83 FR 42089 - Use of Spectrum Bands Above 24 GHz for Mobile Radio Services

FEDERAL COMMUNICATIONS COMMISSION

Federal Register Volume 83, Issue 161 (August 20, 2018)

In this document, a Fourth Notice of Proposed Rulemaking (4th FNPRM) invites members of the public to comment on how best to transition existing spectrum holdings in the 39 GHz band to the new flexible-use band plan, and on using an incentive auction mechanism. The Federal Communications Commission (Commission or FCC) proposes to modify the 39 GHz, Upper 37 GHz, and 47 GHz band plans from 200 megahertz to 100 megahertz channels to facilitate the auctioning of all three bands at the same time. The Commission also proposes an incentive auction to reduce encumbrances and create contiguous blocks of spectrum through the 39 GHz and Upper 37 GHz bands. These proposals will promote the efficient use of this spectrum by incumbents and new licensees.

[Federal Register Volume 83, Number 161 (Monday, August 20, 2018)]
[Proposed Rules]
[Pages 42089-42099]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-17820]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 30

[GN Docket No. 14-177; FCC 18-110]


Use of Spectrum Bands Above 24 GHz for Mobile Radio Services

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, a Fourth Notice of Proposed Rulemaking (4th 
FNPRM) invites members of the public to comment on how best to 
transition existing spectrum holdings in the 39 GHz band to the new 
flexible-use band plan, and on using an incentive auction mechanism. 
The Federal Communications Commission (Commission or FCC) proposes to 
modify the 39 GHz, Upper 37 GHz, and 47 GHz band plans from 200 
megahertz to 100 megahertz channels to facilitate the auctioning of all 
three bands at the same time. The Commission also proposes an incentive 
auction to reduce encumbrances and create contiguous blocks of spectrum 
through the 39 GHz and Upper 37 GHz bands. These proposals will promote 
the efficient use of this spectrum by incumbents and new licensees.

DATES: Comments are due on or before September 17, 2018, and reply 
comments are due on or before October 8, 2018.

ADDRESSES: You may submit comments, identified by GN Docket No. 14-177, 
by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's website: https://www.fcc.gov/ecfs/. Follow the instructions for submitting comments.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: [email protected], phone: 202-418-0530 
or TTY: 202-418-0432.
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Erik Salovaara, Wireless 
Telecommunications Bureau, Auctions and Spectrum Access Division, (202) 
418-0660, [email protected] or Simon Banyai, Wireless 
Telecommunications Bureau, Broadband Division, (202) 418-1443, 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 4th 
Further Notice of Proposed Rulemaking (4th FNPRM), GN Docket No. 14-
177, FCC 18-110, adopted on August 2, 2018, and released on August 3, 
2018. The complete text of this document is available for public 
inspection and copying from 8 a.m. to 4:30 p.m. Eastern Time (ET) 
Monday through Thursday or from 8 a.m. to 11:30 a.m. ET on Fridays in 
the FCC Reference Information Center, 445 12th Street SW, Room CY-A257, 
Washington, DC 20554. The complete text is also available on the 
Commission's website at http://wireless.fcc.gov, or by using the search 
function on the ECFS web page at http://www.fcc.gov/cgb/ecfs/. 
Alternative formats are available to persons with disabilities by 
sending an email to [email protected] or by calling the Consumer & 
Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 
(tty).

Comment Filing Procedures

    Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's rules, 
47 CFR 1.415, 1.419, interested parties may file comments and reply 
comments on or before the dates indicated on the first page of this 
document. Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS). See Electronic Filing of Documents in 
Rulemaking Proceedings, 63 FR 24121 (1998).
     Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS: https://www.fcc.gov/ecfs/filings. Filers should follow the instructions provided on the website 
for submitting comments. In completing the transmittal screen, filers 
should include their full name, U.S. Postal Service mailing address, 
and the applicable docket number, GN Docket No. 14-177.
     Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing. If more than one docket 
or rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for

[[Page 42090]]

each additional docket or rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail. All filings must be addressed to the Commission's Secretary, 
Office of the Secretary, Federal Communications Commission.
     All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters at 
445 12th St. SW, Room TW-A325, Washington, DC 20554. The filing hours 
are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together 
with rubber bands or fasteners. Any envelopes and boxes must be 
disposed of before entering the building.
     Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9050 Junction Dr., 
Annapolis Junction, Annapolis, MD 20701.
     U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 445 12th Street SW, Washington, DC 20554.
    People with Disabilities: To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to [email protected] or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 888-
835-5322 (tty).

Ex Parte Rules--Permit-But-Disclose

    Pursuant to Sec.  1.1200(a) of the Commission's rules, this 4th 
FNPRM shall be treated as a ``permit-but-disclose'' proceeding in 
accordance with the Commission's ex parte rules. Persons making ex 
parte presentations must file a copy of any written presentation or a 
memorandum summarizing any oral presentation within two business days 
after the presentation (unless a different deadline applicable to the 
Sunshine period applies). Persons making oral ex parte presentations 
are reminded that memoranda summarizing the presentation must (1) list 
all persons attending or otherwise participating in the meeting at 
which the ex parte presentation was made, and (2) summarize all data 
presented and arguments made during the presentation. If the 
presentation consisted in whole or in part of the presentation of data 
or arguments already reflected in the presenter's written comments, 
memoranda or other filings in the proceeding, the presenter may provide 
citations to such data or arguments in his or her prior comments, 
memoranda, or other filings (specifying the relevant page and/or 
paragraph numbers where such data or arguments can be found) in lieu of 
summarizing them in the memorandum. Documents shown or given to 
Commission staff during ex parte meetings are deemed to be written ex 
parte presentations and must be filed consistent with Sec.  1.1206(b). 
In proceedings governed by Sec.  1.49(f) or for which the Commission 
has made available a method of electronic filing, written ex parte 
presentations and memoranda summarizing oral ex parte presentations, 
and all attachments thereto, must be filed through the electronic 
comment filing system available for that proceeding, and must be filed 
in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). 
Participants in this proceeding should familiarize themselves with the 
Commission's ex parte rules.

