures would enable operators to amass MDS channels, would avoid the lengthy delay
18 A list of the parties filing comments and replies is provided in Appendix A. The list 
includes parties who, in response to a July 28, 1993 Public Notice, filed comments on ways 
the Commission could expedite the processing of MDS applications. We have considered 
those views and incorporated those materials in the public record of this proceeding.
19 MSAs and RSAs are standard geographic areas used by the Commission for 
administrative convenience hi licensing cellular radio systems. The Commission has also 
used MSAs since 1983 for making mutually exclusive determinations for MDS applications 
filed for the E or F channels under 47 C.F.R. § 21.901(d)(5). ADIs are standard geographic 
areas that were developed by Arbitron Ratings Company. Each county in the United States 
is placed within one of 209 ADIs, the lowest numbered ADI having the highest population.
20 FCC Form 175 contains the applicant's name, the markets in which the applicant 
wishes to bid, the persons authorized to make or withdraw a bid, whether the applicant is 
qualified as a designated entity under 47 C.F.R. § 1.2110, certifications that the applicant is 
legally, technically, financially and otherwise qualified, and identification of all parties 
involved hi agreements, or certification that no agreements exist, relating to the 
authorizations being auctioned or the bidding process.
9596
associated with licensing stations site-by-site and therefore would allow operators to enhance 
their services more rapidly. The Notice asked commenters to determine which type of 
geographic areas would be most suitable for MDS and to address the definition of protected 
service area. In particular, we requested comment on whether the current definition of an 
MDS station's protected service area would be appropriate,21 or whether the boundary of the 
geographic area designed for auction purposes should become the protected service area. We 
also asked commenters to discuss the interference standards for service to the areas adjacent 
to the boundaries between geographic areas. Although the Notice identified this approach of 
licensing MDS channels as the preferred approach, we also invited comment on alternative 
licensing procedures.
13. The Notice suggested an alternative approach that would limit applications to 
predetermined sites where there are vacant E, F or H channels. Notice at 7671-72. Under 
this approach, the Commission would identify such sites based upon the location of an 
already authorized E, F or H channel. The Commission would issue multiple public notices 
specifying the filing period and applicants would file a short-form application to identify 
mutually exclusive situations for purposes of competitive bidding. The auction winner would 
be required to file a long-form application containing a complete engineering proposal and 
specifying a compatible station design with the Commission's interference protection 
standards to all previously proposed or authorized MDS and ITFS facilities.
14. Under another alternative presented in the Notice, the Commission would 
periodically open national filing windows, with no geographic restrictions on filing for ' 
available MDS channels. Notice at 7672-73. Pursuant to this proposal, we would release a 
public notice announcing the filing window for available channels. This proposal would 
initially require a long-form application, containing the applicant's complete technical 
proposal, to determine mutual exclusivity before competitive bidding procedures are 
implemented. The Notice pointed out that this approach would likely result hi a larger 
number of mutually exclusive applications and increase the possibility of "daisy-chains" 
(interlinking application proposals at different locations), which would require a more 
complicated and time consuming competitive bidding process, including subsequent rounds of 
auctions to resolve all mutual exclusivities in a daisy-chain. We invited commenters favoring 
a national window approach to recommend ways to resolve the daisy-chains that might arise 
under this proposal.
15. As an option to the national filing window approach, the Notice discussed 
limiting eligibility to file hi the first window to existing licensees and system operators who, 
at the time the application is filed, are operating with a certain minimum number of 
channels. Notice at 7673. In many situations, the acquisition of a small number of
21 47 C.F.R. § 21.902. In another order, also adopted today, the Commission amends 
47 C.F.R. § 21.902, to expand the protected service area for authorized or previously 
proposed MDS facilities. Second Order on Reconsideration at 11 2-31.
9597
additional channels may be essential for launching a whole new .wireless cable system in a 
given area. This approach would allow existing wireless cable operators to accumulate the 
critical mass of channels necessary to operate competitive wireless cable systems. We asked 
commenters favoring this option to suggest eligibility requirements to govern the filing of 
applications in this first window.
16. Comments. There is no consensus in the comments as to which filing approach 
we should adopt for new MDS stations. The majority of the commenting parties express 
support for the national filing window approach. Of these, most favor a first window limited 
to existing licensees and operators, and some commenters advocate such a preference 
regardless of the filing approach. A few of the commenters support the Notice's preferred 
approach of filing applications for predetermined geographic areas; however, they disagree as 
to the appropriate type and size of service areas. The commenters who discussed the 
approach that would restrict applications to Commission-identified sites where there are 
vacant E, F or H channels available generally oppose that concept. Others suggest additional 
options, such as an MDS allotment plan, or variations of the alternatives proposed in the 
Notice, such as a national filing window coupled with short-form applications or a first 
window limited to existing operators with subsequent windows for remaining MDS channels 
licensed by MSAs and RSAs. Several parties provided additional suggestions for filing 
procedures, not discussed in the Notice.
17. Crowell & Moring, Pacific Telesis Enhanced Services (PacTel), the Rural 
Wireless Cable Coalition (Rural Wireless) and CAI Wireless Systems, Inc. (CAI Wireless) 
favor the Notice's preferred filing approach where the boundary of the geographic area 
becomes the protected service area.22 They agree with the Notice that an approach based 
upon predetermined geographic areas provides the most efficient system for disseminating 
MDS licenses. In particular, Crowell & Moring prefers this approach over site-by-site 
licensing because geographic licensing is easier to administer, it achieves the most efficient 
use of the spectrum, it eliminates daisy-chains (interlinking application proposals at different 
locations), and it avoids burdensome litigation. Crowell & Moring believes that failure to 
adopt a geographic area licensing approach would leave MDS at a serious competitive 
disadvantage compared with Local Multipoint Distribution Service (LMDS) which proposes 
to license by BTAs and Interactive Video and Data Service (TVDS) which licenses by MSAs 
and RSAs. PacTel maintains that the licenses would be awarded to those who value them 
most, and the auction winner would be more likely to be a viable competitor to wired cable. 
Crowell & Moring and PacTel prefer using ADIs as the basis for MDS service areas because 
ADIs are of sufficient size to allow a large subscriber base, improving the value of
22 See Comments of Crowell & Moring at 2-10; PacTel at 2-3; CAI Wireless at 4-6; 
Rural Wireless at 9-10; Reply Comments of Crowell & Moring at 2-12; CAI Wireless at 
8-12; Rural Wireless at 6-9. Rural Wireless includes Central Texas Wireless TV, Inc., 
Adams Telcom, Inc., Leaco Rural Telephone Cooperative, Inc., Delhi Telephone Company 
and Valley Telephone Cooperative, Inc.
9598
advertising and allowing more effective competition with wired cable, and because there are 
more usable channels than available in MSAs and RSAs, ADI auctions would attract more 
bidders. Rural Wireless believes that MSAs would be attractive to larger companies and 
RSAs would be more affordable to small operators, such as rural telephone companies, 
encouraging participation by a variety of service providers. Rural Wireless recommends that 
the auction winner have the option to partition unused portions of the service area. 
Partitioning, according to Rural Wireless, would give rural telephone companies a 
meaningful opportunity to acquire MDS licenses, thereby introducing or improving wireless 
cable to rural areas, many of which have no other source of multichannel video 
programming. CAI Wireless supports using MSAs and RSAs for licensing only after a first 
window for existing operators and recommends that the protected service areas be made 
coterminous with the boundaries of the MSAs and RSAs only after digital compression 
technologies are introduced.23 Finally, Crowell & Moring requests that the Commission 
modify its rules to allow the licensee of a geographic area to apply for unused ITFS 
frequencies anywhere within the protected service area.
18. Numerous commenters oppose geographic licensing where the protected service 
areas of the MDS stations are coterminous with the boundaries of the geographic areas. 
Essentially, they present five interrelated arguments in opposition to this approach. First, 
many commenters assert that such an approach places limits on an operator's flexibility to 
design a system. For example, American Telecasting, Inc. (American Telecasting) explains 
that wireless cable operators select their locations based on where they already have systems, 
the absence of cable service, the presence of poor cable service or other business reasons 
inconsistent with political boundaries. Comments of American Telecasting at 17. Second, a 
few commenters assert that the MDS analog technology, unlike cellular technology, does not 
permit a wireless cable system to provide service throughout a designated area without 
significant leakage into adjacent service areas. According to the Association, if a system is 
designed to maximize coverage of a given geographic area, it will leak significant signal 
levels into a neighboring area, and if a system reduces its signal to prevent leakage, the 
operator loses its flexibility to maximize population coverage. Comments of Association at 
39-40. The Association points out that while it may be possible to design a wireless cable 
system without leakage into adjacent areas after conversion to digital technology, the most 
optimistic estimate for availability of digital compression equipment in quantity is the first 
quarter of 1996. Comments of Association at 3-4. Third, several commenters emphasize 
that the sizes of some areas are inappropriate for the MDS service and may cause delays in 
the introduction of service in many markets. For example, American Telecasting asserts that
23 Digital compression is a technology that employs various techniques to reduce the 
number of bits required to transmit a program. For a given channel bandwidth and digital 
transmission rate, an operator may, depending on circumstances, transmit a single 
uncompressed program or multiple compressed programs. For example, a six-to-one 
compression ratio permits the operator to offer six program channels over one 6 MHz 
channel that would accommodate only one uncompressed program.
9599
area boundaries have nothing to do with wireless cable service areas, that ADIs tend to be 
much larger than wireless cable service areas, that MSAs can be larger or smaller than 
wireless cable service areas and that BTAs are an equally poor methodology. Comments of 
American Telecasting at 18. The Richard L. Vega Group (Vega) indicates that the irregular 
market boundaries of MSAs, RSAs, BTAs, MTAs and ADIs are unfit for MDS. Comments 
of Vega at 2-4. The Association asserts that if the Commission utilizes large geographic 
areas, such as ADIs, it must afford an opportunity for entities to enter into bidding consortia 
and partition the ADI among themselves. The Association further asserts that if channels are 
auctioned by geographic areas, the use of simultaneous multiple round bidding would allow 
applicants to bid for adjacent markets and design systems to maximize population coverage 
beyond boundaries. Comments of Association at 34-37. Fourth, several commenters believe 
that area-based licensing is inconsistent with the licensing of ITFS facilities.24 Specifically, 
some contend that the protected service area for MDS and ITFS should be coterminous to 
ensure adequate protection for all of a wireless cable operator's channels. Other parties 
argue that a licensing system based on geographic areas would result in newly authorized 
systems that are different and most likely incompatible with previously authorized MDS 
facilities, making it difficult for incumbent operators to add channels to their systems. The 
Association is concerned about the level of protection incumbent licensees will have and their 
flexibility to upgrade their facilities in the future. Finally, many commenters believe that a 
licensing system based on geographic areas will attract speculative applications because of the 
simplicity of the short-form and because it is easier for unscrupulous marketers to sell an 
already defined market area. For example, Hardin and Associates, Inc. (Hardin) is 
concerned that applicants may be deceived into bidding on an area that appears to be 
profitable, only to discover after the auction that the area is worthless because of the harmful 
interference from existing stations. Comments of Hardin at 5.
19. Two commenters support the approach which would require the Commission to 
identify sites based upon the location of an already authorized E, F or H channel, but only as 
a second option. See Comments of Hardin at 7; Association at 45-47. For example, Hardin 
contends that this approach, when compared to the geographic licensing approach, is more 
likely to result in constructed stations that coexist with surrounding stations in an 
environment free of interference. Hardin and the Association, however, along with the many 
opponents of this approach, identify several problems with such an approach.25 They contend 
that it limits the operator's flexibility to design a system, it falsely assumes that the
24 See Comments of Association at 41; Caritas Telecommunications (Caritas) at 2; Reply 
Comments of Humanities Instructional Television Educational Center, Inc. (Humanities) at 1; 
University of Arizona at 1; People's Choice TV Corp. at 2; Region IV Education Service 
Center (Region IV) at 1; University of Maryland at 1; American Telecasting at 20; National 
ITFS Association (National ITFS) at 3-4.
25 Id.; See also Comments of CAI Wireless at 7-8; Dalager Engineering Company 
(Dalager) at 2; Marshall Communications, Inc. (Marshall) at 5; Vega at 6.
9600
previously authorized E, F and H cliannels are going to be constructed where previously 
proposed, and it would require the Commission to make subjective choices between sites.
20. The commenting parties who support adoption of the national filing window 
approach assert similar arguments.26 The Association, for example, states that the national 
filing window approach is best because it allows licensees to continue to self-select their 
protected service area through station location and design, and implementation of an 
electronic filing system will eliminate much of the delay associated with site-specific 
licensing. Marshall believes that a national window would result in better coverage for 
populated areas while minimizing harmful interference, as topography and demographics are 
considered when choosing a station location. Heartland believes that implementation of this 
approach would be much less disruptive to the wireless cable industry, stating that although it 
is a slower process, a whole new complicated licensing process would take longer. Hardin 
believes that a national filing window would generate applicants that are genuinely interested 
because a detailed engineering analysis is required prior to submitting a long-form application 
for competitive bidding. Dalager and ACS Enterprises, et al., suggest that daisy-chains be 
resolved by multi-part auctions, determining the auction winner and dismissing any mutually 
exclusive applications and repeating the process with the remaining applicants. Opponents 
contend that the national window site-by-site licensing approach is administratively complex, 
increases the possibility of daisy-chains, encourages litigation and thus, would delay the 
development of new and improved wireless cable service. For example, Rural Wireless 
states that because this approach has no geographic restrictions, the Commission would be 
forced to expend an inordinate amount of resources to resolve daisy-chains and determine 
which mutually exclusive applicants should be placed in the same auction.
21. Of the commenters advocating adoption of the national filing window, a majority 
favor first window eligibility limited to existing MDS licensees and system operators, with 
several variations on the specific eligibility requirements. For example, the Association 
believes that the eligibility restriction should be based upon the number of channels necessary 
to succeed. Comments of Association at 25-33. Of those parties supporting the geographic 
licensing approach, three favor a similar preference as part of their licensing scheme. Most
26 See, e.g., Comments of American Telecasting at 12-17; Dalager at 2; Hardin at 7-9; 
Heartland Wireless Communications, Inc. (Heartland) at 5-6; Marshall at 5-6; Mitchell 
Communications Corp. (Mitchell) at 2; National ITFS at 3-4; Vega at 7-9; Sioux Valley 
Rural Television, Inc. at 1-2; United States Wireless Cable, Inc. (U.S. Wireless) at 4; 
Vermont Wireless Cooperative (Vermont Wireless) at 1; Association at 41-44; ACS 
Enterprises, Inc., Baton Rouge Wireless Cable Television, CableMaxx, Inc., Multimedia 
Development Corp., Rapid Choice TV, Inc., Reading Wireless Cable General Partnership, 
Shreveport Wireless Cable Television Partnership, Superchannels of Las Vegas, Inc., 
Wireless Holdings, Inc. and XYZ Microwave Systems, Inc. (ACS Enterprises, et al.) at 5- 
13; Reply Comments of Association at 19-23; Cross Country Wireless, Inc. (Cross Country) 
at 3; Multi-Micro, Inc. (Multi-Micro) at 2; Applied Video Technologies, Inc. at 2-3.
9601
of the parties advocating first window eligibility are either MDS licensees or wireless cable 
operators. The Association and CAI Wireless believe that this approach will permit the 
Commission to devote scarce processing resources to those in the best position to 
immediately introduce competition into the marketplace. CAI Wireless emphasizes that 
limiting eligibility will deter speculative, fraudulent and anticompetitive applicants. 
Heartland, Vermont Wireless and Multi-Micro assert that existing operators have made 
substantial investments in the wireless cable industry, they built on the expectation of 
eventually acquiring additional channels and they deserve an opportunity to complete their 
systems to effectively compete with wired cable. American Telecasting argues mat this type 
of preference would satisfy the Commission's goal to allow operators to enhance their service 
more rapidly and thus, accelerate competition to cable. In opposition, Dalager argues that 
such a preference is unfair to ineligible individuals who have waited patiently for the 
Commission to lift the freeze, and it is unnecessary because the channels in a specific area 
are worth more to the local operator than anyone else and the marketplace will place a value 
on them at auction. PacTel agrees that licenses should be awarded to those who value them 
most and giving licensees and operators a preference creates the potential for unjust 
enrichment due to the relatively small number of potential bidders. Vega argues that an 
initial window for incumbents discriminates against new entrants to the MDS industry.
22. A few of the commenting parties express their support for different filing 
proposals that were not raised in the Notice, du Treil, Lundin & Rackley, Inc. (du Treil) 
proposes that the Commission develop a comprehensive allotment plan for specific 
communities across the entire country, with a 50-mile separation and competitive bidding by 
market. Comments of du Treil at 1-4. Vega and ACS Enterprises, et al. propose a national 
filing window approach with short-form applications. Vega's proposal would use a 50-mile 
separation to identify mutually exclusive applications for competitive bidding purposes and 
would only require a certification on the short-form application indicating that the necessary 
interference studies were conducted and ACS Enterprises, et al., would require technical 
information on its recommended short-form application, including the specific channels, 
proposed site coordinates, antenna height, polarization and power. Comments of Vega at 
7-9; ACS Enterprises, et al. at 12-13. CAI Wireless proposes a first window limited to 
existing operators followed by windows for the remaining MDS channels licensed by MSA 
and RSA, permitting auction winners to file long-form applications to operate facilities 
anywhere in the service area and mutually exclusive applicants in the boundary areas that are 
unable to negotiate interference rights would participate hi a second auction restricted to the 
channels in the boundary areas. Comments of CAI Wireless at 2-6.
23. Several commenting parties set forth other proposals to enhance processing 
efficiencies or otherwise improve service to the public. For instance, the definition for 
protected service area is an issue of vital importance to the industry and several of the 
commenters indicate that the current interference protection rule which protects an area 
within 15 miles of a transmitter site or more generally, 710 square miles, fails to adequately
9602
protect existing service from MDS stations. See 47 C.F.R. § 21.902(d).27 Some 
commenters also believe that an expanded protected service area would deter speculators. 
They specifically recommend adoption of an approach based on the service capabilities of 
each station, as proposed by the Association in its Petition for Partial Reconsideration in 
Gen. Docket No. 90-54 and reiterated in its Comments in this proceeding.28 Other parties 
argue that the MDS and ITFS protected areas should be identical and a few others contend 
that there should be no change in the: rule. U.S. Wireless believes that automatic forfeiture 
of a license under 47 C.F.R. § 21.44 should be eliminated because it subjects MDS 
conditional licensees and lessees to undue hardship. Reply Comments of U.S. Wireless at 
3-4. Several parties urge the Commission to eliminate the application backlog and improve 
the accuracy of the data base before accepting any new applications, and others recommend 
additional safeguards against abuse of the Commission's processes including ways to deter 
speculators and prevent the warehousing of channels, such as the proposal by U.S. Wireless 
to adopt a finder's preference for reporting unconstructed channels.
24. Resolution: After careful consideration of the merits of the various proposals we 
raised in the Notice, we continue to prefer a filing approach where applicants file short-form 
applications and auction winners file long-form applications. We have decided that BTAs are 
the most appropriate geographic area for MDS. The boundaries of each geographic area, 
with the exceptions of channels obtained through leases with ITFS licensees, will become the 
protected service area for the auction winner. The auction winners will be issued 
authorizations for specific geographic areas and will be permitted to operate one or more 
MDS transmitting stations and signal boosters anywhere inside the service area, provided the 
specific engineering design meets the Commission's interference protection standards to all 
authorized or previously proposed MDS and ITFS facilities, and complies with the limits we 
establish for signal strength along the perimeter of the geographic area. See infra at 
W 50-53. Following the auction, there would be a five year build-out period in which an 
authorization holder can expand service or initiate new service within their area without 
competing applications. The authorisation holder will also be permitted to partition its area 
along established geopolitical boundaries and enter into contracts with eligible parties, 
allowing such parties to file long-form applications for usable MDS channels within that
27 This issue is being addressed in a separate order adopted by the Commission today. 
Second Order on Reconsideration, at tf 2-31. A number of commenters request that the 
Commission reduce the 120-day publiic notice period afforded ITFS licensees and permittees 
under 47 C.F.R. § 21.902(i)(6), to file petitions to deny MDS applications for new and 
modified stations. Hardin and Marshall suggest the Commission adopt a rule requiring the 
use of frequency offset transmitters to reduce cochannel interference. These issues are also 
addressed in the Second Order on Reconsideration, at f5 32-53.
28 Supra at n.5; Comments of Association at 20-25. See, e.g., Comments of American 
Telecasting at 23; Reply Comments of CAI Wireless at 2; Hardin at 2-3; Cross Country; 
Humanities; Multi-Micro; University of Arizona; Region IV; University of Maryland.
9603
partitioned area. See infra at 11 46-47. This will permit broad participation from entities of 
all sizes. This framework provides the most efficient system of disseminating MDS licenses 
because service areas are easily identified and authorizations are promptly granted with 
minimal administrative or judicial delays. This approach will also provide operators 
sufficient flexibility to design systems that satisfy consumer demand.
25. We emphasize that there is no perfect or simple filing approach to adopt at this 
time for new MDS authorizations given the history of the service, the characteristics of the 
technologies involved, the implementation of competitive bidding procedures, and our goal to 
rapidly enhance wireless cable systems as viable competitors in the multichannel video 
marketplace. We also reiterate that MDS is a heavily encumbered service. Although 
conditional licenses in some markets for one or more channels have been forfeited for failure 
to comply with express conditions or to timely construct, in a majority of the markets only 
small portions are unserved and few channels are available. Of the thirteen MDS channels, 
it is possible that no channel remains available for prospective bidders for as many as 59 of 
the cities of the top 100 ranked television markets. There are possibly two or less channels 
available in as many as 90 percent of these market cities. Moreover, the fixed 35-mile 
protected service areas of MDS incumbents, adopted today in a separate proceeding, will 
occupy substantial portions of most BTAs and typically cross BTA boundaries, especially in 
the eastern half of the country where BTAs are relatively geographically smaller. By 
enabling incumbents to continue providing interference-free service to subscribers within the 
expanded 35-mile areas, it is likely that in a substantial number of BTAs, it may be difficult, 
if not impossible, for an auction winner to locate a station anywhere in the BTA to provide 
both interference-free service and the necessary interference protection to protected areas of 
incumbents; unless either the auction winner is the incumbent, negotiates an interference 
agreement with the incumbent or would acquire the authorization of the incumbent.29 We 
emphasize that prospective bidders must carefully ascertain the extent of incumbent 
operations and authorized but unconstructed facilities in any BTAs prior to bidding. Further, 
where there remains outstanding at the time of auction a pending application, petition for 
reconsideration, reinstatement request or application for review affecting any BTA, winning 
bidders would acquire any authorization conditioned upon the outcome of Commission 
actions on such applications or pleadings. Prospective bidders must consider the total impact 
of incumbents in their valuation of the auction areas for competitive bidding purposes.
26. With regard to the definition of the service area to be authorized for MDS, we 
conclude that issuing authorizations by Basic Trading Areas (BTA) reflects the best balance 
of competing considerations. We considered several service area options including
29 In assessing MDS channel availability, we assumed that each authorized or previously 
proposed MDS station has a protected service area of 35 miles, i.e., the expanded service 
area adopted today in a related order. Second Order on Reconsideration.
9604
Metropolitan Statistical Areas (MSA) and Rural Service Areas (RSA),30 the television Areas 
of Dominant Influence (ADI) and the analytically similar Designated Market Areas (DMA),31 
Basic Trading Areas (BTA) and a combination of service areas that vary in size. The record 
reflects that because many MSAs are much smaller than actual service areas existing today, 
wireless cable stations licensed to different entities hi adjacent MSAs would have great 
difficulty providing service to their MSA without causing harmful interference to systems in 
adjacent areas.32 In some cases, operators who designed their systems to maximize 
population, are serving subscribers located beyond the MSA in which the transmission 
facilities are located.33 Furthermore, the record indicates that the use of MSAs and RSAs 
would result in unnecessary fragmentation of natural markets and in order to protect the 
boundaries of adjacent MSAs and RSAs, in many cases, stations would have to operate at 
extremely low levels of power. While simultaneous multiple round bidding would permit the 
consolidation of interdependent MSAs and RSAs, and licensees could acquire additional 
markets after auctions through the zissignment and transfer process, we believe that these 
options may result in unproductive regulatory and transaction costs for the Commission and 
applicants. We believe that the use of larger service areas would alleviate these problems 
and would reduce the need for and cost of interference coordination between neighboring 
licensees.
27. ADIs and DMAs, on the other hand, tend to be much larger than the area in 
which reliable MDS service is available using today's technology. American Telecasting 
indicates that ADIs tend to be over seven tunes the size of actual wireless cable protected 
service areas (of 710 square miles) and therefore concludes that ADIs are the least 
appropriate service area for MDS. It explains that ADIs are designed for television 
advertising measurement purposes and unlike wireless cable, the signal of television stations 
and hence the size of ADIs are attributed to cable carriage of television signals. Comments 
of American Telecasting at 18. Furthermore, the cost of acquiring an ADI authorization 
through competitive bidding, building systems and marketing services in the larger ADIs may 
unnecessarily restrict entry to a small number of applicants. BTAs offer a compromise in
30 MSAs and RSAs are used by the Commission in licensing cellular radio systems. All 
of the 306 MSAs and 428 RSAs ami the counties they comprise are listed in Public Notice, 
Report No. CL-92-40, "Common Carrier Public Mobile Services Information, Cellular 
MSA/RSA Markets and Counties," 7 FCC Red 742 (1992). See also 47 C.F.R. § 22.909.
31 DMAs are standard geograpliic areas developed by A.C. Neilsen Company hi which 
each county in the continental United States is placed within one of the 211 DMAs, the 
lowest numbered DMA having the highest population.
32 See, e.g., Comments of American Telecasting at 18; Marshall at 2-3; Vega at 2-4; 
Association at 35-37; ACS Enterprises, et al. at 6-9.
33 For example, the Association described an existing wireless cable operator in Ohio 
who currently serves subscribers in three different MSAs. Comments of Association at 37.
9605
size that may best approximate MDS service areas. Although varying in geographic shape 
and size, BTAs are bigger than MSAs generally since they often include the MSA and 
surrounding counties, thus mitigating harmful interference among adjacent areas. BTAs offer 
sufficiently large service areas to allow applicants flexibility in designing a system to 
maximize population coverage and take advantage of economies of scale necessary to support 
a successful operation. Yet BTAs are generally smaller than ADIs, making the initial cost of 
acquiring the authorization through competitive bidding lower, and therefore providing 
greater opportunity for participation by small businesses, female and minority entrepreneurs 
and rural telephone companies. The use of BTAs combined with geographic partitioning will 
encourage further participation by a wide variety of applicants. See 47 U.S.C. 
§ 307(j)(4(C). Finally, BTAs provide a manageable number of discrete filing areas for 
competitive bidding purposes.
28. We recognize that the majority of the commenting parties express support for the 
national filing window approach. We believe, however, that using national filing windows 
would most likely result in more of the very substantial processing and administrative delays 
that have long plagued the development of the wireless cable service. Given the history of 
the service, we believe such delays are inherent in site-specific licensing, which would 
require analysis of long-form applications containing the applicant's complete engineering 
proposal before the competitive bidding process begins. Since the national filing window 
approach would likely result in a larger number of mutually exclusive applications and daisy- 
chains, implementation would likely require significant Commission resources and a 
substantial amount of time to conduct the multi-part auctions (to resolve the daisy-chains) 
recommended by some commenters or otherwise complete the competitive bidding process. 
We acknowledge the concerns of some commenters that the licensing approach should afford 
MDS licensees flexibility to locate systems wherever necessary to maximize coverage. The 
record reflects that the success of the wireless cable industry thus far has been based upon 
negotiated agreements with neighboring system operators and strong partnerships with ITFS 
licensees. The filing system and procedures we adopt herein are expected to facilitate such 
negotiations and afford wireless cable operators the flexibility to improve existing systems, 
introduce new systems and implement digital technologies.
29. Indeed, the record indicates that geographic licensing may be the most efficient 
method to these ends in a digital environment, toward which the wireless cable industry is 
moving.34 The nature of digital transmissions will allow more flexibility to tailor signal 
coverage to geographic boundaries using multiple transmitting facilities. We believe that our 
rules will facilitate the transition to digital transmissions. If modification of our rules 
become necessary, we will act promptly to ensure that our rules in no way impede the digital 
future.
34 See Comments of CAI Wireless at 5; Association at 3-4; Reply Comments of CAI 
Wireless at 11; Crowell & Moring at 8.
9606
30. In response to the concern about the protected service areas for MDS (BTAs) and 
ITFS being different, we must emphasize that the two services have differing purposes and 
authorization procedures. One is intended primarily to provide educational and cultural 
development to students enrolled in accredited schools and the authorization is issued to the 
best qualified applicant, while the other is commercial in nature and is subject to competitive 
bidding. Furthermore, unlike MDS stations, the protection afforded to ITFS operators is 
based upon receive sites and protected service area is defined in 47 C.F.R. § 74.903. 
Pursuant to this rule, the protected service area associated with the leasing of excess channel 
capacity will also exjpand to a circle, 35 miles in radius, centered about the transmitter site of 
the ITFS station. We note, however, that hi a recent proceeding we adopted a 35-mile 
protection distance for ITFS receivers, a protection distance that is compatible with many 
BTAs,35 and with the 35-mile protected service area for MDS stations which are authorized 
or previously proposed that we have separately adopted today. Second Order on 
Reconsideration.
31. For the reasons stated above, we believe that licensing by geographic areas is the 
best approach for issuing MDS authorizations. We decide not to adopt the approach 
presented in the Notice limiting applications to predetermined sites identified by the 
Commission based upon the locations of already authorized E, F or H channels where there 
are usable channels. We agree with the commenters that this approach is inflexible. An 
approach in which the Commission identifies the specific site sacrifices the business judgment 
of the operators when they are hi the best position to consider market forces. Further, where 
there is more than one site, the Commission would have to establish criteria for choosing 
among the available locations. In addition, where identified sites are unavailable to the 
highest bidders, the Commission would have to process modification applications, which 
would actually decrease overall processing efficiency and would delay service to the public.
32. We decline to adopt a preference for existing licensees and system operators 
because we believe that, rather than place restrictions on eligibility to participate based upon 
an applicant having access to a minimum number of channels, it is in the public interest to 
encourage participation from a wide: variety of applicants. Indeed, a new entrant into the 
wireless cable industry may place a higher value on the spectrum than an incumbent licensee 
or system operator in a given area. While we recognize that in some areas, the existing 
licensee or operator may be in the best position to immediately introduce competition to 
wired cable, we further believe that a new entrant with sufficient resources will be able to 
accumulate a sufficient critical mass of channels to launch a system hi a market through the 
competitive bidding process and through the assignment or transfer of previously authorized 
channels. Thus, market forces will lead to the accumulation of channels into one operating 
system.
35 Report and Order in MM Docket No. 93-24, 10 FCC Red 2907, 2917.
9607
33. We also decline to adopt the proposals set forth by du Treil, Vega, ACS 
Enterprises, et al. and CAI Wireless. The allotment scheme proposed by du Treil is 
inappropriate for MDS at this point in time because it is a heavily encumbered service. In 
addition, adoption of an allotment proposal would restrict engineering design flexibility. The 
proposals by Vega and ACS Enterprises, et al. to adopt the national filing window with 
short-form applications do not alleviate the delays caused by the likely large number of 
mutually exclusive applications forming daisy-chains. The request by U.S. Wireless to 
eliminate the automatic forfeiture rule is beyond the scope of this proceeding. A number of 
additional proposals were set forth by other commenting parties to otherwise improve the 
MDS filing process or prevent the warehousing of MDS channels, assuming a filing window 
approach was utilized. Essentially, the proposals are unnecessary in light of the 
modifications to our rules adopted hi this proceeding and in the Second Order on 
Reconsideration.
1. Service Areas
34. We therefore will award MDS authorizations for entire BTA service areas under 
competitive bidding procedures. BTAs were designed by Rand McNally to represent the 
natural flow of commerce, comprising areas within which consumers have a community of 
interest. Like the other types of predetermined geographical areas, BTAs vary hi size and 
shape. Typically, a BTA includes a population center(s) (city or large town) and the 
surrounding rural area. BTA boundaries are based on county lines because most statistical 
information relevant to marketing is published in terms of counties. The specific boundaries 
were drawn after a study of several factors, such as physiography, population distribution, 
economic activities, newspaper distribution and transportation facilities.36
35. We note that Rand McNally & Company is the copyright owner of the Basic 
Trading Area and Major Trading Area Listings, which list the counties contained hi each 
BTA, as embodied in Rand McNally's Trading Area System Diskette and geographically 
represented in the map contained hi Rand McNally's Commercial Atlas & Marketing Guide. 
Rand McNally has licensed the use of its copyrighted MTA/BTA listings and maps for 
certain services such as Personal Communications Services (PCS), 800 MHz Specialized 
Mobile Radio Services (SMR) and Local Multipoint Distribution Services (LMDS). Rand 
McNally had also reached an agreement in principle with the American Mobile 
Telecommunications Association (AMTA) for a blanket copyright license for the conditional 
use of the copyrighted material hi the 900 MHz SMR service. These agreements authorize 
the conditional use of Rand McNally's copyrighted material in connection with these 
particular services, require interested persons using the material to include a legend on 
reproductions (as specified hi the license agreement) indicating Rand McNally's ownership, 
and provide for a payment of a license fee to Rand McNally.
36 See Rand McNally 1992 Commercial Atlas & Marketing Guide at 39.
9608
36. Currently, MDS is not covered by any blanket copyright license agreement. 
While current and prospective MDS licensees and other parties interested in using the 
copyrighted materials may negotiate their own licensing arrangement with Rand McNally, as 
in other services, we encourage interested parties and Rand McNally to explore the 
possibility of entering into blanket license agreements similar to those noted above to cover 
MDS. In any event, we note further that an MDS BTA authorization grantee who does not 
obtain a copyright license (either through a blanket license agreement or some other 
arrangement) from Rand McNally for use of the copyrighted material may not rely on grant 
of a BTA-based authorization from the Commission as a defense to any claim of copyright 
infringement brought by Rand McNally against such grantee. The MTA/BTA Listings, the 
MTA/BTA Map and the license agreements noted above are available for public inspection at 
the MDS public reference room, Room 207, 2033 M Street, N.W, Washington, D.C.
37. The Commission will consider awarding the 487 BTA authorizations in the 
United States, with the following additions to be authorized as BTA-like areas: American 
Samoa, Guam, Northern Mariana Islands, San Juan, Puerto Rico, Mayaguez/Aguadilla- 
Ponce, Puerto Rico, and the United States Virgin Islands. Thus, a total of 493 authorizations 
will encompass all land areas within the United States and related territory. We reiterate 
that, based on its geographic size, and the extent of encumbrances, it may not be possible in 
a particular BTA to design and select a station site for any MDS station without negotiating 
an agreement with one or more affected previously authorized or proposed, cochannel or 
adjacent channel MDS or ITFS stations. However, we are going to hold auctions initially 
for all BTAs for which mutually exclusive, short-form applications are filed. The 
Commission will announce the time and place of the auction and the applicable bidding 
procedures by a future public notice. Applicants wishing to participate in the auction process 
will file a short-form application indicating each BTA service area for which they desire to 
bid. To determine eligibility to apply for a BTA service area, we will apply the same 
general eligibility requirements for an MDS authorization.37 There is no restriction on the 
number of BTA service areas for wliich any entity may apply or on the number of BTA 
authorizations awarded to one entity. Incumbent MDS licensees, conditional licensees and 
applicants and new entrants will be eligible. Accordingly, prospective bidders will be able to 
aggregate adjacent BTAs to utilize economies of scale that currently benefit wired cable 
competitors. Selection from among the mutually exclusive applicants will be determined 
through a simultaneous multiple round bidding process. The auction winner for each BTA 
service area, if qualified, will be awarded a BTA authorization. The protected service area 
lies within the geographic boundary of that BTA, except as excluded by any 35-mile circle 
protected service areas of previously authorized or proposed MDS stations and except for 
channels related to ITFS lease agreements.
37 See 47 C.F.R. §§ 21.4, 21.17, 21.900, 21.912. Because we are amending our rules 
to implement competitive bidding, our rules regarding random selection and comparative 
consideration would not apply to applications for new stations filed after the lifting of the 
freeze. See 47 C.F.R. §§ 21.31, 21.914.
9609
2. Rights and Responsibilities of BTA Authorization Holder
38. The following paragraphs describe the service rules regarding the rights and 
responsibilities of the holder of a BTA authorization, the duration of those rights and how an 
event will alter the boundaries of a protected MDS service area. For purposes of clarity, the 
chronology of the events would occur as follows: (1) the 35-mile protected service areas of 
incumbents will become fixed in place upon the effective date of the Second Order on 
Reconsideration; (2) issuance of public notices announcing auctions by geographic area, and 
specifying the filing periods for short-form applications and upfront payments; (3) issuance of 
a public notice identifying all applicants determined to be qualified to bid (i.e., submitted 
acceptable short-form applications and sufficient upfront payments); (4) competitive bidding 
rounds; (5) after bidding has ended, the Commission would declare bidding closed and would 
notify the auction winners, who would then have five business days to make down payments 
and thirty business days to file at least one long-form application;38 (6) following review of 
the long-form applications, the Commission would issue a public notice identifying those 
accepted and opening a thirty-day period for filing petitions to deny; and (7) if no petitions to 
deny are filed or if they are dismissed or denied, the Commission would issue a public notice 
stating that the BTA authorization and the MDS station license are ready to be issued. 
Assuming that the auction winner made full payment of its winning bid within five business 
days of this public notice, the Commission would grant one or more conditional station 
licenses for individual stations within the auction winner's BTA service area and issue the 
BTA authorization for the entire BTA service area.
a. Description of Authorization
39. The holder of a BTA authorization may file one or more long-form applications 
seeking authority to construct stations anywhere inside their BTA on usable MDS channels, 
provided the specific engineering design meets the Commission's interference protection 
standards to all authorized or previously proposed MDS and ITFS facilities, and complies 
with the prescribed signal strength limits at the BTA boundary, i.e., at all points along the 
perimeter of the BTA. A separate conditional station license will be awarded for each single 
channel or channel group at each site location.39 For example, separate licenses will be
38 If the BTA is so heavily encumbered that the winning bidder is unable to file a long- 
form application for a station within the BTA while protecting incumbents from harmful 
interference, the winning bidder must file a statement of intention of use of the BTA, 
accompanied by a current License Qualification Report (FCC Form 430), before the 
Commission issues the BTA authorization. See infra at ft 152-154.
39 This in no way should be interpreted to reflect on other services where we are 
eliminating site licensing. See Further Notice of Proposed Rule Making in PR Docket No. 
93-144 and PP Docket No. 93-253, FCC 94-271 (released Nov. 4, 1994), 59 Fed. Reg.
9610
issued for the E Group, F Group and each of the three H Channels. In this Report and 
Order, the initial license for the BTA service area will be referred to as a "BTA 
authorization" and individual channels will be separately licensed. Thus, we will distinguish 
between three different types of authorizations for MDS facilities: (1) a "BTA authorization" 
awarded to an auction winner of a particular BTA following the requisite long-form 
application or statement of intention and requisite payment, (2) a "station license for each 
individual station within the BTA" service area held by an auction winner, and (3) a "station 
license" for an MDS facility authorized or previously proposed under the rules predating the 
effective date of this Report and Order. Accordingly, under the Commission's rules, as 
amended herein, the holder of a BTA authorization would file a long-form application for 
each usable single channel or channel group at each transmitter site within the auction 
winner's BTA service area, and will have a later opportunity to file amendments to correct 
any defects in the application. The construction period specified in each conditional station 
license granted for the individual stations within the auction winner's BTA service area will 
be the five year build-out date which runs from the grant date of the first conditional license 
within the auction winner's BTA (granted the same date as the BTA authorization). When 
the portion of the system represented by a particular long-form application is constructed and 
ready to begin operation, the holder of the BTA authorization will file a corresponding 
certification of completion of contraction. The license term for those stations will be the 
same ten-year term as MDS station:; licensed prior to the adoption of this Report and Order. 
See 47 C.F.R. § 21.45. The ten-year term for the new licenses will commence on the date 
the Commission declares bidding in the MDS auction to be closed. The holder of a BTA 
authorization has a protected service area that is coterminous with the boundaries of their 
BTA service area, subject to exclusion of the protected service areas and/or locations of 
authorized or previously proposed MDS and ITFS facilities, as further discussed infra 
in 1 54. Individual station licenses that are a part of a BTA service area will not have a 
uniquely associated protected service area. The common protected service area of all 
individual stations within the BTA authorization will be the boundary of that BTA.
40. We emphasize that the actual service areas can be tailored through voluntary 
agreements among the affected parties. Although our rules indicate that the holders of BTA 
authorizations must locate all transmitter sites within the boundaries of the BTA and may not 
cause interference hi adjacent BTAs, the interference rights may be modified through 
negotiation and written agreement. The MDS station facilities within the auction winner's 
BTA may be expanded or modified throughout the BTA service area so long as the system 
continues to be hi compliance with our technical rules and protects incumbent MDS and 
ITFS facilities. The facilities may be expanded beyond the BTA or into the protected service 
area of an incumbent with an agreement from the entity that controls the adjacent BTA or the 
incumbent protected 35-mile circulair area.
60,111 (Nov. 22, 1994); Second Report and Order and Second Further Notice of Proposed 
Rulemaking in PR Docket No. 89-553, PP Docket No. 93-253, and GN Docket No. 93-252, 
FCC 95-159 (released April 17, 1995), 60 Fed. Reg. 21,987 (May 4, 1995).
9611
41. Consistent with our goal of establishing filing procedures and policies that will 
encourage the accumulation of a full complement of channels necessary for a viable MDS 
system, only the BTA authorization holder will be qualified to submit any new application 
for MDS use of available ITFS frequencies within the BTA in accordance with 47 C.F.R. 
§ 74.990(a), and the ITFS application procedures of § 74.991. ITFS station licensees and 
prospective ITFS applicants that seek to construct and operate new ITFS facilities located 
within a BTA and that choose to lease excess channel capacity will be free to negotiate with 
any potential lessee, including the holder of the BTA. In furtherance of our goal of 
accumulating a full complement of channels, however, the holder of the BTA will be 
afforded the right to match the final offer of any proposed lessee. Should the holder of the 
BTA decline to exercise such right, then the ITFS applicant can enter into a lease 
arrangement with any operator it so chooses. This is not intended to interfere with present 
contractual rights that are in effect or renewal of those rights. In the case where a BTA 
authorization holder is the licensee of ITFS channels, the associated protected service area 
will be the entire BTA, and interference protection will be governed in the manner for 
protecting BTA service on MDS channels. However, in the case where a BTA authorization 
holder leases excess channel capacity from an ITFS licensee, the protected area will be a 
35-mile circle centered around the particular ITFS station in the BTA that leases the 
channels. We will afford this area the same protection generally afforded under our ITFS 
rules. BTA authorization holders in adjacent BTAs must protect points on the 35-mile circle 
using cochannel and adjacent channel desired-to-undesired signal strength ratios of 45 dB and 
0 dB, respectively. A special case will occur whenever BTA authorization holders in 
adjacent BTAs both lease the same ITFS channel group, such that the 35-mile protected 
circle of each extends into the BTA of the other. In this regard, we will expect the 
respective ITFS entities and BTA holders to reach an agreement concerning interference 
protection near their common boundary. Moreover, a BTA authorization holder will not be 
required to protect that portion of the 35-mile circle associated with the other authorization 
holder that falls on his or her side of the boundary. We believe that this approach will 
promote our policy objectives for this service and will similarly have only a positive effect 
on the continued successful development of ITFS with the ever expanding financial support 
for that service provided by wireless cable operators.
42. The available MDS spectrum within a BTA authorization will increase if the 
unconstructed facilities or unused channels held by an MDS incumbent with transmitter site 
locations within a particular BTA are forfeited or if previously proposed conditional licenses 
or modifications are not granted. The holders of the BTA authorizations obtain contingent 
rights to this spectrum when they receive their authorizations, so that the forfeited channels 
will revert and become part of the BTA authorization up to the boundary of the BTA. The 
holder of the BTA authorization may, subsequently file long-form applications for the 
forfeited channels, provided the specific station design meets the Commission's interference 
protection standards. Such a policy provides an incentive for the holders of BTA 
authorizations to find and document such warehousing violations, resulting in efficient use of 
fallow spectrum. In addition, authorization rights may be revoked or terminated because of 
gross misconduct, misrepresentation or bad faith by an applicant. Other events may also
9612
change the protected service area, such as the end of the five year build-out period, an 
assignment or transfer or partitioning of the BTA. These events are discussed in detail 
below.
b. Five Year Build-out Period
43. The build-out period in which the holder of a BTA authorization is permitted to 
expand service or initiate new service within their BTA service area will be five years. 
