6. Cellular Vision is currently providing competitive video distribution service within its assigned service area. The licensee is also planning to implement telecommunications service. Approximately 975 applications similar to Hye Crest's were filed between February, 1991 and October, 1992 requesting waiver of the point-to-point rules so that point-tomultipoint service could be offered. The Commission implemented a freeze on the acceptance of applications for common carrier point-to-point microwave service in the 28 GHz band in an order released October 29, 1992, to stop the filing of additional waiver applications."

7. This rulemaking proceeding was initiated by three petitions for rulemaking concerning the 28 GHz band. Harris filed a petition for rulemaking requesting that the Commission channelize the 28 GHz band so that manufacturers of point-to-point equipment could standardize their systems. Cellular Vision filed a petition for rulemaking to change the point-to-point rules in a manner consistent with its waiver so that point-to-multipoint video distribution service could be offered on a regular basis in the band. In response to Cellular Vision's petition, Video/Phone filed a petition for rulemaking proposing a broadband, on-demand video telecommunications service.

8. The First NPRM was released on January 11, 1993. In it, the Commission considered the three petitions for rulemaking. The Commission tentatively concluded that redesignation of the fixed point-to-point use of the band to fixed point-to-multipoint could stimulate greater use of the 28 GHz band, and proposed detailed service rules (other than technical requirements) for implementation of LMDS. The Commission did not specify what type of service would have to be offered, indicating that the marketplace would best decide the use of this spectrum.

9. The Commission proposed two blocks of 1,000 megahertz each for LMDS. This proposal was based on Cellular Vision's existing technology.10 However, because the 28 GHz

7 Cellular Vision filed a timely renewal application for its commercial license for the NYPMSA. The Commission will commence processing Cellular Vision's renewal application by placing the application on Public Notice not later than 30 days after the release date of this Order. The new LMDS services rules will apply to this renewal application.

8

* The Commission denied the waiver requests and dismissed the applications in the First NPRM.

9

Petitions for Redesignation of the Common Carrier Point-to-Point Microwave Radio Service Frequency Band 27.5-29.5 GHz, RM-7722, RM 7872, Order, 7 FCC Rcd 7201 (1992).

10 Cellular Vision, by virtue of its license pursuant to waiver of the existing point-to-point rules, is the only operator licensed to provide LMDS in the United States; it is operating a system in Brighton Beach, New York City. Cellular Vision and TI have operating systems in other countries. Other LMDS developers are testing prototypes and components. A number of LMDS developers have experimental licenses.

band is allocated on a co-primary basis with the Fixed Satellite Service (FSS) for uplinks, the Commission also requested comment from satellite entities regarding the effect of redesignation and the proposed rules on any proposed satellite use of the band.

10. In response to the First NPRM, a number of different uses were proposed for terrestrial and satellite licensing. The Commission considered various proposals for the 28 GHz band and released the Second Notice of Proposed Rulemaking (Second NPRM) on February 14, 1994." In it, the Commission found that the majority of parties supported the Commission's finding of widespread interest in point-to-multipoint uses of the 28 GHz band, but also found significant interest in the band on the part of the satellite industry. Accordingly, the Commission tentatively concluded that the public interest would be served by allowing both terrestrial and satellite providers to co-exist in the 28 GHz band, and decided to begin a negotiated rulemaking procedure to develop technical rules for sharing the band. As a result, the Commission established the LMDS/FSS 28 GHz Band Negotiated Rulemaking Committee (NRMC).

11. The NRMC met between July 26, 1994, and September 23, 1994; the Report of the Committee, dated September 23, 1994, was presented to the Commission and is included in the docket of this proceeding. The results of the work of the NRMC indicated that LMDS and FSS service uplinks (i.e., the ubiquitous subscriber transceivers) are not technically able at this time to share the same spectrum, and that LMDS and feeder links to non-geostationary satellites operating in the Mobile Satellite Service (MSS) could share the same spectrum, subject to feasible sharing criteria. The Commission released the Third NPRM on July 28, 1995, that proposed to segment the 28 GHz band to permit both LMDS and FSS systems to operate and to accommodate feeder links for certain MSS systems in the band. We also proposed service and technical rules revised from the First NPRM and competitive bidding procedures to choose among mutually exclusive applications.

12. In the First Report and Order and Fourth NPRM, we adopted our proposal to designate band segments in the 28 GHz band for several types of wireless systems and cleared the way for our consideration in this Report and Order of the proposed, outstanding service and technical rules in order to implement LMDS. We proposed to designate the 31 GHz band for LMDS use on a primary protected basis. We sought comment on whether the Commission should adopt LMDS eligibility or use restrictions for incumbent LECs and cable operators within their respective geographic service areas. Those issues are resolved in this Order.

11 Rulemaking to Amend Part 1 and 21 of the Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band and to Establish Rules and Policies for Local Multipoint Distribution Service, RM-7872, RM7722, Second Notice of Proposed Rulemaking, 9 FCC Rcd 1394 (1994) (Second NPRM).

C. Summary of Decision

1. LMDS Service Rules and Related Decisions

13. Following is a summary of our actions with respect to LMDS service rules and related issues:

■Spectrum at 31.0-31.3 GHz is designated for LMDS, and incumbent licensees, other than Local Television Transmission Service (LTTS) licensees, are protected from harmful interference in the segments at 31.0-31.075 and 31.225-31.300 GHz.

■ The LMDS spectrum (27.5-28.35 GHz, 29.1-29.25 GHz, and 31.0-31.3 GHz) will be licensed by the 493 Basic Trading Areas (BTAs) for a total of 1,300 GHz of spectrum per BTA.12

■ Two licenses, for 1150 megahertz and for 150 megahertz, will be awarded for each BTA, for a total of 986 LMDS licenses.