Initial Regulatory Flexibility Analysis

    As required by the Regulatory Flexibility Act of 1980, as amended 
(RFA), the Commission has prepared this present Initial Regulatory 
Flexibility Analysis (IRFA) of the possible significant economic impact 
on a substantial number of small entities by the policies and rules 
proposed in the attached 4th FNPRM. Written public comments are 
requested on this IRFA. Comments must be identified as responses to the 
IRFA and must be filed by the deadlines for comments as specified in 
the 4th FNPRM. The Commission will send a copy of this 4th FNPRM, 
including this IRFA, to the Chief Counsel for Advocacy of the Small 
Business Administration (SBA). In addition, the 4th FNPRM and IRFA (or 
summaries thereof) will be published in the Federal Register.

Paperwork Reduction Act

    The 4th FNPRM seeks comment on potential new or revised information 
collection requirements. If the Commission adopts any new or revised 
information collection requirements, the Commission will publish a 
notice in the Federal Register inviting the public to comment on the 
requirements, as required by the Paperwork Reduction Act of 1995, 
Public Law 104-13 (44 U.S.C. 3501-3520). In addition, pursuant to the 
Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 
U.S.C. 3506(c)(4), the Commission seeks specific comment on how it 
might ``further reduce the information collection burden for small 
business concerns with fewer than 25 employees.''

Synopsis

I. Band Plan

    1. We propose to modify the 39 GHz band plan from seven 200 
megahertz channels to fourteen 100 megahertz channels. This change 
should better accommodate the repacking of incumbents, which in the 
vast majority of cases, hold two non-contiguous 50 megahertz license 
blocks for each original paired license (now unpaired). Given the 
natural fit between incumbents' existing 100 megahertz holdings and the 
proposed 100 megahertz channels, the resulting realignment process for 
incumbents would be less complex than using 200 megahertz channels, 
because it would result in far fewer partially-filled channels. This 
change therefore would further our goals of maximizing efficient use of 
this band and allowing this spectrum to be put to use as soon as 
possible.
    2. Further, changing the band plan from 200 megahertz channels to 
100 megahertz channels should not limit this spectrum's potential use 
for 5G services. The 100 megahertz channels are consistent with 3GPP 
standards, and licensees can aggregate to larger channel sizes (such as 
200 megahertz, 300 megahertz, etc.), should they prefer to do so. Given 
that 100 megahertz is the baseline to provide 5G services, the 
Commission has adopted 100 megahertz channels for other UMFUS bands, 
including the 24 GHz band and Lower 37 GHz (37.0-37.6) band, and we 
have proposed to adopt 100 megahertz channels for the 42 GHz band. 
Adopting 100 megahertz channels in the 39 GHz band is consistent with 
our approach in other mmW spectrum bands to support 5G services.
    3. We similarly propose to modify the band plan in the Upper 37 GHz 
band (37.6-38.6 GHz) from 200 megahertz to 100 megahertz channels. The 
Upper 37 GHz band is adjacent to the 39 GHz band, and both bands are 
under the same licensing framework. In aligning the regulatory regimes 
of these bands--including implementing the same service rules and an 
operability requirement--the Commission has effectively treated the two 
bands as one contiguous 2,400 megahertz band of spectrum. We further 
note that a difference in channel size between the two bands could 
create strategic challenges and impede bidding flexibility should the 
Commission auction the two bands together.\1\
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    \1\ With respect to auctioning the Upper 37 GHz band, we note 
that the Spectrum Frontiers 3rd FNPRM is seeking comment on how best 
to accommodate coordination zones in the 37 GHz band for future 
Federal operations at a limited number of additional sites, and 
whether the coordination zones previously established in Section 
30.205 might be reduced to better accommodate nearby non-Federal 
operations without adversely impacting Federal operations at those 
sites. See Spectrum Frontiers 3rd FNPRM at 30, para. 74; Spectrum 
Frontiers R&O, 31 FCC Rcd at 8070-71, para. 149.

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[[Page 42091]]

    4. We also propose to modify the band plan for the portion of the 
47 GHz band licensed under the UMFUS rules, 47.2-48.2 GHz (47 GHz 
band), from 200 to 100 megahertz channels. Modifying the band plan for 
the 47 GHz band to 100 megahertz blocks would provide consistency 
across the remaining UMFUS bands not yet designated for auction, and 
licensees can aggregate spectrum licenses, should they desire larger 
bandwidth. If we auction the 47 GHz band at the same time as we auction 
the 39 GHz and Upper 37 GHz bands, should all band plans be consistent 
100 megahertz blocks?
    5. We seek comment on these proposals. Commenters proposing 
alternative band plans, including retaining the current 200 megahertz 
channels, should specify the benefits of such a plan, particularly with 
respect to how it would further our goal of making contiguous spectrum 
blocks available for both incumbents and new entrants.