Specifically, we will provide the BTA authorization holder five years from the grant date of 
the initial BTA authorization to construct and operate the system. The purpose of this 
requirement is to ensure that service is promptly delivered to the public. See 47 U.S.C. 
§ 309(j)(4)(B). This five year build-out period is not extended by the grant of subsequent 
authorizations, such as the grant of a long-form or modification application for an individual 
station within the BTA service area. We will require the holder of a BTA authorization to 
submit a showing to the Commission five years after the BTA authorization was issued 
demonstrating that it is providing a signal level sufficient to provide adequate service to 
approximately two-thirds of the population of the area within its control in the licensed BTA. 
The holder of the BTA authorization must submit maps and other supporting documents 
showing compliance with this construction requirement. The Commission, in evaluating the 
showing, may consider line-of-sight obstructions and the ability to provide service without 
causing harmful interference to other MDS or ITFS facilities. If the holder of the BTA fails 
to cover any of the BTA, it will forfeit the authorization and it will be ineligible to regain it. 
If the Commission determines that there are usable channels in an unserved or underserved 
area of the BTA, the Commission would partition the area along geopolitical boundaries and 
issue a public notice establishing the reauction of the partitioned area. This public notice 
would announce the auction or auctions by geographic area, specifying the filing period for 
short-form applications and the applicable bidding procedures. The holder of the BTA will 
forfeit the partitioned service area and will be ineligible to bid on it. We believe that this 
coverage policy is reasonable and will result in the channels being made available to 
applicants who will provide service to the public. We further believe that this will deter the 
warehousing of channels and ensure that the spectrum is being effectively utilized for MDS.
c. Assignment or Transfer of Control
44. The holders of BTA authorizations and MDS incumbents may negotiate mergers, 
buyouts, channel swaps, channel splits or make similar arrangements on a voluntary basis, 
pursuant to the general assignment and transfer provisions of 47 C.F.R. § 21.38. Both 
parties are generally permitted to buy from and sell authorizations to each other and to third 
parties, with few limitations.
45. Additional spectrum may be acquired by the holder of a BTA authorization 
through buyouts of incumbent licensees within their authorized BTA service area. As is the 
case with ITFS licensees, wireless cable operators may also acquire spectrum through leasing 
agreements with incumbents. In this case, the protected service area of the acquired station
9613
will extend to the BTA boundary or the existing 35-mile protected circular area (from the 
incumbent), whichever is larger. The holder of the BTA authorization may assign or transfer 
control of its entire BTA, which will include all authorized stations, subject to the unjust 
enrichment provisions for designated entities. See infra at W 183, 189. Such an assignment 
or transfer of an entire BTA may also include unserved areas so long as the five year 
build-out period has not expired. If a BTA authorization is assigned or transferred, the new 
holder of the BTA authorization is held to the original build-out period. The holder of the 
BTA authorization may also partition portions of the BTA along geopolitical boundaries 
under our partitioning rules, discussed below, and contract with eligible parties, allowing 
such parties to file long-form applications for the usable MDS channels within that area. We 
believe that allowing the partitioning of portions of the BTA service area will encourage 
provision of service to rural areas, which will promote the most efficient use of the 
spectrum. See 47 U.S.C. § 309(j)(3)(A) (instructing the Commission to promote the 
development and rapid deployment of new technologies, products, and services for the 
benefit of the public, including those residing in rural areas).
d. Partitioning
46. During the five year build-out period, we will permit the holder of a BTA 
authorization to partition portions of its BTA authorization and enter into contracts with 
eligible parties, allowing such parties to file long-form applications for the usable MDS 
channels within that partitioned area. The BTA may be partitioned along geopolitical 
boundaries, and the Commission may grant such applications, provided they are in 
compliance with the rules. Also, a holder of a BTA authorization will be permitted to add to 
its service area by acquiring a partitioned service area from the holder of an adjacent BTA. 
Following grant of such an application, the authorization will be referred to as "partitioned 
service area." The holder of a partitioned service area would, in effect, then hold something 
similar to a BTA authorization for the partitioned area. The protected service area will 
become or expand to the boundaries partitioned along the designated geopolitical boundaries 
and the same technical rules will apply, including the limiting signal strength at the 
boundaries of the partitioned area. Accordingly, the construction period for the partitioned 
service area will be the remaining portion of the five year build-out period and at the end of 
this five year period, the holder of the partitioned service area must demonstrate that it is 
providing substantial service to the partitioned area. Once construction is complete, the 
license term will run ten years from the date the Commission declared bidding in the MDS 
auction to be closed.
47. We agree with Rural Wireless that allowing holders of the BTA authorizations to 
partition will facilitate the provision of service to small markets and rural areas, some which 
currently have no source of multichannel video programming.40 Partitioning will also
40 Comments of Rural Wireless at 10; See also Reply Comments of Rural Wireless at 8; 
National Telephone Cooperative Association (Telephone Cooperative) at 3.
9614
promote the most efficient use of the spectrum and encourage participation by a wide variety 
of entities, including small businesses, rural telephone companies, and businesses owned by 
members of minority groups and women. See 47 U.S.C. §§ 309(j)(3)(B), (3)(D) and (4)(C).
e. Technical Rights and Responsibilities
48. In determining interference protection standards and other technical provisions 
under this new approach to MDS authorization of service, our objectives are two-fold: (1) to 
provide maximum flexibility to allow both new BTA authorization holders and current MDS 
licensees, conditional licensees, and applicants to develop and expand service in the most 
rapid and economically feasible manner, and (2) to assure that the introduction of new MDS 
service will not result in objectionable interference to the services of incumbent stations and 
will minimize in so far as possible ithe extent of potential interference within BTA service 
areas. These objectives and the provisions herein take into account the extent to which the 
current service has been built around successful negotiations among neighboring operators 
and/or licensees, as well as prospective operators and licensees. We fully expect this spirit 
of cooperation and accommodation to continue and, while we will adopt interference 
protection provisions for BTA and iincumbent service, we will allow and indeed encourage 
the holders of BTA authorizations and incumbents to work out mutually agreeable 
interference concerns with other potentially affected parties whenever possible.
49. As a result of this Report and Order and a separate MDS order we are adopting 
today, protected service areas for BTA authorization holders and MDS incumbents will be 
defined differently. Second Order on Reconsideration at 11 2-31. We believe this approach 
will best facilitate the full development of incumbent wireless cable systems, many of which 
already have secured the desired transmitting site, and serve subscribers within a 
metropolitan area from a single site. In addition, this approach may allow the rapid 
expansion of new MDS service into other unserved portions of BTAs. We adopt an idea 
contemplated in the Notice, that the perimeter of a predetermined geographic area (BTA) 
generally defines its protected area. The holders of BTA authorizations will not be permitted 
to cause interference within the boundaries of an adjacent BTA, without the consent of the 
affected authorization holder. When such interference occurs, an offending party will be 
expected to act promptly to eliminate any unwanted interference in another operator's BTA.
50. Interference among adjacent BTA operators will be partially controlled by 
establishing an allowable limit for 21 station's predicted signal strength at all points along a 
BTA boundary. The same limiting signal strength will apply at the boundaries of every 
BTA, regardless of its size or shape. An exception to this limit would be justified where a 
single entity obtains authorization for adjacent BTAs. While we recognize that several 
commenting parties are concerned that an MDS signal simply does not stop at the area 
boundary, we believe the level of Limiting signal strength given below, together with the 
multitude of available interference abatement techniques, will facilitate control of interference 
between BTA authorization holders in adjoining BTAs. Interference levels to BTA holders 
from MDS incumbent stations will be partially governed by establishing the same maximum
9615
allowable signal strength along the boundary of incumbents' 35-mile circular areas, the 
expanded area provided in the Second Order on Reconsideration.
51. At first glance, it would appear that the approach to interference control between 
adjacent BTAs would be ineffective, given that the levels of desired (D) and undesired (U) 
could be the same at the common boundary between BTAs. The resulting desired-to- 
undesired signal strength ratio (D/U) of 0 dB falls well below the 45 dB standard now 
governing interference between MDS stations operating on the same channel. However, 
taking the signal suppressing affects of receiving antennas into account and further assuming 
that the desired and undesired signals are coming from opposite sides of the BTA boundary, 
the D/U ratio improves to as much as 25 dB. If we further expect that in most cases, 
stations on opposite sides of the boundary would operate with different antenna polarizations, 
then the D/U ratio further improves to 45 dB. These numbers are based on the 
characteristics of the standard MDS receiving antenna found in 47 C.F.R. § 21.902(f). 
Alternatively, station operators on opposite sides of a BTA boundary may design their 
facilities with agreements between affected parties to operate on a frequency offset basis, 
with a less restrictive D/U ratio of 28 dB necessary to prevent cochannel interference in this 
situation. Indeed, a host of interference abatement techniques could be employed to prevent 
interference near BTA boundaries. Admittedly, this approach relies more on operator 
interference agreements and the honoring of another's interference rights than it does on 
applying rigid interference standards in the processing of applications. However, if we were 
to mandate strict compliance with the 45 dB cochannel and 0 dB adjacent channel D/U signal 
strength ratios (the current MDS interference standards) to protect BTA service at the BTA 
boundary, we believe there would be populated areas within a substantial number of BTAs 
that may never be served due to the irregular sizes and shapes of BTAs. Moreover, as we 
have indicated, given the nature and history of the service, as well as the likelihood that 
auction participants will be experienced in conducting negotiations, we believe that we can 
prevent unwanted interference by relying primarily on negotiated agreements and voluntary 
compliance with our interference right-of-ways, which we will enforce as necessary. Thus, 
we consider our limitation of signal strength at the BTA boundaries and incumbent service 
areas as a secondary means of interference protection.
52. Inasmuch as incumbent stations lie within BTAs and authorized BTA stations will 
not have their own protected service areas, interference from incumbent stations can only be 
governed by agreements between affected parties, and indirectly, by placing a limiting value 
on the strength of the signal at the boundary of incumbent MDS stations. A signal strength, 
regardless of its numerical value, will not by itself eliminate the potential for interference 
from incumbent stations. Terrain shielding, and other abatement techniques will also be 
helpful in this regard; however, the most effective means of controlling interference will be 
the agreements between BTA authorization holders and incumbent MDS licensees, which for 
example, may stipulate that an incumbent utilize a directional antenna pointed away from the 
affected BTA.
9616
53. We have selected as the; limiting signal strength a power flux density value of 
- 73 dBw/m2. This value corresponds to a received power level of approximately - 83 dBw 
(decibels above 1 watt) or - S3 dBm (decibels above 1 milliwatt), given a receiver antenna 
with a maximum gain of 20 dBi. A power flux density value is used because "free space" 
propagation is the model long used in the MDS service. This variable depends only on the 
level of power radiated from a transmitting antenna and the distance between the transmitting 
and receiving locations. The value of - 73 dBw/m2 was selected because it is the "free 
space" value of power flux density achieved with an equivalent isotropically radiated power 
(EIRP) of 2,000 watts (the maximum allowable EIRP in the MDS service where omni 
directional antennas are used) at a distance separation of 35 miles. This numerical value is 
stronger than the power flux density achieved under standards used hi the MDS service for 
many years, i.e. , a value of - 75.6 dBw/m2 is achieved with 200 watts of EIRP at a distance 
of 15 miles. Moreover, based on tide record in the Second Order on Reconsideration, it is 
clear that many wireless cable systems serve a substantial subscriber base at distances of 
35 miles or even greater. Thus, we conclude that the selection of this value of limiting 
signal strength will generally enable service over unobstructed signal propagation paths at the 
35-mile boundary of an incumbent's transmitting facilities. The ability to achieve this signal 
level at a BTA boundary will vary considerably, depending on the size of the BTA and the 
placement of a transmitting facility. Clearly, because of their large size, service of many 
BTAs will require multiple transmitting facilities.
54. In the Notice we stated our intention not to change the interference protection 
standards applied "at points along title service contours of protected facilities." Notice at 
7674. Accordingly, BTA authorization holders will be required to design their transmitting 
facilities to protect points along the 35-mile circles and points within the protected service 
areas of incumbents' licensed stations, conditionally licensed stations, or previously proposed 
applications. Specifically, stations proposed in BTA long-form applications must meet the 45 
dB and 0 dB cochannel and adjacent channel desired-to-undesired signal strength ratios at the 
boundary of each protected 35-mile circle. We will also continue to use these stricter 
protection standards within incumbents' protected service areas. Unlike BTA service, which 
does not yet exist, incumbent stations have an established subscriber base hi many cities and 
rural areas throughout the country. Wireless cable systems were carefully crafted, both 
through engineering design, site location and negotiation among affected parties, and in 
partial reliance on the Commission's protection standards. To a considerable extent, these 
systems provide interference-free reception to subscribers, many out to distances beyond 35 
miles. Because many wireless cable systems have been serving subscribers well beyond their 
current 710 square mile protected service area, we do not wish to disrupt existing service 
patterns which compete with wired cable systems.
55. The holders of BTA authorizations within 80 kilometers (50 miles) of the 
Canadian or Mexican borders, may only operate on MDS channels pursuant to the 
restrictions in international agreements. Thus, applicants considering authorizations for 
these BTAs should consider the impact of the additional border requirements in their 
valuation of the service areas for competitive bidding purposes.
9617
3. Treatment of Incumbents
56. As we have stated, a principal objective in this proceeding is to allow incumbents 
to continue existing operations without objectionable interference from new MDS operations 
and to allow them sufficient flexibility to modify then* facilities to respond to market forces. 
Expansion of the protected service boundary to 35 miles will increase an incumbents' service 
area from 710 square miles to 3848 square miles, which will allow for the future orderly 
development of wireless cable systems, particularly as digital technology is introduced. 
Second Order on Reconsideration at 5f 2-31.
57. Incumbents, unless they also control the adjacent BTA territory (either as BTA 
authorization holders or through interference agreements) will not be free to expand further 
their service area into the adjacent BTA. The manner we choose to prevent such occurrences 
is to define a limiting power flux density of - 73 dBw/m2, which may not be exceeded at 
points along the 35-mile protected service area. Subject only to this limitation, incumbents 
will be free to file long-form applications at any time to modify their facilities or add 
facilities such as signal boosters. In a small number of cases involving directional antennas, 
an incumbent's power flux density may already exceed - 73 dBw/m2, for signal paths in 
some directions at a distance of 35 miles. In such cases, we would not force the incumbent 
to reduce the signal strength to the allowable limit, nor would we allow the signal level to 
increase. Incumbents who propose to modify their stations must continue to seek prior 
Commission approval pursuant to 47 C.F.R. §§ 21.40 through 21.42, and include any 
agreements with the holder(s) of a BTA authorization(s). All other current rules continue to 
apply to MDS incumbents unless specifically amended.
58. Finally, since the incumbents' 35-mile protected circles will be embedded within 
one or more BTAs, to prevent additional encroachment into a BTA we must at some point 
fix the 35-mile circles around a permanent reference point, absent an interference agreement 
with a BTA authorization holder. Accordingly, on the effective date of the rules adopted in 
the Second Order on Reconsideration, we will permanently fix the location of the protected 
35-mile circles in the following manner. For incumbent licensees with no conditional 
licenses or pending applications, the "protected reference coordinates" will be those of the 
current site. Subsequent changes in site location would be permitted; however, the 35-mile 
circle would remain centered about the previous site coordinates. For incumbents having 
only a conditional license or a new station application pending before the effective date, the 
site coordinates specified for the conditional license or pending application will become the 
reference coordinates. In cases where an incumbent has two or more authorizations and/or 
pending applications on the effective date, the reference coordinates in each authorization 
and/or application will be provisionally treated as the permanent reference coordinates of the 
protected circle. Eventually, pending applications will be disposed of and conditional 
licenses will either become licenses or be forfeited for failure to construct.
9618
4. Alternative Uses of MDS Frequencies
59. The principal use of MDS frequencies is wireless cable service. Under Section 
21.903(a) of the Commission's rules, 47 C.F.R. § 21.903(a), MDS stations are "generally 
intended to provide one-way radio transmission (usually in an omnidirectional pattern) from a 
stationary transmitter to multiple receiving facilities located at fixed points." At the same 
time, our rules permit use of MDS! frequencies for other kinds of services. Section 
21.903(b), 47 C.F.R. § 21.903(b), states that "[u]nless otherwise directed or conditioned in 
the applicable instrument of authorization, Multipoint Distribution Service stations may 
render any kind of communications service consistent with the Commission's rules on a 
common carrier or on a non-common carrier basis . . . ." We wish to emphasize that 
nothing hi this Report and Order precludes either new licensees or incumbents from using 
MDS frequencies for other lands of services pursuant to 47 C.F.R. § 21.903(b). We note, 
however, that such applicants may need to apply for waivers of certain MDS technical rules, 
such as 47 C.F.R. §§ 21.903(a) and 21.906.
B. INTERFERENCE CRITERIA AND DATA ELEMENTS
60. Proposals. As a complement to the filing proposals and electronic procedures, 
the Notice proposed to adopt a technical equation as the basis for the "free space" 
interference protection calculations. The Commission's MDS engineers currently utilize this 
formula and it is recognized by engineering consulting firms in the wireless cable industry:
The received signal power level (RSL)^ at the output of the FCC 
reference receiving ;antenna is obtained from the following: 41
= (FJRPW - (Lps)^ + 
where the free space loss (LpS)dB is 
)dB = 20 log (4ird/X) dB
In these equations, (RSL),^ is received power in decibels referenced to one watt, (FJRP)dBW 
is equivalent isotropically radiated power in decibels above one watt, d is the distance of the 
signal path in meters, X is the wavelength of the signal in meters, and GAR is the gain of the 
reference receiving antenna, as obtained hi 47 C.F.R. § 21.902(f)(3), Figure 1. The Notice 
proposed to formalize the above equations by adopting them as a rule provision as part of a 
plan to implement computerized interference studies. Additionally, the Notice stated that we 
will require proposed facilities to meet the 45 dB and 0 dB cochannel and adjacent channel
41 Leon W. Couch II, Digital and Analog Communication Systems, p. 384 (3rd ed. 
1990).
9619
desired-to-undesired signal strength ratios at points along the service contours of protected 
facilities which were authorized under the current interference standards. With regard to 
long-form applications, we proi oseii to retain the requirement in 47 C.F.R. § 21.902, that an 
applicant perform analyses of the potential for harmful interference and serve such 
interference studies upon the authorized or previously proposed station applicants, conditional 
licensees or licensees required to be studied, but we would not require the submission of a 
list of those served at the time the long-form application was filed. We explained that, on 
the revised long-form application form, the applicant would supply certain crucial data 
elements describing the station parameters, such as antenna polarization and the station EIRP, 
while the Commission staff would perform interference analyses using a computer program. 
The Notice stated that, although the submission of interference or other engineering analyses 
would not be required with the long-form application, we would require the applicant to 
make the records available for Commission inspection upon request. We also questioned in 
the Notice whether we should eliminate signal contour maps as a required part of the 
interference studies.
61. Pursuant to our streamlining effort, the Notice proposed to improve the current 
application form used for new MDS stations, FCC Form 494,42 by excluding certain data 
elements which have yielded information that is no longer necessary or of only marginal 
utility. Specifically, we proposed to eliminate queries regarding the antenna vertical sketch 
and the narrative description of why grant of the application would be hi the public interest. 
We further proposed to exclude the following parameters of the transmission system: 
transmitter manufacturer and model number, transmitter output power, transmitting antenna 
gain and the specification of transmission line and other transmission losses. We observed 
that with regard to transmitters, we are only concerned that MDS licensees operate 
transmitters that are "type-accepted" by the Commission for use in this service. 
Accordingly, we proposed to eliminate the requirement that the applicant identify the 
transmitter make and model, and simply require that the conditional licensee certify that its 
transmitter is "type-accepted" hi its certification of completion of construction, currently 
FCC Form 494A. The MDS rules now provide for a maximum EIRP, rather than a 
maximum value for transmitter output power. See 47 C.F.R. § 21.904. Thus, the Notice 
stated, so long as the EIRP remains within the limits of Section 21.904, it is not necessary to 
require applicants to specify the equipment parameters used to calculate EIRP. The Notice 
also proposed to allow changes to these transmission parameters without notification to the 
Commission, provided the resulting EIRP would not change. The station power to be 
specified on the application form would be the maximum EIRP hi the horizontal plane, i.e., 
the EIRP at an angle of zero degrees in the vertical plane. We proposed to permit electrical 
beam tilting of antennas; however, hi all cases, applicants would be required to specify the 
EIRP in the zero degree vertical (horizontal) plane. Where beam tilting is employed, the 
EIRP at the zero degree vertical angle will be less than the maximum EIRP at the tilt angle,
42 Since Form 494 is a multi-purpose form that is used for other services, to the extent 
that we are proposing changes, we intend to create a different form to be used for MDS.
9620
due to the vertical suppression characteristic of the transmitting antenna. In most instances, 
this value of EIRP closely approximates the power radiated to the radio horizon which is 
most relevant to interference analysis. By proceeding in this manner, we would not need to 
collect data on antenna vertical radiation patterns.
62. The Notice proposed to further modify the long-form application in an effort to 
make the form compatible with an electronic filing system. At the present time, we propose 
to use a new long-form application together with the current FCC Form 430, the Licensee 
Qualification Report. An appendix to the Notice listed data elements and other informational 
items for our proposed new electronic application form, including general, engineering and 
legal elements. For example, we proposed to retain engineering data elements necessary for 
analysis of interference or possible aiir safety hazards, such as transmitting antenna site 
coordinates, EIRP, antenna polarization, site elevation and antenna structure height above 
ground. Other data would be used to verify an applicant's compliance with a particular 
Commission rule, such as When antenna beam width is used to calculate the maximum 
allowable EIRP of a station using a directional transmitting antenna. We also proposed to 
retain applicant responses which demonstrate compliance with a particular statutory 
requirement, such as an environmental assessment.
63. In reference to applicants locating stations in areas where notification or 
coordination with Canada or Mexico is required by international agreement, the Notice 
indicated that these applicants would! be required to submit the following additional technical 
data, which were not proposed as standard data elements in the electronic long-form 
application: transmitter output power, transmitting antenna gain and transmission line loss. 
In addition to the EIRP at a vertical angle of zero degrees, applicants in the border areas will 
be required to specify the maximum EIRP at the vertical angle corresponding to the beam 
tilt. The Notice explained that the additional data requirements could be submitted in a 
textual exhibit to the electronic application or a paper supplement.
64. Comments. Several commenters support use of the proposed interference 
protection calculations and use of a computer-assisted interference program.43 Vega suggests 
that the Commission make the program available to all users. The Association generally 
supports the formula but is concerned that the proposal to require proposed facilities to 
demonstrate compliance with the 45 dB and 0 dB D/U ratios only at points along the 
protected service area contour could prove problematic when terrain shielding protects the 
contour of the protected service area., but not internal points.44 To avoid this problem, the 
Association recommends, the Commission should mandate that when terrain shielding is
43 See, e.g., Comments of Harclin at 11; Mitchell at 3; Vega at 10; Association at 50; 
ACS Enterprises, et al. at 15.
44 The Commission may waive its interference protection rules when it is apparent that 
the signal is blocked by a substantial terrain obstruction, referred to as terrain shielding.
9621
relied upon to demonstrate interference protection at the boundary, an analysis be conducted 
of the potential for interference along the given radial at the point farthest from the desired 
station that is not terrain shielded, if any. Hardin supports use of the formula and points out, 
however, that the Notice fails to address frequency offset and terrain shielding.
65. Dalager, Hammett & Edison, Inc. (Hammett) and Marshall state that the 
proposed interference protection calculations are too simplistic and thus inadequate because 
they fail to consider terrain shielding, frequency offset or cross polarization. Comments of 
Dalager at 3; Hammett at 1-2; Marshall at 8. Hammett further explains that use of EIRP in 
the horizontal plane ignores beam tilt, concluding that many completely sound designs would 
be rejected if this approach is used. Marshall suggests that the free space propagation 
formula be combined with the equation for desired-to-undesired signal strength ratio.
66. Five parties discuss the submission of maps with the engineering proposal in the 
long-form application. Dalager recommends that the Commission examine adjacent channel 
MDS stations only as far as 25 miles away, rather than 100, and cochannel stations only far 
enough out that a signal reaches then* protected area, rather than a mandatory 100 miles. 
Hardin agrees with Marshall's contention that there is no need for 100-mile maps of adjacent 
channel stations and suggests that investigating potential for adjacent channel interference 
within 50 miles should be sufficient.45 Mitchell asserts that signal contour maps, while not a 
requirement, should be encouraged to prove interference free operation because they will 
enhance the acceptability for new applications. Vega agrees with Commission's proposal to 
modify 47 C.F.R. § 21.902(c)(2) and eliminate the map requirement. Hardin requests that 
we standardize the methodology used to demonstrate terrain shielding, suggesting the use of 
shadow maps as the most efficient method.
67. The Association states that the list of proposed data elements and other 
informational items for our proposed new electronic application form, including general, 
engineering and legal elements, appear to be appropriate. We received several specific 
comments in response to our proposal to exclude certain data elements which have yielded 
information that is no longer necessary or of only marginal utility. Caritas agrees with the 
Notice, that transmitter power ratings should no longer be required, but Hammett contends 
that the Commission should not eliminate the requirement that applicants specify the 
parameters used to calculate EIRP. Comments of Caritas at 3; Hammett at 2. Hammett 
believes that the Commission needs the details on how EIRP was calculated because it is 
important to allow others to check the accuracy of claimed EIRP values. Similarly, Vega 
recommends that the Commission retain the antenna vertical profile sketch because it plays 
an important role in the attributes of mounting configurations of a particular MDS facility in 
relationship to other services utilizing the structure and gives general identification of the 
type of structure, which can be particularly helpful under situations such as elaborate
45 This issue is the subject of a petition of reconsideration of Report and Order, 
PR Docket 92-80, 8 FCC Red 1444 (1993).
9622
structure mounting configurations like the Empire State Building. Vega believes that the 
long-form application should retain the questions on detailed technical information, such as 
transmitter type, transmission line loss and/or antenna gain including antenna manufacturer 
and model number, currently requested on Form 494. Caritas agrees with the Commission's 
proposal to retain the notification requirement of cochannel and adjacent channel licensees 
and permittees, and further recommends that applicants maintain application summaries and 
make them available to entities with sites within a 75-mile radius upon request.
68. Some commenters suggested that we eliminate specific requirements. Many 
commenters request elimination of the requirement under 47 C.F.R. § 21.902(i)(3), to serve, 
by certified mail, a copy of the interference analysis on ITFS licensees or permittees, and 
one of those parties requests that we revise Section 21.902(c) to eliminate the requirement to 
file interference studies for previously proposed MDS stations which at one time had been 
informally classified as a lottery loser. Crowell & Moring and CAI Wireless argue that a 
licensee should be permitted to establish transmitter sites anywhere within the boundaries of 
its service area or modify its facilities without prior approval from the Commission, so long 
as the licensee subsequently files the technical details and certifies that the modification 
complies with the interference protection requirements. Comments of Crowell & Moring 
8-9; CAI Wireless at 8. CAI Wireless also suggests that the Commission end its regulation 
of beam benders, multiple transmitter systems and other engineering solutions which expand 
service quickly to underserved areas.
69. Resolution. With some additional clarification, we will adopt the proposals 
raised in the Notice, including the free space equation and the proposed data elements for the 
long-form application. A draft long-form application, FCC Form 304, is attached as 
Appendix D.46 We will develop computer programs that will help to streamline the 
processing of the long-form and modification applications of MDS incumbents and BTA 
authorization holders. A program is being designed that will perform cochannel and adjacent 
channel interference analysis at one degree intervals along the protected 35-mile circle of 
incumbents' authorized stations or protected station proposals. This program, as envisioned, 
will use the Commission's three-second terrain data base to check for unobstructed signal 
paths between the site of the station being studied and points along the incumbent's protected 
contour. For those radials on which line-of-sight conditions do not exist, either due to a 
terrain obstruction or the earth's curvature, the program will conclude that interference 
would not occur at that point. We note, following long-standing Commission practice, that 
all line-of-sight determinations will assume a receiver height of 30 feet and a standard 4/3 
earth radius for determining the electrical horizon. Where line-of-sight conditions exist, the 
program woul^ first determine the proposed station's EIRP in the pertinent direction, based 
on the EIRP and horizontal relative field strength tabulation given in the application. The
46 The Office of Management and Budget has not yet approved the FCC Form 304 
pursuant to the Paperwork Reduction Act. A public notice will be issued when the new form 
has been approved and is available for use.
9623
received signal power level of the proposed station, the "undesired signal" (U), will then be 
calculated using the free space equation. The value of the receiver antenna gain in this 
calculation will depend on the angular relationship between the radial azimuth and the 
orientation of the receiving antenna. We will assume that the latter is pointed toward the 
station being received. The gain will also depend on whether the proposed station is cross 
polarized or co-polarized with respect to the protected station. The receiving antenna gain 
will be that of the reference receiving antenna found in Section 21.902(f)(3), Figure 1 of the 
Commission's rules. We here establish a fixed value for the "desired signal" level at the 
35-mile boundary. Assuming a receiver antenna gain of 20 dB above an isotropic antenna, 
an EIRP of 2000 watts (33 dBw) and a frequency of 2638 MHz, the midpoint frequency 
between channels El and H3, the free space propagation equation gives a value of
- 82.9 dBw. Our computer program will therefore use a received power level ("D") of
- 83 dBw as the value of the desired signal strength. Finally, the program will compute the 
value of the desired-to-undesired signal strength ratio ("D/U"), which in logarithmic units is 
expressed as D - U. This value will be tested against the minimum standard of 45 dB.
70. Another program is being designed that will analyze the impact of incumbents' 
modification applications. This program will analyze 360 radials spaced by one degree, first 
checking for unobstructed line-of-sight paths to the 35-mile boundary and, for clear paths, 
calculating the free space signal strength that would result from the modification and 
comparing it to the maximum allowable limit; that is, a power flux density value of
- 73 dBw/m2. To the extent that we are not constrained by licensing agreements with third 
parties and to the extent resources are available, we will make our computer programs 
available to the public. This will be announced in a subsequent public notice.
71. We emphasize that we will use computer models as application processing tools. 
Similar processing tools have been successfully used for Low Power Television Service with 
very few reported cases of interference to television reception, none of which occurred inside 
of a station's protected contour. The MDS interference standards should not be confused 
with the processing methods, which can only approximate the standard. For example, under 
the interference standards, incumbents' 35-mile areas are to be protected not only at points 
along the boundary, but also within the boundary.
72. Although, as applicable, we will require MDS applicants to prepare interference 
analyses or notification of application filings, and serve these on potentially affected parties, 
we will generally not require that such studies or a list of the parties served be included with 
applications. However, since electronic filing will be implemented in this service on a 
voluntary basis, we will allow applicants to submit interference studies with their applications 
on a voluntary basis. Applicants may also submit negotiated agreements of tailored 
interference protection or operation on the basis of frequency offset. Applicants may submit 
terrain shielding studies based on methods of their own choosing, including shadow maps. 
There are no universally accepted methods for terrain shielding studies given the widely 
varying characteristics of terrain features. Therefore, we believe it is appropriate to afford 
applicants the flexibility to select a terrain model suitable to the terrain being analyzed.
9624
Additionally, we are persuaded by the comments that interference studies should no longer be 
required to include contour maps. As Marshall points cuts, contour lines can be used in 
several ways and are most useful when drawn on a terrain shadow map, which is not a 
required element in the application process. Applicants may continue to prepare interference 
studies with D/U contour lines at their discretion. Given the structure and processing tools 
associated with our new licensing approach for the MDS service, we will not prescribe how 
applicants' interference studies are to be conducted. Further, potentially affected parties who 
are served a study and disagree with its conclusions may file a petition to deny an 
application.
73. As contemplated in our Notice, we intended to streamline our application forms 
in accordance with our actions herein. We are, therefore, directing the staff to incorporate 
as appropriate those data elements previously listed in the Notice into a revised and 
reformatted long-form application for use in the future by MDS applicants seeking to 
construct new stations or to make changes in their authorized facilities.
C. ELECTRONIC FILING AND ELECTRONIC FEE PAYMENTS
74. Proposals. In the Notice we invited comment on the feasibility of utilizing 
mandatory electronic filing for new MDS applications, on whether ITFS applicants should be 
required to file applications for new stations electronically on a combined application form,47 
and on whether there should be a paper exception for those educators that are not financially 
supported by a wireless cable operator. Notice at 7676-77. The Notice suggested that 
communication links could be used to exchange application data between applicants and the 
Commission, thus minimizing the filing of paper with the Commission and allowing the 
Commission to process MDS and ITFS applications more efficiently. Pursuant to the 
proposal, an electronic form would be designed for personal computers using a Windows 
based environment, and consisting of a series of computer screens. One possible approach 
identified in the Notice involves the use of electronic mailboxes such as that of a Value 
Added Network (VAN). Applicants would transmit relevant data from their personal 
computer to a VAN electronic mailbox. The VAN would, in turn, convert the data into a 
format compatible with Commission files and download the information to an electronic 
mailbox at the Commission. In the Notice, we recognized the possible limitations of this 
approach with respect to maps and other graphic representations. We envisioned that the 
public would have on-line viewing access to our data bases, perhaps through a third-party 
vendor in addition to access at the Commission's public reference room.
47 In 1992, Congress amended the Communications Act of 1934 to permit the electronic 
filing of license and construction permit applications. See Telecommunications Authorization 
Act of 1992, Pub. L. No. 102-538, § 204, 106 Stat. 3533, 3543, codified at 47 U.S.C. 
§§ 308(b) and 319(a). Such applications may be signed "in any manner or form, including 
by electronic means, as the Commission may prescribe by regulation." Id.
9625
75. In the Notice, we also proposed expanding the acceptable methods of payment 
for application fees to include electronic payment under 47 C.F.R. § 1.1109.48 We stated 
our intention of announcing the procedures for the electronic payment of fees in a public 
notice, pursuant to Section 1.1109(a)(l). We sought comment regarding a fee system where 
applicants use a unique fee payor number together with an appropriate service code and a 
suffix in cases where applicants file multiple applications, in order to link the fee payment 
with the electronically filed application.
76. Comments. The majority of commenters support the Commission's initiative to 
implement electronic filing and agree that access by the public to the data base would 
facilitate more accurate and up-to-date information concerning filings with the Commission. 
Commenters are split on whether electronic filing should be mandatory or voluntary. In 
addition, many commenters believe that the Commission should adopt a hybrid approach to 
electronic filing, permitting paper filing of graphic representations and maps. A number of 
commenters express concern regarding what software and access method would be used, 
stressing that the Commission should implement a solution that is user-friendly and able to 
accommodate multiple operating environments. A few commenters express concern about 
data security and system reliability. We received no objections to electronic fee payment. 
Specific comments are discussed below.
77. Commenters who support an electronic filing approach have differing views on 
whether electronic filing should be mandatory or voluntary.49 The Association's position is 
that electronic filing should be mandatory, noting that the costs of electronic filing are small 
compared to the costs of constructing and operating MDS or ITFS stations. Furthermore, 
the Association asserts that the entire electronic filing system would be compromised if some 
or all ITFS licensees were exempted, because the data base would then no longer be 
complete or definitive. ITFS Parties share this view. However, ITFS Parties suggest that 
the Commission consider permitting, for a short transition period, applicants who filed paper 
copies to refile their applications electronically within thirty days of Commission notification 
if they certify that they were unaware of the electronic filing mandate. Further, ITFS Parties 
suggest that the Commission not require that all ITFS filings be electronically filed (e.g.,
48 The Commission recently amended 47 C.F.R. §§ 1.1108 and 1.1109 to permit the 
electronic filing of fee payments, initially on an experimental basis. Implementation of 
Section 9 of the Communications Act, Report and Order in MD Docket No. 94-19, FCC No. 
94-140 (released June 8, 1994), 59 Fed. Reg. 30,984 (June 16, 1994) at 1f 50-51.
49 See, e.g., Comments of Association at 47; and ITFS Parties at 2 (calling for 
mandatory electronic filing). ITFS Parties includes South Carolina Educational Television 
Commission, State of Wisconsin-Educational Communications Board and University of 
Maine System. See, e.g., Comments of Rural Wireless at 12-13; Caritas at 4; National ITFS 
at 4; Pepper & Corazzini, L.L.P. (Pepper) at 8; and Multi-Micro at 2 (calling for voluntary 
electronic filing).
9626
certifications of completion of construction, assignments and transfers).
78. Conversely, several commenters propose voluntary electronic filing, claiming 
that smaller applicants might not have access to the technologies necessary for completion 
and submission of applications via electronic filing, and that an immediate and mandatory 
conversion to an electronic filing system could undermine the goals of the proposal, in part 
due to technical questions and applicant confusion. For instance, Caritas claims that 
mandatory electronic filing would unfairly advantage larger educational institutions which 
have familiarity with, and access to, electronic networks. Similarly, National ITFS believes 
that mandatory electronic filing would place an unusual and onerous burden on educators 
whose application is not supported by an excess capacity lessee, and who may never apply 
for more than four channels. Pepper believes that the Commission should organize a 
committee to recommend Commission-wide electronic filing standards and procedures for all 
services. A few commenters express reservations about electronic filing and whether it 
would increase processing efficiency. See, e.g., Comments of Marshall at 10-12; Vega at 
14-15. Vega proposes that if the Commission implements electronic filing at all, it should 
proceed slowly in making a transition from paper to electronic filing.
79. Dalager and ITFS Parties agree with the Commission's observation in its Notice 
that electronic filing could be problematic in terms of feasibility and cost, with respect to 
graphic representations and maps. See Comments of Dalager at 3; ITFS Parties at 3. 
Dalager and ITFS Parties therefore propose that the Commission consider a hybrid system 
using both paper and electronic filing.
80. A number of commenters provide suggestions and recommendations regarding 
the type of software to be used and access methodology for electronic filing.50 Essentially, 
commenters stress the need to carefully consider alternative approaches, access methodology, 
compatibility issues, ease of use and associated expense. For example, ITFS Parties propose 
that the use of the Internet, rather than a VAN for electronic filing may be a viable option, 
due to wide access to the Internet, and claim that use of a VAN would simply add to the 
applicants cost of filing. Marshall claims that generally, engineering software used for MDS 
saves graphical information (such as shadow maps and radio path studies) in standard 
Hewlett Packard Graphics Language (HPGL) format, and suggests that whatever standard is 
used for electronic filing be compatible with HPGL. Hardin also holds the view that 
whatever standard is used, it should be compatible with HPGL. Pepper proposes that 
whatever software is used, it should be readily available, inexpensive, able to accommodate 
multiple platforms and it should be easy to access with standard communication software and 
protocols.
81. Pepper is concerned about computer security, including the authentication of the
50 See, e.g., Comments of ITFS Parties at 3-5; Marshall at 11-12; Pepper at 3-6; Reply 
Comments of Hardin at 6.
9627
filing parties, and stresses the need for protection of confidential data. Vega is concerned 
about the security of the transfer protocol. A number of commenters, including Caritas, 
ITFS Parties and Pepper, note that a process should be put in place which enables applicants 
to ascertain what information was received by the Commission and on what date. These 
applicants express a need for an immediate and documentable confirmation of receipt, such 
as that which currently exists with date stamping. Pepper also stresses the need for selecting 
a reliable network capable of handling large volumes and having a reliable back-up system.
82. We received no objections to electronic fee payments. Vega expresses support 
for the Commission's adoption of a method of accepting electronic payments, assuming that 
other current forms of payment remain an option. Comments of Vega at 15; See Comments 
of Association at 50. Other commenters declined to address electronic fee payments.
83. Resolution. We will authorize voluntary electronic filing for new MDS 
applications. Use of an electronic filing system is not as essential under the filing approach 
we adopt today because we anticipate that fewer long-form applications will be filed. We 
also considered the burden on educators and determined that applications for new ITFS 
stations will not be included at this time. We appreciate the concerns expressed by 
commenters, including the cost to applicants of implementing and using electronic filing, data 
security and system reliability issues. We will take these concerns into account in deciding 
upon the software which will be used and the access method for electronic filing. We agree 
with commenters who encourage the Commission to evaluate carefully alternative electronic 
filing approaches and who suggest a transition period from paper filing to electronic filing. 
At the present time, we decline to accept the proposal put forth by Pepper regarding the 
establishment of a committee to recommend Commission-wide standards and procedures for 
all services, noting that the merits associated with the formation of such a committee would 
be outweighed by factors such as delayed decision making and implementation of electronic 
filing. Through subsequent public notices we will provide specific details concerning the 
method for electronically filing MDS applications. We will also authorize electronic fee 
payment for MDS applications. Current methods of payment available under 47 C.F.R. 
§ 1.1109 will continue to be accepted. As our resources permit, we will work toward 
improved viewing access to the data bases.
D. COMPETITIVE BIDDING PROCEDURES 
1. Competitive Bidding Background
84. On August 10, 1993, the Omnibus Budget Reconciliation Act of 1993 (Budget 
Act) added a new section 309(j) to the Communications Act of 1934, as amended, 47 U.S.C. 
§§ 151-611 (Communications Act). This amendment to the Communications Act gave the 
Commission express authority to employ competitive bidding procedures to choose from 
among mutually exclusive applications for certain initial licenses. The Commission adopted 
a Notice of Proposed Rule Making in the competitive bidding proceeding on September 23,
9628
1993.51 In its March 8, 1994 Second Report and Order,52 the Commission established 
general rules and procedures and a broad menu of competitive bidding methods to be used 
for all auctionable services, including MDS. We indicated in the Second Report and Order 
that in subsequent Reports and Orders we would set forth specific competitive bidding rules 
that would be applicable to individual services. To date, the Commission has established 
competitive bidding rules specifically applicable to, and has conducted auctions for, 
narrowband Personal Communications Services (PCS),53 the Interactive Video and Data 
Service (IVDS),54 and broadband PCS.55 This Report and Order establishes competitive 
bidding rules and procedures for MDS.
85. Given the interdependences we believe exist between authorizations for certain 
BTA service areas and the declining cost of conducting simultaneous multiple round bidding, 
we choose this auction method for usie in MDS. We also adapt the general procedures set 
forth in the Second Report and Order so as to be compatible with the application procedures 
established for MDS in this Report and Order. Finally, we set forth rules to deter possible 
abuses of the bidding and application procedures, and establish special provisions for small 
businesses, including those owned by minorities and women, to encourage their participation 
in the competitive bidding process and hi the provision of MDS system offerings.
2. Auction Eligibility
86. The Commission has in the past employed a random selection process (i.e., a 
lottery) to select from among mutually exclusive MDS initial applications. See 47 C.F.R. 
§ 1.824. However, Section 309(j) of the Communications Act, as amended, permits auctions 
where (1) mutually exclusive applications for initial licenses or construction permits are
51 Notice of Proposed Rule Making in PP Docket No. 93-253, 8 FCC Red 7635 (1993) 
(Competitive Bidding Notice).
52 Second Report and Order in PP Docket No. 93-253, 9 FCC Red 2348 (1994) (Second 
Report and Order), recon. granted in part, Second Memorandum Opinion and Order, 9 FCC 
Red 7245 (1994) (Second Memorandum Opinion and Order).
53 Third Report and Order in PP Docket No. 93-253, 9 FCC Red 2941 (1994) (Third 
Report and Order), recon. granted in part, Third Memorandum Opinion and Order and 
Further Notice of Proposed Rule Making, 10 FCC Red 175 (1995) (Third Memorandum 
Opinion and Order).
54 Fourth Report and Order in PP Docket No. 93-253, 9 FCC Red 2330 (1994) (Fourth 
Report and Order), petition for recon. pending.
55 Fifth Report and Order in PP Docket No. 93-253, 9 FCC Red 5532 (1994) (Fifth 
Report and Order), recon. granted in part, Fifth Memorandum Opinion and Order, 10 FCC 
Red 403 (1995) (Fifth Memorandum Opinion and Order).