■ All licensees will be permitted to disaggregate and partition their licenses pursuant to our general Part 101 assignment and transfer rules.

■There are no restrictions on the number of licenses a given entity may acquire.

■ Incumbent LECS and cable companies may not obtain in-region 1,150 megahertz licenses for three years.

■LMDS includes both common carrier and non-common carrier services, and an applicant may request authorization in a license on a common carrier basis, a non-common carrier basis, or on both a common carrier and a non-common carrier basis in a single license.

■LMDS licensees will be subject to liberal construction requirements.

See Rand McNally Commercial Atlas & Marketing Guide 36-39 (123d ed. 1992). For a listing of the counties that comprise each BTA service area employed in Personal Communications Service (PCS), see Public Notice, Report No. CW-94-02 (Sept. 22, 1994). Rand McNally is the copyright owner of the Major Trading Area (MTA) and BTA Listings, which list the BTAS contained in each MTA and the counties within each BTA, as embodied in Rand McNally's Trading Area System MTA/BTA Diskette, and geographically represented in the map contained in Rand McNally's Commercial Atlas & Marketing Guide. The conditional use of Rand McNally copyrighted material by interested persons is authorized under a blanket license agreement dated February 10, 1994, and covers use by LMDS applicants. This agreement requires authorized users of the material to include a legend on reproductions (as specified in the license agreement) indicating Rand McNally ownership.

■ All petitions for reconsideration of our decision to dismiss the waiver applications made by entities seeking a license under Hye Crest Management are denied.

■ As noted,13 we direct the Chief, Office of Engineering and Technology, to select a panel of experts to review Cellular Vision's technology and recommend whether its pioneer preference request should be granted.

2. Competitive Bidding Rules and Procedures

14. Following is a summary of our actions with respect to LMDS competitive bidding procedures:

■ We will use simultaneous multiple round auctions for LMDS.

■ We will announce by Public Notice prior to the LMDS auction the general guidelines for bid increments; we will use a simultaneous stopping rule; we will reserve the discretion to vary the duration of the bidding rounds or the interval at which bids are accepted; and we will use the Milgrom-Wilson activity rule with some variations.

■ We delegate authority to the Chief, Wireless Telecommunications Bureau, to determine an appropriate calculation for the upfront payment, which the Bureau will announce by Public Notice.

■ Winning bidders must supplement their upfront payments with a down payment sufficient to bring their total deposits up to 20 percent of their winning bid(s).

■There will be a substantial payment assessed if bidders withdraw a high bid, are found not be qualified to hold licenses after submitting a high bid, or default on payment of a balance due.

■ We adopt installment payments and bidding credits for small entities participating in LMDS auctions.

II. LOCAL MULTIPOINT DISTRIBUTION SERVICE

A. Designation of Spectrum in 31 GHz Band

1. Background

13 See para. 3, supra.

15. In the First Report and Order and Fourth NPRM, we adopted a band plan that designated the spectrum in the 27.5-30.0 GHz band (28 GHz band plan) for LMDS systems. However, we required that LMDS licensees restrict their operations to hub-to-subscriber transmission in the 29.1-29.25 GHz segment. 14 Thus, LMDS licensees would not have 1,000 megahertz of unencumbered spectrum. We proposed to designate the 31.0-31.3 GHz (31 GHz) band for LMDS on a primary protected basis, in order to ensure that there is adequate two-way interactive capacity for the various proposed LMDS systems. We requested comment on our proposal to designate LMDS as a primary "protected" use at 31 GHz, which means that LMDS providers would be entitled to interference protection from any other current authorized primary user of the band. We requested comment on any technical issues that LMDS operators might encounter and possible measures for overcoming such technical difficulties associated with LMDS use.

15

16. We addressed the extent to which the 31 GHz band is encumbered by existing services and the possible impact of our proposal on these services. We found that existing use is light and concentrated in only a few areas, and that the majority of the licensees are local governments using the band to monitor and control traffic light facilities. We concluded that our proposal to make LMDS a protected service presupposes that incumbent licensees would continue to operate on an unprotected basis as secondary to LMDS. We found that overlaying LMDS operations in those areas where there are existing users raises potential interference problems that could degrade the utility of such systems, as well as adversely affect the new LMDS operations."7

17. Consequently, we proposed a number of alternatives for accommodating incumbent licensees without limiting the usefulness of the band for LMDS. We pointed out that in adopting the 31 GHz rules, we had directed entities that could not operate where there is a potential for harmful interference to operate instead in other bands where protection is provid

14 Fourth NPRM, at paras. 67-71, 97-98.

15 Id. at para. 100.

16

Id. We found that current rules governing licensing of spectrum in the 31 GHz band do not provide interference protection to any operations in the band. Id. at paras. 95, 96 (citing Sections 21.701(k), 74.602(h), 78.18(a)(5), 94.65(n), and 95.1(b) of the Commission's Rules, 47 CFR §§ 21.701(k), 74.602(h), 78.18(a)(5), 94.65(n), 95.1(B)). We explained that the service rules had been adopted to satisfy various types of short range, fixed and mobile communications requirements in the 31 GHz band. Id. at para. 99 (citing Establishment of a Spectrum Utilization Policy for the Fixed and Mobile Services Use of Certain Bands Between 947 MHz and 40 GHz, Gen. Docket No. 82-334, Second Report and Order, FCC 85-49, released Feb. 8, 1985) (Spectrum Utilization Second Report and Order)).

17 Id. at paras. 99, 102-103.