II. Reducing Encumbrances in the 39 GHz Band

A. An Incentive Auction

    6. We propose to reconfigure and auction together licenses for all 
the available spectrum in the Upper 37 GHz and 39 GHz bands using an 
incentive auction. We propose to run a clock auction, in which 
incumbents and others may participate, to set both the price of new 
licenses and the amounts for which incumbents will relinquish their 
spectrum usage rights. This clock auction would simultaneously serve as 
the reverse and forward components of the incentive auction. At the end 
of the auction, participating incumbent licensees would receive an 
incentive payment based on their cancelled incumbent licenses. The 
amount of the incentive payment could be used as a credit toward the 
licensees' winning bids for any new licenses in any of the bands 
offered in the auction. Because the Commission has not previously 
conducted an incentive auction in this way, we walk through each step 
in turn.
    7. As an initial matter, we propose to use a two-phase auction 
procedure. In the first phase, participants would bid to win generic 
spectrum blocks using an ascending clock auction that would determine a 
uniform price in each PEA--this encompasses the simultaneous forward-
and-reverse auction. The second phase would assign specific-frequency 
licenses by PEA that would aim to ensure contiguity within each PEA. 
Because unencumbered spectrum blocks in the Upper 37 GHz and 39 GHz 
bands can be treated as largely interchangeable within a PEA, we 
propose to offer these blocks as one category of generic blocks in a 
clock auction. We expect that using a clock auction format with bidding 
for generic blocks followed by an assignment phase will speed up the 
auction considerably relative to a typical FCC simultaneous multiple-
round auction.
    8. Specifically, we propose to use a clock auction design with 
rules similar to those used for the forward auction in the broadcast 
incentive auction and the planned 24 GHz auction. Our proposed clock 
auction format would proceed in a series of rounds, with bidding being 
conducted simultaneously for all generic spectrum blocks available in 
the auction. During the clock phase, the auction would announce prices 
for generic blocks in each PEA, and qualified bidders would submit 
quantity bids for the number of blocks they seek in the PEA at that 
clock price. Bidding rounds would be open for predetermined periods of 
time, during which bidders would indicate their demands for blocks at 
the clock prices associated with the current round. Bidders would be 
subject to activity and eligibility rules that govern the pace at which 
they participate in the auction. In each PEA, the clock price for 
licenses would increase from round to round if bidders indicate total 
demand that exceeds the number of blocks available in the category. 
Bidders would be held to their bids, as in the forward phase of the 
broadcast incentive auction, with the system only allowing a bidder to 
reduce demand if aggregate demand would not fall below the available 
supply of blocks in that PEA. The clock rounds would continue until, 
for all generic blocks in all geographic areas, the number of blocks 
demanded does not exceed the supply of available blocks. At that point, 
those bidders indicating demand for a block in a category at the final 
clock phase price would be deemed winning bidders.
    9. Next, winning bidders from the clock phase would have an 
opportunity to submit sealed bids by PEA for particular frequency 
blocks in a separate assignment phase. We propose that this assignment 
phase be voluntary: Winning bidders need not bid in the assignment 
phase. Regardless of its participation in the assignment phase, the 
assignment phase would aim to assign contiguous frequency blocks within 
a PEA to a bidder that wins multiple blocks.
    10. To encourage participation in the reverse auction, we propose 
to offer incumbents an incentive payment--using what we term here a 
``voucher''--in exchange for the cancellation of certain incumbent 
licenses at the end of the auction. Each voucher would have a dollar 
value equal to the final clock phase price (for a single generic block 
under the new band plan) in the PEA times the ratio of the incumbent's 
MHz-pops to the MHz-pops in a full generic block. We note that, by this 
definition, a participating incumbent licensee with a license for 100 
megahertz of unencumbered spectrum in a PEA could receive a voucher 
precisely equal to the cost of paying a winning bid for a license for 
the same spectrum in the forward auction. Accordingly, participation in 
the clock auction by incumbent licensees will simultaneously be 
participation in the forward and reverse auction: The bids for new 
blocks in the forward auction automatically set the price of vouchers 
that participating incumbent licensees may receive as vouchers in the 
reverse auction. As the auction proceeds, the incumbent licensee can 
elect whether to pursue new licenses by placing new bids in the forward 
auction or to accept the voucher by requesting a reduction in its 
demand. Thus, the auction to determine the amount of the winning bid 
for the new blocks also serves as the reverse auction that determines 
the incentive payment a licensee would receive for voluntarily 
relinquishing spectrum usage rights.
    11. Although incumbent licensees bidding in the auction would be 
free to request a reduction in their demand at any time during the 
auction based on their expectations regarding the value of their 
vouchers, the Commission itself would not process vouchers until after 
the clock auction is over. Provided that the total auction proceeds 
exceed the total incentive payments to be shared with licensees 
relinquishing spectrum usage rights, we can close the incentive auction 
regardless of the proceeds or relinquishments in a particular PEA. 
Then, the Commission would process vouchers for each incumbent licensee 
in each PEA in two steps, depending on whether all the spectrum made 
available in the reverse auction was needed for the forward auction. 
First, the Commission would determine whether demand at the end of the 
forward auction equaled supply in any given PEA; in those PEAs, the 
Commission would cancel the participating

[[Page 42092]]