9629
accepted for filing by the Commission; (2) the principal use of the spectrum will involve or 
is reasonably likely to involve the receipt by the licensee of compensation from subscribers in 
return for enabling those subscribers to receive or transmit communications signals; and 
(3) the objectives set forth in Section 309(j) would be promoted. In the Second Report and 
Order, we concluded that single and multichannel MDS as classes of services would satisfy 
the Section 3090) criteria for auctionability, and, thus, new initial applications in MDS 
would be eligible for competitive bidding. Id. at 2359. The Second Report and Order did 
not, however, expressly resolve the question of the auctionability of mutually exclusive MDS 
station applications filed prior to July 26, 1993, the date specified in the Commission's 
auction authority in the 1993 Budget Act. Id. For the reasons set forth in Section 3 below, 
we now determine to lottery these previously filed MDS applications.
3. Disposition of Previously Filed MDS Applications
87. Before the Commission conducts competitive bidding for the BTA service areas 
applied for under the revised procedures set forth herein, we must first process the remaining 
acceptable, mutually exclusive applications for MDS station licenses that were filed prior to 
July 26, 1993.56 Under the procedures in effect prior to the enactment of competitive 
bidding authority in the 1993 Budget Act, these mutually exclusive MDS applications were to 
have been lotteried. In September 1993, the Commission tentatively concluded to lottery 
rather than auction pre-July 26, 1993 MDS applications. See Competitive Bidding Notice at 
7661. In reaching this decision, the Commission first noted that these applications had 
already incurred substantial delays. The Commission then tentatively decided to eschew 
auctions in favor of lotteries for pending MDS applications to avoid "further delay" in 
granting MDS station licenses and providing service to the public during the time it would 
take for the Commission to promulgate competitive bidding rules. Id. 51 Subsequently, in the 
Second Report and Order, the Commission concluded that new initial applications in MDS 
would be eligible for competitive bidding, but did not resolve the question of whether to 
employ lotteries or auctions to dispose of the previously filed MDS applications. Second 
Report and Order at 2359. Thus, due to processing delays and further delays resulting from 
the consideration of issues raised hi the Budget Act regarding competitive bidding, this group 
of previously filed MDS applications, through no fault of the applicants themselves, has 
never been lotteried.
56 Once we complete our processing, we expect that this group of previously filed, 
acceptable MDS station applications will likely be quite small, consisting of approximately 
100 mutually exclusive applications for five rural locations. The applications for these five 
locations have been pending since 1991.
57 We note that commenters supported the Commission's tentative conclusion to lottery 
previously filed MDS applications. See, e.g., Comments of JAP Telecom Systems, Inc. at 7 
and Comments of MW TV, Inc. at 2-3, filed in response to Competitive Bidding Notice.
9630
88. The 1993 Budget Act empowers the Commission to either auction or lottery these 
previously filed MDS applications.58 Consistent with the statute, our tentative conclusion in 
the Competitive Bidding Notice, and Commission precedent,59 we now exercise our discretion 
to lottery this group of remaining previously filed, mutually exclusive MDS applications. By 
employing lotteries for pre-July 26, 1993 MDS applications, and by holding auctions for 
initial applications accepted for filing after that date, we adopt a straightforward approach 
that is easy to apply, fair to the applicants and serves the public interest.
89. As previously noted by the Commission, the Budget Act's legislative history 
reflects Congress* recognition that equitable considerations and administrative costs may 
justify the use of lotteries for those applicants who, in reliance on the existing lottery 
procedures, had filed applications prior to July 26, 1993. See Cellular Unserved Order at 
7391. In examining the equities and administrative costs at stake here, and based on the 
record before us, we believe that the public interest would be served by using a lottery to 
dispose of the relatively few remaining previously filed MDS applications for the handful of 
locations at issue. Indeed, we believe this situation presents facts that are precisely the type 
that warranted the grant of discretion to the Commission on this point. Specifically, with 
regard to equitable considerations, we note that most of these MDS applications on file have 
been pending for over four years due: to the aforementioned processing delays, which were 
not the fault of the applicants.60 Particularly given this lengthy delay, we believe it would be 
unfair to require these previously filed applicants to refile their applications and participate in 
an auction for BTA service areas, as they submitted then* applications with the expectation of 
participating hi a lottery for a site-specific conditional station license. Our decision will 
ensure that these pending application!; will be processed under the rules in effect at the time 
the applications were filed. It will also result in similar treatment for MDS applications filed 
within the same general time period. Those few applications that remain pending due to 
administrative delay will be processed in a manner similar to other MDS applicants that filed 
prior to July 26, 1993, but were able to have then: applications processed and conditional 
station licenses granted under the lottery procedures then in effect.61
58 See 47 U.S.C. §§ 309(i) & (j); Budget Act, Pub. L. No. 103-66, § 6002(e) (Special 
Rule), 107 Stat. 312, 397 (1993).
59 See Memorandum Opinion and Order in PP Docket No. 93-253, 9 FCC Red 7387 
(1994) (Cellular Unserved Order) (detennining to lottery previously filed applications for 
cellular unserved areas).
60 This four year period that thesie previously filed MDS applications have been pending 
is considerably longer than the one year period that the cellular unserved applications had 
been on file before the Commission determined to lottery those applications.
61 Likewise, the winning applicants for the small number of lotteries held pursuant to 
this decision will receive the benefits of the expanded protected service area definition for 
site-specific stations that we adopt today in a companion item. See Second Order on
9631
90. Moreover, if the Commission were to require the previously filed MDS 
applicants to participate in an auction, it would be necessary to allow the applicants to submit 
the information required by the competitive bidding rules set forth herein. In contrast, a 
lottery would require no further submissions by the applicants, and could be conducted 
almost immediately, unlike an auction, which likely could not be held until the end of this 
year. Furthermore, in fairness to the previously filed applicants, those who indicate no 
desire to participate in an auction may be entitled to a refund of their application fees. Given 
the expected low commercial value of the MDS channels in the small number of rural 
locations at issue here,62 we feel that these administrative costs associated with conducting an 
auction for the approximately 100 previously filed applications would not be justified. See* 
Cellular Unserved Order at 7391-7392. In summary, we believe that it would be inequitable 
and administratively burdensome to require applicants for MDS station licenses, who filed 
their applications over four years ago in reliance upon the lottery procedures then in effect, 
to participate in an MDS auction.
91. We also believe that any concern that many of these previously filed MDS 
applications at issue were prepared and filed by the same entities on behalf of the individual 
applicants "does not, by itself, justify the use of auctions in these circumstances." Id. at 
7391. There is no evidence before us that these individual applicants, if awarded an MDS 
conditional station license by lottery, would not construct and operate an MDS station. 
These applicants did expend the time and the funds required to have their MDS station 
applications prepared and filed, and we have no evidence, on the record before us, to 
conclude that they will fail to construct an MDS station and provide service to the public. 
See, e.g., Comments of MW TV, Inc. filed in response to Competitive Bidding Notice at 2 
(stating that it would be "terribly inequitable" to force MW TV into a "bidding process to 
secure [MDS] authorizations for which it has already expended a substantial amount of funds").63
Reconsideration. Thus, the approximately five lottery winners of site-specific conditional 
station licenses will be afforded treatment similar to other applicants who filed applications 
for site-specific MDS licenses prior to July 26, 1993, but who managed to avoid 
administrative delay and to have their applications processed and conditional licenses granted.
62 As we note in our discussion of the treatment of designated entities (see infra Section 
7), for various reasons unique to MDS we anticipate that the BTA service areas will be 
auctioned for relatively modest amounts under our prospective licensing regime. It seems 
reasonable to assume that the small number of rural, site-specific MDS conditional station 
licenses at issue here would draw even less money at auction than the relatively modest 
amounts we anticipate for the larger geographic areas that will be auctioned in the future.
63 We emphasize that the MDS station applicants prevailing in a lottery will be subject 
to a one year build-out requirement. See 47 C.F.R. § 21.43 (requiring completion of 
construction of MDS stations within twelve months from date of conditional station license
9632
92. Moreover, dismissal of these previously filed applications without prejudice to 
participate in a future BTA auction -- on the basis of a theory that the service for which the 
applicants previously applied either lias changed significantly or no longer exists   presents 
several potential drawbacks. Significantly, dismissal of these pending applications likely 
would engender reconsideration proceedings at the Commission and legal challenges in the 
courts. Such administrative and judicial delays could further postpone granting MDS licenses 
and providing service to the public, contrary to the public interest. In addition, while we are 
changing the conditions under which MDS service may be provided hi the future, such as 
moving to larger geographic area authorizations and expanded service area protection, we are 
not fundamentally changing the nature of the service. Licensees still will be providing 
wireless cable service to subscribers, albeit under altered conditions designed to make the 
service more competitive with cable television. Therefore, on the basis of this record, and 
considering the equitable and administrative factors identified above, we conclude, as we did 
hi the Cellular Unserved Order, that the use of a lottery, rather than competitive bidding, to 
award MDS conditional station licenses to the remaining previously filed applicants would 
best serve the public interest.
93. We also conclude that ouir balancing of the equitable and administrative factors 
identified above to determine whether a lottery or an auction of the previously filed MDS 
applications best serves the public interest is consistent with the specific terms of the 1993 
Budget Act and existing relevant cast: law. We note that the factors set forth in Section 
309(j)(3) pertaining to competitive bidding methodologies do not specifically govern the 
decision as to how to treat these previously filed MDS applications. The Section 309(j)(3) 
factors are incorporated into Section 309(j)(2) as part of the determination of whether a 
service "may" be auctioned. 47 U.S.C. § 309(j)(2) & (3). There is no doubt that we have 
the authority under the statute to use auctions to dispose of these previously filed applications 
for MDS station licenses, if using auctions satisfies the Section 309(j)(3) factors. Rather, the 
question before us here is not whether we may utilize an auction, but whether we should. 
For that determination, the relevant provision of law is Section 6002(e) of the Budget Act.
94. Section 6002(e), entitled "Special Rule," made an exception to the general 
requirement that, if a service met the standards for auctionability under Section 309(j)(2), the 
Commission could not use a lottery to award licenses for such service. Under the Section 
6002(e) Special Rule, the Commission may use a lottery to award licenses even for an 
otherwise auctionable service for certain previously filed applications. In adopting this 
provision, Congress indicated that the exception would "permit" the Commission to use 
lotteries for certain IVDS and "several other licenses." H.R. Conf. Rep. No. 213, 103d 
Cong., 1st Sess. 498 (1993). Thus, even if the factors set forth in Section 309(j)(3) are met 
with regard to auctions, our discretion under the Section 6002(e) Special Rule to choose 
lotteries for other reasons is not diminished.
grant).
9633
95. Congress did not, however, establish any standards for the exercise of the 
Commission's discretion under the Special Rule. As set forth in the Cellular Unserved 
Order, we continue to believe the proper approach is to balance the advantages and 
disadvantages of lotteries and auctions to determine which best serves the public interest on 
the facts before us. This approach is consistent with judicial precedent, which indicates that 
in determining whether to apply new rules to pending applicants, the Commission should 
balance the "ill effect" of the new rule on the pending applicants with the "mischief of 
frustrating the interests the rule promotes." Maxcell Telecom Plus, Inc. v. FCC, 815 F.2d 
1551, 1554 (D.C. Cir. 1987). In certain circumstances, as in Maxcell, which involved 
switching from comparative hearings to lotteries in the cellular radio service, the benefits in 
broadly applying the Commission's new rules outweigh the harms to previously filed 
applicants. In the situation before us, however, as in the Cellular Unserved Order, we 
conclude, for the reasons discussed above, that the "ill effects" on the applicants that 
previously filed applications substantially outweigh any potential "mischief" that may be 
caused to the development of MDS in the small number of rural markets likely at issue. 
Accordingly, we conclude that the use of lotteries for these few pending applications best 
serves the public interest.
4. Competitive Bidding Design
96. In this Report and Order, we have attempted to design auction rules and 
procedures that are compatible with the unique characteristics of MDS and that meet the 
congressional objectives set forth in the Communications Act. See 47 U.S.C. § 309(j)(3). 
We believe that these objectives are embodied in two basic Commission policy goals: 
promoting economic growth and enhancing access to telecommunications service offerings 
for consumers, producers and new entrants. Second Report and Order at 2349-2350. In the 
paragraphs below, we implement competitive bidding for MDS, pursuant to Section 3090') of 
the Communications Act and based on the record hi this proceeding.64 The methodology and
64 Very few comments were filed in response to the Competitive Bidding Notice 
addressing either the applicability of competitive bidding to mutually exclusive MDS initial 
applications or the auction method to be employed for MDS. MW TV, Inc. and IMP 
Telecom Systems, Inc. commented solely on whether to apply competitive bidding rules to 
pending MDS applications. The Association was the only commenter to address the issue of 
MDS auction design.
In the Notice, the Commission invited further comment concerning MDS competitive 
bidding procedures. Of the twenty-two sets of comments submitted in response to this Notice 
and listed in Appendix A, comments relating to competitive bidding in particular were 
submitted by American Telecasting, CAI Wireless, ACS Enterprises, et al., Dalager, 
Heartland, Mitchell, PacTel, Vega, Rural Wireless, U.S. Wireless and Association. Only 
eight commenters addressed MDS auction design specifically (American Telecasting, CAI 
Wireless, ACS Enterprises, et al., Heartland, Mitchell, PacTel, Vega and Association). 
Reply comments addressing competitive bidding issues were submitted by American
9634
procedures we will utilize in conducting MDS auctions are identified below, and additional 
details about specific competitive bidding procedures will be provided by public notice prior 
to the MDS auction.
a. General Competitive Bidding Designs
97. The Second Report and Order established the criteria to be considered in 
selecting the auction methodology for each auctionable service. We generally concluded that 
awarding licenses to those parties that value them most highly will best advance 
congressional policy goals. Id. at 2360. We also indicated that, because a bidder's ability to 
introduce valuable new services and to deploy them rapidly, intensively and efficiently 
increases the value of the license to that bidder, an auction design that awards licenses to 
those bidders who are willing to pay the highest bid tends to promote the development and 
deployment of new services and die efficient and intensive use of the spectrum. Id. at 2349- 
2350.
98. With regard to auction methodologies specifically, the Commission previously 
determined that: (1) licenses with strong interdependencies should be auctioned 
simultaneously;65 (2) multiple round auctions, by providing bidders with information 
regarding other bidders' valuations of licenses, generally will yield more efficient allocations 
of licenses and higher revenues, especially where there is substantial uncertainty as to value; 
and (3) because they are relatively expensive to implement and time-consuming, simultaneous 
and/or multiple round auctions become less cost-effective as the value of licenses decreases. 
Second Report and Order at 2360. We also found that simultaneous multiple round bidding 
facilitates the efficient aggregation of licenses across spectrum bands and geographic areas, 
and, because of the superior information and flexibility this bidding methodology provides, is 
likely to yield greater revenues than other auction designs. Thus, we concluded in the 
Second Report and Order that the use of simultaneous multiple round bidding would 
generally be preferred. Id. at 2366.
99. We also recognized in the Second Report and Order that simultaneous multiple 
round bidding may appear more complex to bidders and could be more difficult and 
expensive to implement than other auction methods. Id. at 2364. We have, however, in the 
past year gained considerable experience in conducting simultaneous multiple round bidding. 
This competitive bidding method has been utilized in several narrowband and broadband PCS
Telecasting, ACS Enterprises, et al., Telephone Cooperative, Rural Wireless, CAI Wireless 
and Association.
65 Licenses are interdependent when the value of a license to the bidder depends on the 
other licenses that the bidder acquires. Second Report and Order at 2361. Licenses may be 
interdependent because they are substitutes or because they are complements. Id. at 2364.
9635
auctions,66 and has proved to be an efficient and effective way to conduct spectrum auctions. 
In addition, the cost to the Commission of conducting simultaneous multiple round bidding 
has decreased considerably since the initial simultaneous auctions because the computer 
software used in these auctions has now been developed. We have also recently initiated 
procedures permitting remote bidding from personal computers throughout the country. 
Consequently, bidders may now participate in simultaneous multiple round auctions in a 
variety of ways ~ on site, by personal computer using remote bidding software, or via 
telephone.
b. MDS Competitive Bidding Design
100. Given our growing and successful experience with this auction design, we 
conclude that the generally favored method of simultaneous multiple round bidding is 
appropriate for MDS. We accordingly adopt this method to auction the BTA service areas.
101. In the Notice, we had tentatively concluded that simultaneous multiple round 
bidding was less appropriate for MDS than other auction methods primarily because the 
"value of and interdependence between" the geographic service areas might not be 
"sufficiently high to justify the use" of the generally preferred auction method. Notice at 
7678. After further consideration, and based upon our continuing successful experience with 
simultaneous multiple round bidding, we now conclude that simultaneous multiple round 
bidding is in fact appropriate for MDS.
102. With regard to the expected value of the BTA service areas at auction, we 
realize that some areas   particularly those with sparse populations   may be auctioned for 
relatively modest amounts.67 The value of any BTA service area at auction will, however, 
vary, depending in large part upon the population of and the amount of usable spectrum in 
that area.68 Heavily populated BTA service areas may therefore attract more substantial
66 The Commission has also recently proposed to utilize simultaneous multiple round 
bidding for both the 800 and 900 MHz Specialized Mobile Radio services. Further Notice of 
Proposed Rule Making in PR Docket No. 93-144 and PP Docket No. 93-253, FCC 94-271 
(released Nov. 4, 1994); Second Report and Order and Second Further Notice of Proposed 
Rulemaking in PR Docket No. 89-553, PP Docket No. 93-253, and GN Docket No. 93-252, 
FCC 95-159 (released April 17, 1995).
67 See, e.g., Comments of Vega at 18; Association at 43; American Telecasting at 5-7; 
ACS Enterprises, el al. at 17 (asserting that MDS channels are low valued).
68 See Comments of CAI Wireless at 9 (population of the relevant area, availability of 
ITFS and MDS channels, and bidder company business strategies "will substantially impact 
the valuation of 'area licenses'"). Wireless cable valuations, whether of companies, systems 
or channels, have generally been done on a population basis. See, e.g., Gerard Klauer
9636
sums, depending on the availability of spectrum within such areas. See Comments of PacTel 
at 3 (noting that "areas with the largest populations should be of significant value"). Given 
the substantially decreased costs associated with implementing simultaneous multiple round 
bidding, we believe that BTA service area values are sufficient to justify the use of this 
auction method. We must consequently disagree with the commenters who state that 
simultaneous multiple round bidding is inappropriate for MDS because this auction method is 
overly expensive, particularly when compared to an open outcry method, and 
administratively complex for the Commission. See Comments of ACS Enterprises, et al. at 
17-19; Vega at 18. See also Comments of Association at 43-44 (supporting use of open 
outcry method on grounds of cost and complexity, if national filing window approach is 
adopted).69
103. With regard to the question of interdependence, we believe that the BTA service 
area authorizations to be auctioned possess a degree of interdependence. As explained in the 
Notice, "[t]here appears to be some geographic interdependence due to coordination of 
interference at the borders." Id. at 7678. Indeed, because we have selected a filing 
approach based on predetermined geographic areas, rather than a national filing window, we 
emphasize that authorizations for adjacent BTA service areas will be interdependent, as 
common ownership of such areas will reduce problems of controlling interference at the 
borders of the BTAs. See Second Report and Order at 2364; See also Comments of 
Association at 37 (adjacent geograpliic markets may be interdependent). Interdependence 
between the BTA authorizations may also arise from economies of scale achieved by wireless 
cable operators spreading of fixed costs over more units of output. See Second Report and 
Order at 2364; See also Comments of PacTel at 3 (there may be interdependencies "due to 
the desire to achieve significant economies of scale"). We accordingly conclude that there is 
some degree of interdependence between BTA authorizations and that this interdependence 
may be significant for geographically contiguous BTAs. See Comments of PacTel at 3 
(noting "some significant interdependence" between "contiguous markets"). Thus, the
Mattison & Co., Inc., The Wireless Cable Industry: Summary of 1994 and Outlook for 1995 
(Dec. 22, 1994) at 3; Singer, Wireless Values: Wall Street Eyes Management and Spectrum, 
Private Cable and Wireless Cable (Nov. 1994) at 21; Paul Kagan Associates, Inc., Wireless 
Cable Investor (Nov. 30, 1994) at 7.
69 Other commenters, while not explicitly asserting that simultaneous multiple round 
bidding is overly complex and expensive for the Commission, nonetheless support the use of 
oral bidding for MDS on the grounds that an open outcry auction would be simple and 
economic (see Comments of CAI Wireless at 9) or efficient (see Comments of Heartland at 
9-10; American Telecasting at 25). We do not dispute that oral bidding can be a cost- 
effective and efficient method of auctioning spectrum. However, we believe that, for the 
reasons described above, simultaneous multiple round bidding will be more cost effective and 
efficient for MDS than oral bidding, particularly given the interdependencies that exist 
between authorizations for adjacent BTA service areas.
9637
adoption of simultaneous multiple round bidding should result in the most efficient award of 
these BTA authorizations. See Second Report and Order at 2363. In particular, we believe 
that potential bidders that operate (or are planning to operate) MDS systems in 
geographically adjacent BTAs and/or in several regions of the country will be able to make 
more informed bidding decisions in a simultaneous auction where all BTA service areas may 
be bid upon at the same time. See Comments of Association at 37 (if Commission selects 
filing approach based on defined geographic areas, Commission should "permit simultaneous 
multi-round bidding . . . that permits an applicant to bid for licenses for adjacent geographic 
markets that may be interdependent.").
104. We must, given the sources noted above from which interdependence may arise, 
disagree with those commenters who indicate that there is little or no interdependence 
between MDS channels and who oppose simultaneous multiple round bidding on that basis. 
See Comments of American Telecasting at 26; Heartland at 8-9; Vega at 17. Indeed, we 
note that some commenters acknowledge that their opposition to simultaneous bidding is 
based, not on firm evidence that BTA authorizations lack interdependence, but rather on then- 
preference for a national filing window approach to MDS licensing.70 However, because we 
are adopting a filing approach based on predetermined geographic areas, the authorizations 
for adjacent BTA service areas will, as discussed above, be interdependent. See Comments 
of Association at 37; PacTel at 3. While it may be difficult to determine the exact degree of 
interdependence between the BTA authorizations to be auctioned, as evidenced by the 
disagreement among the commenters,71 we believe, for the reasons stated previously, that 
there is some interdependence between them and that simultaneous multiple round bidding 
will allow bidders to best take account of such interdependences. Because the Commission 
has gained substantial experience with simultaneous bidding, which has declined significantly 
in cost, we conclude that simultaneous multiple round bidding is appropriate for MDS, as 
this bidding method will most efficiently award authorizations for those service areas 
(particularly contiguous BTAs) which are interdependent. See Second Report and Order at 
2363-2364.
105. In addition to issues of cost and interdependence, other considerations support 
the use of simultaneous multiple round bidding for MDS. Compared with other bidding 
mechanisms, including open outcry and sealed bidding, simultaneous multiple round bidding
70 See Comments of Vega at 17 (since we support national filing window, an 
interdependence issue is virtually eliminated); Association at 43 (under national filing 
window approach, simultaneous multiple round auctions are unnecessary since there will be 
little interdependence between different licenses).
71 See, e.g., Comments of PacTel at 3 ("there may be some significant interdependence 
... in contiguous markets"); Comments of CAI Wireless at 9 ("interdependence between 
geographical areas . . . will vary widely"); Comments of ACS Enterprises, et al. at 18 
("MDS channels to be auctioned would not have a high degree of interdependence").
9638
will generate the most information about the value of BTA service areas during the course of 
the auction. Thus, it is the most likely auction method to award BTA authorizations to the 
bidders who value them most highly. See Comments of PacTel at 3 (simultaneous multiple 
round bidding provides bidders with equal information and allows bidding to continue until 
highest value bidder is identified). We also note that an auction method awarding BTA 
authorizations to the parties who value them most highly should result in the award of 
authorizations to bonafide wireless cable operators, rather than to speculators, because bona 
fide operators will likely value authorizations more highly than, and will therefore outbid, 
speculators, who may be reluctant to pay up front the amounts necessary to obtain 
authorizations through competitive bidding.72 Moreover, given the uncertainty as to the value 
of the MDS spectrum,73 the information generated by simultaneous multiple round bidding 
should prove particularly valuable by giving bidders more flexibility to pursue back-up 
strategies.74 Because of the superior information and flexibility it provides, this auction 
method should also yield more revenue for the MDS spectrum than other auction designs, 
including open outcry.75 Although the raising of revenue is not our dominant concern, we 
note that Congress directed the Commission, in designing auction methodologies, to promote 
"recovery for the public of a portion of the value of the public spectrum resource."
72 Sealed bidding is not generallly favored by commenters expressing any opinion on 
auction design, and is not supported by the Commission for MDS, because mis bidding 
method will generate no information about the value of the BTA service areas during the 
course of an auction, and thus may not award BTA authorizations to the parties who value 
them the most. See Second Report and Order at 2362; Comments of Association at 43-44; 
Heartland at 9-10; ACS Enterprises, et al. at 18-19. The only commenter recommending 
sealed bidding presents no substantive arguments to support its position and fails to address 
the drawbacks inherent in an auction method that provides no information about spectrum 
value to bidders. See Comments of Mitchell at 4.
73 See Comments of Association at 43-44; ACS Enterprises, et al. at 18-19.
74 Commenters recognize the importance of selecting an auction design allowing bidders 
to pursue back-up strategies. See Comments of Association at 44 (opposing sealed bidding 
because it provides no opportunity to pursue back-up strategies).
75 A simultaneous auction for MDS will tend to raise more revenue than a sequential 
oral auction for two reasons. First, it will increase the value of the BTA service areas by 
facilitating efficient aggregation. Second, because it will provide more information about the 
value of the BTA service areas, it will reduce the propensity of sophisticated bidders to bid 
cautiously to avoid the "winner's curse"  the tendency for the winner to be the bidder who 
most overestimates the value of the item up for bid.
9639
47 U.S.C. § 3090)(3)(C).76 Finally, the employment of simultaneous multiple round bidding 
for MDS, rather than open outcry, will eliminate the need for the Commission to select the 
order in which the BTA service areas will be auctioned. See Second Report and Order at 
2360, 2363, 2366.
106. We conclude that these numerous advantages for MDS of simultaneous multiple 
round bidding outweigh any remaining disadvantages cited by some commenters. In addition 
to the objections, as described above, offered against simultaneous bidding based on the 
assumed high cost and adipinistrative burden for the Commission and the perceived lack of 
interdependence, some commenters also assert that simultaneous multiple round bidding is 
complex and expensive for bidders and favor open outcry auctions in part because of their 
perceived simplicity and relatively low cost for bidders. See Comments of Vega at 18; ACS 
Enterprises, et al. at 17. See also Comments of Association at 43 (supporting open outcry as 
less expensive bidding method if national filing window approach is selected).
107. The simultaneous multiple round auction design adopted herein includes several 
features that should allay the concerns expressed by these commenters as to the perceived 
burdensome nature of simultaneous bidding. We expect, for example, to have bidding 
rounds of shorter duration than in other simultaneous multiple round auctions, such as 
broadband PCS. This measure should shorten the MDS auction substantially so that the 
length of the auction should not prove burdensome to bidders. In addition, the burden on 
bidders will be reduced by the variety of methods through which they may participate in the 
MDS simultaneous multiple round auction. Bidders will be able to submit bids on site, via 
personal computers using remote bidding software, or via telephone;77 however, given the 
space limitations for on site bidding and the uncertainty as to the exact number of prospective 
bidders, the Commission reserves the right to have only remote bidding   by personal 
computer and by telephone ~ for the MDS auction. Thus, the expense to the bidders of 
participating in a simultaneous multiple round auction should be less than in an open outcry 
auction, where bidders (and/or their representative(s)) would need to travel to and remain in
76 We agree with commenters to the extent they suggest that the Commission's primary 
mandate is not to adopt an application procedure and auction design that maximize revenue. 
See Reply Comments of CAI Wireless at 6-7; Comments of Association at 29-30; Comments 
of American Telecasting at 4-5. Given the clear language of Section 309(j)(3)(C), we do, 
however, believe that the Commission has a duty to consider the recovery of the value of the 
MDS spectrum as a factor in its adoption of an appropriate MDS auction design.
77 Telephonic bidding should, in particular, be a simple and inexpensive method for 
bidders to submit bids. If submitting bids by telephone, bidders may utilize the Internet to 
learn of the round-by-round results of the auction; on-line services such as CompuServe 
provide Internet access at low cost. Bidders may also, at negligible cost, utilize a bulletin 
board service, accessible by long distance telephone, from which auction results can be 
downloaded to a personal computer.
9640
Washington, D.C. for the duration of the auction. Finally, the Commission will hold a 
seminar for prospective bidders to acquaint them with this bidding design and all alternative 
bid submission methods.
108. Given the mimerous advantages of the generally preferred auction method of 
simultaneous multiple round bidding;, we believe that this methodology will best serve for 
conducting MDS auctions. We note:, however, that the presence of incumbents in the BTA 
service areas could affect the relative desirability and value of BTA authorizations in ways 
we do not anticipate. In the event that the filings of short-form applications indicate that the 
BTA authorizations have relatively little interdependence and lower than expected value, we 
delegate authority to the Mass Media Bureau and the Wireless Telecommunications Bureau to 
reconsider the issue of whether another auction design would be more appropriate.
c. MDS Bidding Procedures
109. There will be one authorization offered in each BTA and the BTA 
authorizations will be awarded by simultaneous multiple round bidding. All BTA service 
areas will be auctioned at the same itime. Bids will be accepted at the same time on all BTA 
service areas in each round of the auction. High bid amounts will be posted after the end of 
the bid submission period in each round of bidding. With modifications to take account of 
the unique characteristics of MDS and to reduce length, MDS auctions will follow the 
general bidding procedures we have used to date to conduct the narrowband and broadband 
PCS auctions.
110. Bid Increments. In using simultaneous multiple round bidding to award the 
BTA authorizations, it is important to specify minimum bid increments. The bid increment 
is the amount or percentage by which the bid must be raised above the previous round's high 
bid in order to be accepted as a valid bid in the current bidding round. The application of a 
minimum bid increment speeds the progress of the auction and, along with activity and 
stopping rules, helps to ensure that ithe auction comes to closure within a reasonable period 
of time. Establishing an appropriate minimum bid increment is especially important hi a 
simultaneous auction with a simultaneous stopping rule. In that case, all markets will remain 
open until there is no bidding on any market, and a delay in closing the bidding on one 
market will delay the closing of all markets. Second Report and Order at 2369.
111. Because we plan to use simultaneous multiple round bidding with a 
simultaneous stopping rule to award BTA authorizations, we believe that it is necessary to 
impose a minimum bid increment to ensure that the MDS auction concludes within a 
reasonable period of time. As we recognized in the Second Report and Order, it is important 
to establish the amount of the minimum bid increment as the greater of a percentage and 
fixed dollar amount. This will ensure a timely completion of the auction even if bidding 
begins at a very low dollar amount. Id. at 2369. Accordingly, we will impose a minimum 
bid increment of some percentage of the high bid from the previous round or a fixed dollar 
amount, whichever is greater, in MDS auctions where simultaneous multiple round bidding is
9641
used. We will announce by public notice prior to the MDS auction the specific bid 
increment that generally will be utilized.
112. The Commission will also retain the flexibility to vary the minimum bid 
increment during the course of the MDS auction by announcement. We may, for example, 
begin the MDS auction with a sizable minimum ^4 increment and reduce the bid increment 
as the auction progresses. Starting with a sizable minimum bid increment will move the 
auction quickly at the beginning, when prices have limited informational content and there is 
little benefit to either bidders or the Commission of refined price movements, while allowing 
bidders to express small differences in valuation as the auction nears a close, increasing both 
efficiency and auction revenues. Small bid increments also reduce the chances of ties. 
Where a tie occurs, the high bidder will be determined by the order in which the bids were 
received by the Commission. See Second Report and Order at 2369. Adjustments in the bid 
increment may be based in part on the level of bidding activity.
113. Duration of Bidding Rounds. To gain the full benefit of the information 
generated by a simultaneous multiple round auction, bidders will need some time between 
bidding rounds to evaluate back-up strategies and consult with then* principals. Prior to the 
MDS auction, we will announce by public notice the duration of bidding rounds for the 
auction. We also reserve the discretion during the course of the auction to vary, by public 
notice or announcement, the duration of bidding rounds or the interval at which bids are 
accepted. We expect to allow more time for the initial rounds in the MDS auction, while 
bidders familiarize themselves with the bidding process, and then increase the frequency of 
rounds as the auction progresses. Thus, we should be able to move the auction toward 
closure in a reasonable period of tune.78
114. Activity Rule. To ensure that a simultaneous MDS auction with a simultaneous 
stopping rule closes within a reasonable period of time and to increase the information 
conveyed by bid prices during the auction, we believe that it is necessary to impose an 
activity rule to prevent bidders from waiting until the end of the auction before participating. 
Because simultaneous stopping rules generally keep all markets open for bidding as long as 
anyone wishes to bid, they also create an incentive for bidders to hold back until prices 
approach equilibrium before making a bid. As noted in the Second Report and Order, this 
could lead to very long auctions. See id. at 2371. Delaying serious bidding until late in an 
auction also reduces the information content of prices during the course of the auction. 
Without an activity rule, bidders cannot know whether a low level of bidding on a particular 
market means that the market's price is near its final level or if instead many serious bidders 
are holding back and may bid up the price later in the auction. When bidding closes on a
78 Given our estimates of the value of the BTA service areas and the likely number of 
bidders, we expect to hold more frequent bidding rounds in the MDS auction than we have 
in certain other simultaneous multiple round auctions, particularly broadband PCS. See 
Second Report and Order at 2368.
9642
market-by-market basis, an activity rule in less important. This is because failure to bid on a 
given market in any round may result in loss of the opportunity to bid on that market, if that 
round turns out to be the last one for that market.
115. In the Second Report and Order, we adopted the three-stage Milgrom-Wilson 
activity rule as our preferred activity rule when a simultaneous stopping rule is used. Id. at 
2372. See also Fifth Report and Order at 5553-5556. We plan to employ this activity rule 
in the MDS auction as well. Under the Milgrom-Wilson activity rule, bidders are required 
to declare their maximum eligibility in advance of the auction and make an upfront payment 
proportional to that eligibility level. In the PCS auctions, activity and eligibility are defined 
in terms of "MHz-pops. tt See, e.g., Fifth Report and Order at 5553-5554. Specifically, the 
number of MHz-pops associated with a PCS license is calculated by multiplying the 
population of the license service area by the amount of spectrum authorized by the license. 
We chose MHz-pops because we anticipated that PCS license values would be closely related 
to the number of MHz-pops in the license service areas. This choice ensures that the 
measure of bidding activity used in the activity rule is highly correlated with license values. 
In the MDS auction, bidding activity and eligibility will be defined in terms of dollar values. 
The Commission will assign an "activity unit" value to each BTA service area for the 
purpose of measuring bidding activity and eligibility. Specifically, the activity unit value for 
a BTA service area will be equal to the upfront payment associated with that BTA service 
area. A bidder's maximum eligibility (which is also the bidder's eligibility for the first 
round of the auction) will be equal to its total upfront payments.79 Because the upfront 
payments will be related to the value of the BTA service areas (see infra ] 136), activity 
units will fulfill the same function that MHz-pops have fulfilled in the previous PCS 
auctions.
116. The Milgrom-Wilson activity rule provides that a bidder's minimum activity 
level, measured as a fraction of eligibility in the current round, will increase during the 
auction. A bidder will be considered "active" on a BTA service area in the current round if 
it is either the high bidder at the end of the bid withdrawal period in the previous round, or 
if it submits a bid in the current round which meets or exceeds the minimum valid bid (i.e. , 
a bid that exceeds the high bid in the previous round by at least the minimum bid increment). 
A bidder's activity level in a round is the sum of the activity units associated with the BTA 
service areas on which the bidder is active.
117. The minimum required bidding activity levels for each stage of the MDS 
auction are as follows. In each round of Stage One of the auction, a bidder who wishes to 
maintain its current eligibility is required to be active on BTA service areas encompassing at 
least fifty percent of the activity units for which it is currently eligible. Failure to maintain
79 As explained in 1 138, however, a small business bidder eligible for a reduction in its 
upfront payment requirement will not have the number of its activity units decreased as a 
result of submitting a reduced upfront payment.
9643
the requisite activity level will result in a reduction in the amount of activity units associated 
with BTAs upon which a bidder will be eligible to be active in the next round of bidding 
(unless an activity rule waiver, as described below, is used). During the first stage, if 
activity is below the required minimum level, eligibility in the next round will be calculated 
by multiplying the current round activity by two (2/1). Eligibility for each applicant in the 
first round of Stage One is determined by the amount of the upfront payment received and 
the BTAs identified in the applicant's short-form application. In each round of Stage Two, a 
bidder who wishes to maintain its current eligibility is required to be active on BTA service 
areas encompassing at least eighty percent of the activity units for which it is eligible in that 
particular round. During the second stage, if activity is below the required minimum level, 
eligibility in the next round will be calculated by multiplying the current round activity by 
five-fourths (5/4). In each round of Stage Three, a bidder who wishes to maintain its current 
eligibility is required to be active on BTA service areas encompassing ninety-five percent of 
the activity units for which it is eligible in that particular round. In the final stage, if activity 
in the current round is below ninety-five percent of current eligibility, eligibility in the next 
round will be calculated by multiplying the current round activity by twenty-nineteenths 
(20/19).
118. In the PCS auctions, we specified transition guidelines for deciding when the 
auction would move from Stage One to Stage Two to Stage Three. Those guidelines are 
based on the "auction activity level," the sum of the MHz-pops of PCS licenses for which the 
high bid increased in the current round as a percentage of the total MHz-pops of all licenses 
offered in the auction. See, e.g., Fifth Report and Order at 5555. However, we also 
retained the discretion to move the PCS auctions from one stage to another at a rate different 
from that set out in the guidelines. See Fourth Memorandum Opinion and Order in PP 
Docket No. 93-253, 9 FCC Red 6858, 6860 (1994).
119. For the MDS auction, we shall employ an analogous procedure. The "auction 
activity level" for a given round of the MDS auction will be defined as the sum of the 
activity units associated with the BTA service areas for which the high bid increases in that 
round, divided by the sum of activity units associated with all of the BTAs being auctioned. 
The following transition guidelines apply. The MDS auction will begin in Stage One and 
move from Stage One to Stage Two when the auction activity level is below ten percent for 
three consecutive rounds in Stage One. The auction will move from Stage Two to Stage 
Three when the auction activity level is below five percent for three consecutive rounds in 
Stage Two. In no case can the auction revert to an earlier stage. The Commission retains 
the discretion to determine and announce during the course of an MDS auction when, and if, 
to move from one auction stage to the next, based on a variety of measures of bidder 
activity, including, but not limited to, the auction activity level as defined above, the 
percentage of BTA service areas on which there are new bids, the percentage of activity units 
on which there are new bids, the number of new bids, and the percentage increase in 
revenue.
120. To avoid the consequences of clerical errors and to compensate for unusual
9644
circumstances that might delay a bidder's bid preparation or submission hi a particular round, 
we will provide bidders with a limited number of waivers of the above-described activity 
rule. We believe that some waiver procedure is needed because the Commission does not 
wish to reduce a bidder's eligibility due to an accidental act or circumstances not under the 
bidder's control. See Second Report and Order at 2372.
121. In MDS auctions, bidders will be provided five activity rule waivers that may 
be used in any round during the course of the auction. See Second Report and Order at 
2373. If a bidder's activity level is; below the required activity level, a waiver will 
automatically be applied. That is, if a bidder fails to submit a bid in a round, and its activity 
level from any standing high bids (high bids at the end of the bid withdrawal period hi the 
previous round) falls below its required activity level, a waiver will be automatically applied. 
A waiver will preserve current eligibility in the next round. An activity rule waiver applies 
to an entire round of bidding and not to a particular BTA service area. Bidders will be 
afforded an opportunity to override the automatic waiver mechanism when they place a bid if 
they intentionally wish to reduce their bidding eligibility and do not want to use a waiver to 
retain their eligibility at its current level. See Fourth Memorandum Opinion and Order in PP 
Docket No. 93-253, 9 FCC Red 6858, 6861 (1994). If a bidder overrides the automatic 
waiver mechanism, its eligibility will be permanently reduced (according to the formulas 
specified hi 1117), and it will not be permitted to regain its bidding eligibility from a 
previous round. An automatic waiver invoked in a round in which there are no new valid 
bids will not keep the auction open. Bidders will have the option of pro-actively entering an 
activity rule waiver during the bid submission period.80 If a bidder submits a proactive 
waiver in a round in which no other bidding activity occurs, the auction will remain open.
122. The Commission retains the discretion to issue additional waivers during the 
course of an auction for circumstances beyond a bidder's control. We also retain the 
flexibility to adjust prior to an auction the number of waivers permitted, or to institute a rule 
that allows one waiver during a specified number of bidding rounds or during specified 
stages of the auction. See Second Report and Order at 2373. We will announce by public 
notice before the MDS auction the number of waivers that will be allowed hi that particular 
auction.
123. As with other auctions, we reserve the right to impose for the MDS auction an 
activity rule less complex than the Milgrom-Wilson rule. See Second Report and Order at 
2372; Fifth Report and Order at 5556. We will announce by public notice before the MDS 
auction the activity rule that will be employed in that particular auction.
124. Stopping Rules. We noted in the Second Report and Order that, with multiple 
round auctions, a stopping rule must be established for determining when the auction is over.
80 Thus, a "proactive" waiver, as distinguished from the automatic waiver described 
above, is one requested by the bidder.
9645
Id. at 2369. In an MDS simultaneous multiple round auction, bidding could close separately 
on individual BTA service areas, simultaneously on all BTA service areas, or a hybrid 
approach could be used. Under an individual approach, bidding would close on each BTA 
service area after one round passed in which no new acceptable bids were submitted for that 
particular service area. With a simultaneous stopping rule, bidding would remain open on all 
BTA service areas until there was no new acceptable bid on any service area. This approach 
would have the advantage of providing bidders full flexibility to bid for any BTA service 
area as more information became available during the course of the MDS auction, but it 
could lead to a very long auction, unless an activity rule were imposed. See id. at 2370. A 
hybrid approach would combine the individual and the simultaneous approaches.81
125. For MDS auctions, we intend to utilize a simultaneous stopping rule, as we 
have successfully used in previous simultaneous multiple round auctions. Bidding will 
accordingly remain open on all BTA service areas until bidding stops on every BTA service 
area. The auction will close after one round passes in which no new valid bids or proactive 
waivers are submitted. The Commission retains the discretion, however, to keep the MDS 
auction open even if no new valid bids and no proactive waivers are submitted. In the event 
that the Commission exercises this discretion, the effect will be the same as if a bidder had 
submitted a proactive waiver.82 Since we are also imposing an activity rule (as discussed 
above), we believe allowing simultaneous closing for all BTA service areas will afford 
bidders flexibility to pursue back-up strategies without running the risk that bidders will 
refrain from bidding until the final rounds. We also believe that a simultaneous stopping rule 
will best enable bidders to take account of any interdependences that exist between BTA 
authorizations (especially authorizations for adjacent areas) and will allow bidders to make 
the most informed bidding decisions. Thus, simultaneously closing bidding on BTA service 
areas will most likely award licenses to the bidders who value them most highly. See Second 
Report and Order at 2370.
126. Additionally, the Commission may also declare at any time after forty rounds 
that the MDS auction will end after a specified number of additional rounds. If the 
Commission invokes this stopping rule, it will accept bids in the final round(s) only for BTA 
service areas on which the high bid increased in at least one of the preceding three rounds.
81 For example, in a hybrid approach, we could use a simultaneous stopping rule (along 
with an activity rule designed to expedite closure) for higher valued BTA service areas. For 
lower valued BTA service areas, where the loss from eliminating some back-up strategies 
would be less, bidding on BTAs could be allowed to close individually. See Second Report 
and Order at 2370.
82 This will help ensure that the MDS auction is completed within a reasonable period of 
time, because it will enable the Commission to utilize larger bid increments, which speed the 
pace of the auction, without risking premature closing of the auction. See Memorandum 
Opinion and Order in PP Docket No. 93-253, 9 FCC Red 7684, 7685 (1994).
9646
See Second Report and Order at 2370 n.106. Stopping the MDS auction after a specified 
number of additional rounds will ensure ultimate Commission control over the duration of the 
auction. See id. at 2370. Thus, the Commission will have the means to prevent bidders 
from continuing to bid on a few BTA service areas (or even a single service area) solely to 
delay the closing of bidding for all BTA service areas in an MDS auction with a 
simultaneous stopping rule. This will also ensure that the Commission can end the MDS 
auction if it determines that the benefits from ending the auction, and hence granting BTA 
authorizations more rapidly, exceed the possible efficiency loss from cutting off bidding on a 
few BTA service areas. If we exercise this option, we favor the use of three final rounds. 
