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b. Decision

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a. Background; Comments .......
b. Decision ............................................

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(1) Upfront Payments

328 (2) Down Payments, Long-Form Applications, and Payment in Full .... 331 (3) Bid Withdrawal, Default, and Disqualification Payments ......... 333

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1. Background; Comments ......... 2. Decision ...

2. Decision

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a. Non-Common Carrier Services and Video Programming ............

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(1) General Standards ..
(2) Over-the-Air Reception Devices for Video Programming .....

b. Common Carrier Services and Telecommunications Services

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(1) General Standards
(2) Personal Wireless Service Facilities

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III. ORDER ON RECONSIDERATION OF WAIVER

APPLICATION DENIALS

A. Background; Pleadings .......
B. Decision

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1. Effect on Assigned Users
2. Evaluation of Public Interest Arguments .....

......................... 3. Claims Regarding Nature of Services and Types of Applicants ...

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IV. FIFTH NOTICE OF PROPOSED RULEMAKING

A. Introduction
B. Discussion

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1. In General .........................................
2. Available License Area ..................
3. Minimum or Maximum Disaggregation Standards ..

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4. Combined Partitioning and Disaggregation
5. Construction Requirements
6. License Term ............
7. Competitive Bidding Issues ...
8. Licensing Issues

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APPENDIX A: Final Rules
APPENDIX B: List of Existing Governmental and Private Business 31 GHz Licensees
APPENDIX C: Initial Regulatory Flexibility Analysis
APPENDIX D: Final Regulatory Flexibility Analysis
APPENDIX E: List of Pleadings

I. INTRODUCTION

A. Overview

1. This is the Second Report and Order in the Commission's ongoing proceeding to establish and license Local Multipoint Distribution Service (LMDS), a fixed broadband pointto-multipoint microwave service, in the 27.5-29.5 GHz band (28 GHz band). We adopt, in part, service rules proposed in the First NPRM and Third NPRM to govern the licensing and operations of LMDS. We adopt, in part, competitive bidding rules proposed in the Third NPRM to select among mutually exclusive applications for LMDS. We also adopt, in part, proposals in the Fourth NPRM to redesignate spectrum in the 31.0-31.3 GHz band (31 GHz band) for LMDS and to impose eligibility restrictions on certain potential applicants. We rule on petitions for reconsideration of the Commission's dismissal of waiver applications in the First NPRM. We also adopt a Fifth Notice of Proposed Rulemaking proposing specific procedural, operational, and administrative rules for the partitioning and disaggregation of LMDS licenses.

2. Our decision today will open the door for a new broadband wireless service. The technology developed for use in this frequency band provides very high subscriber capacity for two-way video telecommunications. There is sufficient capacity in the proposed LMDS system designs to provide wireless competition to both local exchange carriers (LECs) and cable television systems, even in urban areas. In addition, based on the interest generated in

Rulemaking to Amend Part 1 and Part 21 of the Commission's to Redesignate the 27.5-29.5 GHz Frequency Band and to Establish Rules and Policies for Local Multipoint Distribution Service: RM-7872, RM7722, Applications for Waiver of the Commission's Common Carrier Point-to-Point Microwave Radio Service Rules, Suite 12 Group Petition for Pioneer's Preference: PP-22, University of Texas - Pan American Petition for Reconsideration of Pioneer's Preference Request Denial; Notice of Proposed Rulemaking, Order, Tentative Decision, and Order on Reconsideration, 8 FCC Rcd 557 (1993) (First NPRM); Rulemaking to Amend Parts 1, 2, 21, and 25 of the Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band, to Reallocate the 29.5-30.0 GHz Frequency Band, to Establish Rules and Policies for Local Multipoint Distribution Service and for Fixed Satellite Services: CC Docket No. 92-297, and Suite 12 Group Petition for Pioneer's Preference: PP-22; Third Notice of Proposed Rulemaking and Supplemental Tentative Decision, 11 FCC Red 53 (1995) (Third NPRM).

2 Rulemaking to Amend Parts 1, 2, 21, and 25 of the Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band, to Reallocate the 29.5-30.0 GHz Frequency Band, to Establish Rules and Policies for Local Multipoint Distribution Service and for Fixed Satellite Services, First Report and Order and Fourth Notice of Proposed Rulemaking, FCC 96-311, released July 22, 1996 (First Report and Order and Fourth NPRM).

3 Comments filed in response to the First NPRM, Third NPRM, and Fourth NPRM and considered in the Report and Order are listed in Appendix E. We include an abbreviated name for each commenter and that abbreviation is used in this Report and Order.

LMDS by entrepreneurs in the United States, LMDS has attracted attention and support from both developed and developing countries around the world. LMDS developers offer the prospect of modern wireless telephone systems, video distribution, and other communications services to developing countries that do not have a wireline or cable infrastructure.

3. We defer issuing a final Order on our Tentative Decision and Supplemental Tentative Decision in the Third NPRM regarding Cellular Vision’s pioneer preference request in the First NPRM, and, instead, order the Wireless Telecommunications Bureau and the Office of Engineering and Technology to initiate a peer review process. Pursuant to Section 1.402(h) of the Commission's Rules, the Chief, Office of Engineering and Technology, will select a panel of experts to review Cellular Vision's technology and recommend whether the request should be granted. The Commission will establish, conduct, and seek the consensus of the panel pursuant to the Federal Advisory Committee Act, and will evaluate its recommendations in light of all the submissions and comments in the record. In addition, panelists will have the authority to seek further information pertaining to preference requests and to perform field evaluations, as appropriate.

4. The Commission makes no warranties about the use of this spectrum for particular services. Applicants should be aware that a Commission auction represents an opportunity to become a Commission licensee in this service, subject to certain conditions and regulations. A Commission auction does not constitute an endorsement by the Commission of any particular services, technologies, or products, nor does a Commission license constitute a guarantee of business success. Applicants should perform their individual due diligence before proceeding, as they would with any new business venture.

B. Background

5. In January 1991, the Commission granted the application of CellularVision's predecessor-in-interest, Hye Crest Management, Inc., for a license to provide LMDS in the 27.5-28.5 GHz frequency band covering the New York City Primary Metropolitan Statistical Area (NYPMSA). The application was granted pursuant to waiver of the point-to-point rules in Part 21 in order to allow a fixed cellular point-to-multipoint operation for video distribution (wireless cable). The licensee was granted waivers of Sections 21.108 (directional bandwidth requirements) and 21.700 (status eligibility).

4 Cellular Vision is the successor-in-interest to Suite 12 Group and Hye Crest Management, Inc.

5 47 CFR 1.402(h).

• Application of Hye Crest Management, Inc., for License Authorization in the Point-to-Point Microwave Service in the 27.5-29.5 GHz Band and Request for Waiver of the Rules, File No. 10380-CF-P-88, Memorandum Opinion and Order, 6 FCC Rcd 332 (1991) (Hye Crest Management).

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