incumbents' licenses and make payments based on the vouchers.\2\
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    \2\ For example, if an incumbent licensee had 150 megahertz of 
pre-auction spectrum throughout a PEA before the clock auction and 
won bids for two 100-megahertz blocks at $10,000 a block in a PEA 
where demand equaled supply at the end of the clock auction, that 
licensee's pre-auction spectrum licenses would be cancelled, it 
would receive a voucher of $15,000 (1.5 x $10,000) and it would owe 
$20,000 for the two winning bids (i.e., it would be required to pay 
$5,000 net).
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    12. In the event that demand by bidders in the forward auction in a 
PEA is less than the total supply of blocks offered, we need to address 
how to prioritize the blocks supplied by incumbent licensees relative 
to the supply of blocks that are held by the FCC in order to determine 
whether all incumbent-supplied blocks can be relinquished. That is, if 
bidders are interested in obtaining fewer new licenses than the total 
number of available blocks, which block or blocks will remain unsold--
those partial or full blocks that an incumbent wishes to relinquish or 
those held by the FCC? For example, we could attempt to minimize 
payments to incumbent licensees by first satisfying demand with FCC-
held blocks, and then, to the extent possible, with incumbent-offered 
blocks. If only some incumbent-held blocks can be used to satisfy 
demand, how should we prioritize among incumbent-held blocks? Should we 
use a pseudo-random number to break such ties, or should we prioritize 
blocks offered by incumbents in a different manner, such as allowing 
any incumbents with partial-PEA spectrum usage rights to relinquish 
before holders of full-PEA rights, so as to result in a repacked 
spectrum blocks that are more consistent with the new band plan? 
Alternatively, if we prioritized the reconfiguration of the band by 
first satisfying demand with incumbent-held supply, how should we 
prioritize which incumbent-held blocks to supply first? We note that, 
in situations where the demand for blocks does not exceed the total 
supply of blocks, the final clock phase price, at which incentive 
payments will be calculated, is likely to be equal to the minimum 
opening bid.
    13. As a further encouragement for participation in the auction, we 
propose to condition bidding for new licenses in the auction on 
incumbents' offering their existing spectrum usage rights in the 
auction. In other words, an incumbent licensee seeking new licenses in 
the forward auction must be a participant in the simultaneous reverse 
auction. Such a requirement would ensure that incumbent licensees are 
not given a one-way option--purchasing new unencumbered spectrum at 
auction while keeping a different set of blocks encumbered and thus 
unavailable for an efficient auction.
    14. One advantage of this approach is it maximizes the ability of 
incumbent licensees to maintain and consolidate their holdings (or to 
rationalize their holdings by relinquishing spectrum usage rights in 
some areas to acquire rights in other areas) while jointly maximizing 
the amount of clear, unencumbered spectrum for auction. Such an 
incentive auction appears to be the most efficient path forward to 
rationalize the Upper 37 GHz and 39 GHz bands for mobile 5G and high-
speed fixed wireless service. It promotes a rapid transition of the 
currently fragmented band while at the same time respecting incumbent 
spectrum rights and providing opportunities for entry into the band by 
other wireless providers. We seek comment on these proposals and on 
alternative approaches to conducting, in a timely manner, an auction of 
licenses in the Upper 37 GHz and 39 GHz bands. We also seek comment on 
additional incentives we could provide for incumbent licensees to 
participate in the reverse auction.
    15. A potential concern with the proposed auction is that 
incumbents with vouchers may have an incentive to engage in insincere 
bidding in markets where they want to be net suppliers of spectrum to 
inflate the value of their voucher payments. We seek comment on the 
validity of such concerns. We also note that these concerns should be 
mitigated by our no withdrawal rule, which we used in the forward phase 
of the broadcast incentive auction. We seek comment on any other 
potential safeguards that could be implemented against insincere 
bidding incentives or other strategic behavior in the proposed 
incentive auction.
    16. Another potential concern is the interaction of vouchers and 
bidding credits. For example, given existing rural and small business 
bidding credits, bidders for new licenses may be eligible to receive up 
to a 25 percent credit toward their winning bid if they qualify. If 
that bidding credit were applied across their gross winning bids, an 
incumbent licensee could feasibly retain its existing holdings in the 
auction while simultaneously receiving an incentive payment.\3\ To 
avoid that result, we propose to limit the application of bidding 
credits to cash payments for winning bids in the auction, after the 
winning bidder has used any vouchers it has to satisfy winning bids. We 
seek comment on this proposal and any other scenarios where the use of 
an incentive auction with vouchers may create arbitrage opportunities 
given our normal bidding rules. For example, should we address winning 
bidders that default on their payments differently here?
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    \3\ For example, if a small business incumbent with one 100 
megahertz PEA license before the auction won a single license in 
that same PEA for $10,000, its voucher would be $10,000 while its 
required payment on the one purchased license would be $7,500 
($10,000 times 75 percent).
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    17. Given that non-incumbent licensees also may qualify for bidding 
credits, how should we address the theoretical possibility that auction 
proceeds could total less than the incentive payments owed to 
incumbents? Should we adopt a rule that would preclude the auction from 
closing in the event proceeds from winning bids will be insufficient, 
analogous to the final stage rule we adopted in the broadcast 
television spectrum incentive auction? Alternatively, should we adopt a 
rule to recalculate the amount of incentive payments, so that the 
payments do not exceed the available auction proceeds? We seek comment 
on these potential possibilities and how to address them. Are there 
other particular scenarios in which the auction proceeds might fall 
short of the amount needed to pay the face value of vouchers? Or other 
methods of addressing such possibilities?
    18. We also seek comment on two alternative proposals. First, 
incumbents would receive license(s) for all vouchers that are 
equivalent to a whole number of new license(s) without bidding at all 
in the clock phase. The specific frequencies for these licenses would 
be assigned in the assignment round. Under this alternative, incumbent 
licenses that are not encumbered would not be able to relinquish 
spectrum, and in those PEAs, the total number of blocks offered in the 
clock phase would be reduced by the number of 100 megahertz licenses 
held by incumbents. In the assignment phase, all blocks won by winning 
bidders and all incumbent licenses would be assigned (or in the case of 
incumbent licenses, reassigned) frequencies.
    19. A second, more narrowly tailored alternative would be to 
exchange automatically for vouchers only encumbered PEA and RSA 
licenses. Unencumbered PEA licenses would have the option of converting 
their unencumbered generic PEA blocks to vouchers if they so choose. 
All encumbered licenses would still be required to be converted to 
vouchers, since, were these licensees to hold out, this would leave 
spectrum that could not fit into the new band plan and

[[Page 42093]]

thereby reduce the efficiency of the auction.
    20. Under all these approaches, unencumbered PEA licensees can 
obtain new licenses without additional license payments. Under our 
proposed approach, however, licensees would have to bid to obtain a new 
license, making more licenses available for bidding and increasing the 
number of bidders. Making unencumbered PEA licensees bid may increase 
the efficiency of the assignment of licenses by having incumbents face 
the market price of holding onto their licenses. At a high enough 
price, some may relinquish their spectrum to other bidders who value it 
more highly. We seek comment on these proposals, particularly from any 
current licensee that would choose not to participate in the incentive 
auction using one of these three approaches described above or any 
other similar approach.