Allowing more than one additional round provides some opportunity for counter-offers, thus 
reducing the risk that a BTA authorization will not be awarded to the party that values it 
most highly.
127. If this fail-safe mectamism is used in an MDS auction, there are two reasons not 
to take bids on BTA service areas on which there has been no recent bidding. First, the fact 
that bidding on an individual BTA service area may close will provide an additional incentive 
to bid actively and thus speed the conclusion of the MDS auction. If bids are accepted on all 
BTA service areas in the final round(s) there is less risk to a bidder in holding back. 
Second, closing bidding on BTA service areas for which activity has ceased ensures high 
bidders for those service areas that they will not lose a BTA authorization without having an 
opportunity to make a counter-offer.83 This reduces the uncertainty associated with 
aggregating BTA authorizations (such as those for adjacent BTAs) that may be worth more as 
a group than individually. If final bids are accepted on all BTA service areas, a high bidder 
on an aggregation of BTA service areas may unexpectedly lose a significant part of the 
aggregation and have no chance to regain it except hi the post-auction market, where 
bargaining or other transaction costs may be high.
128. The Commission does not intend to exercise this option except in extreme 
circumstances, such as where the MDS auction is proceeding very slowly, there is minimal 
overall bidding activity, and it appears unlikely that the auction will close within a reasonable 
period of time. Before exercising this option, however, the Commission would first attempt 
to increase the pace of the auction by announcing that the auction will move into the next 
stage, where bidders would be required to maintain a higher level of bidding activity. Under 
these circumstances, the Commission may also first increase the number of bidding rounds 
per day and increase the amount of the minimum bid increments for those limited number of 
BTA service areas where there is still a high level of bidding activity.
83 Either the MDS auction will close only when bidding ceases on all BTA service areas, 
so the high bidder will have an opportunity to respond to any new bids, or the Commission 
will call for final bids but not accept new bids on BTA service areas on which there have 
been no new bids hi the previous ithree rounds, so no other bidder will have the opportunity 
to outbid the high bidder hi a final round.
9647
129. Additionally, because of the large number of BTA service areas to be auctioned 
at once, we will retain the discretion either to use a hybrid stopping rule or to allow bidding 
to close individually for these service areas if, as we gain more experience with auctions, we 
determine that simultaneous stopping rules are too complex to implement for very large 
numbers of service areas. The specific stopping rule for ending bidding on the BTA service 
areas will be announced by public notice prior to the MDS auction.
5. Procedural and Payment Issues
a. Pre-Auction Application Procedures
130. The Second Report and Order established general rules and procedures for 
participating in auctions. Again, however, we noted that these might be modified on a 
service-specific basis. As described below, we have determined that we will follow for new 
MDS initial applications the procedural and payment rules established in the Second Report 
and Order and set forth at 47 C.F.R. Chapter I, Part 1, Subpart Q, with modifications to fit 
MDS. Certain procedural details will be supplied later by public notices. Our objective has 
been to design rules and procedures that will reduce administrative burdens and costs on 
bidders and the Commission, ensure that bidders and licensees are qualified and able to 
construct their systems, and minimize the potential for delay of service to the public. See 47 
U.S.C. § 309(j)(3)(A) (in designing auction rules, Commission should seek to promote 
development and rapid deployment of products and services for public benefit, without 
administrative or judicial delays).
131. Before an MDS auction, the Commission, or, pursuant to delegated authority, 
the Mass Media Bureau, in conjunction with the Wireless Telecommunications Bureau, will 
release public notices concerning the auction. The public notices will specify the BTA 
service areas to be auctioned,.the filing deadline for short-form applications, and the time, 
place, and method of competitive bidding to be used, as well as applicable bid submission 
and payment procedures.
132. Applicants will be required to submit short-form applications by the date 
specified by public notice. Applicants should file a short-form application identifying all 
BTA service areas specified by the public notice in which they are interested in bidding.84 If 
the Commission receives only one application that is acceptable for filing for the same BTA 
service area and thus there is no mutual exclusivity,85 the Commission will by public notice
84 As described in detail below, the short-form applications must also include an exhibit 
identifying any bidding consortia or other arrangements relating to the BTA service areas 
being auctioned. See infra K 164.
85 Absent mutually exclusive applications, the Commission is prohibited from conducting 
an auction. See 47 U.S.C. § 309(j)(l).
9648
cancel the auction for this BTA service area and establish a date for the filing of either an 
initial long-form application for an MDS station license or, for a heavily encumbered BTA, a 
statement of intention with regard to the BTA.86
133. To encourage maximum bidder participation, we will provide applicants whose 
short-form applications are substantially complete, but which contain minor errors or defects, 
with an opportunity to correct their applications prior to the auction. However, applicants 
will not be permitted to make any major modifications to their applications; for MDS, we 
classify all amendments to short-forms as major, except those to correct minor errors or 
defects, such as typographical errors, or those to reflect ownership changes or formation of 
bidding consortia specifically permitted under the anti-collusion rules set forth below. See 
infra 1 165. We note in particular that a change in control of an applicant or a change in the 
BTAs upon which an applicant wishes to bid will be regarded as a major amendment to the 
short-form application. In addition, applications that are not signed in any manner or form, 
including by electronic means, or tliat fail to make the requisite certifications will be 
dismissed and may not be resubmitied. See Second Report and Order at 2377; 47 C.F.R. 
§ 1.2105(b).
134. After reviewing the short-form applications, the Commission will issue another 
public notice listing all applications containing minor defects, and applicants will be given an 
opportunity to cure and resubmit defective applications. On the date set for submission of 
corrected applications, applicants who on their own discover minor errors in their 
applications, such as typographical errors, also will be permitted to file corrected 
applications. Following a review of the corrected applications, the Commission will release 
another public notice announcing the names of all applicants whose applications have been 
accepted for filing. Applicants identified in this public notice will then be required to submit 
the full amount of their upfront paj^ment. See Second Report and Order at 2377.
b. Upfront Payments
135. In the generic auction rules, we described five types of payments: upfront 
payments, down payments, final payments, bid withdrawal payments, and default and 
disqualification payments. Given the history of speculators filing MDS applications, we 
believe a substantial upfront payment is needed for MDS auctions to discourage speculative 
bidding and increase the likelihood of applicants who intend to provide service to the public 
obtaining the remaining available MDS channels. Requiring a substantial upfront payment 
provides some degree of assurance that only serious, qualified bidders will participate and 
serves as a deterrent to the filing of speculative applications, which may delay the provision 
of service to the public. The upfront payments will also provide the Commission with a 
source of funds to satisfy any bid withdrawal or default and disqualification payments
86 See infra t1 150-154, for the procedures for filing either a long-form application for a 
station license or a statement of intention with regard to the BTA.
9649
assessed. See Second Report and Order at 2378-2379. Therefore, we will require an upfront 
payment for the MDS auction.87
136. We believe the upfront payment should bear a relation to the value of the BTA 
authorizations that a bidder hopes to be awarded. We accordingly delegate to the Mass 
Media Bureau and the Wireless Telecommunications Bureau the authority to determine an 
appropriate upfront payment for each BTA service area being auctioned, taking into account, 
at the Bureaus' discretion, such factors as the population and the approximate amount of 
usable spectrum in each BTA.88 Bearing hi mind the uncertainties associated with valuing 
the BTA authorizations, we expect that the Bureaus will follow the guidelines laid out in the 
Second Report and Order and establish upfront payments equal to around five percent of the 
expected amounts of winning bids for the various BTA service areas. See id. at 2378-2379. 
In no event will the upfront payment for any BTA service area be less than $2500, the 
minimum suggested in the Second Report and Order, and we retain the flexibility for the 
Bureaus to modify this minimum if we find that a higher amount would better deter 
speculative filings. Id. at 2379.
137. Prior to the MDS auction, the Mass Media Bureau, in conjunction with the 
Wireless Telecommunications Bureau, will publish a public notice listing the upfront payment 
amounts corresponding to each BTA service area to be auctioned. The number of activity 
units associated with a BTA service area (see 5 115) equals the amount of the upfront 
payment for that BTA. A prospective bidder must submit an upfront payment equal to the 
largest combination of activity units on which the bidder anticipates being active in any single 
round. The combination of activity units on which a bidder is active in a round equals the 
sum of the activity units associated with the BTAs on which the bidder has submitted a bid, 
or on which the bidder is the standing high bidder. Although a bidder may file applications 
for every BTA service area being auctioned, the total upfront payment submitted by each 
applicant will determine the combinations of BTA service areas on which the applicant will 
actually be permitted to be active in any single round of bidding.89
87 Commenters addressing this issue agree that upfront payments should be required for 
MDS to deter insincere or unqualified applicants. See Comments of Association at 51; Vega 
at 17-18; ACS Enterprises, el al. at 20-21.
88 See Comments of Association at 51 (if Commission adopts filing approach for MDS 
based on predetermined geographic areas, formula based on population and megahertz in 
each service area is appropriate for determining upfront payments).
89 Consider, for example, an applicant that submits a $100,000 total upfront payment. 
As explained above at 1 115, the maximum number of activity units for that applicant is 
100,000. In any single round, the applicant could be active on two BTA service areas with 
50,000 activity units each, on five BTAs with 20,000 activity units each, on ten BTAs with 
10,000 activity units each, or on any combination of BTA service areas for which the sum of
9650
138. A prospective bidder in the MDS auction that claims status as a small business, 
as defined in tf 190-191, will be eligible for a twenty-five percent reduction in its upfront 
payment requirement. See infra 11184-185 for a discussion of the reduced upfront payments 
measure. A small business eligible for this reduction in its upfront payment will not have the 
number of its activity units decreased as a result of submitting a reduced upfront payment.90
139. We do not believe that a very low upfront payment, as one commenter 
proposes, is sufficient to discourage: speculative or insincere bidding. See Comments of 
Vega at 18 (recommending $500 upfront payment per every five market or channel groups). 
We also feel that a flat fee unrelated to the value of the individual BTA service areas, as 
another commenter suggests, is inappropriate. See ACS Enterprises, et al. at 20 (supporting 
upfront payment of $2000 per channel). Given the Commission's experience with defaults 
by some winning bidders hi the July 1994 F/DS auction, we find that an upfront payment 
which reflects the value of the BTA service areas being auctioned is preferable to a low flat 
fee unrelated to BTA service area values. See Comments of Association at 52 (stating that 
upfront payments in excess of $2500 minimum established in Second Report and Order and 
employed in IVDS auction are needed to assure seriousness of MDS applicants and to cover 
defaults by winning MDS bidders).
140. Applicants identified by public notice as those whose applications have been 
accepted for filing will be required to submit then* upfront payments to the Commission's 
lock-box bank by the date specified in the public notice, which generally will be no later than 
fourteen days before the scheduled auction. Upfront payments may be made by wire transfer 
or by cashier's check drawn hi U.S. dollars from a financial institution whose deposits are 
insured by the Federal Deposit Insurance Corporation and must be made payable to the 
Federal Communications Commission. All payments, including upfront, down and final 
payments, should be accompanied by FCC Form 159 (remittance advice form). After the
associated activity units totals 100,000 or less. As set forth above, a bidder is "active" on a 
BTA service area if it is either the high bidder on that BTA from the previous round (at the 
end of the bid withdrawal period), or if it submits a bid on that BTA in the current round 
which exceeds the previous round's high bid by at least the minimum bid increment. See 
supra 1116. Thus, a bidder who begins the auction eligible to bid (based on the magnitude 
of its upfront payment) on BTA service areas associated with 100,000 activity units and who, 
hi the first round, is the high bidder on a BTA service area associated with 50,000 activity 
units, may only, hi the second round, submit new bids on a combination of BTAs associated 
with 50,000 or fewer activity units.
90 For example, if a small business applicant is interested in bidding on a BTA with an 
upfront payment of $100,000, it would be required, under the reduced upfront payment 
measure, to submit only $75,000 to qualify to bid on that BTA. This applicant would still, 
however, receive 100,000 activity units   the number of activity units equivalent to the full 
upfront payment amount associated with that BTA.
9651
Commission receives from its lock-box bank the names of all applicants who have submitted 
timely upftont payments, the Commission will issue a public notice announcing the names of 
all applicants that have been determined to be qualified to bid in the MDS auction. Any 
applicant who fails to submit a sufficient upfront payment to qualify it to bid on any BTA 
service area being auctioned will not be identified on this public notice as a qualified bidder, 
will be prohibited from bidding in the MDS auction, and its application will be dismissed. 
See Second Report and Order at 2377; 47 C.F.R. § 1.2106.
141. The upfront payments submitted by prospective bidders will later be counted 
toward the down payments that winning bidders must make. The upfront payments of 
bidders who are not the high bidder on any BTA service area will be refunded as soon as 
possible after the MDS auction. Prior to refunding the upfront payments of non-winning 
bidders, however, we will determine whether they are subject to withdrawal or default 
payments. In some circumstances, it may be appropriate to retain upfront payments until 
after the winning bidders have tendered their down payments because further rounds of 
competitive bidding may be held if down payments are not made. No interest will be paid 
on upfront payments. See Second Report and Order at 2380.
c. Down Payments and Full Payments
142. To provide further assurance that winning bidders will be able to pay the full 
amount of their bids, we decided generally in the Second Report and Order that each winning 
bidder must tender a down payment sufficient to bring the total deposit up to twenty percent 
of the winning bid. We believe a down payment requirement is appropriate for MDS.91 
Accordingly, winning bidders will be required to supplement their upfront payments to bring 
their total deposit with the Commission up to at least twenty percent of the final payment due 
for the BTA authorization(s) won hi the MDS auction. If the upfront payment already 
tendered amounts to twenty percent or more of the winning bid, no additional deposit will be 
required. To the extent that any upfront payment not only covers, but exceeds, die required 
down payment, the Commission will refund any excess amount after determining that no bid 
withdrawal payments are owed by the bidder. To simplify this process administratively, the 
Commission will not honor requests that this excess amount be retained and applied toward 
later payments or obligations. The down payment will be due within five business days after 
the winning bidders have been notified by the Commission, and may be made by cashier's 
check or by wire transfer to the Commission's lock-box bank. The down payment will be 
held by the Commission until the winning bidder has been issued its BTA authorization and 
has paid the remaining balance of its winning bid, or until the winning bidder is found 
unqualified to be a station licensee or has defaulted, in which case it will be returned, less 
applicable default payments. During the period that deposits are held pending ultimate award 
of the BTA authorization, the interest that accrues, if any, will be retained by the
91 Commenters addressing this issue similarly see no reason to depart from the approach 
established in the Second Report and Order. See Comments of Association at 52.
9652
government. See Second Report and Order at 2381-2382; 47 C.F.R. § 1.2107(b).
143. Based upon our experience in conducting spectrum auctions, we will require 
winning bidders to make full payment of the balance of their winning bids prior to the 
issuance of their BTA authorizations. Specifically, the Commission will, when a BTA 
authorization is ready to be issued, release a public notice stating that fact. The auction 
winner for that BTA will be required to make full payment of the balance of its winning bid 
within five business days following tin's public notice. The Commission will issue the BTA 
authorization to the auction winner within ten business days following notification of receipt 
of full payment. See Second Report and Order and Second Further Notice of Proposed 
Rulemaking in PR Docket No. 89-553, PP Docket No. 93-253, and GN Docket No. 93-252, 
FCC 95-159 (released April 17, 1995) at 1 109.
144. Auction winners that an: small businesses eligible for installment financing will 
be subject to differing payment requirements, however. See infra fl[ 190-192 for discussion 
of small business eligibility. Specifically, a small business will be required to bring its total 
deposit with the Commission up to ten percent of its winning bid within five business days 
after having been notified by the Commission of its winning bidder status. An additional ten 
percent will be due within five business days following the public notice that its BTA 
authorization is ready to be issued, lilie Commission will then issue the BTA authorization 
to the small business within ten business days following notification of receipt of this 
additional ten percent payment.
d. Bid Withdrawal, Default and Disqualification Payments
145. In the Second Report and Order, we concluded that strong incentives are needed 
to ensure that potential bidders are financially and otherwise qualified to participate in 
auction proceedings, so as to avoid delays in the deployment of new services to the public. 
Id. at 2382. We accordingly stated tliat we will, in simultaneous multiple round auctions, 
impose a bid withdrawal payment requirement in instances where a high bid is withdrawn 
during the course of the auction and an additional default payment if a winning bid is 
withdrawn after the auction has closed. Id. at 2373-2374.
146. In an MDS simultaneous multiple round auction, any bidder who withdraws a 
high bid during an auction before the Commission declares bidding closed will be required to 
reimburse the Commission in the amount of the difference between its high bid and the 
amount of the winning bid the next time the BTA service area is offered by the Commission, 
if this subsequent winning bid is lower than the withdrawn bid.92 No withdrawal payment
92 If a BTA service area is re-offered by auction, the "winning bid" refers to the high 
bid in the auction in which the service area is re-offered. If a BTA service area is re-offered 
in the same auction, the winning bid refers to the high bid amount, made subsequent to the 
withdrawal, in that auction. If the subsequent high bidder also withdraws its bid, that bidder
9653
will be assessed if the subsequent winning bid exceeds the withdrawn bid. After bidding 
closes, a defaulting auction winner (i.e. , a winner who fails to remit the required down 
payment within the prescribed time, fails to submit a long-form application or statement of 
intention, fails to make full payment, or is otherwise disqualified) will be subject to an 
additional payment of three percent of the subsequent winning bid or three percent of the 
amount of the defaulting bid, whichever is less. See 47 C.F.R. §§ 1.2104(g) and 1.2109; 
Second Report and Order at 2373-2374. The additional three percent payment is designed to 
encourage bidders who wish to withdraw their bids to do so before bidding ceases. We will 
hold deposits made by defaulting or disqualified auction winners until full payment of these 
amounts. In rare cases in which it would be inequitable to retain a down payment, we will 
entertain requests for waiver of this provision. We believe that these payment requirements 
will discourage insincere bidding and default and ensure that bidders have adequate financing 
and that they meet all eligibility and qualification requirements.93
147. In addition, "if a default or disqualification involves gross misconduct, 
misrepresentation or bad faith by an applicant, the Commission also may declare the 
applicant and its principals ineligible to bid in future auctions, and may take any other action 
that it may deem necessary, including institution of proceedings to revoke any existing 
licenses held by the applicant." Second Report and Order at 2383. Parties who obtain their 
BTA authorizations through the auction process are put on notice that if their BTA 
authorizations are cancelled for any reason they will lose all monies paid to the Commission 
regarding those authorizations. This loss of monies paid is not intended as an exclusive 
remedy. Where such BTA holder's conduct so warrants, additional sanctions, including 
monetary fines and station license revocation, may be imposed.
148. In the event that an MDS auction winner defaults or is otherwise disqualified, 
the Commission must determine whether to hold a new auction or simply offer the BTA 
service area to the second-highest bidder. As we stated in the Second Report and Order, we 
believe that, as a general rule, when an auction winner defaults or is otherwise disqualified 
after having made the required down payment, the best course of action is to re-auction the
will be required to pay an amount equal to the difference between its withdrawn bid and the 
amount of the subsequent winning bid the next time the BTA service area is offered by the 
Commission. If a BTA service area which is the subject of withdrawal or default is not re- 
auctioned, but is instead offered to the highest losing bidders hi the initial auction, the 
"winning bid" refers to the bid of the highest bidder who accepts the offer. Losing bidders 
will not be required to accept the offer. We wish to encourage losing bidders in MDS 
simultaneous multiple round auctions to bid on other BTA service areas, and therefore we 
will not hold them to their losing bids on a service area for which a bidder has withdrawn a 
bid or on which a bidder has defaulted.
93 Commenters addressing this issue agree that default payments are needed to deter 
speculation and insincere bidding. See Comments of Association at 54; PacTel at 4-5.
9654
BTA service area. Id. at 2383. Although we recognize that this may cause a brief delay in 
the initiation of service to the public, circumstances may change so significantly during the 
time between the original auction and the disqualification as to alter the value of the BTA 
service area to auction participants, as well as to parties who did not participate. In this 
situation, awarding BTA authorizations to the parties that value them most highly can best be 
assured through a re-auction. If, however, the default occurs within five business days after 
the bidding has closed, the Commission retains the discretion to offer the BTA service area 
to the second highest bidder at its final bid level, or if that bidder declines the offer, to offer 
the BTA service area to other bidders (in descending order of their bid amount) at the final 
bid levels. Moreover, if only a small number of relatively low value BTA service areas are 
to be re-auctioned and only a short time has passed since the initial auction, the Commission 
may choose to offer the BTA service; areas to the highest losing bidders because the cost of 
holding another auction for MDS may not exceed the benefits. See id.\ 47 C.F.R. 
§ 1.2109(b)and(c).
149. If a new MDS auction becomes necessary because of default or disqualification 
more than five business days after bidding has ended, the Commission will afford new 
parties an opportunity to file applications. One of our primary goals hi conducting auctions 
is to assure that all serious interested bidders are in the pool of qualified bidders at any re- 
auction. We believe that allowing new applications will facilitate achieving this goal, and 
that the short delay that may result from allowing new applications in a re-auction is 
warranted. Indeed, if we were not to allow new applicants in a re-auction, interested parties 
might be forced into an after-market transaction to obtain the BTA authorizations, which 
would itself delay service to the public and may prevent the public from recovering a 
reasonable portion of the value of the spectrum resource. See Second Report and Order at 
2384; 47 C.F.R. § 1.2109(c).
e. Post-Auction Application Procedures
150. Unlike other services where auction winners may file a single long-form 
application to obtain a single license for the entire geographic area auctioned, the winning 
bidder for each BTA service area will be required, in accordance with our existing rules, to 
submit separate long-form applications for each channel group and location within the BTA 
for which the bidder wants to obtain an MDS station license. The whining bidder for each 
BTA service area will therefore be required to submit a separate long-form application for 
each Channel E group, for each Channel F group, and for each Channel 1, 2 (or 2A), HI, 
H2, and H3 within the BTA for which the winning bidder wishes to receive a license.
151. The long-form application for the initial MDS station license within each BTA 
service area will be due from the winning bidder for that BTA within thirty business days
9655
after such bidder has been notified of its winning bidder status.94 After the Commission 
receives the winning bidder's down payment and the long-form application for the initial 
MDS station license within the BTA, we will review the long-form application, which must 
include, among other items, a FCC Form 430 and exhibits concerning the winning bidder's 
involvement in bidding consortia and status as a designated entity.95 If the long-form 
application is found to be acceptable, the Commission will release a public notice announcing 
this fact, triggering the thirty day filing window for petitions to deny. If the Commission 
denies or dismisses all petitions to deny (if any are filed), and is otherwise satisfied that the 
applicant is qualified, the BTA authorization will be issued and the initial conditional MDS 
station license within the BTA service area of the auction winner will be granted, assuming 
that the auction winner (except for a small business making installment payments) has made 
full payment as set forth in f 143. See Second Report and Order at 2383; 47 C.F.R. §§ 
1.2107(c), 1.2108. Subsequent long-form applications for MDS station licenses within BTA 
service areas, which auction winners may submit at any time during the five year build-out 
period, will be reviewed by the Commission and granted in a similar manner, except, of 
course, that the winning bidders will need to make no further payments.
152. However, we realize that a number of BTA service areas may be so 
encumbered that the winning bidder for such a BTA may be unable to file a long-form 
application proposing another MDS station within the BTA while meeting the Commission's 
interference standards as to all previously authorized or proposed MDS and ITFS facilities. 
The winning bidder's objective in bidding on such a heavily encumbered BTA would likely 
be to purchase the previously authorized or proposed MDS stations within the BTA and to 
maintain full flexibility to make modifications. It also seems likely that a winning bidder for 
a heavily encumbered BTA may itself possess most or all of the previously authorized or 
proposed MDS stations within that BTA, and the bidder's goal in obtaining the authorization 
for the BTA in which it already had MDS stations would similarly be to preserve full 
flexibility to make modifications. The winning bidder for a BTA service area so heavily 
encumbered that it believes it cannot file an acceptable long-form application proposing an 
MDS station with average transmitted power within its BTA should follow the post-auction
94 We realize that other services have generally required the filing of long-form 
applications within ten days of notification of the winning bidders. However, given the need 
for MDS auction winners to protect all previously authorized or proposed MDS and ITFS 
facilities within their BTA service areas from harmful interference, we believe that such 
winning bidders will likely require a longer period of time to complete the requisite 
engineering studies and interference analyses before filing their initial long-form applications 
for MDS station licenses.
95 The content of these exhibits is set forth in Section 21.956(b) of our amended rules, 
attached as Appendix C. Commenters agree that such information is needed, particularly 
where an applicant claims status as a designated entity. See Comments of U.S. Wireless at 
13.
9656
procedures set forth below.
153. After notification of its status as a winning bidder for a heavily encumbered 
BTA service area, the bidder must make its down payment within five business days in the 
normal manner. Within thirty business days after notification of its winning bidder status, 
the winning bidder must file with the Commission, in lieu of a long-form application for an 
MDS station license, a statement of intention with regard to the BTA service area, showing 
the encumbered nature of the BTA, identifying the incumbents, and describing hi detail its 
plan for obtaining the previously authorized or proposed MDS stations within the BTA. We 
do not intend to force winning bidders to file long-form applications for MDS station licenses 
hi BTAs so encumbered that the only proposed station to not cause harmful interference to 
incumbents would, for example, be a facility with a one watt transmitter and a highly 
directional antenna, serving no significant population. Winning bidders must, however, 
document in their statements of intention that additional MDS stations with average 
transmitted power could not be constructed in their BTAs without causing harmful 
interference to previously authorized or proposed MDS and FTPS facilities. If a whining 
bidder fails to file either this statement of intention or a long-form application within the 
thirty day period, it will be hi default and will be subject to the appropriate default payments. 
The statement of intention should also include a FCC Form 430, a drug certification, and the 
same exhibits concerning the winning bidder's financial circumstances, involvement in 
bidding consortia, and status as a designated entity that must be attached to initial long-form 
applications. See supra ^ 151.
154. The Commission will, following its review of the winning bidder's statement of 
intention, issue the BTA authorization to the winning bidder. Such issuance of the BTA 
authorization will, of course, be made only following full payment by the winning bidder as 
set forth in f 143, except for a small! business making installment payments. Parties wishing 
to comment on or oppose the issuance of a BTA authorization issued in connection with the 
filing of a statement of intention by a whining bidder must do so prior to the Commission's 
issuance of the BTA authorization.
f. Period of MDS Station Licenses
155. Under the Commission s rules, licenses for MDS stations are to be "issued for a 
period not to exceed 10 years." 47 C.F.R. § 21.45(a). "Unless otherwise specified by the 
Commission," the expiration of MDS station licenses as a class is, however, set on a single 
date (May 1) "hi the year of expiration" (i.e., the year which is ten years from the last 
expiration date of the class of MDS licenses, which was 1991). Id. Thus, the current term 
for all MDS station licenses as a class will expire on May 1, 2001, regardless of when these 
licenses are awarded. Because MDS station licenses as a class are due to expire on this set 
date, an MDS licensee who receives its station license on, for example, May 1, 1996 would 
in effect have the license for only five years before the licensee must apply for renewal.
156. For the reasons set forth herein, we believe that MDS auction winners should
9657
not be subject to the fixed MDS station license renewal cycle which, under existing rules, 
will expire on May 1, 2001, only five years or so from the time that any auction winner 
could expect to receive its initial station license in its BTA service area. We believe all 
winning bidders in the MDS auction should be assured of receiving station licenses of a 
duration sufficient so that they may have a reasonable period of time to construct their 
systems and earn a return on the amounts they invested in acquiring the BTA authorizations 
and MDS station licenses by competitive bidding. In addition, we realize that bidders who 
must arrange financing will need to assure lenders that they will have possession of their 
MDS station licenses for a reasonably lengthy period of time. We therefore determine that 
all MDS station licenses granted in every BTA service area auctioned should be for a ten 
year period (the maximum specified in Section 21.45(a)) to run from the date that the 
Commission declares bidding hi the MDS auction to be closed.
157. We conclude that awarding MDS station licenses with definite ten year terms, 
rather than much briefer, indeterminate terms dependent on when the license is granted, 
serves both prospective bidders and the Commission well. As described above, the set ten 
year period is of sufficient certainty and length to be fair to parties who must now pay 
considerable sums, and perhaps obtain outside financing, hi order to acquire BTA 
authorizations and MDS station licenses. In addition, we note that granting MDS station 
licenses with set ten year terms will allow small businesses eligible for installment financing 
to make payments over a period comparable to the length of their initial station licenses.96 
Furthermore, specifying that MDS licenses for stations located in BTA service areas acquired 
by competitive bidding will be for ten year terms dated from the close of bidding in the MDS 
auction, rather than from the actual date of issuance of each individual station license, will be 
administratively convenient for the Commission. Because all MDS station licenses granted 
within BTA service areas acquired by competitive bidding will expire on the same date, the 
Commission will be able to easily process those licenses and to deal more expeditiously with 
their renewal. In accordance with Section 21.4S(a), we hereby specify that all MDS station 
licenses granted hi every BTA service area auctioned will have ten year terms from the date 
that the Commission declares bidding in the MDS auction closed.
6. Regulatory Safeguards
a. Unjust Enrichment and Anti-Trafficking Provisions
158. Congress directed that we take steps to prevent unjust enrichment due to 
trafficking in licenses that were obtained through competitive bidding. See 47 U.S.C.
96 See Comments of Association at 59 (noting that Commission's general approach of 
permitting installment payments to be spread over term of license would be inequitable since 
all MDS station licenses were set to expire on May 1, 2001, regardless of when issued, and 
advocating that small businesses be allowed to pay for licenses hi installments over a ten year 
period).
9658
§ 309(j)(4)(E). In Section 7 below, we adopt specific rules to prevent designated entities 
from taking advantage of special provisions for such entities by transferring control of their 
BTA authorizations immediately following the MDS auction. Moreover, the MDS rules 
already contain provisions to reduce trafficking. See 47 C.F.R. § 21.39 (generally 
prohibiting assignment or transfer of MDS conditional station licenses prior to completion of 
construction of facility). These existing anti-trafficking provisions will continue to apply to 
MDS conditional station licenses granted prior to the institution of competitive bidding 
procedures. Consistent with the Second Report and Order, however, the existing MDS- 
specific anti-trafficking provisions will not apply to BTA authorizations and MDS conditional 
station licenses granted within auctioned BTA service areas.
159. With regard to BTA authorizations obtained by auction, an applicant seeking 
approval for an assignment or transfer of control of a BTA authorization within three years 
of receipt of such authorization by means of competitive bidding must, together with its 
assignment or transfer application, file with the Commission a statement indicating that its 
authorization was obtained through competitive bidding. Such applicant must also file with 
the Commission the associated contracts for sale, option agreements, management 
agreements, or other documents disclosing the total consideration received in return for the 
assignment or transfer of the authorization. We will give particular scrutiny to auction 
winners who have not yet begun commercial service within their BTA service areas and who 
seek approval for an assignment or transfer of control of their authorizations within three 
years after the receipt of such authorizations, in order to determine if any unforeseen 
problems relating to unjust enrichment have arisen outside the designated entity context. See 
Second Report and Order at 2385-2386; 47 C.F.R. § 1.2111(a).
160. After consideration, we determine not to adopt any additional restrictions on the 
assignments or transfers of BTA authorizations, outside of the designated entity context. In 
our opinion, unjust enrichment is unlikely to be a problem in the MDS competitive bidding 
process where the auction winners will pay the market price for their BTA authorizations and 
hence resale of such authorizations should not involve any unjust enrichment. See Second 
Report and Order at 2385. Moreover, prohibitions on assignments or transfers of BTA 
authorizations, even if for a limited time, might have the unintended effect of delaying 
service to the public. See id. We therefore decline to impose prohibitions on assignments or 
transfers, such as a prohibition on the resale of MDS "channels for profit until those 
channels have been operational for one year," as one commenter suggests. See Comments of 
Rural Wireless at 11.
b. Construction Build-out Requirements
161. Congress has directed that the Commission, in implementing auction 
procedures, "include performance requirements, such as appropriate deadlines and penalties 
for performance failures, to ensure prompt delivery of service to rural areas, to prevent 
stockpiling or warehousing of spectrum by licensees or permittees, and to promote 
investment in and rapid deployment of new technologies and services." 47 U.S.C.
9659
§ 309(j)(4)(B). In the Second Report and Order, we decided that it was generally 
unnecessary to impose additional construction build-out or other performance requirements 
for auctionable services beyond those already provided in service rules. Id. at 2386. 
However, following a review of our existing MDS rules, we determined to alter the 
construction requirements that will be applicable to the holders of BTA authorizations 
obtained by competitive bidding.
162. Our current rules require the completion of construction of MDS stations within 
twelve months from the date of the conditional station license grant. 47 C.F.R. § 21.43. 
We will continue to apply this existing requirement to MDS conditional station licenses 
granted prior to the institution of competitive bidding procedures. We will not, however, 
apply this twelve month construction requirement to MDS conditional station licenses granted 
in the future hi the BTA service areas of auction winners. Instead, we will require the 
holders of BTA authorizations to meet the five year build-out requirements set forth at 5 43.
163. We believe that this change in our construction requirements is necessitated by 
our decision to grant BTA-based authorizations to MDS auction winners. Our goal in 
imposing any construction or other performance requirement is to insure that each auction 
winner provides service throughout its BTA. We believe that the imposition of a general 
BTA-wide build-out requirement will better achieve this goal than our continued imposition 
of a twelve month construction requirement on each particular MDS facility within the BTA.97
c. Rules Prohibiting Collusion
164. In the generic auction rules, we adopted special provisions to prevent collusive 
conduct hi the context of competitive bidding. 47 C.F.R. § 1.2105(c). We indicated that 
such rules would serve the objectives of the Budget Act by preventing parties, especially 
larger firms, from agreeing in advance to bidding strategies that might divide the market 
according to their strategic interests and to the disadvantage of other bidders. Such rules 
could also strengthen confidence hi the bidding process. Second Report and Order at 2386. 
These rules apply to all auctionable services, including MDS. Applicants are required to 
identify in an exhibit to then- short-form applications any parties with whom they have 
entered into any consortium arrangements, joint ventures, partnerships or other agreements 
or understandings which relate to the BTA service areas being auctioned. Applicants are also 
required to certify that they have not entered into any explicit or implicit agreements, 
arrangements or understandings with any parties, other than those identified, regarding the 
amount of their bid, bidding strategies or the particular BTA service areas on which they will
97 We also note that imposing such a build-out requirement is consistent with the 
requirements of other area-based services, such as PCS. See 47 C.F.R. §§ 24.103 and 
24.203 (requiring building out of narrowband and broadband PCS systems to serve 
percentage of population, or specified amount of area, within relevant service area).
9660
or will not bid. See 47 C.F.R. § 1.2105(a)(2)(viii) and (ix). Except as otherwise provided 
in 1165, after the short-form applications are filed and prior to the time the winning bidder 
has made its required down payment, all applicants are prohibited from cooperating, 
collaborating, discussing or disclosing in any manner the substance of their bids or bidding 
strategies, or discussing settlement agreements, with other applicants, unless such applicants 
are members of a bidding consortium or other joint bidding arrangement identified on the 
applicants' short-form application. See 47 C.F.R. § 1.2105(c)(l). Communications among 
applicants concerning matters unrelated to the MDS auction will, however, be permitted after 
the filing of short-form applications. See Fourth Memorandum Opinion and Order in PP 
Docket No. 93-253, 9 FCC Red 6858, 6869 (1994).
165. Despite the restrictions set forth in f 164, applicants may amend their short- 
form applications to reflect formation of bidding consortia or changes in ownership after the 
short-form application filing deadline has passed, provided such changes do not result in a 
change in control of the applicant, and provided that the parties forming consortia or entering 
into ownership agreements have not applied to bid on the same BTA service areas. In 
addition, after the filing of short-form applications, applicants may make agreements to bid 
jointly for BTA service areas, provide*! the parties to the agreement have not applied for the 
same BTA service areas. A holder of a non-controlling attributable interest in an entity 
submitting a short-form application may also, following the filing of the short-form 
application and under certain conditions specified in 47 C.F.R. § 1.2105(c)(4), acquire an 
ownership interest in, form a consortium with, or enter into a joint bidding arrangement 
with, other applicants for the same BTA service areas. To reflect these changes in 
ownership or in the membership of consortia or joint bidding arrangements, applicants must 
amend their short-form applications by submitting a revised short-form, filed within two 
business days of any such change; such modifications will not be considered major 
amendments of the applications. However, any amendment which results hi the change of 
control of an applicant will be considered a major amendment of the short-form. See supra 
1 133; 47 C.F.R. § 1.2105(c)(2), (3) and (4); Second Memorandum Opinion and Order at 
7254; Memorandum Opinion and Order in PP Docket No. 93-253, 9 FCC Red 7684, 7688- 
7689 (1994). Finally, the winning bidder for each BTA service area must, as an exhibit to 
its initial long-form application or statement of intention, explain the terms and conditions 
and parties involved hi any bidding consortia, joint venture, partnership or other agreement it 
had entered into relating to the competitive bidding process prior to the time bidding was 
completed. See 47 C.F.R. § 1.2107(d).
166. Where specific instances of collusion hi the competitive bidding process are 
alleged, the Commission may conduct: an investigation or refer such complaints to the United 
States Department of Justice for investigation. Bidders who are found to have violated the 
antitrust laws or the Commission's rules in connection with participation in the auction 
process may, among other remedies, foe subject to the loss of their upfront payment, down 
payment or their full bid amount, cancellation of their BTA authorizations, and may be 
prohibited from participating in future: auctions. See Second Report and Order at 2388; 
47 C.F.R. § 1.2109(d).
9661
7. Treatment of Designated Entities 
a. General Considerations
167. Section 309(j) of the Communications Act provides that the Commission 
"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." 47 U.S.C. § 309(j)(4)(D). To achieve this congressional goal, 
the statute directs the Commission to "consider the use of tax certificates, bidding 
preferences, and other procedures." Id. In addition, Section 309(j)(3)(B) instructs the 
Commission, in establishing eligibility criteria and bidding methodologies, to promote 
"economic opportunity and competition ... 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," which are collectively referred to as 
"designated entities." 47 U.S.C. § 309(j)(3)(B); 47 C.F.R. § 1.2110. Section 309(j)(4)(A) 
further provides that to promote these objectives, the Commission shall consider alternative 
payment schedules, including lump sums or guaranteed installment payments. 47 U.S.C. 
§ 309(j)(4)(A).
168. In instructing the Commission to ensure the opportunity for designated entities 
to participate in auctions and spectrum-based services, Congress was aware of the problems 
that designated entities would have in competing against large, well-capitalized companies in 
auctions and the difficulties they encounter in accessing capital. For example, the legislative 
history accompanying our grant of auction authority states generally that the Commission's 
regulations "must promote economic opportunity and competition," and "[t]he Commission 
will realize these goals by avoiding excessive concentration of licenses and by disseminating 
licenses among a wide variety of applicants, including small businesses and businesses owned 
by members of minority groups and women. H.R. Rep. No. Ill, 103d Cong., 1st Sess. 254 
(1993) (House Report). The House Report states that the House Committee was concerned 
that, "unless the Commission is sensitive to the need to maintain opportunities for small 
businesses, competitive bidding could result in a significant increase in concentration in the 
telecommunications industries." Id. More specifically, the House Committee was concerned 
that the adoption of competitive bidding should not have the effect of "excluding small 
businesses from the Commission's licensing procedures," and anticipated that the 
Commission would adopt regulations to ensure that small businesses would "continue to have 
opportunities to become Commission licensees." Id. at 255.
169. Consistent with Congress' concern that auctions not operate to exclude small 
businesses, the provisions relating to installment payments in Section 309(j) were clearly 
intended to assist small businesses. The House Report states that these provisions were 
drafted to "ensure that all small businesses will be covered by the Commission's regulations, 
including those owned by members of minority groups and women." Id. at 255. It also 
states that the provisions in Section 309(j)(4)(A) pertaining to installment payments were 
intended to promote economic opportunity by ensuring that competitive bidding does not
9662
inadvertently favor incumbents with "deep pockets" "over new companies or start-ups." Id.
170. Moreover, with regard to access to capital, Congress had made specific findings 
in the Small Business Credit and Business Opportunity Enhancement Act of 1992, that "small 
business concerns, which represent higher degrees of risk in financial markets than do large 
businesses, are experiencing increased difficulties in obtaining credit." Small Business Credit 
and Business Opportunity Enhancement Act of 1992, Pub. L. No. 102-366, § 331(a)(3), 106 
Stat. 986, 1007 (1992). As a result of these difficulties, Congress resolved to consider 
carefully legislation and regulations "to ensure that small business concerns are not 
negatively impacted" and to give priority to passage of "legislation and regulations that 
enhance the viability of small business concerns." Id. at § 331(b)(2) & (3).
171. In our initial implementation of Section 309(j), the Commission established in 
the Second Report and Order eligibility criteria and general rules that would govern the 
special measures for small businesses, rural telephone companies, and businesses owned by 
minorities and women. We also identified several measures, including installment payments, 
bidding credits and spectrum set-asides, that we could choose from in formulating the rul&s 
for auctionable spectrum-based services. In addition, we established rules to prevent unjust 
enrichment by designated entities seeldng to assign or transfer licenses obtained through use 
of one of these special measures. See Second Report and Order at 2388-2400.
172. In adopting provisions to provide designated entities opportunities in MDS, we 
note that, while Section 309(j) lists the various designated entities together, the statute does 
not indicate that each group must be ^afforded the same type of treatment. See Competitive 
Bidding Notice at 7646. We have consistently emphasized that the provisions applicable to 
particular designated entities would viary depending on the nature of each individual service. 
In particular, we have evaluated the capital requirements, the nature of the expected pool of 
bidders, and other characteristics of each service to determine the appropriate measures to 
achieve the objectives of the auction statute. See Second Memorandum Opinion and Order at 
7256; Fourth Report and Order at 2336.
173. With regard to MDS, we note that this service differs from the other services 
that have been auctioned to date in several important ways. First, unlike PCS and IVDS, 
wireless cable is a heavily encumbered service with many of the channels in most major 
markets already occupied. Given the limited amount of remaining usable spectrum and the 
need to protect incumbents from harmful interference, we anticipate that the BTA service 
areas will be auctioned for relatively modest amounts, particularly in comparison to the sums 
bid in the PCS auctions. Second, it is necessary for MDS channels within a geographic area 
to be aggregated under the control of a single wireless cable operator, to allow it to compete 
with wired cable television systems in the same area. Notice at 7667. Thus, our goal in this 
proceeding is not to set the stage for ;the development of an entirely new industry, such as 
PCS, but to allow the progression and rationalization of the existing wireless cable industry. 
Accordingly, we cannot adopt designated entity rules that would hinder the accumulation of 
MDS channels within BTAs by entities financially capable of operating wireless cable
9663
systems and providing competitive service to the public.
174. Because MDS differs from other auctionable services, we requested hi our 
Notice comment on the various special measures available for designated entities. We 
specifically requested comment on "which entities should be eligible to receive them, and 
their appropriateness in light of the characteristics of MDS." Notice at 7678-7679. Despite 
our specific request for comment, no minority or women-owned entities, or organizations 
representing them, submitted comments on the need for special measures for such entities in 
MDS. Thus, the Commission has no record before it with reliable information about the 
percentage of minority and women-owned businesses in the wireless cable industry and no 
information as to how such businesses could be disadvantaged hi an MDS auction without 
special incentives for them.
175. In this Report and Order we adopt specific designated entity measures 
appropriate for MDS, based on the record hi this proceeding and on the unique 
characteristics of the service as identified above. Specifically, we have determined to make 
installment payments, reduced upfront payments and bidding credits available to small 
businesses, including those owned by minorities and women, and to small business consortia. 
We also adopt the unjust enrichment provisions set forth in the Second Report and Order 
applicable to installment payments and bidding credits. Id. at 2395; 47 C.F.R. § 1.2111(c) 
& (d). We decline to adopt spectrum set-asides. Such a measure is inappropriate for MDS, 
given the heavily encumbered nature of this service and the lack of sizable, discrete blocks of 
spectrum to auction.98
b. Entities Eligible for Special Measures
176. Although we will offer installment financing, reduced upfront payments and 
bidding credits to small businesses, we have concluded that the provision of additional 
measures for rural telephone companies is unnecessary hi the MDS auction. Congress 
intended by including rural telephone companies in the category of designated entities to 
ensure that rural consumers received the benefit of new technologies. See 47 U.S.C. 
§ 309(j)(3)(A); Fourth Report and Order at 2337 n.66. However, many rural consumers and 
residents of smaller communities already receive the benefit of wireless cable services. 
Numerous wireless cable operators focus on uncabled rural areas and small towns, and rural
98 This decision is consistent with the Commission's previous determination that, due to 
the small amount of spectrum available, spectrum set-asides were not appropriate for I YDS. 
See Fourth Report and Order at 2336. Such determination is also consistent with the 
comments received in this proceeding, which uniformly state that set-asides are not 
appropriate for MDS, given the limited amount of spectrum available and the need to 
aggregate channels to create competitive wireless cable service. See Comments of PacTel at 
3; Vega at 19; Association at 64-66; American Telecasting at 26; ACS Enterprises, et al. at 
24.
9664
states, such as North and South Dakota, Oklahoma, and Nebraska, have among the highest 
numbers of operating and planned wireless cable systems. Moreover, given the anticipated 
modest auction prices of authorizations for sparsely populated rural BTAs, we do not believe 
that rural telephone companies will need either a special exemption from the MDS 
competitive bidding process or additional measures provided to them in order to compete in 
the auction process." Rural telephone companies will, of course, be eligible for the 
incentives provided to small businesses generally if they meet those eligibility requirements. 
See Reply Comments of Telephone Cooperative at 2-3 (urging Commission to provide rural 
telephone companies same treatment as small businesses, if they meet small business 
eligibility requirements.) This determination not to provide additional measures for rural 
telephone companies is consistent with the Commission's decisions in the PCS and IVDS 
auction rules, and with other comments received hi this proceeding. 100
177. In addition, we expect irural telephone companies to take advantage of the 
partitioning option described above at ft 46-47, so they will not have to bid on entire BTAs 
to obtain authorizations for the rural areas they are interested hi serving. Thus, rural 
telephone companies should be able 1:0 obtain authorizations for partitioned BTAs by private 
negotiation and agreement with auction winners. Rural telephone companies could also form 
bidding consortia to participate hi MDS auctions, and then partition the BTAs won among 
consortia participants. In our opinion, the offering of this broad partitioning option to all 
interested entities, including rural telephone companies, also serves to make the provision of 
additional measures for rural telephone companies unnecessary.
178. Although we will offer installment financing, reduced upfront payments and 
bidding credits to minority and women-owned small businesses, we have also for several 
reasons determined, in the absence of evidence hi the record to the contrary, that the 
provision of special measures to minority and women-owned enterprises, regardless of size, 
is unnecessary. First, we tiote that installment financing, reduced upfront payments and 
bidding credits will not be limited to certain BTA service areas, but will be available to small 
businesses for every BTA service area to be auctioned. We believe that broadening the 
scope of opportunity for small businesses hi this manner should also create substantial
99 See Comments of Rural Wireless at 3-9 (arguing for either an exemption from 
competitive bidding process or additional special measures for rural telephone companies 
because Congress wanted to ensure the provision of wireless cable services to rural 
consumers and because rural telephone companies have been unable to compete in other 
spectrum auctions, including PCS).
100 See Comments of ACS Enterprises, et al. at 24; Reply Comments of Association at 
18; Reply Comments of American Telecasting at 16-17 (noting that additional measures for 
rural telephone companies are not necessary to ensure that rural consumers receive benefit of 
wireless cable service, and that there is no reason to prefer rural telephone companies over 
others as providers of such service in rural areas).
9665
opportunity for minority and women-owned enterprises. Census data has shown that 
approximately ninety-nine percent of all women-owned and ninety-nine percent of all 
minority-owned businesses generate annual receipts of one million dollars or less. 101 Thus, 
we expect that virtually all minority and women-owned enterprises will be eligible for the 
special measures adopted herein for small businesses. Moreover, we note that we are 
permitting consortia of small businesses to utilize installment financing, reduced upfront 
payments and bidding credits, if each member of the consortia is individually eligible. Small 
minority and women-owned enterprises may therefore join together in consortia to participate 
in MDS auctions and still remain eligible for all special measures available to small 
businesses individually.
179. Second, we believe that small minority and women-owned entities, with the 
various incentives they will receive as small businesses, should be able to participate 
successfully in competitive bidding, given the anticipated relatively modest value of many of 
the BTA service areas to be auctioned. Due to the heavily encumbered nature of the wireless 
cable industry, the Commission has estimated that the amounts bid in the MDS auction will 
not approach the levels reached in earlier auctions, particularly PCS. Thus, additional 
incentives for minority and women-owned enterprises, regardless of their size, appear less 
necessary for MDS than for other auctionable services.
180. Moreover, we note that minority and women-owned entities may also, like rural 
telephone companies, take advantage of the broad partitioning option set forth above at 
51 46-47. Unlike other services that have limited the availability of partitioning to rural 
telephone companies, we are allowing any type of entity to negotiate with auction winners to 
obtain authorizations for partitioned BTAs. Thus, minority and women-owned entities that 
do not wish to bid on entire BTAs should be able to acquire authorizations for partitioned 
portions of those service areas.
181. This determination not to provide additional measures for minority and women- 
owned companies, regardless of their size, is consistent with the Commission's position in 
other auction rules. In the Fifth Report and Order, we specifically observed that, due to the 
expected high auction value of the PCS spectrum and the substantial build-out costs, it would 
be necessary to provide additional assistance to women and minority enterprises to ensure 
their opportunity to participate in broadband PCS than would be "necessary in other, less 
costly spectrum-based services." Id. at 5572-5573. We believe that the installment 
financing, reduced upfront payments and bidding credits available to all small businesses, 
along with the broad partitioning option, should be sufficient to give minority and women- 
owned entities the opportunity to participate in the "less costly" MDS auction.
101 See Women-Owned Businesses, WB 87-1, 1987 Economic Census, at 144, Table 8; 
Survey of Minority-Owned Business Enterprises, MB 87-4, 1987 Economic Census, at 81-82, 
Table 8.
9666
c. Installment Payments
182. In this Report and Order, we approve installment financing for small 
businesses. 102 Permitting a winning bidder to pay through installments is the equivalent of 
having the government extend credit to the bidder. With this installment financing option, a 
prospective bidder may not need to rely as heavily on private financing either before or after 
an auction. Given the difficulties experienced by small businesses hi obtaining credit (see 
supra 1 170), this governmental extension of credit should be particularly valuable to small 
businesses that are winning bidders in spectrum auctions. Installment payments should 
therefore be both an effective method of promoting the participation of designated entities in 
the provision of spectrum-based services and a means of distributing licenses and services 
among geographic areas. Second Report and Order at 2389-2390. In the Second Report and 
Order, we determined that installment payments should be offered only to small businesses 
(including those owned by minorities and women), and then only hi instances where use of 
the spectrum being auctioned was likely to match the business objectives of bona fide small 
businesses. Id. at 2390. We also specifically noted that the legislative history of the Budget 
Act indicates that large enterprises with established revenue streams are not intended the 
beneficiaries of installment financing. Id. Given the considerable number of small 
enterprises currently involved in the wireless cable industry, we believe that MDS has 
offered, and will continue to offer, bona fide business opportunities to small enterprises.
183. We will therefore permit the use of installment payment plans hi all MDS 
auctions, and follow the general procedures set forth in the Second Report and Order. The 
installment payment option will allow a small business to pay the full amount of its whining 
bid in installments (less the upfront payment and the down payment, half of which is due five 
business days after notification to the winning bidder and the other half five days after the 
public notice stating that the BTA authorization is ready for issuance). Only interest 
payments will be due for the first two years, with principal and interest both being amortized 
over the remaining years qf the ten year period running from the date that the BTA 
authorization is issued. Also, interest charges will be fixed at the tune of issuance of the 
BTA authorization at a rate equal to ithat of ten year U.S. Treasury notes, plus two and one 
half (2.5) percent. See Second Report and Order at 2390. Timely payments of all 
installments will be a condition of the issuance of the BTA authorization. Failure to make 
such timely payments on or before the date due is also grounds for cancellation of the BTA 
authorization, although limited grace periods for defaulting small businesses may be 
considered on a case-by-case basis. See id. at 2391. If a small business making installment 
payments seeks to assign or transfer its BTA authorization to a non-small business entity, we 
will require payment of any remaining unpaid principal balance, and of any unpaid interest 
accrued, as a condition of the assignment or transfer. See id. at 2395.
d. Reduced Upfront Payments
102 No commenter opposes the adoption of an installment payments measure.
9667
184. Upfront payment requirements are designed to ensure that bidders are qualified 
and serious and to provide the Commission with a source of funds in the event that it 
becomes necessary to assess default or bid withdrawal payments. See Second Report and 
Order at 2377-2379. Although the Commission has not chosen to create a general exception 
to our upfront payment requirements for designated entity applicants (see id. at 2380), we 
have previously allowed designated entities to make reduced upfront payments. See, e.g., 
Fifth Report and Order at 5600. We believe that allowing small businesses to make reduced 
upfront payments should facilitate auction participation by capital-constrained wireless cable 
operators and permit them to conserve resources for building out their systems after the MDS 
auction. See infra f 191 for a discussion of the capital constraints faced by wireless cable 
operators.
185. Specifically, we will for the MDS auction reduce the upfront payment 
requirement by twenty-five percent for small businesses and for small business consortia. 
See Fifth Report and Order at 5600" (reducing upfront payment for bidders in entrepreneurs' 
block PCS auction by twenty-five percent). As discussed in 1 137, prior to the MDS 
auction, the Mass Media Bureau, in conjunction with the Wireless Telecommunications 
Bureau, will publish a public notice listing the upfront payment amount corresponding to 
each BTA service area to be auctioned. A prospective bidder claiming eligibility as a small 
business and wishing to bid on a particular BTA service area will thus be required to submit 
an upfront payment equal to seventy-five percent of the upfront payment specified in the 
public notice for that BTA. We believe that this reduction in the upfront payments for small 
businesses will properly permit wireless cable operators to conserve their capital for building 
out their systems and adding subscribers, while still serving to discourage insincere or 
speculative bidding.
e. Bidding Credits
186. Given the difficulties faced by small businesses in accessing capital (see supra 
1 170), and based upon our expectations as to the numbers and types of bidders that will 
participate in the MDS auction, we conclude that a bidding credit is appropriate for small 
businesses in the MDS auction. A bidding credit, in effect, functions as a discount on the 
bid price a bidder will actually have to pay to obtain a BTA authorization and, thus, will 
address directly the financing obstacles encountered by small businesses. A bidding credit 
should accordingly "level the playing field" by helping small businesses, particularly 
incumbent wireless cable operators, to compete effectively in the MDS auction against larger 
enterprises, such as the large telecommunications carriers. We also believe the offering of a 
bidding credit may aid small businesses to more easily attract capital; specifically, outside 
investors may be more eager to invest in a small wireless cable operator if that operator will 
be benefited by a bidding credit in the MDS auction. For these reasons, we believe that a 
bidding credit will have a significant positive effect on the ability of small businesses to 
participate successfully in an MDS auction.
187. We note that the commenters in this proceeding differ as to the appropriateness
9668
of a bidding credit for MDS. Some commenters support the provision of a bidding credit to 
help ensure that small businesses are given an opportunity to participate in the provision of 
spectrum-based services. See Comments of Vega at 19; Rural Wireless at 11-12. Other 
commenters either oppose the adoption of a bidding credit measure or support a bidding 
credit severely restricted in its applicability. See Comments of American Telecasting at 26; 
ACS Enterprises, et al. at 21; Association at 63-64. These commenters oppose the adoption 
of a widely-available bidding credit because they contend that the offering of such a credit to 
designated entities who may not possess MDS channels already may work against the 
accumulation of channels hi the hands of entities with the ability to develop viable wireless 
cable operations. After consideration, we must disagree with those commenters who oppose 
the offering of a bidding credit. We believe that the adoption of a bidding credit for small 
businesses will not only enable small businesses generally to better compete in the MDS 
auction, but may also actually encourage the aggregation of channels in the hands of existing 
wireless cable operators by allowing these incumbents to compete successfully in the auction 
against larger enterprises, such as telecommunications carriers, who may not currently 
possess MDS channels.
188. For these reasons, we will offer a fifteen percent bidding credit to small 
businesses, and to consortia of small businesses, bidding on any of the BTA service areas 
available in the MDS auction. Given the encumbered nature of MDS and the presence of 
incumbents in most BTAs, 'it appeals unpractical to restrict the availability of bidding credits 
to certain channels or spectrum blocks. Additionally, we believe that we would provide 
greater opportunities for small businesses, including incumbent wireless cable operators, if 
we offer bidding credits on all BTA. service areas. We feel that these bidding credits will 
help achieve the objectives of Congress by providing small businesses, including women- 
owned and minority-owned small businesses, with a meaningful opportunity to obtain BTA 
authorizations and to conserve scarce capital for building out their wireless cable systems 
after the auction. Although other services have provided larger bidding credits to certain 
designated entities, we believe that the fifteen percent credit is sufficient for MDS because, 
unlike these other services, we will offer this bidding credit on all authorizations to be 
awarded to small businesses. 103
103 See, e.g., Third Report and Order at 2970 (providing twenty-five percent bidding 
credit on specified channels to certain designated entities in nationwide narrowband PCS 
auction); Third Memorandum Opinion and Order at 201 (providing forty percent bidding 
credit on specified channels to certain designated entities in regional narrowband PCS 
auction); Fourth Report and Order at 2337 (offering twenty-five percent bidding credit on 
one of two IVDS licenses available in each geographic license area). See also Second Report 
and Order and Second Further Notice of Proposed Rulemaking in PR Docket No. 89-553, PP 
Docket No. 93-253, and GN Docket No. 93-252, FCC 95-159 (released April 17, 1995) at 
H 130 (proposing to provide ten percent bidding credit on all 900 MHz Specialized Mobile 
Radio channel blocks to be auctioned).
9669
189. To prevent unjust enrichment by small businesses trafficking in BTA 
authorizations acquired through the use of bidding credits, we will require small businesses 
to reimburse the government, as set forth below, if BTA authorizations are transferred or 
assigned to entities that do not fulfill the small business eligibility requirements. See Second 
Report and Order at 2395. Small businesses seeking to transfer or assign a BTA 
authorization to an entity not meeting the definition of small business will be required to 
reimburse the government for the amount of the bidding credit, plus interest at the rate 
imposed for installment financing at the time the authorization was awarded, before transfer 
or assignment will be permitted. The amount of the required reimbursement will be reduced 
over time. A transfer or assignment in the first two years after issuance of the authorization 
will result in a reimbursement of one hundred percent of the value of the bidding credit; 
during year three, of seventy-five percent of the bidding credit; in year four, of fifty percent; 
in year five, of twenty-five percent; and thereafter, no reimbursement. 104
f. Eligibility for Installment Payments, Reduced Upfront Payments and 
Bidding Credits
190. In the Second Memorandum Opinion and Order, the Commission amended its 
generic auction rules to replace the small business definition used by the Small Business 
Administration (SBA) with a provision enabling the Commission to establish a small business 
definition in the context of each particular service, taking into consideration the 
characteristics and capital requirements of the particular service. See 47 C.F.R. 
§ 1.2110(b)(l). In response to our specific request for comment on the appropriate definition 
of small business for MDS, the majority of commenters expressing an opinion supports the 
definition adopted by the Commission for the narrowband and broadband PCS. See 
Comments of Association at 61-62; Reply Comments of American Telecasting at 17-18; 
Reply Comments of ACS Enterprises, et al. at 8. Under this approach, a small business is 
an entity that, together with its affiliates, has annual average gross revenues for the three 
preceding years not hi excess of $40 million.
191. Following our review of the comments and our consideration of the capital 
requirements of MDS, we conclude that the approach utilized by the narrowband and 
broadband PCS is also appropriate for MDS. We will also allow consortia of small 
businesses, each member of which individually meets the $40 million gross revenue standard, 
to qualify for installment payments, reduced upfront payments and bidding credits. See 
47 C.F.R. § 1.21100). As noted by industry analysts and by commenters, wireless cable, 
although significantly less capital intensive than traditional coaxial cable, is not inexpensive. 
Tower and head end expenses may range from under $1 million for a small rural system to 
$2 to $3 million per system in major markets, and the cost of adding each new subscriber
104 Commenters addressing this issue agree with the Commission that measures to 
prevent unjust enrichment are needed. See Comments of ACS Enterprises, et al. at 22-23.
9670
has been estimated to be $400 to $600. 10S Thus, even though the cost of acquiring BTA 
authorizations at auction are estimated to be relatively modest in comparison to other 
services, considerable capital is nonetheless required to construct a competitive wireless cable 
system. Moreover, analysts have emphasized that the wireless cable industry has historically 
had difficulty in obtaining financing and that the future success of wireless cable is crucially 
dependent upon its ability to obtain additional financing. 106
192. Given the capital requirements of the wireless cable industry and its past 
difficulties in attracting capital, we telieve that the $40 million gross revenue standard is 
appropriate for MDS. 107 If the Commission were to adopt a significantly lower standard for 
the definition of small business, we would exclude companies with the financial wherewithal 
to operate wireless cable systems competitive with cable television from eligibility for 
installment payments, reduced upfront payments and bidding credits. See Second 
Memorandum Opinion and Order at 7268; Comments of Association at 63. For example, if 
we define small businesses as entities with annual gross revenues of less than $2 million, as 
one commenter urges, we would prevent wireless cable companies with the financial ability 
to construct systems and add subscribers from obtaining the benefits of these various special 
measures. See Comments of Vega at 19. We also believe that the standard SBA definition 
of small business -- an entity with no more than $6 million net worth and no more than $2 
million in annual profits - is similarly overly restrictive. 108 We accordingly decline to adopt 
the SBA's definition of small business for MDS, as a single commenter urges. See 
Comments of Rural Wireless at 12. We therefore conclude that the $40 million gross 
revenue standard utilized by other services is appropriate, as it would not exclude enterprises
105 See Gerard Klauer Mattison & Co., Inc., The Wireless Cable Industry: Summary of 
1994 and Outlook for 1995 (Dec. 22, 1994) at 2; Dillon Read & Co. Inc., The Wireless 
Cable Industry (Aug. 22, 1994) at 10; Gerard Klauer Mattison & Co., Inc., The Wireless 
Cable Industry (Jan. 21, 1993) at 4; Comments of Association at 62-63; Reply Comments of 
American Telecasting at 18.
106 See Gerard Klauer Mattison & Co., Inc., The Wireless Cable Industry: Summary of 
1994 and Outlook for 1995 (Dec. 22, 1994) at 2; Gerard Klauer Mattison & Co., Inc., The 
Wireless Cable Industry (Jan. 21, 1993) at 4.
107 We also note, as the commenters point out, that the capital requirements for certain 
narrowband PCS facilities appear comparable to or even lower than the capital required to 
construct a viable wireless cable system. Because the Commission adopted the $40 million 
standard for narrowband PCS, these commenters assert that the adoption of the same 
standard is appropriate for MDS. See Comments of Association at 62; Reply Comments of 
American Telecasting at 18; Third Report and Order at 2969 n.40; Third Memorandum 
Opinion and Order at 196.
108 See Second Memorandum Opinion and Order at 7268; Third Memorandum Opinion 
and Order at 195; Fifth Report and Order at 5606-5608.
9671
in need of special incentives to compete successfully in the wireless cable industry, but would 
not provide such incentives to larger telecommunications enterprises with well-established 
revenue streams and easier access to capital.
g. Records Maintenance and Audits
193. All holders of BTA authorizations acquired by auction that claim designated 
entity status will be required to maintain, at their principal place of business or with then- 
designated agent, an updated documentary file of ownership and revenue information 
necessary to establish their status. Holders of BTA authorizations or their successors hi 
interest must maintain such files for a ten year period running from the date that their BTA 
authorizations are issued. The files must be made available to the Commission upon request.
194. BTA authorization holders claiming eligibility under designated entity provisions 
will be subject to audits by the Commission, using in-house or contract resources. Selection 
for an audit may be random, on information, or on the basis of other factors. Consent to 
such audits is part of the certification included in the short-form application. Such consent 
will include consent to the audit of the holders' books, documents and other material 
(including accounting procedures and practices), regardless of form or type, sufficient to 
confirm that such holders' representations are, and remain, accurate. Such consent will also 
include inspection at all reasonable times of the facilities, or parts thereof, engaged hi 
providing and transacting business or keeping records regarding licensed MDS offerings, and 
will also include consent to the interviewing of principals, employees, customers, and 
suppliers of the BTA authorization holders.
195. We believe that the above records maintenance and audit provisions are 
necessary to prevent abuse of the special measures offered to those MDS auction winners 
claiming designated entity status. These provisions requiring the retention of records should 
not prove overly burdensome, and they will help to ensure that only entities eligible under 
the auction rules will be able to take advantage of the designated entity measures.
IV. ORDERING CLAUSES
196. Accordingly, IT IS ORDERED that, pursuant to the authority of Sections 4(i) 
and 0), 301, 303(f), 303(g), 303(h), 3030), 303(r), 307(c), 308(b), 3090) and 403 of the 
Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 301, 303(f), 303(g), 
303(h), 3030), 303(r), 307(c), 308(b), 3090), and 403, this Report and Order is adopted, 
and Part 21 of the Commission's Rules ARE AMENDED as set forth hi the attached 
Appendix C.
197. IT IS FURTHER ORDERED that the rule amendments set forth in Appendix C 
WILL BECOME EFFECTIVE 60 days after their publication in the Federal Register.
9672
198. IT IS FURTHER ORDERED that, upon approval by the Office of Management 
and Budget, FCC Form 304 as set forth in Appendix D will supersede FCC Form 494.
FEDERAL COMMUNICATIONS COMMISSION
William F. Caton 
Acting Secretary
9673
APPENDIX A - LIST OF COMMENTING PARTIES
COMMENTS
1. American Telecasting, Inc. (American Telecasting)
2. CAI Wireless Systems, Inc. (CAI Wireless)
3. Caritas Telecommunications (Caritas)
4. Crowell & Moring
5. Dalager Engineering Company (Dalager)
6. du Treil, Lundin & Rackley, Inc. (du Treil)
7. Hammett & Edison, Inc. (Hammett)
8. Hardin and Associates, Inc. (Hardin)
9. Heartland Wireless Communications, Inc. (Heartland)
10. Marshall Communications, Inc. (Marshall)
11. Mitchell Communications Corp. (Mitchell)
12. The National ITFS Association (National ITFS)
13. Pacific Telesis Enhanced Services (PacTel)
14. Pepper & Corazzini, L.L.P. (Pepper)
15. The Richard L. Vega Group (Vega)
16. The Rural Wireless Cable Coalition (Rural Wireless) includes: Central Texas Wireless 
 TV, Inc., Adams Telcom, Inc., Leaco Rural Telephone Cooperative, Inc., Delhi 
 Telephone Company and Valley Telephone Cooperative, Inc.
17. Sioux Valley Rural Television, Inc.
18. South Carolina Educational Television Commission, State of Wisconsin-Educational 
 Communications Board and University of Maine System (ITFS Parties)
19. United States Wireless Cable, Inc. (U.S. Wireless)
20. Vermont Wireless Cooperative (Vermont Wireless)
21. The Wireless Cable Association International, Inc. (Association)
LATE-FILED COMMENTS
1. ACS Enterprises, Inc., Baton Rouge Wireless Cable Television LLC, CableMaxx, Inc., 
Multimedia Development Corp., Rapid Choice TV, Inc., Reading Wireless Cable 
General Partnership, Shreveport Wireless Cable Television Partnership, Superchannels 
of Las Vegas, Inc., Wireless Holdings, Inc. and XYZ Microwave Systems, Inc. 
(ACS Enterprises, et al.)
REPLY COMMENTS
1. ACS Enterprises, et al.
2. American Telecasting, Inc. (American Telecasting)
3. CAI Wireless Systems, Inc. (CAI Wireless)
4. Cross Country Wireless, Inc. (Cross Country)
5. Crowell & Moring
6. Hardin and Associates, Inc. (Hardin)
7. Humanities Instructional Television Educational Center, Inc. (Humanities)
9674
8. Multi-Micro, Inc. (Multi-Micro)
9. National Telephone Cooperative Association (Telephone Cooperative)
10. Pepper & Corazzini, L.L.P. (Pepper)
11. The Rural Wireless Cable Coalition (Rural Wireless)
12. United States Wireless Cable, Inc. (U.S. Wireless)
13. University of Arizona
14. The Wireless Cable Association International, Inc. (Association)
LATE-FILED REPLY COMMENTS
1. Applied Video Technologies,, Inc.
2. People's Choice TV Corp.
3. Region IV Education Services Center (Region IV)
4. University of Maryland
5. University of Texas
COMMENTS FILED IN 1RESPONSE TO JULY 28, 1993 PUBLIC NOTICE
1. American Telecasting, Inc.
2. Philip E. AtJdnson
3. Amelia N. Backus
4. Leo H. Bond
5. Cardiff Broadcasting Group
6. Eileen Cassidy
7. CellTek
8. Norman Cloutier
9. Coalition of Wireless Cable Operators includes: Air Cable Television Systems, Broadcast 
Services International, Inc., Continental Wireless Cable Television, Inc., Family 
Entertainment Network, Inc., Family Entertainment Network Partnership, Green Bay 
Entertainment Network Partnership, MultiMedia Development Corp., People's Cable, 
Inc., Rapid Choice TV, Inc., Skyline Entertainment Network, Inc., Wireless 
Entertainment Network, Inc., and Wireless Entertainment Network Partnership
10. Robert E. Hayes
11. Margaret K. Haynes
12. Byron Homa
13. Richard P. Heuschele, M.D.
14. Arthur C. Larson
15. Lawrence Behr Associates, line.
16. Alfred O. Martinson
17. Mt. Pleasant Wireless
18. Multi-Micro, Inc.
19. National Telephone Cooperative Association
20. Paul M. Parks
21. Mary Patterson
22. Zigmund F. Podkowa
23. Elizabeth J. Raudio
9675
24. Arnold Rettig
25. Sioux Valley Rural Television, Inc.
26. Carl Stark
27. Transworld Telecommunications, Inc., Tampa Bay, Inc., Marrco Communications, Inc., 
United Communications, Ltd. and the Cellular Group
28. Tribune Broadcasting Company
29. United Telephone Mutual Aid Corporation, Pioneer Telephone Cooperative, Inc. and 
Socorro Satellite Systems, Inc.
30. The Wireless Cable Association International, Inc.
31. Wireless One, L.L.C.
32. WJB-TV Limited Partnership
9676
APPENDIX B - FINAL REGULATORY FLEXIBILITY ANALYSIS
Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C. § 604, the 
Commission's final analysis is as follows:
I. Need For, and Purpose of, This Action
The Commission published an Initial Regulatory Flexibility Analysis, see generally 5 
U.S.C. § 603, within the Notice of Proposed Rulemaking in MM Docket No. 94-131. As 
noted in that initial analysis, this proceeding will streamline the procedures for filing 
applications in MDS, and thereby expedite the provision of services to the public.
Under the terms of the 1993 Budget Act, the Commission may now utilize 
competitive bidding mechanisms inthe granting of certain initial licenses. The Commission 
published an Initial Regulatory Fle:dbility Analysis within the Notice of Proposed Rulemaking 
in PP Docket No. 93-253, and published a Final Regulatory Flexibility Analysis within the 
Second Report and Order in that docket. As noted in that previous final analysis, this 
proceeding will establish a system of competitive bidding for choosing among mutually 
exclusive initial MDS applications, and will carry out congressional mandates that certain 
designated entities be afforded an opportunity to participate in the competitive bidding 
process and the provision of spectrum-based services.
H. Legal Basis for This Action
Authority for the action taken in this proceeding may be found in Sections 4(i) and 
0), 301, 303(f), 303(g), 303(h), 3030), 303(r), 307(c), 308(b), 309(j) and 403 of the 
Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 301, 303(f), 303(g), 
303(h), 3030), 303(r), 307(c), 308(b), 3090), and 403.
HI. Summary of the Issues Raised by the Public Comments in Response to the 
Initial Regulatory Flexibility Analysis
No comments were submitted in response to our Initial Regulatory Flexibility 
Analysis for either MM Docket No. 94-131 or PP Docket No. 93-253.
IV. Significant Alternatives Considered
Although, as described in (III) above, no comments were received pertaining to our 
Initial Regulatory Flexibility Analysis for MM Docket No. 94-131 and PP Docket No. 93- 
253, the Second Report and Order addressed at length the general policy considerations 
raised as a result of the new competitive bidding legislation. This Report and Order 
considered in detail various alternatives for revising MDS application procedures and 
implementing competitive bidding for MDS, and the comments submitted on such 
alternatives.
9677
This Report and Order also specifically considered the impact of the provisions 
adopted on small entities. Overall, the Commission believes that the provisions adopted 
herein would benefit small entities by employing short-form applications for MDS and by 
providing certain special incentives to small entities in the competitive bidding process. In 
addition, the Commission, while authorizing electronic filing, did not make such filing, with 
its possible associated costs, mandatory for MDS applicants.
9678
APPENDIX C
I. Part 21 of Chapter 1 of Title 47 of the Code of Federal Regulations is amended as 
follows:
Part 21- Domestic Public Fixed Radio Services
1. The authority citation for Part 21 continues to read as follows:
Authority: Sees. 1, 2, 4, 201-205, 208, 215, 218, 303, 307, 313, 314, 403, 404, 410, 
602; 48 Stat. 1064, 1066, 1070-1073, 1076, 1077, 1080, 1082, 1083, 1087, 1094, 1098, 
1102, as amended; 47 U.S.C. 151, 154, 201-205, 208, 215, 218, 303, 307, 313, 314, 403, 
602; 47 U.S.C. 552, 554.
2. Section 21.2 is amended as follows: 
§ 21.2 Definitions.
As used as follows: *****
Basic Trading Area (BTA). The geographic areas by which the Multipoint 
Distribution Service is licensed. BTA boundaries are based on the Rand McNally 1992 
Commercial Atlas and Marketing Guide, 123rd Edition, pp. 36-39, and include six additional 
BTA-like areas as specified in § 21.924(b).
BTA authorization holder. The individual or entity authorized by the Commission to 
provide Multipoint Distribution Service to the population of a BTA.
BTA service area. The area within the boundaries of a BTA to which a BTA 
authorization holder may provide Multipoint Distribution Service. This area excludes the 
protected service areas of incumbent MDS stations and the registered receive sites of 
previously authorized and proposed ITFS stations.
Incumbent. An MDS station that was authorized or proposed before September 15, 
1995, including those stations that are subsequently modified, renewed or reinstated.
Partitioned service area authorization holder. The individual or entity authorized by 
the Commission to provide Multipoint Distribution Service to the population of a partitioned 
service area.
Partitioned service area (PSA). The area within the coterminous boundaries of one of 
more counties or other geopolitical subdivisions, drawn from a BTA, to which an 
authorization holder may provide Multipoint Distribution Service or the area remaining in a 
BTA upon partitioning any portion of that BTA. This area excludes the protected service 
areas of incumbent MDS stations and the registered receive sites of previously authorized and 
proposed ITFS stations.
$679
* * * * *
3A. Section 21.7 is amended to read as follows:
§ 21.7 Standard application form for domestic public fixed radio service licenses.
Except for the Multipoint Distribution Service, * * *
3. Section 21.13 is amended to read as follows:
§ 21.13 General application requirements.
a\ *****
(4) Except for applications in the Multipoint Distribution Service filed on or after 
September 15, 1995, state specifically the reasons why a grant of the proposal would 
serve the public interest, convenience, and necessity.
(b) Applications in the Multipoint Distribution Service, the Digital Electronic Message 
Service (DEMS) and the Point-to-Point Microwave Service shall not cross-reference 
previously filed material. Applications other than for the Multipoint Distribution Service, 
DEMS and Point-to-Point Microwave Services may cross-reference previously filed material 
where documents, exhibits or other lengthy showings already on file with the Commission 
contain information which is required by an application form and may specifically refer to 
such information, if:
*****
4. Section 21.15 is amended to read as follows:
§ 21.15 Technical content of applications.
*****
(a)(l) Except in the case of applicants for Multipoint Distribution Service stations who filed 
applications on or after September 15, 1995, applicants proposing a new station location 
(including receive-only stations and passive repeaters) must indicate whether the station site 
is owned. If it is not owned, its availability for the proposed radio station site must be 
demonstrated. Under ordinary circumstances, this requirement will be considered satisfied if 
the site is under lease or under written option to buy or lease.
* * *
(3) Except for BTA and PSA authorization holders, Multipoint Distribution Service 
applicants proposing a new station location must certify the proposed station site will be 
available to the applicant for timely construction of the facilities during the initial
§680
construction period.
* * * * *
(c) Each application involving a new or modified antenna supporting structure or passive 
facility, the addition or removal of an antenna, or the repositioning of an authorized antenna 
for a station or receive-only facility (except receive-only facilities in Multipoint Distribution 
Service and the Digital Electronic Message Service) must be accompanied by a vertical 
profile sketch of the total structure depicting its structural nature and clearly indicating the 
ground elevation (above sea level) at the structure site, the overall height of the structure 
above ground (including obstruction lights when required, lightning rods, etc.) and, if 
mounted on a building, its overall height above the building. The proposed antenna on the 
structure must be clearly identified and its height above-ground (measured to the center of 
radiation) clearly indicated. Alternatively, applicants in the Multipoint Distribution Service 
who filed applications on or after September 15, 1995 may provide this information in the 
MDS long-form application.
* * * * *
(e) Except for applicants in the Multipoint Distribution Service who filed applications on or 
after September 15, 1995, an applicant proposing construction of one or more new stations 
or modification of existing stations where substantial changes in the operation or maintenance 
procedures are involved must submit a showing of the general maintenance procedures 
involved to insure the rendition of good public communications service. The showing should 
include but need not be limited to the following:
* * * * *
(g) Except for applications in the Multipoint Distribution Service filed on or after September 
15, 1995, each application in the Point-to-Point Radio, Local Television Transmission and 
Digital Electronic Message Service; (excluding user stations) proposing a new or replacement 
antenna (excluding omni-directioiHil antennas) shall include an antenna radiation pattern 
showing the antenna power gain distribution in the horizontal plane expressed in decibels, 
unless such pattern is known to be on file with the Commission in which case the applicant 
may reference in its application the FCC-ID number that indicates that the pattern is on file 
with the Commission. Multipoint Distribution Service applicants who filed applications on 
after September 15, 1995 must provide related information in completing an MDS long-form 
application.
* * * * *
5. Section 21.27 is amended to read as follows: 
§ 21.27 Public notice period.
(a) *****
9681
(7) the BTAs designated for licensing through the competitive bidding process 
and the filing date for short-form applications for those areas;
(8) the auction winners in the competitive bidding process;
* * * * *
6. Section 21.35 is amended to read as follows:
§ 21.35 Comparative evaluation of mutually exclusive applications.
(a) In order to expedite action on mutually exclusive applications in services under this rules 
part where the competitive bidding process or random selection process do not apply, the 
applicants may request the Commission to consider their applications without a formal 
hearing in accordance with the summary procedure outlined in paragraph (b) in this section 
if:
* * * * *
7. Section 21.41 is amended to read as follows:
§ 21.41 Special processing of applications for minor facility modifications.
* * * * *
(b) * * * * *
(7) In the Multipoint Distribution Service, the modified facility would not produce a 
power flux density that exceeds - 73 dBW/m2, pursuant to §§ 21.902 and 21.939 of this 
subpart, at locations on the boundaries of protected service areas to which there is an 
unobstructed signal path.
* * * * *
8. Section 21.42 is amended to read as follows:
§ 21.42 Certain modifications not requiring prior authorization.
(a) Equipment in an authorized radio station may be replaced without prior authorization or 
notification if:
(1) The replacement equipment is identical (i.e., same manufacturer and model 
number) with the replacement equipment;
(2) For the Multipoint Distribution Service, the replacement transmitter, transmitting 
antenna, transmission line loss and/or devices between the transmitter and antenna, or
9682
combinations of the above, do not change the EIRP of a station in any direction.
(b) *****
(3) The Commission is notified of changes made to facilities by the submission of a 
completed FCC Form 494 or for die Multipoint Distribution Service, an MDS long-form 
application, as applicable, within tliirty days after the changes are made.
(4) In the Multipoint Distribution Service, the modified facility would not produce a 
power flux density at the protected service area boundary that exceeds - 73 dBW/m2, 
pursuant to §§ 21.902 and 21.939 of this subpart.
(c) *****
(3) * * *
(i) * * *
(ii) For Digital Electronic Message Service, the new antenna conforms with 
§ 21.906 and the gain of the new antenna does not exceed that of the previously authorized 
antenna by more than one dB in any direction.
(iii) For the Multipoint Distribution Service, the new antenna conforms with 
§ 21.906 and the EIRP resulting from the new antenna does not exceed that resulting from 
the previously authorized antenna by more than one dB in any direction.
(d) Licensees may correct erroneous information on a license which does not involve a major 
change (i.e. , a change that would be classified as a major amendment as defined by § 21 .23) 
without obtaining prior Commission approval by filing a completed FCC Form 494, or for 
the Mutlipoint Distribution Service licensees, by filing the MDS long-form application.
9. Section 21.43 is amended to read as follows:
§ 21.43 Period of construction; certification of completion of construction.
(a) Except for Multipoint Distribution Service station licenses granted to BTA and PSA 
authorization holders, each license: for a radio station for the services included in this Part 
shall specify as a condition therein the period during which construction of facilities will be 
completed and the station made ready for operation. * * *
*****
10. Section 21.44 is amended to read as follows:
3683
§ 21.44 Forfeiture and termination of station authorization.
(a) * * *
(1) The expiration of the construction period specified therein, where applicable, or 
after such additional time as may be authorized by the Commission, unless within 5 days 
after that date certification of completion of construction has been filed with the Commission 
pursuant to § 21.43;
* * * * *
11. Section 21.900 is amended to read as follows: 
§ 21.900 Eligibility.
(c) * * *
The applicant shall state whether or not service will be provided on a common carrier or non 
common carrier basis. In addition, a common carrier applicant shall state whether there is
any affiliation or relationship to any intended or likely subscriber or program originator.* * *
12. Section 21.901 is amended to read as follows:
§ 21.901 Frequencies.
*****
(d) * * *
*****
(5) Notwithstanding the provision of § 21.31(a) all applications, except for those filed 
on or after September 15, 1995, that propose to locate transmission facilities within or within 
24.1 kilometers (15 miles) of the border of a Standard Metropolitan Statistical Area (SMSA) 
will be considered together. * * *
(6) * * *
(7) All applications for frequencies in this band, except for those filed on or after 
September 15, 1995, must contain a showing of how interference with the operation of 
adjacent channels will be avoided and what steps the applicant has taken to comply with § 
21.902(a) of this part.
*****
9684
13. Section 21.902 is amended to read as follows: 
§ 21.902 Frequency interference.
(a) All applicants, conditional licensees, and licensees shall make exceptional efforts to avoid 
harmful interference to other users and to avoid blocking potential adjacent channel use hi the 
same city and cochannel use in nearby cities. In areas where major cities are in close 
proximity, careful consideration should be given to minimum power requirements and to the 
location, height, and radiation pattern of the transmitting antenna. Licensees, conditional 
licensees, and applicants are expected to cooperate fully in attempting to resolve problems of 
potential interference before bringing the matter to the attention of the Commission.
(b) As a condition for use of frequency in this service, each applicant, conditional licensee, 
and licensee is required to:
(1) Not enter into any lease or contract or otherwise take any action that would 
unreasonably prohibit location of another station's transmitting antenna at any given site
inside its own protected service area. * * * * *
(3) Engineer the system to provide at least 45 dB of cochannel interference protection 
within the 56.33 km (35 mile) protected service area of any authorized or previously 
proposed station that transmit, or may transmit, signals for standard television reception.
(4) Engineer the station to provide at least 0 dB of adjacent channel interference 
protection within the 56.33 km (35 mile) protected service area of any authorized or 
previously proposed station that transmits, or may transmit, signals for standard television 
reception.
(5)(i)Engineer the station to limit the calculated free space power flux density to
- 73 dBW/m2 at the boundary of a 56.33 km (35 mile) protected service area, where there is 
an unobstructed signal path from the transmitting antenna to the boundary; or alternatively, 
obtain the written consent of the entity authorized for the adjoining area to exceed the
- 73 dBW/m2 limiting signal strength at the common boundary.
(ii) In determining signal path conditions, the following shall be used: a 9.1 meter (30 
feet) receiving antenna height, the transmitting antenna height, terrain elevations and 4/3 
earth radius propagation conditions.
(6) If a proposed station is within 80 km (50 miles) of the Canadian or Mexican 
border, the station must be designed to meet the requirements set forth hi international 
treaties.
(c) The following interference studies must be prepared, must be available to the Commission 
upon request, and may be submitted as part of any application:
(1) An analysis of the potential for harmful interference within the 56.33 km (35 
mile) protected service areas of any authorized or previously proposed incumbent station:
(i) if the coordinates of the applicant's proposed transmitter are within 160.94 
km (100 miles) of the center coordinates of any authorized or previously proposed incumbent 
station with protected service area of 56.33 km (35 miles) as specified hi § 21.902(d); or
9685
* * * * *
(2) Applicants may design interference studies in any manner that demonstrates the 
avoidance of harmful interference, as defined in this subpart.
(i) In lieu of interference studies, applicants may submit in accordance with 
§ 21.938 a written statement of no objection to the operation of the MDS station.
(ii) The Commission may direct applicants to submit interference studies of a 
specific nature.
(3) Except for new stations proposed in applications filed after June 15, 1995, in the 
case of a proposal to operate a non-colocated station within the protected service area of an 
authorized, or previously proposed, adjacent channel station, an analysis that identifies the 
areas within the protected service areas of both the authorized or previously proposed 
adjacent channel station and the proposed station that cannot be protected as specified in 
§ 21.902(b)(4) and an explanation of why the proposed station cannot be colocated with the 
existing or previously proposed station.
* * * * *
(5) [Removed.]
(d)(l) Subject to the limitations contained in subsection (e) of this section, each MDS station 
licensee shall be protected from harmful electrical interference, as determined by the 
theoretical calculations, for a protected service area of which the boundary will be 56.3255 
kilometers (35 miles) from the transmitter site.
(2) As of September 15, 1995, the location of these protected service area boundaries shall 
become fixed. The center of the circular area shall be the geographic latitude and longitude 
of the transmitting antenna site specified in station authorizations or previously proposed 
applications filed at the Commission before September 15, 1995. Subsequent transmitter site 
changes will not change the location of the 56.3255 kilometers (35 mile) protected service 
area boundaries.
* * * * *
(f) In addressing potential harmful interference in this service, the following definitions, 
procedures and other criteria shall apply:
(1) * * * Harmful interference will be considered present when a free space calculation for 
an unobstructed signal path determines that this ratio is less than 45 dB.
(2) * * * Harmful interference will be considered present when a free space calculation for 
an unobstructed signal path determines that this ratio is less than 0 dB. * * *
* * * * *
(4) For purposes of this section, the received signal power level (RSIOjBw at the output of 
the FCC reference receiving antenna is obtained from the following formulas (or an 
equivalent adaptation):
9686
where the free space loss (L^) is 
(Lpsfo = 20 log (47rd/X) dB 
in which the parameters are defined as follows:
is the received power in decibels referenced to one watt. 
(EIRP)dBW is the equivalent isotropically radiated power in decibels above one watt. 
d is the distance of the signal path in meters. 
X is the wavelength of the signal in meters.
GAR is the dB gain of the reference receiving antenna above an isotropic antenna (obtained 
from Figure 1 of this section.)
(5) A determination of signal path conditions shall use a 9.1 meters (30 feet) receiving 
antenna height, the transmitting antenna height, terrain elevation, and assume 4/3 earth radius 
propagation conditions.
(6) An application will not be accepted for filing if cochannel or adjacent channel 
interference is predicted at the boundary of the 56.33 km (35 mile) protected service area of 
an authorized or previously proposed incumbent station based on the following criteria:
(i) interference calculations shall be made only for directions where there is an 
unobstructed signal path from the site of a proposed station to the boundary of any protected 
area.
(ii) calculations of received power levels hi units of dBW from the proposed 
station will be made at one degree intervals around the protected service area.