B. A Pre-Auction Voucher Exchange

    21. To address concerns raised with respect to incumbent licensees 
whose licenses involve RSAs or encumbered PEAs, and thus do not cover 
the entire population of a PEA, we propose a pre-auction voucher 
exchange.\4\ Much as vouchers in the incentive auction allow incumbent 
licensees to consolidate and rationalize their holdings during the 
auction, a voucher exchange could allow incumbents to consolidate and 
rationalize their holdings before the auction--although in a somewhat 
more limited manner. Specifically, it could aid incumbent licensees in 
minimizing the number of PEAs going into the auction in which they 
would have only fractional vouchers--and thus no ability to assure 
themselves that they could exit the auction with a whole number of new 
licenses without making net payments to secure their spectrum holdings.
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    \4\ For encumbered PEA licenses (i.e., licenses that are co-
channel with an RSA license), the licensee's voucher would cover 
only the population where it is authorized to operate prior to the 
start of the exchange--that is, the area outside of the overlapping 
RSA license.
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    22. The design of the voucher exchange should allow incumbents to 
exchange their fractional vouchers in one or more PEAs, caused by 
holding an RSA or encumbered PEA license, to create full vouchers in 
another PEA subject to certain restrictions. The first step in a 
voucher exchange is to aggregate the vouchers for all encumbered blocks 
within a PEA, which is likely to leave a fractional voucher in each 
PEA.
    23. Next, the Commission would specify exchange rates (expressed on 
a per MHz-pop basis) that would allow incumbent licensees to exchange 
these fractional vouchers with the Commission. We seek comment on how 
to establish the relative exchange rates needed for a voucher exchange. 
Should we calculate those exchange rates based on the relative value of 
PEA licenses estimated from previous auctions? If so, which prior FCC 
auctions should be used to calculate the exchange rates between PEAs?
    24. Incumbents would then be allowed to exchange their vouchers 
subject to the condition that net trades for each incumbent over all 
PEAs be revenue neutral, i.e., aggregate trades up and down will 
balance given the FCC-specified exchange rates.\5\ Vouchers could only 
be exchanged up or down to no more than the nearest integer above or no 
less than the nearest integer below their current fractional voucher 
holdings.\6\ If there exists a PEA in which it is not feasible for all 
incumbent licensees to ``trade up'' within the 39 GHz band, we propose 
that incumbent licensees would only be permitted to ``trade down.'' All 
voucher trades with the Commission would be completed prior to the 
clock auction phase of the incentive auction. We propose that, before 
initiating the voucher exchange, we would educate all potential 
participants so that they can understand the process and consequences 
of participating in the exchange. We find that this should promote an 
efficient process for both the Commission and participants.
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    \5\ If all of an incumbent's licenses within PEA #1 in the 
aggregate cover 20% of the MHz-pops of an unencumbered 100 megahertz 
block in PEA #1, the license(s) are represented by a voucher 
denominated as 0.2. If all of an incumbent's licenses within a PEA 
#2 in the aggregate cover 40 percent of the MHz-pops of an 
unencumbered 100 megahertz block in PEA #2, that incumbent's voucher 
in PEA #2 would be 0.4. Note that the incumbent's license(s) in PEA 
#2 might cover 80 percent of the population in the PEA with only 50 
megahertz of bandwidth, or 40 percent of the population with 100 
megahertz, or 20 percent of the population with 200 megahertz. A 
voucher representing any of these combinations in PEA #2 would be 
denominated 0.4. If the exchange rate between PEA #1 and #2 was such 
that a voucher in PEA #2 can be exchanged for a voucher of two times 
its amount in PEA #1, then the incumbent could exchange its 0.4 
voucher in PEA #2 for a PEA #1 voucher for 0.8 (0.4 times two). The 
incumbent would then combine its original 0.2 voucher in PEA #1 with 
the 0.8 voucher received in the exchange and have a 1.0 voucher in 
PEA #1. The incumbent's voucher in PEA #2 would then be 0.0.
    \6\ Using our prior example, the limitation that incumbents 
cannot increase vouchers to more than the nearest integer above its 
initial holdings means that an incumbent with 0.2 in PEA #1 and 0.9 
in PEA #2 cannot exchange its PEA #2 voucher for a PEA #1 voucher of 
1.8 (0.9 times the exchange rate of two) because the result would 
increase the incumbent's holdings in PEA #1 from 0.2 to 2.0, which 
is more than the nearest integer above, or 1.0.
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    25. We seek comment on this framework for implementing a pre-
auction voucher exchange to serve the public interest, including how 
best to address concerns raised in the record with respect to prior 
proposals. To establish the framework, we seek comment on the best 
methods for achieving our goals. How could a voucher exchange best 
facilitate a low cost rapid rationalization of spectrum holdings by 
allowing incumbent licensees to aggregate fractional holdings across 
PEAs and to retain all their equivalent spectrum usage rights in PEAs 
of their choosing to the extent permitted by their fractional holdings 
and the exchange rates? Are there any other limits or restrictions that 
should be imposed on exchanges that incumbents can make? Separate from 
the voucher exchange and building on the Voluntary Rebanding PN, should 
we expand the process by which incumbent licensees can modify their 
licenses prior to the auction, for example, by allowing for inter-
market swaps using the same exchange rates as the voucher exchange?
    26. One restriction we may impose on any exchange that will result 
in modified licenses (rather than cancelled licenses and vouchers for 
the auction) is to require that any such exchange result in less 
geographically encumbered spectrum. Would that serve the public 
interest? How should encumbrances be measured? Furthermore, after 
exchanging across a number of markets, it is likely that a licensee 
will not be able to have full PEA licenses in all markets. One approach 
to this remainder would be to set it to zero in that market. Would this 
be appropriate, given the opportunity afforded by the exchanges to 
minimize such holdings? What other approaches could be taken regarding 
such remainders? For example, should an incumbent be permitted to 
maintain one fractional license in one PEA?
    27. We also seek comment on how the voucher exchange should 
interact with existing licenses and the incentive auction. For example, 
should we cancel or modify the affected licenses of exchange 
participants before the auction in exchange for vouchers? Should we 
leave such licenses untouched until after the auction? Should only 
incentive auction participants be allowed to participate in the voucher 
exchange? Further, should we consider holding this type of voucher 
exchange independent of whether we hold an incentive auction to allow 
incumbent licensees to combine their fractional licenses into whole 
licenses under the new band plan?

[[Page 42094]]