(iii) the assumed value of the desired signal level at the boundary of an 
incumbent station shall be - 83 dBW, which is the calculated received power hi free space at 
a distance of 56.33 km (35 miles), given an EIRP of 2000 watts and a receiver antenna gain 
of 20 dBi.
(iv) harmful interference will be considered to occur at locations along the 
boundary wherever the ratio between the desired signal level of - 83 dBw and the received 
power from a proposed cochannel or adjacent channel station is less than 45 dB or 0 dB for 
cochannel or adjacent channel proposals, respectively.
(7) Alternatively, MDS applications will be accepted on the basis of an executed written 
interference agreement between potentially affected parties filed hi accordance with § 21.938.
(g)(l) All interference studies submitted pursuant to paragraph (c) of this section must be 
served on all licensees, conditional licensees, and applicants for the stations required to be 
studied by this section. This service must include a copy of the FCC application and occur 
on or before the date the application is filed with the Commission.
(2) MDS licensees, conditional licensees and applicants of facilities with 56.33 km (35 
mile) protected service areas shall notify in writing the holders of authorizations for adjoining 
BTAs or PSAs of application filings for modified station licenses, provided the proposed 
facility would produce an unobstructed signal path to any location within the adjoining BTA 
or PSA. This service must include a copy of the FCC application and occur on or before the
9687
date the application is filed with the Commission.
(h) For purposes of § 21.31 (a) an MDS application, except for those applications filed after 
June IS, 1995, filed for a facility that would cause harmful electrical interference within the 
protected service area of any authorized or previously proposed station will be presumed to 
be mutually exclusive with the application for such authorized or previously proposed station.
* »c * * *
14. Section 21.904 is amended to read as follows:
§ 21.904 Transmitter power.
* * * * *
(c)(l) An increase in station transmitter power, above currently-authorized or previously 
proposed values, to the maximum values provided in subsections (a) and (b) of this section, 
may be authorized, if the requested power increase would not cause harmful interference to 
any authorized or previously proposed co-channel or adjacent-channel station with a 
transmitter site within 80.5 kilometers (50 miles) of the applicant's transmitter site, or if an 
applicant demonstrates that:
(i) A station, that must be protected from interference, potentially could suffer 
interference that would be eliminated by increasing the power of the interfered-with station; 
and
(ii) The applicant requesting authorization of a power increase agrees to pay all 
expenses associated with the increase in power to the interfered-with station.
* * * * *
15. Section 21.913 is amended to read as follows:
§ 21.913 Signal booster stations.
* * * * *
(b) In addition to the other application requirements of this part, each application for a signal 
booster station that would retransmit an MDS signal must certify that the proposed booster 
station site is within the protected service area, as defined in §§ 21.902(d) and 21.934, of the 
MDS station.
(c) In addition to the other application requirements of this Part, each application for a signal 
booster station that would retransmit an MDS signal must state in the application that it has 
prepared a study which demonstrates that the power flux density at the edge of the MDS
9688
protected service area does not exceed - 73.0 dBW/m2 at locations for which there is an 
unobstructed siganl path to the boundary.
(d) In addition to the other application requirements of this part, each application for a signal 
booster station must state in the application that is has prepared a study which demonstrates 
that the proposed booster station will cause no harmful interference to co-channel and 
adjacent-channel existing or previously-proposed ITFS and MDS stations with transmitters 
within 80.5 kilometers (50 miles) of the proposed booster station's transmitter site.
(e) In addition to the other application requirements of this part, each application must 
include a written consent statement of the licensee of each MDS, ITFS, and OFS station 
whose signal is retransmitted.
* * * * *
(g) * * *
* * * * *
(8) The power flux density at the edge of the MDS station's protected service area does 
not exceed -73.0 dBW/m2, if the signal of an MDS station is repeated;
II. The following sections are added as amendments to Part 21 of Chapter 1 of Title 47 
of the Code of Federal Regulations:
§ 21.921 Basis and purpose for electronic filing and competitive bidding process.
(a) Basis. The rules for competitive biding procedures for the Multipoint Distribution Service 
(MDS) in this part are promulgated under the provisions of the Communications Act of 
1934, as amended, which vests authority in the Federal Communications Commission to 
regulate radio transmission and to issue licenses for radio stations, and § 309(j) of the Act, 
which vests authority in the Commission to conduct competitive bidding.
(b) Purpose. This part states the conditions under which portions of the radio spectrum are 
made available and licensed for Multipoint Distribution Service via the competitive bidding 
procedures.
(c) Scope. The rules in this part apply only to authorizations and station licenses granted 
under the competitive bidding procedures of this section. This subpart contains some of the 
procedures and requirements for the issuance of authorizations to construct and operate 
multipoint distribution services. One also should consult Part 1, Subpart Q of the 
Commission's rules, §§21.1 through 21.406 and 21.900 through 21.920 of this subpart, and
9689
other Commission rules of importance with respect to the licensing and operation of MDS 
stations.
§ 21.922 Authorized frequencies.
The frequencies in the MDS service available through the competitive bidding process are 
in the frequency allocations table of § 21.901 of this subpart.
§21.923 Eligibility.
Any individual or entity, other than those precluded by §§ 21.4 and 21.912 of this subpart, 
is eligible to receive a Basic Trading Area (BTA) authorization and a station license for each 
individual MDS station within the BTA. There is no restriction on the number of BTA 
authorizations or MDS station licenses, including multiple cochannel station licenses, sought 
by or awarded to a qualified individual or entity.
§ 21.924 Service areas.
(a) MDS service areas are regional Basic Trading Areas (BTAs) which are based on the 
Rand McNally 7992 Commercial Atlas & Marketing Guide, 123rd Edition, at pages 38-39. 
The BTA Map is available for public inspection at the public reference room, Multipoint 
Distribution Service, Video Services Division, Mass Media Bureau, Room 207, 2033 M 
Street, N.W., Washington, DC.
(b) The following additions will be available for licensing separately as BTA-like areas: 
American Samoa; Guam; Northern Mariana Islands; San Juan, Puerto Rico; 
Mayaguez/Aguadilla-Ponce, Puerto Rico; and the United States Virgin Islands.
(c) The area within the boundaries of a BTA to which a BTA authorization holder may 
provide Multipoint Distribution Service excludes the protected service areas of any incumbent 
MDS stations and the registered receive sites of previously authorized or proposed ITFS 
stations.
§ 21.925 Applications for BTA authorizations and MDS station licenses.
(a)(l) An applicant must file a short-form application and, when necessary, the short-form 
application supplement, identifying each BTA service authorization sought.
(2) For purposes of conducting competitive bidding procedures, short-form applications 
are considered to be mutually exclusive with each other if they were filed for, and specified 
the same, BTA service area.
(b)Separate long-form applications must be filed for each individual MDS station license
9690
sought within its the protected service area of a BTA or PSA, including:
(1) an application for each E-chanael group, F-channel group, and single H, 1, and 2A 
channel station license sought;
(2) an application for authority to operate at an MDS station in the area vacated by an 
MDS station incumbent that has forfeited its station license; and
(3) an application for each ITFS-channel group station license sought in accordance with 
§§74.990 and 74.991.
(c) The Commission shall grant BTA authorizations to auction winners as set forth in 
§ 21.958.
i
(d) No long-form application filed by the BTA authorization holder will be accepted prior to 
completion of the competitive bidding process and no long-form application will be granted 
until expiration of the 30-day petition to deny period following the public notice listing of the 
application as being accepted for filing.
(e) Applicants may use the electronic filing procedures to file both the Multipoint 
Distribution Service short-form and long-form applications with the Commission.
§ 21.926 Amendments to long-form applications.
(a) A Multipoint Distribution Service long-form application may be amended as a matter of 
right up to the date of the public notice announcing the application has been accepted for 
filing provided that:
(1) the proposed amendments do not amount to more that a pro forma change of 
ownership and control;
(2) the Commission has not otherwise forbidden the amendment of pending applications.
(b) Requests to amend a long-form application placed on public notice as being accepted for 
filing may be granted only if a written petition demonstrating good cause is submitted and 
properly served on the parties of record.
§ 21.927 Sole bidding applicants.
Where the deadline for filing MDS short-form applications has expired and a particular 
BTA service area has been specified in a single short-form application only, the applicant 
shall be named the auction winner for that BTA authorization.
21.928 Acceptability of short- and long-form applications.
The acceptability of short- and long-form applications will be determined according to the
9691
requirements of §§ 21.13, 21.15, 21.20, 21.21 and 21.952.
§ 21.929 Authorization period for station licenses.
Notwithstanding § 21.45, each new MDS station licensed within a BTA or PSA will be 
granted for a term of ten years, terminating ten years from the date the Commission declared 
bidding closed in the MDS auction.
§ 21.930 Five-year build-out requirements.
(a)(l)A BTA authorization holder has a five-year build-out period, beginning on the date of 
the grant of the BTA authorization and terminating on the 5th year anniversary of the grant 
of the authorization, within which It may develop and expand MDS station operations within 
its service area.
(2) This period is not extended by the grant of subsequent authorizations (i.e., grant of a 
station license or modification).
(3) Timely certifications of completion of construction for each MDS station within a BTA 
or partitioned service area must be filed upon completion of construction of a station.
(b) Each BTA authorization holder has the exclusive right to build, develop, expand and 
operate MDS stations within its BTA service area during the five-year build-out period. The 
Commission will not accept competing applications for MDS station licenses within the BTA 
service area during this period.
(c)(l) Within five years of the grant of a BTA authorization, the authorization holder must 
construct MDS stations to provide signals pursuant to § 21.907 that are capable of reaching 
at least two-thirds of the population of the applicable service area, excluding the populations 
within protected service areas of incumbent stations.
(2) Sixty days prior to the end of the five-year build out period, the BTA authorization 
holder must file with the Commission proof that demonstrates the holder has met the 
requirements of § 21.930(c)(l). The most recent census figures available from the U.S. 
Department of Commerce, Bureau of Census prior to the expiration of the authorization 
holder's five-year build-out period will be used to determine compliance with population- 
based requirements. In no event shall census figures gathered prior to 1990 be used.
(d)(l) If the Commission finds that the BTA authorization holder has demonstrated that it has 
met the requirements of § 21.930(c)(l), the Commission will issue a declaration that the 
holder has met such requirements.
(2) If the Commission finds that the BTA authorization holder has not provided a signal as 
required in § 21.930(c)(l), the Commission shall partition from the BTA any unserved area, 
using county lines as a guide, and shall re-authorize service to the unserved area pursuant to 
the MDS competitive bidding procedures of this subpart. Applications for such unserved 
areas are not acceptable for filing until a filing date is announced through a public notice, 
(i) The competitive bidding procedures set forth in §§ 21.950 to 21.961 shall be
9692
followed by applicants seeking authority to provide MDS service to the unserved partitioned 
area.
(ii) The BTA authorization holder originally authorized to provide service is ineligible 
to participate in the competitive bidding process for the unserved areas partitioned from its 
BTA.
§ 21.931 Partitioned service areas (PSAs).
(a)(l) The holder of a BTA authorization may enter into contracts with eligible parties to 
partition any portion of its service area according to county boundaries, or according to other 
geopolitical subdivision boundaries, oir multiple contiguous counties or geopolitical 
subdivisions within the BTA service area.
(2)(i) Partitioning contracts must be; filed with the Commission within 30 days of the date 
that such agreements are reached.
(ii) The contracts must include descriptions of the areas being partitioned and include 
any documentation necessary to convey to the Commission the precise boundaries of the 
partitioned area.
(3) Parties to partitioning contracts must file concurrently with such contracts one of the
following, where appropriate:
(i) an MDS long-form application for authority to operate a new MDS station within the
PSA;
(ii) applications for assignment or transfer of existing stations within the PSA; or 
(iii) a statement of intention as defined in § 21.956(a) along with a completed FCC
Form 430.
(b) The eligibility requirements applicable to BTA authorization holders also apply to those 
individuals and entities seeking PSA authorizations.
(c) Any individual or entity acquiring the rights to a partitioned area of a BTA also acquires 
the rights to any previously authorized individual stations located within the partitioned area 
that were held by the previous authorisation holder, provided that grantable applications for 
assignment and transfer of control, FCC Forms 702 and 704, are filed for existing stations 
and that acceptable amendments to pending long-form applications are filed. Pending long- 
form applications filed by the previous; authorization holder for transmitter sites within the 
PSA may also be dismissed without prejudice at the applicant's request.
(d) Authorizations for PSAs will be issued in accordance with § 21.958; however, when 
individual stations within an PSA are assigned along with the partitioned area, the 
authorization will be granted concurrently with the grant of the applications for assignment 
and transfer of the existing stations.
(e) Subsequent to issuance of the authorization for a PSA, the partitioned area will be treated 
as a separate protected service area.
(f)(l) When any area within a BTA becomes a PSA, the remaining counties and other
9693
geopolitical subdivisions within that BTA will also be subsequently treated and classified as a 
PSA(s).
(2) At the time a BTA is partitioned, the Commission shall cancel the BTA authorization 
initially issued and issue a PSA authorization to the former BTA authorization holder.
(g) The duties and responsibilities imposed upon BTA authorization holders in this part and 
throughout the Commission's rules, such as § 21.930(c)(l), apply to the holders of PSA 
authorizations.
(h) The build-out period for PSAs voluntarily partitioned shall be the remainder of the five- 
year build-out period applicable to the BTA or PSA from which the PSA was drawn. For 
PSA authorizations issued pursuant to § 21.930(d)(2) and the competitive bidding process, 
the build-out period is five years, beginning on the date of the grant of the PSA 
authorization. The requirements of § 21.930(c)(l) also apply to the holders of authorizations 
for PSAs.
§ 21.932 Forfeiture of incumbent MDS station licenses.
(a) If the license for a incumbent MDS station is forfeited, absent the filing and grant of a 
petition for reinstatement pursuant to § 21.44(b), the 56.33 km (35 mile) protected service 
area of the incumbent station shall dissolve and the protected service area shall become part 
of the BTA or PSA surrounding it.
(b) If upon forfeiture the protected service area of a forfeited license extends across the 
boundaries of more than one BTA or PSA, the portions of the protected service area of the 
incumbent station shall merge with the overlapping BTAs or PSAs.
(c) The holder of the authorization for the BTA or PSA with which the service area of the 
forfeited incumbent station has merged has the exclusive right to file a long-form application 
to operate a station within the merged area and may modify the locations of its stations to 
serve the forfeited area.
§ 21.933 Protected service areas.
(a) The stations licensed to the holder of a BTA authorization shall have a protected service 
area that is coterminous with the boundaries of that BTA, subject to the exclusion of the 
56.33 km (35 mile) protected service area of incumbent MDS stations and the registered 
receive sites of previously proposed and authorized ITFS facilities within that BTA.
(b) The stations licensed to the holder of a PSA authorization shall have a protected service 
area that is coterminous with the boundaries of the counties or other geopolitical subdivisions 
comprising the PSA, subject to the exclusion of the 56.33 km (35 mile) protected service 
area of incumbent MDS stations and the registered receive sites of previously proposed and 
authorized ITFS facilities within that PSA.
"9694
§ 21.934 Assignment or transfer of control of BTA authorizations.
(a)(l) A BTA or PSA authorization holder seeking approval for a transfer of control or 
assignment of its authorization within three years of receiving such authorization through a 
competitive bidding procedure must, together with its application for transfer of control or 
assignment, file with the Commission a statement indicating that its authorization was 
obtained through competitive bidding.
(2) Such applicant must also file with the Commission the associated contracts for sale, 
option agreements, management agreements, or other documents disclosing the total 
consideration that the applicant would receive in return for the transfer or assignment of its 
authorization. This information should include not only a monetary price, but also any 
future, contingent, in-kind, or other consideration (e.g., management or consulting contracts 
either with or without an option to purchase; below market financing).
(b) Transfers of control or assignments of BTA or PSA authorizations are subject to the 
limitations of §§ 21.4, 21.900 and 21.912 of this subpart.
(c) The anti-trafficking provision of § 21.39 does not apply to the assignment or transfer of 
control of a BTA or PSA authorization, which was granted pursuant to the Commission's 
competitive bidding procedures.
§ 21.935 Assignment or transfer of control of station licenses within a BTA.
Licenses for individual stations witiiin a BTA or PSA area issued to authorization holders 
may not be transferred or assigned unless they are acquired as part of a PSA.
§ 21.936 Cancellation of authorization.
(a) The Commission may revoke or cancel a BTA or PSA authorization for gross 
misconduct, misrepresentation or bad faith on the part of the authorization holder.
(b) Cancellation of a BTA or PSA authorization shall result in termination of any rights the 
authorization holder holds in individual proposed or authorized stations within the BTA or 
PSA.
§ 21.937 Negotiated interference protection.
(a) The level of acceptable electromagnetic interference that occurs at or within the 
boundaries of BTAs, PSAs, or an incumbent MDS station's 56.33 km (35 mile) protected 
service area can be negotiated and established by an agreement between the appropriate 
parties, provided that:
(1) the parties to such an agreement file with the Commission a written statement of no
9695
objection, acknowledging that the parties have agreed to accept a level of interference that 
does not meet the protection standards set forth in §§ 21.902 or 21.938 of the Commission's 
rules;
(2) the statement bears the signatures of all parties to the agreement, or the signatures of 
their representative agents; and
(3) the statement is filed with the Commission within 30 days of its ratification or filed in 
conjunction with an application with which the agreement is associated, whichever is earliest.
§ 21.938 BTA and PSA technical and interference provisions.
(a) BTA or PSA authorization holders are expected to cooperate with one another by 
designing their stations hi a manner that protects service in adjoining BTAs and PSAs, 
including consideration of interference abatement techniques such as cross polarization, 
frequency offset, directional antennas, antenna beam tilt, EIRP decrease, reduction of 
antenna height, and terrain shielding.
(b) Unless the affected parties have executed a written interference agreement in accordance 
with § 21.937, stations licensed to a BTA or PSA authorization holder must not cause 
harmful electromagnetic interference to the following:
(1) the protected service areas of other authorization holders in adjoining BTAs or PSAs.
(2) the 56.33 km (35 mile) protected service areas of authorized or previously proposed 
MDS stations (incumbents).
(3) registered receive sites and protected service areas of authorized or previously 
proposed stations in the Instructional Television Fixed Service pursuant to the manner in 
which interference is defined in § 74.903(a).
(c) Unless the affected parties have executed a written interference agreement hi accordance 
with § 21.937, it shall be the responsibility of a BTA or PSA authorization holder to correct 
at its expense any condition of harmful electromagnetic interference caused to authorized 
MDS service at locations within other BTAs or PSAs or within the 56.33 km (35 mile) 
protected service areas of authorized or previously proposed MDS stations (incumbents).
(d) Unless specifically excepted, BTA or PSA authorization holders are governed by the 
interference protection and other technical provisions applicable to the Multipoint 
Distribution Service.
(e) The calculated free space power flux density from a station may not exceed - 73 dBW/m2 
at locations on BTA or PSA boundaries for which there is an unobstructed signal path from 
the transmitting antenna to the boundary, unless the applicant has obtained the written 
consent of the authorization holder for the adjoining BTA or PSA.
9696
(f)(l) Authorization holders for BTAs or PSAs must notify authorization holders of adjoining 
areas of their application filings for new or modified stations; provided the proposed facility 
would produce an unobstructed signal path anywhere within the adjoining BTA or PSA.
(2) This service of written notification must include a copy of the FCC application and 
occur on or before the date the application is filed with the Commission.
(3) With regard to incumbent MDS stations, authorization holders for BTAs or PSAs must 
comply with the requirements of § 21.902.
(g) Where a PSA adjoins a BTA and both authorizations are held by the same individual or 
entity, the PSA shall be considered an extension of the protected service area of the BTA 
regarding the interference protection, limiting signal strength, and notification provisions of 
this section.
§ 21.939 Harmful interference abatement.
In the event harmful interference occurs or appears to occur, after notice and an 
opportunity for a hearing, Commission staff may require any Multipoint Distribution Service 
conditional licensee or licensee to:
(a) modify the station to use cross polarization, frequency offset techniques, directional 
antenna, antenna beam tilt, or
(b) order an equivalent isotropically radiated power decrease, a reduction of transmitting 
antenna height, a change of antenna location, a change of antenna radiation pattern, or a 
reduction in aural signal power.
§ 21.940 to § 21.949
[Reserved.]
§ 21.950 MDS subject to competitive bidding.
Mutually exclusive MDS initial applications are subject to competitive bidding. The general 
procedures set forth in 47 C.F.R. Chapter I, Part 1, Subpart Q are applicable to competitive 
bidding proceedings used to select among mutually exclusive MDS applicants, unless 
otherwise provided in 47 C.F.R. Chapter I, Part 21, Subpart K.
§ 21.951 MDS competitive bidding procedures.
(a) The following competitive bidding procedures will generally be used in MDS auctions. 
Additional, specific procedures may be set forth by public notice. The Commission may also 
design and test alternative procedures. See 47 C.F.R. §§ 1.2103 and 1.2104.
(1) Competitive bidding design. Simultaneous multiple round bidding will be used in MDS
9697
auctions, unless the Commission specifies by public notice the use of sequential oral (open 
outcry) bidding or sealed bidding (either sequential or simultaneous). Combinatorial bidding 
may also be used with any type of auction design.
(2) Competitive bidding mechanisms. The Commission may utilize the following 
mechanisms in MDS auctions:
(i) Sequencing. The Commission will establish and may vary the sequence in which the 
BTA service areas will be auctioned.
(ii) Grouping. In the event the Commission uses either a simultaneous multiple round 
competitive bidding design or combinatorial bidding, the Commission will determine which 
BTA service areas will be auctioned simultaneously or in combination.
(iii) Reservation price. The Commission may establish a reservation price, either 
disclosed or undisclosed, below which a BTA service area subject to auction will not be 
awarded.
(iv) Minimum bid increments. The Commission will, by announcement before or 
during an MDS auction, require minimum bid increments in dollar or percentage terms.
(v) Stopping rules. The Commission will establish stopping rules before or during 
multiple round MDS auctions in order to terminate an auction within a reasonable time.
(vi) Activity Rules. The Commission will establish activity rules which require a 
minimum amount of bidding activity. In the event that the Commission establishes an 
activity rule hi connection with a simultaneous multiple round auction, the Commission will 
allow bidders to request and to receive automatically waivers of such rule, the number of 
which will be determined by the Commission.
(vii) Suggested minimum bid. The Commission may establish suggested minimum bids 
on each BTA service area subject to auction. Bids below the suggested minimum bid would 
count as activity under the activity rule only if no bids at or above the suggested minimum 
bid are received.
(b) Identities of bidders. The Commission will generally release information concerning the 
identities of bidders before each auction but may choose, on an auction-by-auction basis, to 
withhold the identity of the bidders associated with bidder identification numbers. The 
Commission will announce by public notice before the MDS auction whether the bidders' 
identities will be revealed.
(c) Commission control of auction. The Commission may delay, suspend, or cancel an MDS 
auction in the event of a natural disaster, technical obstacle, evidence of security breach, 
unlawful bidding activity, administrative necessity, or for any other reason that affects the 
fair and efficient conduct of the competitive bidding. The Commission also has the 
authority, at its sole discretion, to resume the competitive bidding starting from the beginning
9698
of the current or some previous round or cancel the competitive bidding in its entirety.
§ 21.952 Bidding application procedures.
(a) Short-form applications. To participate in MDS auctions, all applicants must submit 
short-form applications, along with all required certifications and exhibits specified by such 
forms, pursuant to the provisions of § 1.2105(a) and any Commission public notices. See 47 
C.F.R. § 1.2105(a).
(b) Filing of short-form applications. Prior to any MDS auction, the Commission will issue 
a public notice announcing the availability of BTA service areas and, in the event that 
mutually exclusive short-form applications (as defined by § 21.925(a)(2» are filed, the date 
of the auction for those BTA service areas. This public notice also will specify the date on 
or before which applicants intending to participate in an MDS auction must file their short- 
form applications in order to be eligible for that auction, and it will contain information 
necessary for completion of the application as well as other important information such as the 
material which must accompany the forms, any filing fee that must accompany the 
application or any upfront payment that will need to be submitted, and the location where the 
application must be filed.
(c) Modification and dismissal of short-form applications.
(1) Any short-form application that is not signed in some manner or form, including by 
electronic means, and does not contain all requisite certifications is unacceptable for filing 
and cannot be corrected subsequent to any applicable filing deadline. Such short-form 
application will be dismissed with prejudice.
(2) The Commission will provide bidders a limited opportunity to cure certain defects 
specified herein and to resubmit an amended short-form application. For MDS, we classify 
all amendments to a short-form application as major, except those to correct minor errors or 
defects, such as typographical errors, or those to reflect ownership changes or formation of 
bidding consortia or joint bidding arrangements specifically permitted under § 21.953. A 
short-form application may be modified to make minor amendments. However, applicants 
who fail to correct defects hi their short-form applications hi a timely manner as specified by 
public notice will have their applications dismissed with no opportunity for resubmission.
(3) A short-form application will be considered to be a newly filed application if it is 
amended by a major amendment and may not be resubmitted after applicable filing deadlines.
§ 21.953 Prohibition of collusion.
(a) Except as provided in paragraphs (b), (c) and (d) of this section, after the filing of short- 
form applications, all applicants in an MDS auction are prohibited from cooperating,
9699
collaborating, discussing or disclosing in any manner the substance of their bids or bidding 
strategies, or discussing or negotiating settlement agreements, with other applicants until after 
the winning bidder makes the required down payment, unless such applicants are members of 
a bidding consortium or other joint bidding arrangement identified on the applicant's short- 
form application. Communications among applicants concerning matters unrelated to the 
MDS auction will be permitted after the filing of short-form applications.
(b) Applicants may modify their short-form applications to reflect formation of consortia or 
changes hi ownership at any tune before or during an auction, provided such changes do not 
result in a change in control of the applicant, and provided that the parties forming consortia 
or entering into ownership agreements have not applied for the same BTA service areas.
(c) After the filing of short-form applications, applicants may make agreements to bid jointly 
for BTA service areas, provided the parties to the agreement have not applied for the same 
service areas.
(d) After the filing of short-form applications, a holder of a non-controlling attributable 
interest in an entity submitting a short-form application may, under the circumstances 
specified in § 1.2105(c)(4), acquire an ownership interest in, form a consortium with, or 
enter into a joint bidding arrangement with, other applicants for the same BTA service areas. 
See 47 C.F.R. § 1.2105(c)(4).
(e) To reflect the changes in ownership or in the membership of consortia or joint bidding 
arrangements specified in paragraphs (b), (c) and (d) of this section, applicants must amend 
then* short-form applications by submitting a revised short-form application, filed within two 
business days of any such change; such modifications will not be considered major 
amendments of the applications within the meaning of § 21.952(c)(2). However, any 
amendment which results in the change of control of an applicant will be considered a major 
amendment of the short-form.
(f) For purposes of this section, the terms "applicant" and "bids or bidding strategies" are 
defined as set forth in 47 C.F.R. § 1.2105(c)(5).
§ 21.954 Submission of upfront payments.
(a) The Commission will require applicants to submit an upfront payment prior to the MDS 
auction. The amount of the upfront payment for each BTA service area being auctioned and the 
procedures for submitting it will be set forth in a public notice. Upfront payments may be 
made by wire transfer or by cashier's check drawn in U.S. dollars from a financial institution 
whose deposits are insured by the Federal Deposit Insurance Corporation and must be made 
payable to the Federal Communications Commission. No interest will be paid on upfront 
payments.,
(b) For MDS auctions, the Commission will require each applicant to submit an upfront 
payment equal to the largest combination of activity units (as defined in the Commission's
9700
activity rules established pursuant to § 21.951(a)(2)(vi» associated with the BTAs on which 
the applicant anticipates being active in any single round of bidding. Applicants who are 
small businesses eligible for reduced upfront payments will be required to submit an upfront 
payment amount in accordance with § 21.960(c). If an upfront payment is not in compliance 
with the Commission's rules, or if insufficient funds are tendered to constitute a valid upfront 
payment, the applicant shall have a limited opportunity to correct its submission to bring it 
up to the minimum valid upfront payment prior to the auction. An applicant who fails to 
submit a sufficient upfront payment to qualify it to bid on any BTA service area being 
auctioned will be ineligible to bid, its application will be dismissed, and any upfront payment 
it has made will be returned.
(c) The upfront payment(s) of a bidder will be credited toward any down payment required 
for the BTA service areas on which the bidder is the winning bidder. Where the upfront 
payment amount exceeds the requircxl down payment of a winning bidder, the Commission 
may refund the excess amount after determining that no bid withdrawal payments are owed 
by that bidder. In the event a payment is assessed pursuant to § 21.959(a) for bid 
withdrawal or default, upfront payments or down payments on deposit with the Commission 
will be used to satisfy the bid withdrawal or default payment before being applied toward any 
additional payment obligations that liie winning bidder may have.
§ 21.955 Submission of down payments.
(a) After bidding has ended on all BTA service areas, the Commission will identify and 
notify the winning bidders and dechire the bidding closed in the MDS auction. Within five 
(5) business days after being notified that it is a winning bidder on a particular BTA service 
area(s), a winning bidder must submit to the Commission's lockbox bank such additional 
funds as are necessary to bring its total deposits (upfront payment plus down payment) up to 
twenty (20) percent of its winning bid(s). This down payment may be made by wire transfer 
or by cashier's check drawn in U.S. dollars from a financial institution whose deposits are 
insured by the Federal Deposit Insurance Corporation and must be made payable to the
Federal Communications Commission.
(b) Winning bidders who are small businesses eligible for installment payments under 
§ 21.960(b) are only required to bring their total deposits up to ten (10) percent of their 
winning bids. Such small businesses must pay the remainder of the twenty (20) percent 
down payment within five (5) business days following release of the public notice stating that 
their BTA authorizations are ready to be issued.
(c) Down payments will be held by the Commission until the winning bidder has been issued 
its BTA authorization and has paid the remaining balance of its winning bid, in which case it 
will not be returned, or until the wuining bidder is found unqualified to be a station licensee 
or has defaulted, in which case it willl be returned, less applicable default payments. No 
interest will be paid on any down payment.
9701
§ 21.956 Filing of long-form applications or statements of intention.
(a) Within 30 days of being notified of its status as a winning bidder, each winning bidder 
for a BTA service area will be required to submit either: (1) an initial long-form application 
for an MDS station license, along with any required exhibits; or (2) a statement of intention 
with regard to the BTA service area, along with any required exhibits, showing the 
encumbered nature of the BTA, identifying all previously authorized or proposed MDS and 
ITFS facilities, and describing in detail the winning bidder's plan for obtaining the previously 
authorized and/or proposed MDS stations within the BTA. A winning bidder that fails to 
submit either the initial long-form application or statement of intention as required under this 
section, and fails to establish good cause for any late-filed application or statement, shall be 
deemed to have defaulted and will be subject to the payments set forth in § 21.959(a).
(b) Each initial long-form application for an MDS station license within an auction winner's 
BTA service area, and each statement of intention with regard to an auction winner's BTA 
service area, must also include the following:
(1) FCC Form 430;
(2) an exhibit detailing the terms and conditions and parties involved in any bidding 
consortia, joint venture, partnership or other agreement or arrangement the winning bidder 
had entered into relating to the competitive bidding process prior to the time bidding was 
completed (see 47 C.F.R. § 1.2107(d));
(3) an exhibit complying with 47 C.F.R. §§ 1.2110(i) and 21.960(e), if the winning bidder 
submitting the long-form application or statement of intention claims status as a designated 
entity.
(c) Subsequent long-form applications for additional MDS station licenses within the BTA 
service areas of winning bidders may be submitted at any time during the five year build-out 
period and need not contain the exhibits specified in paragraph (b)(2)-(3) of this section.
§ 21.957 Petitions to deny against long-form applications; comments on statements 
of intention.
(a) Within thirty (30) days after the Commission gives public notice that a long-form 
application for an MDS station license submitted by a winning bidder within its BTA service 
area has been accepted for filing, petitions to deny that application may be filed. Any such 
petitions and oppositions thereto must comply with the requirements of §§ 47 C.F.R. 1.2108 
and 21.30.
(b) Parties wishing to comment on or oppose the issuance of a BTA authorization issued in 
connection with the filing of a statement of intention by a winning bidder must do so prior to 
the Commission's issuance of the BTA authorization.
9702
§ 21.958 Full payment and issuance of BTA authorizations.
Each winning bidder, except for small businesses eligible for installment payments under 
§ 21.960(b), must pay the balance of its winning bid for its BTA service area(s) in a lump 
sum within five (5) business days following the release of the public notice stating that the 
BTA authorization^) is ready to be issued. A winning bidder who submitted a long-form 
application for an MDS station license within its BTA service area pursuant to § 21.956(a) 
will receive its BTA authorization concurrent with the grant of its MDS conditional station 
license within its BTA service area. A winning bidder who submitted a statement of 
intention with regard to its BTA service area pursuant to § 21.956(a) will receive its BTA 
authorization following the Commission's review of its statement of intention. The 
Commission will issue a BTA authorization to a winning bidder within ten (10) business days 
following notification of receipt of lull payment of the amount of the winning bid.
§ 21.959 Withdrawal, default and disqualification.
(a) When the Commission conducts; an MDS simultaneous multiple round auction, the 
Commission will impose additional payment requirements on bidders who withdraw high bids 
during the course of an auction, who default on down or full payments due after an auction 
closes, or who are disqualified. The withdrawal and default payments set forth below will be 
deducted from any upfront payment; or down payments that the withdrawing, defaulting or 
disqualified bidder has deposited with the Commission.
(1) Bid withdrawal prior to close of auction. A bidder who withdraws a high bid during 
the course of an auction will be subject to a payment equal to the difference between the 
amount bid and the amount of the winning bid the next tune the license is offered by the 
Commission. No withdrawal payment will be assessed if the subsequent winning bid exceeds 
the withdrawn bid.
(2) Default or disqualification after close of auction. If a winning bidder defaults or is 
disqualified after the close of such an auction, the defaulting bidder will be subject to the 
payment in paragraph (1) above, plus an additional payment equal to three (3) percent of the 
subsequent winning bid. If the subsequent winning bid exceeds the defaulting bidder's bid 
amount, the three percent payment will be calculated based on the defaulting bidder's bid 
amount.
(b) If the Commission were to conduct a sequential oral (open outcry) auction or sealed bid 
auction for MDS, the Commission may modify the payments set forth in paragraph (a) above 
to be paid in the event of bid withdrawal, default or disqualification; provided, however, that 
such payments shall not exceed the payments specified in paragraph (a) above.
(1) In the case of sealed bidding:
(i) If a bid is withdrawn before: the Commission releases the initial public notice 
announcing the winning bidder(s), no bid withdrawal payment will be assessed.
9703
(ii) If a bid is withdrawn after the Commission releases the initial public notice 
announcing the whining bidder(s), the bid withdrawal payment will be equal to the difference 
between the high bid amount and the amount of the next highest bid. Losing bidders will 
only be subject to this bid withdrawal payment for a period of thirty (30) days after the 
Commission releases the initial public notice announcing the winning bidders.
(2) In the case of oral sequential (open outcry) bidding:
(i) If a bid is withdrawn before the Commission has declared the bidding to be closed 
for the BTA service area bid on, no bid withdrawal payment will be assessed.
(ii) If a bid is withdrawn after the Commission has declared the bidding to be closed for 
the BTA service area bid on, the bid withdrawal payment of paragraphs (a)(l) and (2) of this 
section will apply.
(c) If a winning bidder withdraws its bid after the Commission has declared competitive 
bidding closed or fails to remit the required down payment within five (5) business days after 
the Commission has declared competitive bidding closed, the bidder will be deemed to have 
defaulted, its application will be dismissed, and it will be liable for the default payment 
specified in paragraph (a)(2) above. In such event, the Commission may either re-auction 
the BTA service area to existing or new applicants or offer it to the other highest bidders (hi 
descending order) at their final bids.
(d) A winning bidder who is found unqualified to be an MDS station licensee, fails to remit 
the balance of its winning bid hi a timely manner, or defaults or is disqualified for any 
reason after having made the required down payment, will be deemed to have defaulted and 
will be liable for the payment set forth in paragraph (a)(2) above. In such event, the 
Commission will generally conduct another auction for the BTA service area, affording new 
parties an opportunity to file applications for such service area.
(e) Bidders who are found to have violated the antitrust laws or the Commission's rules hi 
connection with their participation in the MDS competitive bidding process may be subject, 
in addition to any other applicable sanctions, to loss of then- upfront payment, down payment 
or full bid amount, and may be prohibited from participating in future auctions.
§ 21.960 Designated entity provisions for MDS.
(a) Designated entities. As specified in this section, designated entities that are winning 
bidders for BTA service areas are eligible for special incentives in the auction process. See 
47 C.F.R. § 1.2110.
(b) Installment payments. Small businesses and small business consortia may elect to pay the 
full amount of their winning bids for BTA service areas hi installments over a ten (10) year 
period running from the date that their BTA authorizations are issued.
9704
(1) Each eligible winning bidder paying for its BTA authorization^) on an installment 
basis must deposit by wire'transfer or cashier's check in the manner specified in § 21.955 
sufficient additional funds as are necessary to bring its total deposits to ten (10) percent of its 
winning bid(s) within five (5) business days after the Commission has declared it the winning 
bidder and closed the bidding. Failure to remit the required payment will make the bidder 
liable for the payments set forth in § 21.959(a)(2).
(2) Within five (5) business days following release of the public notice stating that the 
BTA authorization of a winning bidder eligible for installment payments is ready to be 
issued, the winning bidder shall pay another ten (10) percent of its winning bid, thereby 
commencing the eligible bidder's installment payment plan. The Commission will issue the 
BTA authorization to the eligible winning bidder within ten (10) business days following 
notification of receipt of this additional ten (10) percent payment. Failure to remit the 
required payment will make the bidder liable for the payments set forth in § 21.959(a)(2).
(3) Upon issuance of a BTA authorization to a winning bidder eligible for installment 
payments, the Commission will notify such eligible BTA authorization holder of the terms of 
its installment payment plan. For MDS, such installment payment plans will:
(i) impose interest based on the rate of ten (10) year U.S. Treasury obligations at the 
time of issuance of the BTA authorization, plus two and one half (2.5) percent;
(ii) allow installment payments for a ten (10) year period running from the date that the 
BTA authorization is issued;
(iii) begin with interest-only payments for the first two (2) years; and
(iv) amortize principal and interest over the remaining years of the ten (10) year period 
running from the date that the BTA. authorization is issued.
(4) A BTA authorization issued 1:0 an eligible winning bidder that elects installment 
payments shall be conditioned upon the full and timely performance of the BTA authorization 
holder's payment obligations under the installment plan.
(i) If an eligible holder making installment payments is more than ninety (90) days 
delinquent in any payment, it shall be hi default.
(ii) Upon default or in anticipation of default of one or more installment payments, a 
holder may request that the Commission permit a three (3) to six (6) month grace period, 
during which no installment payments need be made. In considering whether to grant a 
request for a grace period, the Commission may consider, among other things, the holder's 
payment history, including whether the holder has defaulted before, how far into the payment 
period the default occurs, the reasons for default, whether the holder has met construction 
build-out requirements within its BTA service area, the holder's financial condition, and 
whether the holder is seeking an eligible buyer. If the Commission grants a request for a 
grace period, or otherwise approves a restructured payment schedule, interest will continue
9705
to accrue and will be amortized over the remaining years of the ten (10) year payment 
period.
(iii) Following expiration of any grace period without successful resumption of payment 
or upon denial of a grace period request, or upon default with no such request submitted, the 
BTA authorization will automatically cancel and the Commission will initiate debt collection 
procedures pursuant to Part 1, Subpart 0 of the Commission's rules.
(5) Unjust enrichment.
(i) If an eligible BTA authorization holder that utilizes installment financing under this 
subsection seeks to assign or transfer control of its BTA authorization to an entity not 
meeting the eligibility standards for installment payments, the holder must make full payment 
of the remaining unpaid principal and any unpaid interest accrued through the date of 
assignment or transfer as a condition of approval.
(ii) If a BTA authorization holder that utilizes installment financing under this 
subsection seeks to make any change in ownership structure that would result hi the holder 
losing eligibility for installment payments, the holder shall first seek Commission approval 
and must make full payment of the remaining unpaid principal and any unpaid interest 
accrued through the date of the change in ownership structure as a condition of approval. 
Increases in gross revenues that result from revenues from operations, business development 
or expanded service shall not be considered changes in ownership structure under this 
paragraph.
(c) Reduced upfront payments. A prospective bidder that qualifies as a small business, or as 
a small business consortia, is eligible for a twenty-five (25) percent reduction in the amount 
of the upfront payment required by § 21.954. To be eligible to bid on a particular BTA, a 
small business will be required to submit an upfront payment equal to seventy-five (75) 
percent of the upfront payment amount specified for that BTA in the public notice listing the 
upfront payment amounts corresponding to each BTA service area being auctioned.
(d) Bidding credits. A winning bidder that qualifies as a small business, or as a small 
business consortia, may use a bidding credit of fifteen (15) percent to lower the cost of its 
winning bid on any of the BTA authorizations awarded in the MDS auction.
(1) Unjust enrichment.
(i) If a BTA authorization holder that utilizes a bidding credit under this subsection 
seeks to assign or transfer control of its BTA authorization to an entity not meeting the 
eligibility standards for bidding credits, the authorization holder must reimburse the 
government for the amount of the bidding credit, plus interest at the rate imposed for 
installment financing at the time the authorization was awarded, before assignment or transfer 
will be permitted. The amount of the required reimbursement will be reduced over time. 
An assignment or transfer in the first two years after issuance of the BTA authorization will 
result in a reimbursement of one hundred (100) percent of the value of the bidding credit;
  9706
during year three, of seventy-five (75) percent of the bidding credit; in year four, of fifty 
(50) percent; in year five, twenty-five (25) percent; and thereafter, no reimbursement.
(ii) If a BTA authorization holder that utilizes a bidding credit under this subsection 
seeks to make any change in ownership structure that would result in the holder losing 
eligibility for bidding credits, the holder shall first seek Commission approval and must 
reimburse the government for the amount of the bidding credit, plus interest at the rate 
imposed for installment financing at the time the authorization was awarded, as a condition 
of approval. The amount of the required reimbursement will be reduced over time. Such a 
change in ownership structure in the first two years after issuance of the BTA authorization 
will result in the reimbursement of one hundred (100) percent of the value of the bidding 
credit; during year three, of seventy-five (75) percent of the bidding credit; in year four, of 
fifty (50) percent; in year five, twenty-five (25) percent; and thereafter, no reimbursement. 
Increases in gross revenues that result from revenues from operations, business development 
or expanded service shall not be considered changes in ownership structure under this 
paragraph.
(e) Short-form application certification; Long-form application or statement of intention 
disclosure. An MDS applicant claiming designated entity status shall certify on its short- 
form application that it is eligible for the incentives claimed. A designated entity that is a 
winning bidder for a BTA service airea(s) shall, in addition to information required by 
§ 21.956(b), file an exhibit to either its initial long-form application for an MDS station 
license, or to its statement of intention with regard to the BTA, which discloses the gross 
revenues for each of the past three years of the winning bidder and its affiliates. 
This exhibit shall describe how the winning bidder claiming status as a designated entity 
satisfies the designated entity eligibility requirements, and must list and summarize all 
agreements that affect designated entity status, such as partnership agreements, shareholder 
agreements, management agreements and other agreements, including oral agreements, which 
establish that the designated entity will have both de facto and dejure control of the entity. 
S«?47C.F.R. § 1.2110(i).
(f) Records maintenance. All holders of BTA authorizations acquired by auction that claim 
designated entity status shall maintain, at their principal place of business or with their 
designated agent, an updated documentary file of ownership and revenue information 
necessary to establish their status. Holders of BTA authorizations or their successors in 
interest shall maintain such files for a ten (10) year period running from the date that their 
BTA authorizations are issued. The files must be made available to the Commission upon 
request.
(g) Audits. BTA authorization holders claiming eligibility under designated entity provisions 
shall be subject to audits by the Commission, using in-house or contract resources. Selection 
for an audit may be random, on information, or on the basis of other factors. Consent to 
such audits is part of the certification included in the short-form application. Such consent 
shall include consent to the audit of the holders' books, documents and other material 
(including accounting procedures and practices), regardless of form or type, sufficient to 
confirm that such holders' representations are, and remain, accurate. Such consent shall also
9707
include inspection at all reasonable times of the facilities, or parts thereof, engaged in 
providing and transacting business or keeping records regarding licensed MDS offerings, and 
shall also include consent to the interviewing of principals, employees, customers, and 
suppliers of the BTA authorization holders.