C. Mandatory Repacking

    28. We propose to repack incumbent licensees that choose not to 
participate in the incentive auction. Just as the Commission repacked 
television broadcasters that chose not to participate in the broadcast 
incentive auction, the Commission has the authority to modify the 
holdings of existing licensees ``if in the judgment of the Commission 
such action will promote the public interest, convenience, and 
necessity.'' Repacking the holdings of non-participating incumbent 
licensees will ensure that we can minimize encumbrances in the band and 
maximize the amount of clean spectrum available for auction, while 
preserving existing usage rights for incumbents.
    29. We seek comment on all aspects of this proposal. We also seek 
comment on what criteria to apply when repacking encumbered licenses. 
How can the Commission best make modified frequency assignments to 
maximize the contiguous spectrum for auction participants while 
preserving to the greatest extent possible each incumbent license's 
bandwidth, previous geography, and existing contiguity?
    30. For example, must or should we maintain frequency contiguity 
for RSA licenses that overlap PEAs? Given the requirement of 
operability throughout the band, how significant is such contiguity? We 
note that partitioning RSAs that overlap multiple PEAs into their 
respective PEAs might make it possible to repack more efficiently and 
even enable repacked frequencies to be assigned in the auction's 
assignment phase.
    31. One approach to repacking non-participating incumbents would 
involve a two-step calculation. The first step would entail 
reconfiguring those incumbent licenses that do not align with PEA 
boundaries (e.g., RSA licenses or partial PEA licenses) into full PEA 
licenses with an equivalent amount of spectrum in each PEA, as measured 
in MHz-pop. The second step would be to restate the incumbent's 
fractional holdings of 100 MHz PEA blocks as mostly integer numbers of 
100 MHz PEA blocks, in a way that the repacked spectrum maintains the 
same value as evaluated with respect to FCC-specified exchange rates 
(i.e., those set for the voucher exchange). In all but one of their 
PEAs, the fractional holdings of a repacked incumbent would be replaced 
by either the nearest integer above or the nearest integer below the 
fractional holdings. The one PEA left with fractional holdings would be 
the PEA with the smallest possible value. We note that an incumbent 
could avoid the effects of such repacking by entering into the 
incentive auction.
    32. Other efficiencies might be realized by other means. For 
example, converting MHz-pops in a geographic area that is less than a 
full PEA (i.e., an RSA license or an encumbered PEA license) into the 
same MHz-pops in a portion of a 100 megahertz block across the whole 
PEA could facilitate more efficient repacking. We note that, depending 
on how many and which current licensees choose not to participate in 
the incentive auction, there may be some left-over segments, i.e., when 
less than a whole 100 megahertz PEA block remains. We seek comment on 
whether we should attempt to consolidate such holdout segments in this 
manner, and if so whether to auction overlay licenses on them or 
otherwise maximize their value for the American public.
    33. We seek comment on the options presented above, including 
possible variations, and on the costs and benefits of mandatory 
repacking for non-participants. Should there be a de minimis spectrum 
holdings threshold to qualify for repacking and how should this level 
be set? How and when should the frequency reassignment be done in order 
to minimize the spectrum required to repack holdout licenses? How 
should the adjacent spectrum blocks to the holdout segment be 
auctioned, given that they may be less than 100 megahertz?

D. Incentive Auction Legal Authority

    34. Congress expressly authorized the Commission to conduct 
incentive auctions beyond the broadcast television spectrum incentive 
auction. Using this authority, the Commission can offer incentive 
payments to licensees that choose to relinquish existing spectrum usage 
rights provided by incumbent licenses instead of retaining such rights 
pursuant to new licenses. More specifically, the ``Commission may 
encourage a licensee to relinquish voluntarily some or all of its 
licensed spectrum usage rights in order to permit the assignment of new 
initial licenses subject to flexible-use service rules by sharing with 
such licensee a portion . . . of the proceeds (including deposits and 
upfront payments from successful bidders) from the use of a competitive 
bidding system under this subsection.'' To do so, the Commission must 
determine ``the value of the relinquished rights . . . in the reverse 
auction'' and that reverse auction must have ``at least two competing 
licensees participate.''
    35. As explained above, we propose to use the clock phase winning 
bids for new licenses to determine the incentive payment that 
participating incumbent licensees may receive. A participating 
incumbent licensee will have a choice between competing in bidding for 
new licenses and offering spectrum usage rights or relinquishing 
spectrum usage rights under existing licenses in exchange for an 
incentive payment.
    36. Under the auction design proposed above, any relinquishment of 
spectrum usage rights for an incentive payment would be ``voluntary'' 
within the meaning of the statute. All incumbent licensees may decline 
to participate in the incentive auction and instead receive new 
licenses that provide spectrum usage rights equivalent to their 
existing licenses. Modifying existing licenses in this way does not, 
however, require the use of our incentive auction authority. Rather, we 
rely on our clear authority to modify license frequencies pursuant to 
the public interest. Given that incumbent licensees will participate in 
the incentive auction by choice, we conclude that any subsequent 
decision an incumbent doing so makes to relinquish spectrum usage 
rights should be considered voluntary. We seek comment on our 
conclusion.
    37. We propose above that incumbent licensees that choose not to 
participate in the reverse auction may not participate in the auction 
of new licenses. Could that additional consequence of choosing not to 
participate affect whether a subsequent relinquishment is voluntary? An 
incumbent licensee that chooses between relinquishing spectrum usage 
rights for an incentive payment or instead receiving new licenses for 
equivalent spectrum usage rights at no additional cost presumably does 
so voluntarily, regardless of whether it chose to participate because 
of some collateral consequence of non-participation. Nothing compels 
such a licensee to make the relinquishment instead of retaining its 
spectrum usage rights under new licenses.
    38. We also conclude that our proposal that incumbent licensees 
that choose not to participate in the reverse auction may not 
participate in the forward auction of new licenses is consistent with 
our authority to determine qualifications that auction participants 
must satisfy. More specifically, we conclude that the proposed 
consequence of an incumbent's choice would constitute a rule of general 
applicability regarding auction participation. We seek comment on these 
conclusions.

[[Page 42095]]

    39. Our proposal satisfies additional statutory requirements for 
our incentive auction authority. The ``reverse'' nature of the auction 
required by the statute is one in which those rights are relinquished 
by licensees to the Commission, reversing the typical flow of rights 
assigned based on spectrum license auctions. Although auctions in other 
contexts--such as the Connect America Fund Phase II Auction to 
distribute universal service support for high-speed broadband 
deployment in rural America--are sometimes called reverse auctions 
because the price declines over the course of bidding, nothing in the 
statute requires that a reverse auction to relinquish spectrum usage 
rights use descending bidding. We note that in the broadcast television 
spectrum incentive auction, the Commission chose to use a descending 
clock price auction for the reverse auction component because a 
descending clock auction design involved several features that were 
particularly helpful in that context, not because it was statutorily 
required.
    40. We also conclude that, so long as at least two incumbent 
licensees with licenses in the same PEA choose to participate in the 
incentive auction, the reverse auction will meet the statutory 
requirement to have at least ``two competing licensees 
participat[ing]'' in the reverse auction.\7\ In the broadcast 
television spectrum incentive auction, the Commission concluded that at 
least two licensees participate in the reverse auction so long as more 
than one non-commonly controlled party qualifies as an applicant to 
participate in the auction. This is so because any qualified applicant 
that bids in the auction must take into account the presence of another 
qualified applicant that has the opportunity to bid, regardless of 
whether the second applicant in fact bids. We find that same conclusion 
should apply here, too. Incumbents seeking to relinquish spectrum usage 
rights in the proposed auction must take into account the demand for 
new licenses by other qualified applicants, as they only will be able 
to relinquish rights so long as demand for new licenses exceeds supply. 
We seek comment on this analysis.
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    \7\ See Incentive Auction Report and Order, 29 FCC Rcd at 6742, 
para. 413. The Commission took care to note that it might ``apply 
[the two competing participants] requirement differently in other 
reverse auctions, depending upon the particular eligibility 
criteria, auction design and other circumstances.'' Id. at 6743, 
para. 414 n.1224. Accordingly, while we find the discussion 
regarding this requirement helpful, it is not controlling.
---------------------------------------------------------------------------

    41. Further, we seek comment generally on whether our proposal to 
conduct an auction with the elements described above or any of our 
alternative scenarios for conducting an incentive auction would be 
consistent with our statutory authority to conduct an incentive 
auction. To the extent that commenters assert that these scenarios are 
not consistent with our incentive auction authority, commenters should 
discuss any changes that could more fully satisfy that authority.
    42. As noted above in our proposal, we have authority to modify the 
holdings of existing licensees based on our judgment of the public 
interest. We conclude that the potential modifications considered above 
are within our authority. We ask that commenters proposing further 
modifications to address whether their proposals are within our 
authority.
    43. Legal Authority for Alternative Auction Mechanisms. We seek 
comment on alternative legal authority should we decide not to conduct 
an incentive auction. For example, we seek comment on whether we might 
conduct an auction as described above while providing current licensees 
with bidding offset credits in place of vouchers and incentive 
payments. We seek comment on whether issuing bidding offset credits in 
order to protect existing spectrum uses--and past Commission public 
interest judgments reflected in prior licensing decisions--while 
clearing existing spectrum assignments is necessary to the management 
of spectrum in the public interest and not inconsistent with the 
Communications Act. Effectively clearing prior spectrum assignments so 
that new licenses for this spectrum may be assigned by competitive 
bidding will promote statutory objectives. Issuing bidding offset 
credits is within the Commission's statutory authority regarding the 
design of competitive bidding systems. Section 309(j)(4) of the 
Communications Act grants the Commission authority to consider a 
variety of methods of helping entities pay for licenses that are 
offered at auction, including alternative payment schedules, tax 
credits, and bidding preferences.
    44. We ask commenters to address the differences, if any, in 
incentives provided to current licensees by providing them with a 
bidding offset credit without an opportunity to receive an incentive 
payment. Commenters should address the likely differences in the 
outcome of the auction resulting from such different incentives, and 
whether providing incentive payments would better serve the public 
interest, notwithstanding the need to share a portion of the auction 
proceeds. Would the amount of repurposed spectrum be affected? We also 
seek comment on any other approaches that might achieve the purposes of 
the proposal without sharing proceeds from the auction of new licenses 
with existing licensees.

III. Initial Regulatory Flexibility Analysis

    45. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared this present Initial 
Regulatory Flexibility Analysis (IRFA) of the possible significant 
economic impact on a substantial number of small entities by the 
policies and rules proposed in the attached 4th FNPRM . Written public 
comments are requested on this IRFA. Comments must be identified as 
responses to the IRFA and must be filed by the deadlines for comments 
as specified in the 4th FNPRM. The Commission will send a copy of this 
4th FNPRM, including this IRFA, to the Chief Counsel for Advocacy of 
the Small Business Administration (SBA). In addition, the 4th FNPRM and 
IRFA (or summaries thereof) will be published in the Federal Register.

A. Need for, and Objectives of, the Proposed Rules

    46. In the 4th FNPRM, we propose to modify the band plan for the 
38.6-40 GHz (39 GHz) band to 100 megahertz channels for the Part 30 
Upper Microwave Flexible Use Service (UMFUS), and propose to similarly 
modify the 37.6-38.6 GHz (Upper 37 GHz) and 47.2-48.2 GHz (47 GHz) 
bands to 100 megahertz channels if we adopt the 100 megahertz channel 
plan for the 39 GHz band. The 4th FNPRM also seeks comment on which 
auction mechanism to use to realign existing 39 GHz licenses.
    47. First, we propose to modify the 39 GHz band plan from seven 200 
megahertz to fourteen 100 megahertz channels to allow for better 
consolidation of existing license holdings. We propose modifying the 
Upper 37 GHz band plan from 200 megahertz to 100 megahertz channels, 
given that the two bands are adjacent and have the same service rules 
and an operability requirement. Further, in the 4th FNPRM we propose to 
auction the 39 GHz and Upper 37 bands together. In addition we propose 
to modify the 47 GHz band plan from 200 to 100 megahertz channels if we 
auction all three bands at the same time and seek comment on that 
proposal.
    48. Second, we propose to use a two-phase incentive auction. In the 
first phase, participants would bid to win generic spectrum blocks 
using an

[[Page 42096]]