§ 21.961 Definitions applicable to designated entity provisions.
(a) Scope. The definitions hi this section apply to § 21.960, unless otherwise specified in 
that section.
(b) Small business; consortium of small businesses
(1) A small business is an entity that together with its affiliates has average annual gross 
revenues that are not more than $40 million for the preceding three calendar years.
(2) Attribution and aggregation of gross revenues
(i) Except as specified in paragraph (b)(2)(ii), the gross revenues of the applicant (or 
BTA authorization holder) and its affiliates shall be considered on a cumulative basis and 
aggregated for purposes of determining whether the applicant (or holder) is a small business.
(ii) Where an applicant (or BTA authorization holder) is a consortium of small 
businesses, the gross revenues of each small business shall not be aggregated.
(3) A small business consortium is a conglomerate organization formed as a joint venture 
between mutually-independent business firms, each of which individually satisfies the 
definition of a small business.
(c) Gross revenues shall mean all income received by an entity, whether earned or passive, 
before any deductions are made for costs of doing business (e.g. , cost of goods sold), as 
evidenced by audited financial statements for the preceding relevant number of calendar 
years, or, if audited financial statements were not prepared on a calendar-year basis, for the 
preceding relevant number of fiscal years. If an entity was not in existence for all or part of 
the relevant period, gross revenues shall be evidenced by the audited financial statements of 
the entity's predecessor-in-interest or, if there is no identifiable predecessor-in-interest, 
unaudited financial statements certified by the applicant as accurate.
(d) The definition of an affiliate of an applicant is set forth in 47 C.F.R. § 1.2110(b)(4).
9708
APPENDIX D - DRAFT FCC FORM 304
Subject to Approval by the Office of Management and Budget
Federal Communications Commission Approved by OMB 
Washington, D.C. 20554 xxxx-xxxx
Expires xx/xx/xx
Instructions for FCC 304
Application for a Multipoint Distribution Service Authorization
(FCC Form 304 attached)
GENERAL INSTRUCTIONS
Introduction
This FCC Form is to be used to apply for a license for new Multipoint Distribution 
(MDS), Multichannel Multipoint Distribution (MMDS) or MDS/MMDS signal booster 
station, amend a pending license application, modify a granted license pursuant to 47 
CFR Sections 21.40 and 21.41 and notify the Commission of station modifications 
pursuant to 47 CFR Section 21.42.
For Assistance
For assistance with FCC Form 304 applications, contact the MDS Section of the 
Mass Media Bureau at the FCC, Washington, D.C. 20554, Telephone Number (202) 
416-1106.
Applicable Rules1 and Regulations
Before this application is prepared, the applicant should review the relevant portions 
of Parts 0, 1, 17 and 21 of the FCC rules in Title 47 of the Code of Federal 
Regulations (C.F.R.). Copies of Title 47 may be purchased from the Superintendent 
of Documents, Government Printing Office, Washington, DC 20402. You may 
telephone the GPO order desk at (202) 783-3288 for current prices. FCC rules 
generally require various exhibits to be filed with an application, in addition to the 
information requested in the application form. Applicants should make every effort to 
file complete applications in compliance with the Rules. Replies to questions in this 
form and the applicant's statements constitute representations on which the FCC will 
rely in considering the application. Thus, time and care should be devoted to all 
replies, which should reflect accurately the applicant's responsible consideration of 
the questions asked. Include all information called for by this application. Failure to 
do so can result in a dismissal or return of the application or a delay in processing 
the application.
English to Metric Conversions
The following English to Metric equivalents should be used to convert heights and 
distances, where necessary:
1 foot = 0.3048 meters 
1 mile = 1.6093 kilometers
9709
Electronic Filing
The Commission has authorized the voluntary electronic filing for new MDS 
applications, based on the data and other information contained in this form. The 
specific details concerning the method for electronically filing MDS applications, 
including an electronic counterpart to this paper form, will be provided through 
subsequent Commission public notices.
Paper Conies
All entries on the form shall be typed or legibly printed in ink. A separate application 
must be submitted for each MOS or signal booster station at a separate site and for 
each MDS channel or channel group specified in 47 CFR Section 21.901. Submit an 
original and one copy of the application (SIGN ORIGINAL COPY ONLY).
Incorporation bv Reference
You may not incorporate by reference data, documents, exhibits, or other showings 
already on file with the FCC. All applicable items on this form must be answered 
without reference to a previous filing.
Current Information
Information filed with the FCC must be kept current. The applicant should notify the 
FCC regarding any material change in the facts as they appear in the application. 
See 47 CFR Section 1.65.
Waiver Requests
Requests for waivers of the FCC's Rules must contain an exhibit a stating reasons 
sufficient to justify a waiver. A separate request with the required showing must be 
made for each rule waiver desired, identifying the specific rule or policy for which the 
waiver is requested.
Exhibits
Each document required to be filed as an exhibit should be current as of the date of 
filing. Each page of each exhibit must be identified with the number or letter of the 
exhibit, the number of the page of the exhibit and the total number of pages of the 
exhibit. If interference studies are submitted, attach these as an exhibit.
Certificate of Completion of Construction
The applicant is reminded that upon completion of construction, an MDS licensee is 
required to submit a certification of construction completion and that the station is 
operational pursuant to 47 CFR Section 21.43. FCC Form 304A should be used to 
make such notification to the FCC.
9710
INSTRUCTIONS FOR SECTION I - GENERAL AND FEE INFORMATION
Item 1. The legal name of the applicant should be the same as reported in FCC Form 
430, "Licensee Qualification Report" (See also Section II., Item 1.) The name should 
also be the same as shown on any related station license or service authorization for 
a Basic Trading Area (BTA) or partitioned service area (PSA). The address listed 
may vary from that reported on FCC Form 430 if the address of the corporate officer, 
or other employee authorized to certify this application, differs from that of the 
applicant's principal office. Applicants must provide a current and valid mailing 
address in the United States, and this address must be that of the applicant, not the 
address of an equipment supplier, consultant or any third party; the authorization will 
be sent to this address. Failure to respond to FCC correspondence sent to the 
address of record may result in dismissal of an application.
Item 2. FEE INFORMATION. By law, the Commission is required to collect charges 
for certain of the regulatory services it provides to the public. Generally, MOS 
applicants seeking a new station license or a major change to an existing license are 
required to pay and submit a fee with the filing of FCC Form 304. However, 
governmental entities, which include any possession, state, city, county, town, village, 
municipal organization or similar political organization or subpart thereof controlled by 
publicly elected and/or duly appointed public officials exercising sovereign direction 
and control over their respective communities or programs, are exempt from the 
payment of this fee. Also exempted from this fee are long-form license applications 
for MDS stations to be operated in conjunction with an authorization for a Basic 
Trading Area (BTA) or Partitioned Service Area (PSA), which was attained directly 
through competitive bidding procedures. Applications for minor facilities changes or 
notifications pursuant to 47 CFR Sections 21.41 or 21.42 are nonfeeable. To avail 
itself of a fee exemption, the applicant must indicate its eligibility by checking the 
appropriate box in Question 2(B), Section I. FCC Form 304 applications NOT 
involving the payment of a fee can be hand-delivered or mailed to the FCC's 
Washington, D. C. offices. See 47 C.F.R. Section 0.401 (a).
The Commission's fee collection program utilizes a U.S. Treasury lockbox bank for 
maximum efficiency of collection and processing. All FCC Form 304 applications, 
which require the remittance of a fee, must be submitted to the appropriate post office 
box address. See 47 C.F.R. Section 0.401 (b). A listing of the required fee and the 
address to which FCC Form 304 should be mailed or otherwise delivered is also set 
forth in the "Common Carrier Services Fee Filing Guide" which is obtained either by 
writing to the Commission's Form Distribution Center, 2803 52nd Avenue, Hyattsville, 
Maryland 20871, or by calling Telephone No. (202) 418-FORM and leaving your 
request on the answering machine provided for this purpose. See also 47 C.F.R. 
Section 1.1104.
Payment of any required fee must be made by check, bank draft, money order or 
credit card. If paying by check or bank draft, make checks payable to the Federal 
Communications Commission, denominated in U.S. dollars, and drawn upon a U.S.
9711
financial institution. No postdated, altered or third-party checks will be accepted. DO 
NOT SEND CASH. Checks dated six months or older will not be acceptable for filing. 
Applicants who wish to pay by money order or credit card, must submit FCC Form 
159 together with their application. Payment of application fees may also be made by 
electronic payment, provided prior approval has been obtained from the Commission. 
Applicants interested in this option must first contact the Billings and Collections 
Branch at (202) 418-1995 to make the necessary arrangements.
Parties hand-delivering FCC Forms 304 may receive dated receipt copies by 
presenting copies of the applications to the acceptance clerk at the time of delivery. 
For mailed-in applications, a "return copy" of the application can be furnished provided 
the applicant clearly identifies the "return copy" and attaches it to a stamped, self- 
addressed envelope. Only one piece of paper per application will be stamped for 
receipt purposes.
For further information regarding the applicability of a fee, the amount of the fee or the 
payment of the fee, refer to the "Common Carrier Services Fee Filing Guide."
CLASSIFICATION OF FILING
Item 3. This item indicates whether this filing is intended as an application for a new 
station, a major change in an authorized station pursuant to 47 CFR Section 21.23 
a minor change in authorized facilities, as defined in 47 CFR Section 21.41, a 
notification of facilities changes pursuant to 47 CFR Section 21.42, or an amendment 
to a pending application. Applications for new stations, or major or minor changes, 
will be assigned a new file number to the filing. Application amendments will be 
associated with the pending application identified in Item 5b.
Item 4. Indicate which type of protected service area is associated with this 
application filing. A 56.33 kilometer (35 mile) circular protected area applies to 
MDS licensees or conditional licensees who received prior to September 1, 1995, 
their initial authorization for an MDS station for which a modified license is requested 
herein, or an associated signal booster station. The circular area also applies to 
applicants using this form to amend applications on file at the Commission prior to 
September 1, 1995, or to modify station authorizations that were initially applied for 
prior to September 1, 1995. An MDS station to be operated in a Basic Trading Area 
(BTA), one of the six BTA-like areas or partitioned service area (PSA), as defined in 
47 CFR Section 21.2, should be so indicated here and also specified in Section IV.
Item 6. Indicate whether this filing is for an MDS station, or a signal booster station 
pursuant to 47 CFR Section 21.913. Each MDS station signal booster at a different 
site requires a separate application.
9712
Contact Representative
Item 7. This item identifies the contact representative (usually the headquarters office 
of a large applicant, the law firm or other representative of the applicant, or the 
person or company that prepared or submitted the application on behalf of the 
applicant). In the event there is a question concerning the application, the FCC 
will attempt to communicate with the contact representative first.
Certifications
Item 8. The engineering certificate must be signed by the technically qualified person 
responsible for preparation of the engineering information. In this context, a 
"technically qualified person" is a person qualified to calculate and determine the 
interference potential and the efficient utilization of the proposed facilities, and is 
thoroughly familiar with the technical requirements as specified in the applicable parts 
of the Commission's Rules. Except for electronically filed applications, such 
engineering certifications must be signed in the original for each application.
Item 9. Certification on behalf of the applicant shall be made personally by the 
individual applicant, a partner (if the applicant is a partnership), a corporate officer or 
duly authorized employee (if applicant is a corporation that has been specifically 
authorized to act for and on behalf of the applicant, or officer/member (if applicant is 
an unincorporated association). Note: The financial certification must be updated 
when this financial certification is no longer substantially accurate and complete.
INSTRUCTIONS FOR SECTION 01 - LEGAL INFORMATION
Item 1. If FCC Form 430, "Licensee Qualifications Report" has been previously filed, 
it need be updated only when the information presently on file with the MDS Section 
of the FCC's Mass Media Bureau is no longer substantially accurate and complete in 
all matters of decisional significance. Examples of significant types of changes which 
must be reported include: a change in control (de jure or de facto) of an applicant; a 
change in alien ownership or control, which is significant under § 310(a) of the 
Communications Act; or any conviction or administrative finding required to be 
reported under item 7 of FCC Form 430.
Items 6. - 9. These items apply only to applicants who have attained a BTA, one of 
the six additional BTA-ilike areas, or a partitioned service area directly through the 
competitive bidding procedures. Applicants who have already submitted the 
information called for by these items, by filing a Statement of Intent, may omit these 
items.
9713
INSTRUCTIONS FOR SECTION III - PURPOSE OF FILING
Item 1. Applicants should enter in alphabetical order one or more letters 
corresponding to the listed purposes of this filing; i.e.. a request for authorization of a 
new station or request for authority to make various modifications to an authorized 
station, or notification of facilities modifications already made where specific FCC 
authorization is not required. Describe in an exhibit facilities changes or other 
purposes not fisted in this item.
INSTRUCTIONS FOR SECTION IV - STATION LOCATION INFORMATION
Item 1. This item indicates the nature of an action regarding transmitting antenna site 
coordinates. Applicants may use this form to correct the geographic coordinates of 
their antenna site. However, a discrepancy of more than 10 seconds in site latitude, 
longitude or both requires the filing of a major change application.
Items 2 - 5. These items identify the antenna site by its address, or if there is no 
address, by a brief description of the location such as a distance and direction from 
known landmarks, city or town, county and state. If not located in a city or town, 
insert the name of the nearest identifiable community.
Item 6. This item is the geographic coordinates of the location of the transmitting 
antenna site. Items 6a. and 6b. are the North Latitude and West Longitude, 
respectively, with reference to North American Datum of 1927 (NAD27). Specify 
South Latitude and East Longitude where applicable; otherwise, North Latitude and 
West Longitude will be presumed. Geographic coordinates should be rounded off to 
the nearest second; e.g., 29.5' is rounded to 30'. The National Geodetic Survey is in 
the process of replacing NAD27 with the more accurate 1983 North American Datum 
(NAD83) and updating current topographic maps with NAD83 datum. In addition, 
coordinates determined by use of the satellite-based Global Positioning System 
already reflect the NAD 83 datum. To prevent intermixing of data using two different 
datum, however, the Commission announced that until further notice, applicants are to 
furnish coordinates based on NAD27 datum on all submissions and the Commission 
will continue to specify NAD27 coordinates in its data bases and authorizations. In 
addition, applicants who have already filed applications with coordinates that reflect 
NAD 83 datum must provide NAD27 coordinates to the appropriate Commission 
licensing bureau. See Public Notice, entitled "FCC Interim Procedures for the 
Specification of Geographic Coordinates," 3 FCC Red 1478 (1988).
Item 7. This item reports the ground elevation of the transmitting site in meters above 
mean sea level.
Item 8. This item keys to location data in the data base that is to be replaced by the 
data in Items 2-6. The filer should complete this item only if (1) correcting 
geographical coordinates or (2) relocating the pertinent facilities at the location 
indicated by this item to the location specified in Items 2 - 6.
9714
Item 9. Quiet Zone. Quiet zones are those areas where it is necessary to restrict 
radiation so as to minimize possible impact on the operations of radio astronomy or 
other facilities that are highly sensitive to radio frequency interference. The protected 
areas involved and procedures required are given in 47 CFR Section 21.113.
Item 10. Environmental Policy. Each applicant should check the appropriate box to 
indicate whether a Commission grant of the proposed communications facility(ies) may 
or may not have a significant environmental impact as defined by 47 C.F.R. Section 
1.1307. Briefly, Commission grant of an application may have a significant 
environmental impact if any of the following are proposed:
(a) A facility is to be located in sensitive areas (e.g., an officially designated 
wilderness area, a wildlife preserve area, a flood plain) or will physically or visually 
affect sites significant in American history.
(b) A facility whose construction will involve significant changes in surface features.
(c) The antenna tower and/or supporting structure(s) will be equipped with high 
intensity white lights and are to be located in residential neighborhoods.
(d) The facilities or the operation of which will cause exposure of workers or the 
general public to levels of radio frequency radiation in excess of the "Radio Frequency 
Protection Guides" recommended in "American National Standard Safety Levels with 
respect to Human Exposure to Radio Frequency Electromagnetic Fields, 300 kHz to 
100 GHz," (ANSI C95. 1-1982), by the Institute of Electrical and Electronics 
Engineers, Inc., 345 East 47th Street, New York, New York 10017.
NOTE: In answering this question, applicants for MDS signal booster stations and 
MDS stations which transmit with an equivalent isotropically radiated power (EIRP) of 
200 watts or less are excluded from the standards set forth in subparagraph (d) 
above. However, in determining the appropriate response to this question, such 
applicants must still perform an analysis of the subject facilities in the context of the 
matters set forth in subparagraphs (a)   (c) above.
If you answered No, a brief statement explaining the reasons why there will not be a 
significant environmental impact must be submitted. With respect to RF radiation 
exposure, the required statement must include a description of the steps that have 
been taken to protect the general public, station employees, and other persons 
authorized access to the tower from exposure to RF radiation levels in excess of the 
specified safety standards and that these steps comply with those required by OST 
Bulletin No. 65, October, 1985, entitled "Evaluating Compliance with FCC-Specified 
Guidelines for Human Exposure to Radiofrequency Radiation." The applicant must 
take into account ALL non-excluded transmitters at and around the station's 
transmitter site; that is, contributions to environmental RF levels from all nearby radio 
and television stations, not just the applicant's station, must be considered.
9715
If you answered Yes, submit the required Environmental Assessment (EA). The EA 
includes for antenna towers and satellite earth stations:
(a) A description of the facilities, as well as supporting structures and appurtenances, 
and a description of the site, as well as the surrounding area and uses. If high 
intensity white fighting is proposed or utilized within a residential area, the EA must 
also address the impact of this lighting upon the residents.
(b) A statement as to the zoning classification of the site, and communications with, 
or proceedings before and determinations (if any) made by, zoning, planning, 
environmental or other local, state or federal authorities on matters relating to 
environmental effect.
(c) A statement as to whether construction of the facilities has been a source of 
controversy on environmental grounds in the local community.
(d) A discussion of environmental and other considerations which led to the selection 
of the particular site and, if relevant, the particular facility; the nature and extent of any 
unavoidable adverse environmental effects; and any alternative sites or facilities which 
have been or might reasonably be considered.
The information submitted in the EA shall be factual (not argumentative or conclusory) 
and concise with sufficient detail to explain the environmental consequences and to 
enable the Commission, after an independent review of the EA, to reach a 
determination concerning the proposal's environmental impact, if any. The EA shall 
deal specifically with any feature of the site which has special environmental 
significance (e.g., wilderness area, wildlife preserve, natural migratory paths for birds 
and other wildlife, and sites of historic, architectural or archeological value). In the 
case of historically significant sites, it shall specify the effect of the facilities on any 
district, site, building, structure or object listed in the National Register of Historic 
Places, 39 Fed. Reg. 6402 (February 19, 1974). It shall also detail any substantial 
change in the character of the land utilized (e.g., deforestation, water diversion, 
wetland fill, or other extensive change of surface features). In the case of wilderness 
areas, wildlife preserves, or other like areas, the statement shall discuss the effect of 
any continuing pattern of human intrusion into the area (e.g., necessitated by the 
operation and maintenance of the facilities).
9716
The EA shall also be accompanied with evidence of site approval which has been 
obtained from local or federal land use authorities.
To the extent that such information is submitted in another part of the application, it 
need not be duplicated in the (EA, but adequate cross-reference to such information 
shall be supplied.
An EA need not be submitted to the Commission if another agency of the Federal 
Government has assumed responsibility: (a) for determining whether the facilities in 
question will have a significant effect on the quality of the human environment and, (b) 
if it will affect the environment, for invoking the environmental impact statement 
process.
Protected Service Area
Item 11. Indicate in this item the nature of the protected service area. Individual 
stations licensed in conjunction with a BTA or PSA authorization do not have 
individually associated service areas; rather, the service area is that of the BTA or 
PSA. A BTA service area must include all the counties in that BTA as defined in the 
Rand McNally 1992 Commercial Atlas and Marketing Guide, 123rd Edition, pp. 36-39. 
Upon the removal of any portion of a BTA through partitioning, the remaining area is 
no longer a BTA but, itself, becomes a partitioned service area, defined by its counties 
or other recognized geopolitical subdivisions.
Item 12. If the. proposed MDS station or signal booster station is not licensed in 
conjunction with a BTA or PSA authorization, but rather is associated with an 
"incumbent" MDS license, conditional license or application, give the geographic 
coordinates of the center of the fixed 56.33 kilometer (35 mile) circular protected 
service area. On September 1 1995, the center coordinates of the circular protected 
areas became fixed at the then-authorized and/or previously proposed coordinates.
Item 13. This item must be answered only if the filing is for a station licensed in 
conjunction with a BTA authorization, including the six additional BTA-like areas 
defined by the Commission. BTA market designators and market names are listed in 
FCC Public Notices or in the FCC Record.
Item 14. This item must be answered only if the filing is for a station licensed in 
conjunction with an authorization for a partitioned service area (PSA). Identify each 
contiguous county or other recognized geopolitical subdivision in the space provided. 
If more space is needed, continue the description in an exhibit. Applicants not using 
electronic filing procedures may also submit a map depicting the PSA, if so desired.
9717
INSTRUCTIONS FOR SECTION V. TRANSMITTING ANTENNA INFORMATION
Item 1. This item specifies numbers used to later-identify (Section VI., Item 8) the 
antennas described in Items 2-4, below. It serves no other purpose. A separate 
number is used to identify each different type of antenna to be included in a multiple- 
antenna array. Most MDS stations employ a single transmitting antenna, which 
entails completing only the leftmost column for items 2 - 4. This application form also 
accommodates the use of multiple antenna arrays, where the array is treated as a 
single entity. All antennas in the array must operate from the same site. The antenna 
array must have a single antenna radiation center height above ground and a 
"composite" horizontal plane radiation pattern, based on the superposition of the fields 
of its individual antennas, regardless of the degree of electrical coupling between the 
antennas. If more than one identical antenna is to be used in an array, these 
antennas need only be identified once; i.e.. by one number in Item 1.
Items 2-3. These items describe an antenna(s) by its manufacturer and model 
number and must be completed regardless of whether a directional or omnidirectional 
antenna is being proposed. Manufacturer is the name of the company that made the 
antenna, and model number is the designation that the manufacturer assigns to the 
antenna.
Item 4. For a directional antenna in the horizontal plane, indicate the total beamwidth 
between the 3 dB (or 1/2 power) points in the major radiation lobe of the antenna or 
enter "omni" for an omnidirectional antenna; i.e.. an antenna with an approximately 
circular radiation pattern. Note: 47 CFR Section 21.904, provides a formula for 
relating the antenna beam width and the maximum permissible effective isotropic 
radiated power (EIRP). For multiple antenna systems, the maximum permissible EIRP 
is that allowed for an omnidirectional antenna if the composite horizontal radiation 
pattern is approximately circular. Otherwise, the maximum EIRP in a main horizontal 
lobe is determined by the beam width of the dominant antenna in the array that 
produces that lobe.
Item 5. This item specifies the horizontal radiation pattern of a directional antenna or 
multiple-antenna array in terms of a tabulation of relative field strengths, which are 
used to calculate corresponding values for the amount of power radiated in different 
azimuths. If a single omnidirectional transmitting antenna is proposed, Item 5. 
is not applicable and may be omitted. If a single directorial antenna is proposed and 
the antenna manufacturer and model number are included in the Commission's list of 
common "off-the-shelf directional antennas (periodically released by Public Notice), 
so indicate in Item 5b. and omit the tabulation of relative field strengths. Otherwise, 
tabulate the horizontal radiation pattern in Item 5d. by entering relative field strengths 
for the 36 azimuths given in the table. For single antennas, the radiation pattern 
must be entered in a "normalized" fashion, the method antenna manufacturers 
normally use to depict "polar diagrams" of horizontal radiation patterns. In a 
normalized radiation pattern, the antenna's main lobe, (or one of the main lobes where 
the relative field strength has a value of 1.0) is always pointed at True North, which is
9718
an azimuth of 0 degrees. Starting at True North, give the relative field strengths at 10 
degree intervals, proceeding clockwise around the radiation pattern. The FCC 
antenna data base allows for relative field strengths at ten additional azimuths, as 
selected by the applicant (the last set of columns in Item 5d.). Applicants should enter 
the azimuths corresponding to the maximum and minimum values of (normalized) 
relative field strengths for the antenna, if these azimuths are not a multiple of 10 
degrees.
Where two or more transmitting antennas are used, the applicant must tabulate in 
Item 5d. the "composite" horizontal radiation pattern, regardless of the degree of 
electrical coupling between the antennas. For composite antennas, applicants may not 
refer to a composite pattern already "on file" in another MDS application or station 
authorization, nor a composite pattern contained in the FCC's directional antenna data 
base. Unlike the case of the normalized tabulation for a single antenna, complete the 
table in Item 5.d by entering the "unnormalized" relative field strengths of the 
composite antenna radiation pattern; i.e.. the actual horizontal radiation pattern that 
will exist once the station is placed in operation. For example, if the antenna's main 
lobes are at azimuths of 40 arid 220 degrees, enter in the table a relative field 
strength value of 1.0 at azimuths of 40 and 220 degrees, etc. Applicants should enter 
the azimuths corresponding to the maximum and minimum values of unnormalized 
relative field strengths for the antenna, if these azimuths are not a multiple of 10 
degrees.
INSTRUCTIONS FOR SECTION VI.- REQUESTED TRANSMITTING FACILITIES
Item 1. This item specifies the channel(s) and any associated visual carrier frequency 
offset(s) for the proposed station operation. Allowable offsets are "+" (plus) and "-" 
(minus). For example, an applicant requesting use of the E-channel group with a plus 
(+) offset would enter the following: E1[+] E2[+] E3[+] E4[+]. An applicant would 
specify MDS channel 1 with no offset as: 1[ ], leaving the offset box empty. Note: 
Operation on the basis of a 10 kHz frequency offset requires that two cochannel 
stations operate with different visual carrier offsets, that the related transmitters meet 
the prescribed frequency tolerances in 47 CFR Section 21.101 and that the affected 
parties have agreed in writing to operate on the basis of frequency offset and that this 
application includes a statement to that effect, signed by both parties. By specifying a 
frequency offset, an applicant acknowledges compliance with these requirements, or is 
submitting with this application a request for waiver of the MDS interference protection 
standards, supported by full engineering justification.
Item 2. This item specifies the emission designators for the transmitter, which is 
normally the same as the type accepted/notification values. The visual and aural 
emission designators for the transmission of standard television signals are 
5M75C3F and 250KF3E, respectively.
9719
.3.. This item specifies the polarization of transmitting antenna(s); enter "H" for
horizontal polarization or "V" for vertical polarization. This application form and the 
FCC data base provide for a single polarization for each transmitting facility. 
Proposed use of any other type of polarization should be described in an exhibit.
Item 4. This item specifies the height of the antenna center of radiation above ground 
(in meters) which, together with the ground elevation of the site, is used in 
determinations of signal path obstructions.
Item 5. This item specifies the maximum effective isotropic radiated power (EIRP) in 
the horizontal plane, expressed in decibels above one watt (dBW). The specified 
EIRP should be that corresponding to an angle of zero degrees in the transmitting 
antenna's vertical radiation plane, regardless of whether or not antenna beam tilt is 
used. To calculate the EIRP in dBW, take the logarithm to the base ten of the 
transmitter output power (in watts), multiply by ten, add to the result the antenna gain 
(in dbi) and then subtact the sum of the losses from transmission line and other 
devices to be inserted between the transmitter and antenna (in dB). To convert EIRP 
from units of watts to dBW, take the logarithm to the base ten of the EIRP in watts 
and multiply the result by ten. Note: Applicants proposing to locate MDS stations or 
signal boosters within 80.5 kilometers (50 miles) of the Canadian or Mexican borders 
should attach an exhibit which specifies the maximum EIRP in the vertical plane, 
reflecting the use of antenna beam tilt, if applicable.
Item 7. Indicate whether the antenna is directional or omnidirectional in the horizontal 
plane and specify the amount of nonstandard antenna beam tilt, if any, accurate to the 
nearest 1/1 Oth of a degree; i.e.. beam tilt in addition to that incorporated into the 
antenna design. Beam tilt is not a factor in MDS interference calculations performed 
by the FCC staff in application acceptance studies, but will appear on MDS station 
licenses. For directional antennas in the horizontal plane, specify the azimuth 
orientation of the major lobe(s) of radiation in degrees clockwise from True North 
("orientation of the main lobe".) In FCC computerized interference studies, the 
normalized relative fields of the antenna (Section V, Item 5.) are "rotated" by this 
angle in order to calculate the power radiated for 360 equally spaced radial azimuths. 
Note: Do not enter for this item the orientation of the line of symmetry between major 
radiation lobes.
9720
Item 8. This item applies only to applications proposing the use of multiple tansmitting 
antennas. Indicate the azimuth of the major horizontal radiation lobe(s), degrees 
clockwise from True North, of each individual antenna in the system, usually also 
reflecting the physical orientation of the antenna. Use the antenna numbers (Section 
V., Item 1) to identify the individual antennas. For example, a proposed array 
consisting of two identical antennas radiating equal power, one pointed North, the 
other South, would be specified as follows:
Antenna No. Azimuth of Main Lobe(s)
First antenna 1 0 
Second antenna 1 180 
Third antenna 
Composite antenna array *** 0, 180
Note 1: Applications proposing to locate MDS transmit or signal booster stations 
within 80.5 kilometers (50 miles) of the Canadian or Mexican border must provide in 
an exhibit the following additional information about their proposed facilities: (a) 
transmitter peak visual output power (watts), transmitting antenna gain (dBi) and 
transmission system losses (dB); e.g.. losses due to transmission line, diplexers, 
combiners, etc. This additional data is needed to meet international notification 
requirements.
Note 2: An indication as to the specific transmitter make and model is not required on 
the application. Rather, in filing a Certificate of Completion of Construction, an MOS 
licensee must certify that it has installed a transmitter that has been type accepted by 
the FCC for use in the MDS service pursuant to 47 CFR Sections 21.120. See also 
47 CFR Section 21.908.
INSTRUCTIONS FOR SECTION VII. - ANTENNA STRUCTURE DATA
Item 1. The term "new" applies to the proposed construction of a new antenna 
structure or the use of a structure which contains no FCC licensees of any kind. The 
term "existing" applies to any structure with an antenna which is presently utilized by 
an existing FCC licensee(s).
Item 2. If item 1 is "Existing", enter the call sign of one existing FCC licensee using 
the structure and the radio service for that call sign.
Item 3. See antenna figure examples on the lower portion of this page. Indicate the 
number of the figure which most resembles your antenna structure. In item 3a., enter 
the type of supporting structure on which the antenna is or will be mounted (e.g.. 
building, tower, tank, silo, building/tower, etc.) In item 3b., enter the height above 
ground in meters, to the highest point of the supporting structure only. For instance, if 
the antenna structure consists of a building/tower combination, include any elevator 
shaft, flag pole, or penthouse in the support structure height, but not the antenna,
9721
tower, pole or mast. If the antenna structure is a tower only, include the height of the 
tower, but not the antenna. Refer to letter "b" in the antenna figure examples below. 
In item 3c., enter the overall height above ground in meters, of the entire antenna 
structure to the highest point, including any appurtenances. You must include 
antennas, dishes, or obstruction lighting. Refer to letter "d" in the antenna figure 
examples below.
Item 4. Enter the FCC assigned tower number if the tower is existing and the number 
is known.
Item 5. You must notify the Federal Aviation Administration on FAA Form 7460-1 
(obtainable from any FAA office), with certain limited exceptions as set forth in Part 17 
of the FCC Rules and Part 77 of the FAA Rules, of any of the following construction or 
alterations of an antenna structure:
(1) Construction of any new structure or alteration of any existing structure, which 
would result in the top of the antenna or the antenna structure exceeding a height of 
61 meters (200 feet) above ground level at the antenna site.
(2) Construction of any new structure or alteration of any existing structure, which 
would result in the top of the antenna or the antenna structure exceeding the height of 
an imaginary surface extending outward and upward at one of the following slopes:
(a) 1 meter above the airport elevation for each 100 meters from the nearest 
runway longer than 1 kilometer within 6.1 kilometers of the antenna structure, 
excluding helicopter and seaplane bases with specified boundaries, if that airport is 
either listed in the Airport Directory of the current Airman's Information Manual or 
is operated by a Federal military agency.
(b) 2 meters above the airport elevation for each 100 meters from the nearest 
runway shorter than 1 kilometer within 3.1 kilometers of the antenna structure, 
excluding helicopter and seaplane bases with specified boundaries, if that airport is 
either listed in the Airport Directory or is operated by a Federal military agency.
(c) 4 meters above the airport elevation for each 100 meters from the nearest 
landing and takeoff area within 1.5 kilometers of the antenna structure of each 
heliport listed in the Airport Directory or that is operated by a Federal military 
agency.
(3) Any construction of an antenna structure (or any alteration of an antenna structure 
that would increase its height) on an airport listed in the Airport Directory of the current 
Airman's Information Manual.
9722
4) When requested by the FAA, any construction or alteration that would be in an 
instrument approach area (defined in the FAA standards governing instalment 
approach procedures) and available information indicates it might exceed an 
obstruction standard of the FAA.
If you intend to install towers of unusual height or at locations in close proximity to 
aircraft landing areas, it will be to your advantage to discuss the location and height of 
the antenna in detail with the appropriate FAA area office before filing your application.
Item 6. If a Notice of Construction or Alteration has been filed with the FAA, enter "Y". 
If a Notice of Construction or Alteration has not been filed, enter "N". If "Y" (yes), 
enter the date filing was made with the FAA and the name of the regional FAA office 
where the filing was made. Also enter the FAA assigned Aeronautical Study Number, 
if known.
INSTRUCTIONS FOR SECTION VIII. - INTERFERENCE ANALYSIS AND
NOTIFICATION REQUIREMENTS
The Commission's Rules require MDS applicants to perform certain analyses of the 
potential for causing harmful interference to authorized or previously proposed MDS 
and ITFS facilities and to serve these studies on affected licensees, conditional 
licensees, and/or applicants, together with a copy of this application form and related 
exhibits. Interference analyses do not have to be submitted with MDS applications 
filed at the FCC, although applicants may do so. In lieu of performing the required 
analyses, an applicant may submit a written statement(s) of "no objection" to the 
operation of the proposed station, signed by the licensee(s), conditional licensee(s) or 
applicant(s) whose facility(ies) otherwise must be included in the interference 
analyses. The Commission Rules also provide for notification of BTA and PSA 
authorization holders of the areas adjoining an applicant's protected service area. 
Before filing an application, an applicant should carefully review the rules governing 
interference protection, analysis and/or notifications, and the limiting MDS signal 
strength. These are contained in 47 CFR Sections 21.901, 21.902, 21.913, 21.937, 
and 21.938.
Items 1. - 6. of this section are the applicant's declaration of compliance with all 
required interference and signal strength analyses and/or notifications on or prior to 
the date of filing this application. Applicants are reminded that any such analyses or 
agreements must be available to the Commission, upon request. The Commission 
may also request evidence that an applicant properly notified MDS licensees or 
authorization holders.
9723
:CC 304 Approved by OMB 
FEDERAL COMMUNICATIONS COMMISSION xxxxxxx
Expires dd/mm/yy 
Est. Avg. Burden Hours 
Per Response: ## Mrs.
Application for a Multipoint Distribution Service Authorization
FCC Use Only 
(File Number)
Fee Use Only
Section I. General and Fee Information
1. Legal Name of Applicant Telephone Number
Mailing Street Address or P.O. Box 
ATTENTION:
City
Call Letters
State Zip Code
Other FCC identifier (if applicable)
I. A. Is a fee submitted with this application? [ ] Yes No
B. If "No", indicate reason for fee exemption (see 47 CFR Section 1.1112 and go 
to Question 3.
[ ] Government Entity [ ] BTA or PSA Authorization Attained Directly
Through Competitive Bidding 
or
[ ] Nonfeeable Application 
C. If "Yes", provide the following information:
(a) Fee Type 
Code (b) Fee Multiple (c) Fee Amount
$
(d) Fee Payor ID FCC USE ONLY;
t
9724
CLASSIFICATION OF FILING
3. This filing is for a (an) 
(check one)
[ ] New station authorization
[ ] Major change to authorized station
[ ] Minor change pursuant to 47 CFR § 21.41
[ ] Notification pursuant to 47 CFR §21.42
[ ] Major amendment to pending application
[ ] Minor amendment to pending application
4. The proposed station is associated with which type of protected service area? 
(check one)
[ ] Basic Trading Area (BTA) or partitioned service area (PSA) 
[ ] Circular protected area, 56.33 kilometers (35 mile) radius
5.
6.
a. If filing references an existing station: 
call letters of 
existing station:
b. If filing amends a pending application: 
File number of 
pending application:
Type of station: (check one) [ ] MDS station [ ] Signal booster station
7.
CONTACT REPRESENTATIV
Name of Contact Representative 
(if other than applicant)
    
 
Telephone Number
Firm or Company Name
Mailing Street Address or P.O. Box
City State Zip Code
8. Certification of Person Responsible for Preparing Engineering Information 
Submitted in this Application.
certify that I am responsible for the preparation of the engineering information 
:ontained in this application, that I am familiar with Part 21 of the Commission's Rules 
and have either prepared or reviewed the engineering information submitted in this 
application, and that it is complete and accurate to the best of my knowledge.
Date Type or Print Name of Person Signature
Certifying i
=irm or Company Name
Mailing Street Address or P.O. Box
State Zip Code
City
Telephone Number (Area Code) 
( )
"9725
9. Certifications of Applicant
Except for applicants for stations to be licensed in conjunction with an authorization for 
a Basic Trading Area (BTA) or partitioned service area (PSA), the applicant certifies 
hat it has, or has reasonable assurance that it will have, the ability to meet the 
expected costs of constructing the facility within the construction permit period and the 
stimated operating expenses for twelve months and that the proposed station site will 
e available to the applicant for timely construction of the facilities during the initial 
nstruction period. I am familiar with Part 21 of the Commission's Rules and have 
ither prepared or reviewed the information submitted in this application. The 
applicant waives any claim to the use of any particular frequency of the 
electromagnetic spectrum as against the regulatory power of the United States 
Because of previous use of the same, whether by license or otherwise, and requests a 
construction authorization in accordance with this application. All statements made in 
he attached exhibits are a material part hereof and are incorporated herein as if set 
Dut in full in this application. The undersigned, individually and for the applicant, 
lereby certifies that the statements made in this application are true, complete and 
correct to the best of the signer's knowledge and belief, and are made in good faith.
By checking "Yes", below, the applicant certifies that, in the case of an individual 
applicant, he or she is not subject to a denial of federal benefits, that includes FCC 
benefits pursuant to Section 5301 of the Anti-Drug Abuse Act of 1988, 21 U.S.C. 
Section 862, or, in the case of a non-individual applicant (e.g., a corporation, 
Dartnership or other unincorporated association), no party to the application is subject 
o a denial of federal benefits that includes FCC benefits pursuant to that section. For 
he definition of a "party" for these purposes, see 47 CFR Section 1.2002(b).
[ ] Yes [ ] No 
Failure to check "Yes" may cause dismissal of your application.
Date Applicant (Must correspond with 
that shown on Page 1)
Type or Print Name of 
Person Signing
Signature Title (Position Held by Person 
Signing)
9726
Section II. Legal Information
1. Licensee Qualification Report: Does the applicant have a [ ] Yes No 
current "Licensee Qualification Report," FCC Form 430, on file 
for the MDS service? If "No", that form must be completed 
and submitted with this application. If "Yes", indicate the date 
of such filing with the MDS Section of the Video Services Division 
of the Mass Media Bureau: _____________
2. Applicant proposes service as a [ ] Common Carrier [ ] Non-common Carrier
OWNERSHIP AND CONTROL OF FACILITIES
3. Are there any agreements or understandings existant [ ] Yes No 
or under negotiation which affect the ownership or 
control of the facilities proposed herein, or any right or 
interest therein by any person not party to this 
application? If "Yes", submit an exhibit explaining such 
understanding or agreements.
4. Are there any agreements or understandings existant [ ] Yes No 
or under negotiation which affect the management or 
operation of the facilities proposed herein? If "Yes", 
submit an exhibit demonstrating how the applicant will 
retain control over the facilities and certifying compliance 
with 47 CFR Section 21.13(g).
Does this application propose a new or modified station [ ] Yes No
for which there is an ownership interest in, control by,
affiliation with, or leasing arrangement with a cable
television company? If "Yes", submit an exhibit describing
the relationship with the cable company and a map or
narrative depicting the overlap, if any, of the boundaries
of the cable franchise area and MDS protected service area.
9727
INITIAL LONG-FORM APPLICATION OF AUCTION WINNERS ONLY
3. (a) Is this the initial long-form application for an MDS station [ ] Yes No 
within an auction winner's BTA service area; i.e.. the first 
station to be licensed in this BTA to the auction winner?
(b) If "Yes", has the applicant previously filed a Statement of [ ] Yes No 
Intent regarding this BTA?
If this is the initial long-form application and the applicant 
has not previously filed a Statement of Intent, the applicant 
must submit the information specified in Questions 7, 8 and 
9 of this section.
Submit an exhibit pursuant to 47 CFR Section 1.2107(d) detailing the terms and 
and conditions and parties involved in any bidding consortia, joint venture, 
partnership or other arrangement the applicant had entered into relating to the 
competitive bidding process.
3. Submit an exhibit pursuant to 47 CFR Section 21.956 providing information on the 
applicant's subsidiaries, affiliates, significant stockholders, and partners, if any.
. Does the applicant claims status as a designated entity? [ ] Yes No 
If "Yes", submit an exhibit pursuant to 47 CFR Sections 
1,2110(i) and 21.962(c) describing how the applicant 
satisfies the designated entity eligibility requirements, 
summarizing all agreements that affect designated entity 
status, and disclosing specified revenue and net worth 
information. .
9728
Section III. PURPOSE OF FILING
1. The purpose of this filing is to: [ ]
Enter one or more letters that 
correctly describes the purpose 
of this filing.
A. request authorization for new station
B. request authority to add channel(s) to an E- or F- group authorization
C. request authority to change channel(s) within an authorized E- or F- group
D. request authority to relocate transmitting site
E. request authority to increase EIRP by more than 1 dB in any direction
F. request authority to increase antenna radiation center height above ground
G. request authority to increase overall height of antenna structure
H. request authority to change antenna polarization
I request authprity to change transmitter emission type or bandwidth
J. change antenna horizontal radiation pattern
K. change azimuth of main horizontal lobe of radiation
L add or change visual frequency offset
M. decrease EIRP
N. change antenna radiation center height by less than 1.5 meters
0. increase overall height of antenna to a height of 6.1 meters or
less above ground or building 
P. decrease overall height of antenna structure 
Q. delete a channel(s)
R. other facilities changes (submit exhibit explaining changes) 
S. correct erroneous information on license not involving a major change
pursuant to 47 CFR § 21.23 (submit exhibit if nature of correction(s) is not
listed here.)
9729
Section IV. Station Location Information
ANTENNA SITE LOCATION
1. Action requested [ ] Add new station [ ] Move location [ ] Correct coordinates 
(check one)
2. Street address or other description of antenna site
3. City: 4. State: 5. County:
6. Transmitting antenna site coordinates 
a. North latitude b. West longitude 
( DD-MM-SS) " (DD-MM-SS)
7. Ground elevation above 
mean sea level (meters)
8. If changing antenna location or correcting antenna site coordinates, give 
coordinates of the site being changed or corrected. Note: Correction of site 
latitude or longitude or both by more than 10 seconds is a major change in 
authorized facilities.
a. North latitude 
(DD-MM-SS)
b. West longitude 
(DD-MM-SS)
9. Quiet Zone: Does this application propose to construct 
or modify a station in any "quiet zone" area where radio 
use is restricted? If "Yes", give the name of authority 
notified and date of notification.
[ ] Yes No
a. Authority notified: b. Date of notification:
0. Environmental Policy: Would a Commission grant of any 
proposal in this application or amendment have a significant 
environmental effect as defined by 47 CFR 1.1307? If "Yes", 
submit with the application the environmental assessment 
required by 47 CFR §§ 1.1308 and 1.1311. If "No", give a brief 
explanation of why there will not be a significant environmental 
effect (submit an exhibit if more space is necessary).
[ ] Yes No
9730
PROTECTED SERVICE AREA
11. The protected service area associated with the proposed station is a: 
(Check one)
[ ] Circle with radius of 56.33 km (35 miles)
[ ] Basic Trading Area (BTA) or one of the six additional BTA-like areas
[ j Partitioned service area (PSA)
tote: By definition, a BTA authorization must include all counties of that
BTA; i.e.. no counties of a BTA have been partitioned to another entity. 
Upon the removal of any portion of a BTA through partitioning, the remaining 
area is no longer a BTA, but, itself, becomes a partitioned service area.
2. For application proposals associated with a 56.33 km (35 mile) 
protected service area, enter the geographic coordinates of the center of 
of the authorized circular protected service area. Caution: The center 
coordinates may not coincide with the antenna site coordinates if the site has 
been, or is herein proposed to be relocated.
a. North latitude b. West longitude 
(DD-MM-SS) (DD-MM-SS)
3. For applications proposing to locate the transmitting antenna site 
in a Basic Trading Area (BTA):
BTA Numerical Designator BTA Name (city/state)
4. For applications proposing to locate the transmitting antenna site 
in a partitioned service area (PSA), identify the contiguous counties and/or 
other political subdivisions that comprise the PSA in which the proposed antenna 
site will be located. A map depicting the PSA may be submitted, but is not 
required.
9731
Section V. Transmitting Antenna Information
1 . Antenna Number:
2. Manufacturer:
3. Model Number:
4. Beam Width:
(or "omni")
1 2 3
5. Tabulation of horizontal relative field strengths for a directional antenna or array.
a. The
b. For
station at this site will use: [ ] a single antenna [ ] multiple antennas
single transmitting antenna systems, is the [ ] Yes No
horizontal radiation pattern for this antenna already tabulated
in the FCC's directional antenna data base? If "No", enter in
Question 5.d, values for the normalized horizontal relative field
strengths for this antenna.
c. For
Refer to the instructions for guidance.
multiple transmitting antenna systems, tabulate .in
Question 5.d, values for the horizontal plane relative field strengths
for the "composite" antenna system. Give the non-normalized
(i.e.. actual) relative field strength corresponding to each specified
azimuth.
d.
\zimuth
0
10
20
30
40
50
60
70
80
90
100
110
Required Azimuths
Rel Field Azimuth
120
130
140
150
160
170
180
190
200
210
220
230
Rel Field Azimuth
240
250
260
270
280
290
300
310
320
330
340
350
Optional Azimuths
Rel Field Azimuth Rel Field
9732
Section VI. Requested Transmitting Facilities
1. Channel [offset]: _[ ]  I 1 _[ ] _[ ]
2. Emission Designator. Visual: [ ] Aural: [ ] 3. Polarization: _
4. Antenna Radiation Center Height Above Ground: meters
5. Equivalent Isotropically Radiated Power dBW
6. Transmitting Antenna System: [ ] Single Antenna or [ ] Multiple Antennas
7. Data for a Single Transmitting Antenna System
(a) Antenna Type: [ ] Omnidirectional or [ ] Directional
(b) If Directional, Azimuth of Main Horizontal Lobe: __ (c) Beam Tilt _._
8. Data for a Multiple ("Composite") Transmitting Antenna System
Give the main lobe azimuth(s) (clockwise from True North) of the each separate 
antenna in the multiple antenna array, and also give the main lobe azimuth(s) of 
the composite horizontal plane radiation pattern resulting from the combined use 
of these antennas Use the antenna numbers in Section V. that correspond to 
each different antenna in the array. For example, if the array consists of two 
identical antennas, the number 1 would be entered in the Antenna No. column for 
both the first and second antenna.
Antenna No.
(a) First antenna
(b) Second antenna
(c) Third antenna
(d) Composite antenna array
Azimuth of Main Lobe(s)
9733
Section VII. Antenna Structure Data
1 . Structure is [ ] N,ew [ ] Existing
3. Figure number (1, 2, or 3) of figures t 
a. Structure type: 
b. Height of support structure ("b" in 
c. Overall height of structure ("d" in f
4. FCC tower no. (if known): 5.
6. If "Yes", FAA notified? [ ] les
a. Date FAA notification filed:
c. FAA study number (if known):
d. If required FAA notification has not
2. Existing station using structure 
a. Call sign: 
b. Radio service:
>elow which most resembles the structure: _ 
figures): ._. meters
iaures): meters
Is FAA.notification required? [ ] Yes No
No
b. FAA regional office (city/state):
been made, briefly explain below.
I
ij
Figure 1
a,d
a • (wight to tip of antenna b' 
(AOU
Ftgun»2
QDfncm
atructure e
Rgu
i
d
b
,.-_._,.- d«  ground otamtlon .
(AMSL) "
^ ^
b
r
r»3
 r
* overall halgM o 
wluding aU appu
<AOI \
MM
a
f atiuetun 
wnancai
9734
Section VIII. Interference Analysis and Notification Requirements
1. The applicant has met the following requirement to: [ ] Yes No
(a) Prepare an analysis of the potential for harmful 
interference from its proposed facilty to the protected 
service area of all authorized and previously proposed 
"incumbent" MDS stations, for which the geographic 
coordinates of the center of the protected 56.33 kilometer 
(35 mile) circular areas are located within 160.94 kilometers 
(100 miles) of the proposed MDS station antenna site, 
[or 80.47 kilometers (50 miles) of a proposed signal booster 
site], and which operate or propose to operate on the same 
channel or an adjacent channel or, in lieu of an interference 
analysis to a particular station(s),
(b) The applicant has previously filed or is filing with this 
application a written statement(s) of "no objection" to the 
operation of the proposed station from the licensee(s), 
conditional licensee(s) and/or applicant(s). (See 47 CFR 
Sections 21.902 and 21.937.)
2. The applicant certifies that it has, on or before the [ ] Yes No 
date of submission of this application, served the 
above-referenced interference analyses, together with 
a copy of this application, on all "incumbent" MDS 
licensees, conditional licensees and/or applicants 
for which a written statement of "no objection" has 
not been submitted.
3. The applicant certifies that it has, on or before the [ ] Yes No 
date of submission of this application:
(a) Served written notice of this filing, including a copy of 
this application, on all authorization holders for an adjoining 
BTA or partitioned service area, provided the proposed facilities 
would produce an unobstructed electromagnetic signal path to 
any location within an adjoining BTA or partitioned service area 
or, alternatively,
(b) Has previously filed or is filing with this application a written 
statement(s) of "no objection" to the operation of the proposed 
station from the applicable service authorization holders. Note: 
These notification or consent provisions do not apply to an MDS 
authorization holder or licensee with respect to an adjoining area 
authorized to the same entity.
9735
The applicant has prepared an analysis, which [ ] Yes No 
demonstrates that:
(a) The proposed MDS station or signal booster would 
not produce a free space power flux density greater than 
- 73 dBW/m2 at any point on the boundary of its protected 
service area for which there is an unobstructed electromagnetic 
signal path to the transmitting antenna or, alternatively, that
(b) It has filed or is filing with this application, a written 
statement(s) of "no objection" to the operation of the proposed 
facility from authorization holders of an adjoining BTA or 
partitioned service area, permitting the power flux density to 
exceed the limiting value at the boundary.
5. The applicant has prepared an analysis, which [ ] Yes No 
demonstrates that:
(a) The proposed MDS station or signal booster would not 
cause harmful interference to any authorized E-, F-, G- or 
D-channel ITFS station with a transmitter site within 80.5 
kilometers (50 miles) of the site coordinates of the proposed 
station or, alternatively, that
(b) It is submitting with this application, a written statement(s) 
of "no objection" to the operation of the proposed station 
from the ITFS licensees and/or permittees pursuant to 47 CFR 
Section 21.902(i).
6. The applicant certifies that it has, on or before the [ ] Yes No 
date of submission of this application, served the 
interference studies and a copy of this application 
on all ITFS licensees and permittees for which a 
written statement of "no objection" is not submitted 
with this application.
9736
Section IX. Other Information
. The applicant has entered into an agreement(s) to [ ] Yes No
operate the proposed station on the basis of visual
carrier frequency offset with respect to one or more
authorized stations or pending applications. If "Yes",
submit an exhibit that identities the parties with
whom an offset agreement has been reached; include
the name of the licensee, conditional licensee or
applicant, station location, channel(s), frequency 
| offsets ("+" or"-") and the call sign or application file, 
! if known. Also include a signed statement from each 
; affected licensee, conditional licensee or applicant who 
| agrees to operate on the basis of frequency offset.
12. In addition to the other interference analysis and/or notification 
requirements, an applicant for an MDS signal booster
a. certifies that the site of the proposed signal booster [ ] Yes No 
is located within the applicant's protected service area.
b. has included with the application a written consent [ ] Yes No 
statement of the licensee of each MDS, ITFS and OFS 
station whose signal is to be retransmitted.
3. Rule waivers and exceptions: Is the proposal contained [ ] Yes No 
in this application inconsistent with any of the Commission's 
Rules? If "Yes", submit an exhibit describing all requests for 
waivers or exceptions, including justification and supporting 
documentation.
4. Additional Exhibits. Provide any other information in attached exhibits 
that may be required by the Commission's Rules, but is not addressed in this 
form.
Exhibit No. Identity Exhibit No. Identity
9737
Partial Dissenting Statement of Chairman Reed E. Hundt
Amendments of Parts 21 and 74 of the Commission's Rules with Regard to Filing Procedures 
in the Multipoint Distribution Service and in the Instructional Television Fixed Service and 
Implementation of Section 309(j) of the Communications Act - Competitive Bidding (MM 
Docket No. 94-131 and PP Docket No. 93-253)
For too many years, the MDS - or wireless cable - service has been plagued by 
backlogs, delays and outright fraud. One reason is sadly no secret. The Commission's 
policy of licensing MDS spectrum by lottery was an utter failure. As Congress explained 
when it granted the Commission auction authority, n[l]otteries engendered rampant 
speculation, undermined the integrity of the FCC's licensing process and, more importantly, 
frequently resulted in unqualified persons winning an FCC license."1 The lottery policy did 
as much to stymie competition in the cable market as to foster it, and it denied the public the 
revenues to which it is entitled for use of the spectrum.
The Report and Order we adopt today marks a significant break from that past. 
Taking advantage of the authority granted by the Omnibus Budget Reconciliation Act of 1993 
(the "Budget Act"), the Report and Order announces that MDS spectrum will henceforth be 
distributed by auction.2 That policy change and others described in the Report and Order 
replace the old lottery system with a market-based approach that encourages aggregation of
'House Comm. on the Budget, Report to H.R. 2264, H.R. Rep. No. Ill, 103d Cong., 
1st Sess., p. 248 (1993) ("House Report").
2The Report and Order also uses "MDS" to include both vyyjfah^n<»| Multipoint 
Distribution Service (MMDS) stations as well as gfog|?-?hannel Multipoint Distribution 
Service stations, and I follow that lead in this statement.
9738
channels by licensees who value them the most, who are most likely to construct wireless 
cable systems, and who are most likely to do so rapidly. The Commission has long held out 
the promise that wireless cable could emerge as an effective competitor in the video 
marketplace, leading to more consumer choice, better service and reduced prices. The 
portions of the order that set rules for new MDS applications will help keep that promise, 
and I am happy to vote to approve those new rules.
Regrettably, the Report and Order in one respect preserves the failed policy of the 
Commission's past. Although the Budget Act gives the Commission the authority to auction 
applications filed before July 26, 1993, a majority of the Commission has decided to resolve 
pending MDS applications by lottery. This will affect a minimum of 101 applications for 
five MDS license, and probably more. More than 4,000 applications for more than 350 
MDS licenses filed before July 26, 1993, are still pending before the Commission, and there 
is no sure way to know how many of those licenses will now be distributed by lottery or 
simply handed out without a lottery iif there are no mutually exclusive applications. And 
while the Commission has dismissed or returned roughly 3,000 applications pending before 
July 26, 1993, there is no way to know how many of those will be reinstated by the courts 
and then distributed for free. Because the giveaway the majority mandates cannot be 
reconciled with the public interest that the Communications Act requires our policies to 
serve, I dissent from that portion of the Report and Order.
Although this is only the second time I have dissented, in whole or in part, from a
9739
Commission decision, it is not the first time I have dissented from a decision choosing 
lotteries over auctions. See Implementation of Section 3090)  f the Communications Act - 
Competitive Bidding, Memorandum Opinion and Order, PP Docket No. 93-253 (released 
July 14, 1994) (lotteries for unserved cellular areas) (Commissioners Ness and Chong not 
participating). I dissent again because the decision to use lotteries here is even less 
justifiable than in the context of unserved cellular areas. First, lotteries will result in 
significant windfalls to the successful applicants, who will receive licenses for sites that are 
500 percent larger and far more valuable than the ones they applied for. The FCC is not 
supposed to be the Federal Christmas Present Commission - particularly in June. Second, 
lotteries of licenses for small specific sites undermine the Commission's new and 
commendable policy of awarding authorizations for large geographical areas. That policy is 
designed to reduce roadblocks to the aggregation of MDS channels within boundaries that the 
market selects, so that wireless cable operators can put together truly competitive systems. 
The majority's decision means that fewer vacant channels will be available for those who win 
Basic Trading Area (BTA) authorizations at auction, and it may mean that BTA authorization 
holders' rights to vacant channels will be contingent on the Commission's resolution of 
applications still pending and on judicial review of those applications and those previously 
dismissed.
I dissent again on the issue of auctions vs. lotteries for another reason. While any 
single decision to use lotteries instead of auctions may seem in isolation not to be terribly 
costly, those decisions in the aggregate inflict serious harm on the public interest.
9740
Today's decision is particularly disheartening in light of the eminently sensible 
alternative that is available. The Commission should recognize that pending MDS 
applications were filed to provide a service under rules that no longer exist and that the 
public interest is best served by applying the new MDS rales to pending applicants as well as 
new ones. The Commission should dismiss all pending applications, allowing applicants who 
desire to provide the new MDS service to participate in the auction for BTA authorizations.
* * * * *
It is not an oversimplification to say that the Commission's extensive experience with 
lotteries and its recent experience wiith auctions lead to two straightforward principles that 
should be the starting point for our ithinking about all licensing decisions: Auctions are 
good. And lotteries are bad.
There is no longer any serious dispute that sound public policy requires auctioning 
spectrum licenses except where there are clear and compelling public interest reasons to the 
contrary. Auctions put licenses into the hands of those who value them most highly, and 
who are therefore most likely to provide service the public desires and to do so quickly and 
efficiently. Auctions also permit the U.S. Treasury to recover for the public a portion of the 
value of the public's spectrum.
Lotteries, meanwhile, do nothing to ensure that the licensee is the person or business
9741
most likely to use the spectrum for the public good. They do nothing to ensure that the 
licensee will actually use the spectrum to provide any service, much less do so quickly. As 
Commissioner Ness points out, hundreds and hundreds of MDS licenses granted by lottery 
were eventually forfeited for failure to construct MDS stations. Under a lottery system, it is 
only by freakish accident that a spectrum license lands in the hands of those who will use it 
most productively.
Lotteries not only fail to further the public interest, they actually harm it. As the 
North American Securities Administrators Association and the Council of Better Business 
Bureaus have concluded, n[w]hen the federal government holds a lottery, con artists are 
among those who profit the most."3 Nothing proves that more than the Commission's 
unhappy experience with MDS lotteries. As numerous newspaper articles and federal and 
state investigations have demonstrated, the Commission's wireless cable lotteries have done 
"more to enrich con artists than to grant ordinary citizens entree into the cable business." A. 
Crenshaw, "No Jackpot in This Lottery," Washington Post, Apr. 19, 1992.
The mechanism for the con is the "application mill." The Commission's MDS 
lotteries have led to an "explosion in abusive application mills that seek to reel in unwary 
small investors with the lure of the latest in high tech and the promises of quick riches." 
Investor Alert, p. 1. This is not to say that there are no legitimate applications that arrive
3North American Securities Administrators Association and the Council of Better 
Business Bureaus, Investor Alert, p. 1 (April 1992).
9742
through application mills. But there is no doubting that application mills have left many 
victims in their wake. Victims of ajjplication-mill scams include not only unlucky investors 
but the public as well. The public is harmed both because it is denied fair compensation for 
use of the public spectrum, and also because applications from application mills, even when 
granted, too often do not result in the construction of wireless cable facilities. The public is 
thus denied access to a competitor to wired cable and to the unproved service and lower 
prices we can expect to accompany such competition.
Unfortunately, this discussion of application mills is highly relevant to the question 
before the Commission. Of the roughly 100 mutually exclusive applications for five sites 
that the Commission today commits to resolving by lottery, virtually all come through 
application mills with which the Mass Media Bureau is all too familiar. A single mill, 
Applied Telemedia Engineering and Management, Inc., is associated with 83 of the 
applications. That company was the target of a Federal Trade Commission investigation that 
resulted hi the settlement'of a federal-court complaint alleging deceptive conduct in 
connection with MDS applications. While the company denied wrongdoing, it nonetheless 
agreed, among other things, to the iissuance of an injunction requiring that it pay $100,000 to 
the FTC for consumer redress and (hat it refrain from deceptive activities.4 Each of the 83
4Federal Trade Connniijtjtion v. Applied Telemedia Engineering and Mftflagement. Inc.. 
Final Judgment and Order for Permanent Injunction and for Settlement of Claims for 
Monetary Relief as to Defendants Applied Telemedia Engineering and Management, Inc., 
and Gerald Seifer, No. 91-0635-CTV-UNGARO-BENAGES (S.D. Fl., Jan. 12, 1993). See 
also M. Carnevale, "Miami Firm Faces Lawsuit by the FTC Over TV Licenses; Company 
Misled Consumers About 'Wireless Cable' Operations, Agency says," The Wall Street 
Journal, B7, April 2, 1991.
9743
pending MDS applications involving Applied Telemedia was filed before entry of that federal 
injunction, and most were filed before the FTC action was initiated.
In view of those facts, it strikes me as impossible to reconcile the majority's decision 
to award pending applications by random selection with one of Congress's main reasons for 
granting the Commission auction authority in the first place: deep dissatisfaction with 
lotteries. "[LJotteries have.been characterized by 'get rich quick' appeals by firms that would 
submit an application for a fee, so-called 'licensing mills,' and by licenses landing in the 
hands of those ill equipped to build or operate a service properly utilizing radio spectrum." 
House Report, p. 248.
The majority offers equitable considerations and administrative costs as its reasons for 
choosing lotteries over auctions. Those were the arguments offered in the context of pending 
applications for unserved cellular areas. They were unpersuasive then. They are even less 
persuasive now.
With respect to equitable considerations, the majority ignores the critical fact: that 
what pending applicants applied for no longer exists. The Commission today significantly 
expands the protected service area for "incumbent" MDS licensees, which includes the 
pending applicants who have yet to be awarded licenses. Pending MDS applicants sought 
licenses to provide wireless cable service throughout a 710 square mile area. Lottery 
winners will receive far more valuable licenses to provide wireless cable service throughout a
9744
3848 square mile area, an area five times as large.
This extraordinary windfall i.s entirely undeserved. It is highly unlikely that many 
pending applicants for lotteries invested a significant amount of time or money in developing 
detailed business plans. Why should they when their chances of obtaining a license were 
those associated with a lottery? And, at least as a general rule, bonafide businesses forced 
to apply for a lottery would prefer an auction even now, because competitive bidding is far 
more likely than random selection actually to reward investment and innovation. While it is 
true that application mill applicants may have been convinced to "invest" unfortunate sums of 
money in a chance to win a lottery, that is hardly the kind of investment that sound public 
policy should reward. The majority tries to make much of the long (and certainly 
regrettable) delays experienced by many applicants, but I simply do not see how that justifies 
the windfall the majority awards them, any more than the $155 application fee entitles them 
to the significant benefit they will receive (the majority, of course, noting that the $155 bet 
can be refunded, if necessary). These pending applicants never had a reasonable expectation 
that they would actually win a lottery and receive a license. And given clear Commission 
policy and judicial precedent, see iiifia. at 14-15, the applicants were on notice that the 
Commission might ultimately decline to award the licenses for which they applied, or award 
the licenses in a different way.
A serious analysis of the equities would have to consider not only the equitable claims 
of pending applicants, but the equitable claims of others. The majority never considers,
9745
however, whether its decision is fair to those who chose not to apply for a small service area 
but who would have applied for the larger and more valuable area that will now be given 
away; or whether its decision is fair to the American public as a whole, which will now be 
denied compensation for commercial use of the spectrum. Nor does the majority ask 
whether its decision is fair to residents of the affected areas, who are now less likely to 
receive the benefits of competition. If , as the majority suggests, delays are critical to an 
equitable analysis, surely the majority is obliged to consider the delay in rolling out wireless 
cable serve that a lottery will almost certainly cause.
The majority seeks to sidestep the likelihood of such a service delay by relying on a 
presumption that lottery winners will actually provide MDS service. See Repon and Order, 
Par. 91 ("[TJhere is no evidence before us that [application mill] applicants, if awarded an 
MDS station license by lottery, would not construct and operate an MDS station"). This 
presumption is contradicted by the Commission's experience with MDS lotteries, which, as 
I've mentioned, has resulted in the forfeiture of an embaiassing percentage of MDS licenses 
for failure to provide service. And it is precluded by the congressional finding that lotteries
•place licenses "in the hands of those ill equipped to 
build or operate a service properly 
utilizing radio spectrum." House Report, p. 248. If the Commission is to rely on a 
presumption in this area, it should rely on a presumption that is the exact reverse of the one 
it has selected. Lotteries should be spumed absent, at least, clear evidence that lottery 
applicants will actually construct and operate MDS stations.
9746
With respect to administrative costs, the only issue the majority raises is a trivial one: 
that an auction would require applicants to update their applications. That strikes me as a 
cost easily worth bearing given the benefits of competitive bidding. Moreover, the majority 
fails to say how it can justify not requiring pending applicants to update their applications 
given that the Commission will now be giving away licenses to provide wireless cable service 
over vastly expanded areas. Even under our old rules, MDS applicants were required to 
certify that they have the financial ability to construct wireless cable facilities and to provide 
wireless cable service for 12 months. 47 C.F.R. 21.17. It strikes me as arbitrary to assume 
that certifications provided in connection with a small wireless cable service area suffice to 
demonstrate the financial ability to construct and run a wireless cable operation that would 
cover an area five times as large. A logical application of our rules, and the only one 
consistent with a desire to ensure tliat new lottery winners will actually provide wireless 
cable service, would require pending applicants to recertify that they are financially qualified.
The majority asserts that its decision "serves the public interest," but its-public 
interest inquiry consists entirely of its (incomplete) equity analysis and its (unconvincing) 
administrative argument. The Commission, it seems to me, is obliged to engage in a more 
extensive analysis of the public interest before choosing lotteries over auctions. While the 
Budget Act does give the Commission the discretion to reject auctions for applications 
pending before July 26, 1993, prqper exercise of that discretion requires considering the 
public interest factors Congress deemed important enough to place in the Budget Act itself. 
The majority quite rightly observes that the Budget Act, on its face, does not compel the
9747
Commission to review each of the listed public interest factors in deciding how to resolve 
pending applications, but nor does it compel consideration of equitable or administrative 
factors. And contrary to the majority's apparent view, the legislative history of the Budget 
Act contains no support for the notion that Congress intended the Commission to focus 
exclusively on equitable concerns and administrative costs. The legislative history of the 
Section 6002(e), the "Special Rule," reads in full:
The Conference Agreement adopts the House approach and adds additional language 
which permits the Commission to use lotteries for applications that were accepted for 
filing before July 26, 1993. This provision will permit the Commission to conduct 
lotteries for the nine Interactive Video Data Service markets for which applications 
have already been accepted, and several other licenses.5
*
If anything, this sparse legislative history - which suggests only a congressional willingness 
to tolerate licenses for nine IVDS markets plus "several other licenses" - precludes the 
majority's approach, under which lotteries would be used for a far greater number of 
licenses, in MDS and other services. It certainly does not support the majority's apparent 
view that it is inappropriate to consider factors other than the equities and administrative 
costs. The question, to paraphrase the majority, is not whether we are required to consider 
the statutory public interest factors, but whether we should. I think the answer is obvious. 
And I think that the decision to resolve pending MDS applications by lottery cannot be 
squared with those statutory factors.
First, the majority's decision to distribute pending MDS applications by lottery will
SH.R. Rep. 103-213, 103d Cong., 1st Sess. 498-499 (1993) (Conf. Rep.).
9748
not promote "the development and nipid deployment of new technologies, products, and 
services for the benefit of the public, including those residing in rural areas, without 
administrative or judicial delays." 47 U.S.C. 309(j)(3)(A). We can confidently infer from 
experience that the lottery winner is unlikely on its own to construct an MDS facility within 
one year, as required, at which point: the spectrum will return to the Commission and have to 
be redistributed. Second, the majority's decision to distribute pending MDS applications by 
lottery will not promote "economic opportunity and competition" and will not ensure that 
new and innovative technologies are readily accessible to the public by encouraging small
•
businesses, rural telephone companies, and businesses owned by minorities and women to 
become licensees. 47 U.S.C. 309(j)(3)(B). Random distribution of licenses is the antithesis 
of a Commission policy to ensure the diversity of licensees, and a spectrum licensing method 
that we know from experience to be inconsistent with a rapid build out ensures neither 
economic opportunity nor the ready jiccessibility of new technologies.
Third, the majority's decision to distribute pending MDS applications by lottery 
obviously does not promote the "recovery for the public of a portion of the value of the 
public spectrum resource made available for commercial use and avoidance of unjust 
enrichment through the methods employed to award uses of that resource." 47 U.S.C. 
309(j)(3)(Q. It is hard to predict the revenue that the U.S. Treasury will be denied as a 
result of the majority's decision, particularly when the universe of sites subject to lottery may 
expand if the Commission does not dismiss as-yet reviewed applications or if the court 
reinstates applications that have been dismissed. We can be certain, however, that a lottery
9749
will generate no revenue at all, and that whatever amounts an auction would generate would 
be very warmly received by Congress and the Treasury.
Finally, the majority's decision to distribute pending MDS applications by lottery is 
utterly inconsistent with the Commission's obligation to promote "efficient and intensive use 
of the electromagnetic spectrum." 47 U.S.C. 309(j)(3)(D). An auction winner would have 
an economic incentive to design and build its system to offer low-cost service to the public 
by, among other things, using spectrum-efficient technology that minimizes the need for 
future upgrades of its facilities to accommodate spectrum shortages. By contrast, a lottery 
winner, if it actually did build out its system, would be more likely to construct a system 
using relatively inexpensive, spectrum-inefficient technology, to allow for the sale of its 
license as soon as our rules permit.
Three alternatives to lotteries present themselves. The Commission could require 
pending applicants to bid for the specific sites for which they applied. While better than a 
lottery, that is ultimately an unsatisfactory alternative given the likelihood that pending 
lottery applicants - the bulk of which, again, came through application mills - are not 
prepared to construct MDS stations and provide wireless cable service. The Commission 
could reopen the filing window and then subject those specific sites to competitive bidding. 
But that would leave the Commission in the business of licensing small specific sites, when 
the rest of today's Report and Order rejects that approach in favor of one that primarily 
relies on authorizations to rationalize wireless cable service within a large geographical area.
9750
The order quite persuasively explains the substantial public policy benefits of such an 
approach, with which, again, the majority's decision is inconsistent.
Plainly, the preferred alternative flows from recognizing that licensing additional 
MDS stations on a small site-specific basis, as proposed in the pending applications, would 
frustrate the important public policy goals that the Commission's new approach to MDS 
furthers. The new rules, which require (among other things) that applications may be filed 
and granted only on a BTA basis, should apply to all pending applications for new MDS 
stations. Because pending applications are not consistent with the new rules, they should be 
dismissed, with applicants who desire to reapply and participate in the BTA auctions free to 
do so. Such a d*«""?ffl1 would covtff not only pending mutually exclusive applications for 
MDS licenses, which the majority would distribute by lottery, but also pending applications 
for which there is no competitor. A logical consequence of the majority's failure to dismiss 
pending applications is that applicants not facing mutual exclusivity would be entitled to 
receive MDS channels for free, no matter the public interest reasons for awarding those 
channels to the BTA authorization holder.
Although it states that there are "several potential drawbacks" to this approach, the 
majority mentions just one: that dismissal would lead to delays because there would be 
reconsideration proceedings at the Commission and legal challenges in court.6 But there is
In the same paragraph, the majority asserts that "while we are changing conditions 
under which MDS service may be provided in the future, such as moving to larger 
geographic area authorizations and expanded service area protection to encourage aggregation
9751
ample Commission precedent and clear legal authority for dismissing pending applications 
that are inconsistent with new Commission roles, as Commissioner Ness explains. See also 
See Private Operational-Fixed Microwave Service. 48 Fed. Reg. 32,578 (1983), affd. 
AffiliflT*** Communications Corp. v. PCC. No. 83-1686, unpublished judgment (D.C. Cir. 
May 8, 1985). And the majority overlooks the risk of legal challenges associated with the 
course it has chosen. Many of the pending applications that Commission has dismissed are 
awaiting judicial review, and those that the Commission dismisses in the future will likely 
also end up in court. These cases could take a longer time to resolve than a challenge to a 
blanket dismissal order, if there was one, since they involve a variety of reasons for 
dismissal. If pending applicants eventually prevail in those lawsuits, the result could well be 
further litigation when those applicants claim a right to vacant channels for which BTA 
authorization holders thought they had paid.
Meanwhile, bidders and BTA authorization holders will have to contend with the 
uncertainty associated with ^Ti?!n^'6i|icd pending appltcfltigns awaiting judicial review. They 
will also have to deal with the burdens of negotiating with lottery winners - the five sites we 
know about as well as those that we now do not, as well as those non-mutuaUy exclusive 
applicants who will simply be given their licenses for free - in order to accomplish the 
aggregation of wireless cable channels that the Commission, in the portions of the Report and 
Order that I join, says its new rules promote. Quoting Maxcell Telecom Plus. Inc. v. FCC.
of available channels, we are not fundamentally changing the nature of the service." The 
facts in that sentence provide not a drawback to dismissing all pending applications, but the 
main reasons for doing so.
9752
815 F.2d 1551, 1SS4 (D.C. Cir. 1987) - a case in which the D.C. Circuit upheld a 
Commission decision to apply new riles to pending applicants - the majority purports to 
"balance the 'ill effect' of the new flrtDS] mle[s] on the pending applicants with the 
'mischief of frustrating the interests the rule[s] promote.'" Report and Order, par. 95. Even 
if the Commission could properly ignore the equitable interests of those other than pending 
applicants, and even if the Commission could properly decline to bring the Budget Act's 
public interest factors to bear on its dlecision, I have no doubt that the "mischief" to the new 
MDS framework that will be caused by the majority's decision far outweighs the minimal "ill 
effects" of applying the new MDS rules to pending lottery applicants.
9753
Separate Statement
of 
Commissioner James H. Quello
June IS, 1995
Re: Amendment of Parts 21 and 74 of the Commission's Sides with Regard to Filing 
Procedures in the Multipoint Distribution Service and in the Instructional Television Fixed 
Service (MM Docket No. 94-131) and Implementation of Section 309Q) of the Communications 
Act - Competitive Bidding (PP Docket No. 93-253)
I would like to make a few brief comments today on the issue of auctions versus lotteries 
for pending applications. Before I do so, I want to congratulate Barbara Kreisman and her staff for their diligence and hard work in reducing the backlog of MDS applications. This 
Commission unanimously agrees that the three items today will go a long way toward making 
this service a reality, which will benefit the American public by bringing a wireless competitor 
to cable television.
Where we disagree is on the decision of how to treat pending applications during a time of 
transition from one licensing methodology, lotteries, to another, auctions. I will not belabor the 
relative problems or benefits of lotteries or auctions because this should not be a philosophical 
debate.
We have before us approximately 100 applications for five sites mat were filed many years 
before this Commission received auction authority. Such auction authority, I might note, was 
received during my tenure as Chairman. We were specifically granted 4J8CTfliofl at mat time, 
however, to determine how to process what I will call "pre-filed and accepted* applications for 
various communications services. But for our own adimnistrative inability to process thousands 
of MDS applications in a timely manner we would not be faced with the problem of what to do 
with these applications that have been languishing in regulatory "Limbo" for over four years.
The record does not evince any mal fides or intent to deceive by not constructing on the part 
of the applicants. We must therefore conclude that these applications were filed hi good faith 
with the expectation that they would be processed under the rules hi existence at the time of 
filing. Even though we have decided to modify the service somewhat we should not punish 
those applicants who were caught in the transition through no fault of their own. I believe that 
they have a significant vested equitable interest in having the applications that they paid fees to 
file processed in accordance with then- expectations and our rules at that time.
9754
As this Commission has faced this issue in other services, such as Cellular Unserved for 
example, I have consistently maintained - and will continue to conclude - that unless directed 
otherwise by Congress, we should exercise the discretion we have been given to treat pending 
applicants fairly which means processing their applications under the rules extant at the time of 
filing. In this instance, this means that we should, as I believe the majority will decide, lottery 
the pending 100 applications for the five MDS sites and then proceed to auction new 
applications.
In summary, I believe that it would be inequitable and administratively burdensome to force 
applicants for MDS station licenses, who filed their applications many years ago in reliance upon 
the lottery rules then in effect, to participate in an MDS auction, which - unlike a lottery that 
can be held almost immediately - cannot be held until the end of this year, which would, yet 
again, delay service to the public.
Long before it became fashionable to talk about "serving our customers," I have endeavored 
to decide the matters before us by using common sense and fairness based on the facts. I do 
not believe it is our function to justify desired outcomes through legal technicalities. The fact 
that something is legally permissible does not make it right or fair.
I have uncharacteristically spolcen at some length today because I want to convey my deep- 
seated conviction mat pending applications should be treated fairly by processing them under 
the rules in effect at the time of filing.
9755
SEPARATE STATEMENT
OF 
COMMISSIONER ANDREW C. BARRETT
RE: Amendment of Parts 21 and 74 of the Commission's Rules With Regard To Filing Procedures in the Multipoint Distribution 
Service and in the Instructional Television Fixed Service and Implementation of Section 309 (j) of the Communications Act- 
Competitive Bidding, MM Docket No. 94-131 and PP Docket No. 93- 253.
By the Commission's actions today, we adopt rules to facilitate the continued^deployment of Multipoint Distribution 
Services ("MDS"). In doing so, we process thousands of applications and initiate a competitive bidding process for the 
licensing of MDS. In order to process the remaining acceptable, mutually exclusive applications for MDS station licenses that 
were filed prior to July 26, 1993, when the Commission first received auction authority, the Commission has determined to 
employ a lottery rather than an auction procedure.
I support the use of a lottery for these- pending mutually exclusive applications for several reasons. First and foremost, 
because I believe that there are compelling public interest justifications for doing so as I did when the Commission decided 
how to license the cellular unserved areas.1 The pending applications in this proceeding were filed more than four years 
ago and the applicants relied in good faith on lottery procedures in existence at that time. Moreover, it is apparent that the 
delay in processing these applications was of no fault of these applicants. Therefore, it appears unreasonable to now subject 
their applications to a modified licensing procedure.
Second, some have argued that applicants who have filed by way of "application mills" are in large measure applicants that 
lack the wherewithal to build or operate the systems that are licensed to them. Moreover, some contend that these applicants 
tend to unnecessarily delay service to the public. Simply put, we cannot unequivocally determine that these MDS applicants have 
no intention of constructing the facilities in order to provide service to the public. Indeed, one could argue that the 
utilization of auctions does not necessarily guarantee service in
1 See. Memorandum Opinion and Order, Cellular Unserved Areas (License Selection Procedures), 9 FCC Red 7387, 7391 
(1994). In this decision, we specifically held that to move from lotteries to auctions in the licensing of cellular facilities 
would be unfair to those applicants who relied in good faith upon existing lottery procedures.
9756
a timely fashion. . Finally, as a member of the "old regime," I am loathe to making the assumption that an applicant seeking a 
license under the lottery procedure is less likely to intend to construct facilities than an applicant seeking a license under 
the competitive bidding process.
In addition, some have argued that these applicants will receive an added benefit as a result of being granted a larger 
BTA. However, the modification we make today with respect to the protected service area will benefit current licensees who through 
the lottery process were granted a 15 mile protected service area. Moreover, I am not convinced that our decision today will 
interrupt the aggregation of licenses as some have alleged. That aggregation is already occurring, and I believe, will continue to 
occur and will not necessarily cease because licenses for these few locations will-be subject to the lottery process.
While this action may delay the commencement of the auctions, for which authority was obtained under Commissioner 
Quello's leadership, I believe that the Commission is doing the right thing by using a lottery procedure to process the remaining 
previously filed MDS applications. In my estimation, to do otherwise would not only contradict precedent, ignore the 
principle of fairness as well.
9757
SEPARATE STATEMENT
OF 
COMMISSIONER SUSAN NESS
DISSENTING IN PART
Re: Licensing and Service Rules and Competitive Bidding Procedures for Multipoint 
Distribution Service
I fully support the new rules for MDS1 licensing that we adopt today. I am confident that 
the licensing of MDS on a regional basis through competitive bidding will enhance existing 
wireless cable systems and bring about the construction of new systems in unserved areas. 
However, I dissent from that portion of the decision concerning our treatment of pending 
applications.
I believe that the public interest would have been better served by applying our new rules to 
the pending MDS lottery applications, resulting in their dismissal, and permitting those 
applicants who choose to do so to bid in future MDS auctions.
I do not favor using auctions at all costs. There may be some situations where, in light of 
all the factors, lotteries would be in the public interest. This is not such a case.
I do not believe that the approach adopted today by the majority - to permit pending 
applications to be awarded under the old lottery rules, but to enable them to benefit from the 
expanded protected service areas of the new rules - serves the public interest. It does not 
comply with Congressional intent or Commission policy to reward speculation in this 
manner. It will delay, rather than enhance, the construction and growth of wireless cable 
services.
I would prefer that the pending MDS applicants be subject to the competitive bidding 
procedures adopted today for new MDS applicants. Congress gave the FCC the authority to 
auction licenses, rather than award them by lottery, where mutually exclusive applications 
have been filed. Congress concluded that auctions, rather than lotteries, would better ensure 
that spectrum licenses will be awarded to those who most value them.
The Omnibus Budget Reconciliation Act of 1993 ("OBRA") gives the Commission discretion 
to use either competitive bidding or lotteries for applications accepted for filing prior to July
'"MDS" as used herein refers to both single channel Multipoint Distribution Service 
(MDS) and Multichannel Multipoint Distribution Service (MMDS).
9758
26, 1993. The MDS pending applications present us with the opportunity to exercise that 
discretion and to determine which approach best serves the public interest.
There are over 4,000 MDS applications pending at the FCC which were submitted before 
July 26, 1993. A small fraction of these applications have been accepted for filing. These 
applications were submitted under our old, pre-OBRA rules that authorized lotteries for 
specific geographic sites.
The beneficial effects of using auctions are perhaps most evident in services where 
speculation has been rampant. MDS has just such a history. Over the last 27 months, over 
1100 MDS authorizations have been cancelled or forfeited for failure to construct. Why? 
Because lotteries attract speculators - individuals who have no relevant experience and no 
serious intention to construct and operate a wireless cable system.
The high level of speculation'has meant delay in our efforts to foster the effective delivery of 
wireless cable service. Incumbent MDS operators have been unable to aggregate additional 
channels. Potential new entrants have been smothered by the backlog of pending 
applications.
In February 1993, the Commission took measures to stem the increasing speculation in MDS 
and to prevent rewarding speculators who had already applied. One measure adopted was a 
prohibition on partial and full settlement agreements among MDS applicants. The 
Commission found that few MDS applicants entering settlement agreements had any serious 
intention to construct; rather, most of them wished to have their applications granted solely 
for the purpose of later selling their authorizations to wireless cable operators in need of 
spectrum.2 In an attempt to ensure that "speculative applicants are not rewarded," the 
Commission applied the new prohibition on settlement agreements to both future and pending 
applications.3
The new rules we adopt today authorizing the use of competitive bidding to award MDS 
authorizations will finally eliminate the problems of speculation that have plagued MDS and 
will ensure that licenses in the future will go to those parties who value them the most.
I recognize that lotteries could be held relatively soon for the five sites where, once our 
processing is complete, the Mass Media Bureau predicts there will be approximately 100 
acceptable mutually exclusive pending applications. But the small number of applications at
2Amendment of Parts 1, 2 and 21 of the Commission's Rules Governing Use of the 
Frequencies in 2.1 and 2.5 GHz Bands, 8 FCC Red. 1444, 1447 (1993VReport & Order).
3Id.
9759
issue does not relieve us of the obligation to make a policy decision that carefully weighs all 
of the relevant factors.
The evidence is overwhelming that few, if any, of these applicants have a bona fide intention 
to construct and operate an MDS system. Indeed, the practical result of a lottery in this 
instance is very likely to be the precise result Congress sought to eliminate when it gave the 
FCC auction authority. Even in the improbable event that a bona fide applicant wins a 
lottery, the result will be one more site-specific license encumbering the BTA, further 
frustrating the new method of licensing that we today embrace as the best approach for the 
future.
The bona fide MDS applicants among these pending applications that the majority seeks to 
protect, if they exist, may or may not succeed in an auction. However, an auction at least 
ensures that they will compete for a license with parties who are equally serious in their 
commitment to build a wireless cable system, rather than with speculators lacking any intent 
to construct.
Moreover, the majority has failed to consider the resources required for the further 
processing of the pending applications required by continuing with lotteries. The public 
would benefit from the reduction of the administrative burden on the agency by the dismissal 
of over 4,000 pending applications, the majority of which will be, or have already been, 
dismissed for technical deficiencies. The blanket dismissal would also render moot the 
pending court appeals of previously dismissed applications from mis group.
The new BTA service areas and technical and operational rules we adopt today represent a 
very significant change in our licensing of MDS. I am persuaded that, under these changed 
circumstances, applying our new rules to the pending applications would conform with 
Commission precedent. The Commission's authority to apply new rules to pending 
applications is not new and in fact has been invoked previously in MDS. In 1993, when the 
Commission adopted the prohibition on settlements among MDS applicants described above, 
the Commission specifically addressed the issue of applying the new rule to pending 
applications and its authority to do so. The Commission concluded at that time that "[i]t is 
well-settled that the rules applicable to previously-filed applications may be amended."4 
Indeed, the new rules to expand the protected service areas of incumbents that we adopt 
today will be applied to pending MDS applications as well.
The Commission has applied new rules to pending applications in other cases. See, e.g.. 
Amendment of the Commission's Rules to Allow the Selection from Among Mutually 
Exclusive Competing Cellular Applications Using Random Selection or Lotteries Instead of
4Report & Order. 8 FCC Red. at 1447, citing United States v. Storer Broadcasting 
Co.. 351 U.S. 192 (1956); Hispanic Information & Telecommunications Network. Inc. v. 
FCC. 865 F.2d 1289 (D.C. Cir. 1989).
9760
Comparative Hearings, 9&F.C.C.2d 175 (1984), recon.. 101 F.C.C.2d 577 (1985); Request 
for Pioneer's Preference in Proceeding to Allocate Spectrum for Fixed and Mobile Satellite 
Services for Low-Earth Orbit Satellites, 7 FCC Red. 1625, 1628 n. 22 (1992)(ltthe 
Commission by rule making may adopt threshold eligibility criteria that affect pending 
applications if it determines that such rules serve the public interest"); Amendment of Part 90 
of the Commission's Rules to Provide for the Use of the 220-222 MHz Band by the Private 
Land Mobile Radio Services, 7 FCC Red. 4484, 4489 n. 66 (1992).
In this instance, application of our new rules for competitive bidding to pending lottery 
applications would necessarily result in the dismissal of those applications. The Commission 
has previously dismissed pending applications, without prejudice to the applicants' right to 
re-file, as a result of a change in rules. See Private Operational-Fixed Microwave Service, 
48 Fed. Reg. 32,578 (1983)(citing the administrative burdens involved in resolving the 
changes needed as a result of rule changes, the Commission dismissed 1,400 pending 
applications and opened a new filing window for applicants to apply under the new rules), 
aff*d. Affiliated Communications Corn, v. FgC. No. 83-1686, unpublished judgment (D.C. 
Cur. May 8, 1985). All interested pending MDS applicants, once dismissed, would similarly 
be able to participate in the auctions for MDS authorizations for any BTA under our new 
rules.
For all these reasons, I believe that the public would be better served if the Commission had 
chosen to employ competitive bidding procedures for all MDS authorizations and dismissed 
the pending MDS lottery applications, rather than proceeding with lotteries.
9761