ascending clock auction that would determine a uniform price in each 
PEA--this encompasses the simultaneous forward-and-reverse auction. The 
second phase would assign specific-frequency licenses by PEA that would 
aim to ensure contiguity within each PEA. Because the spectrum blocks 
in the Upper 37 GHz and 39 GHz bands can be treated as largely 
interchangeable within a PEA, we propose to offer unencumbered blocks 
as one category of generic blocks in a clock auction. Specifically, we 
propose to use a clock auction design with rules similar to those used 
for the forward auction in the broadcast incentive auction and the 
planned 24 GHz auction. Next, winning bidders from the clock phase 
would have an opportunity to submit sealed bids by PEA for particular 
frequency blocks in a separate assignment phase. We propose that this 
assignment phase be voluntary: Winning bidders need not bid in the 
assignment phase. Regardless of its participation in the assignment 
phase, the assignment phase would aim to assign contiguous frequency 
blocks within a PEA to a bidder that wins multiple blocks.
    49. We propose to encourage incumbent licensees to participate in 
the reverse auction by offering them an incentive payment--using what 
we term here a ``voucher''--in exchange for the cancellation of certain 
incumbent licenses at the end of the auction. Each voucher would have a 
dollar value equal to the final clock phase price (for a single generic 
block under the new band plan) in the PEA in which the incumbent 
license is located times the ratio of bandwidth provided by the 
incumbent's license and the population that can be reached using that 
license within a given PEA (expressed in MHz-pops) divided by the 
bandwidth and population reached by a generic block (expressed in MHz-
pops). We propose to further encourage incumbent licensees to 
participate in the reverse auction by requiring such participation if 
the incumbent licensee seeks to participate in the accompanying forward 
auction. In addition, we seek comment on two alternative auction 
proposals. First, incumbents would receive license(s) for all vouchers 
that are equivalent to a whole number of new license(s) without bidding 
at all in the clock phase. In the assignment phase, all blocks won by 
winning bidders and all incumbent licenses would be assigned (or in the 
case of incumbent licenses, reassigned) frequencies. We seek comment on 
a second alternative in which we would exchange automatically for 
vouchers only encumbered PEA and RSA licenses.
    50. Third, we propose a pre-auction voucher exchange process in 
which incumbents can trade fractional license holdings for full license 
holdings--including across markets in some circumstances--under the new 
band plan, with these trades reflected as full vouchers in the auction. 
The exchange would allow incumbents to aggregate fractional holdings 
across PEAs and to retain all their equivalent spectrum usage rights in 
PEAs of their choosing to the extent permitted by their fractional 
holdings and the exchange rates. We seek comment on establishing the 
relative exchange rates needed for a voucher exchange. We seek comment 
on a framework for implementing a pre-auction voucher exchange to serve 
the public interest, including how best to address concerns raised in 
the record with respect to prior proposals.
    51. Fourth, we propose to repack incumbent licensees that choose 
not to participate in reverse auction portion of the incentive auction. 
Repacking the holdings of non-participating incumbent licensees will 
ensure that we can minimize encumbrances in the band, maximizing the 
amount of clean spectrum available for auction, while preserving 
existing usage rights for incumbents. We propose that licensees that 
choose to repack encumbered licenses in lieu of exchanging for vouchers 
should not be allowed to bid on new licenses in either the clock phase 
of the auction or be allowed to bid on frequency assignments during the 
assignment round. Prohibiting auction participation for such licensees 
would create a strong incentive for incumbents to choose to exchange 
all of their licenses for vouchers.
    52. Lastly, we propose to auction together all licenses in the 
Upper 37 GHz and 39 GHz, using the Commission's incentive auction 
authority, where existing 39 GHz license holders could relinquish their 
spectrum usage rights in return for an incentive payment, and/or 
acquire new rights. We conclude that the auction design we propose 
would satisfy the requirement to conduct a reverse auction to determine 
the amount of compensation licensees would accept for voluntarily 
relinquishing spectrum usage rights. All incumbent licensees may 
decline to participate in the incentive auction and instead receive new 
licenses that provide spectrum usage rights equivalent to their 
existing licenses. We seek comment on our proposal to condition bidding 
for new licenses in the auction on incumbents' offering their existing 
spectrum usage rights in the auction. Such a requirement would ensure 
that incumbent licensees are not given a one-way option--purchasing new 
unencumbered spectrum at auction while keeping a different set of 
blocks encumbered and thus unavailable for an efficient auction. 
Furthermore, in case we were to conclude that the auction design 
proposed above would not satisfy the statutory requirements for an 
incentive auction, we seek comment on alternatives in which auction 
proceeds are not shared with incumbents, such as providing current 
licensees with bidding offset credits in place of vouchers
    53. Overall, the proposals in the 4th FNPRM are designed to 
facilitate broadband deployment, including 5G services, by providing 
opportunities to make it easier for licensees in the band to 
rationalize their existing holdings into contiguous swathes of 
spectrum, and by offering new licenses of contiguous spectrum at 
auction while protecting incumbents' existing spectrum usage rights. 
This will ensure that this spectrum is efficiently used and will foster 
the development of new and innovative technologies and services, as 
well as encourage the growth and development of a wide variety of 
services, ultimately leading to greater benefits to consumers.

B. Legal Basis

    54. The proposed action is authorized pursuant to Sections 1, 2, 3, 
4, 5, 7, 301, 302, 302a, 303, 304, 307, 309, and 310 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 153, 154, 
155, 157, 301, 302, 302a, 303, 304, 307, 309, and 310, Section 706 of 
the Telecommunications Act of 1996, as amended, 47 U.S.C. 1302.

C. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules Will Apply

    55. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act.'' A ``small business concern'' is one which: (1) Is independently 
owned and operated; (2) is not dominant in its field of operation; and 
(3) satisfies any additional criteria established by the SBA.

[[Page 42097]]

    56. Small Businesses, Small Organizations, Small Governmental 
Jurisdictions. Our actions, over time, may affect small entities that 
are not easily categorized at present. We therefore describe here, at 
the outset, three broad groups of small entities that could be directly 
affected herein. First, while there are industry specific size 
standards for small businesses that are used in the regulatory 
flexibility analysis, according to data from the SBA's Office of 
Advocacy, in general a small business is an independent business having 
fewer than 500 employees. These types of small businesses represent 
99.9% of all businesses in the United States which translates to 28.8 
million businesses.
    57. Next, the type of small entity described as a ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.'' 
Nationwide, as of August 2016, there were approximately 356,494 small 
organizations based on registration and tax data filed by nonprofits 
with the Internal Revenue Service (IRS).
    58. Finally, the small entity described as a ``small governmental 
jurisdiction'' is defined generally as ``governments of cities, 
counties, towns, townships, villages, school districts, or special 
districts, with a population of less than fifty thousand.'' U.S. Census 
Bureau data from the 2012 Census of Governments indicate that there 
were 90,056 local governmental jurisdictions consisting of general 
purpose governments and special purpose governments in the United 
States. Of this number there were 37,132 General purpose governments 
(county, municipal and town or township) with populations of less than 
50,000 and 12,184 Special purpose governments (independent school 
districts and special districts) with populations of less than 50,000. 
The 2012 U.S. Census Bureau data for most types of governments in the 
local government category show that the majority of these governments 
have populations of less than 50,000. Based on this data we estimate 
that at least 49,316 local government jurisdictions fall in the 
category of ``small governmental jurisdictions.''
    59. Wireless Telecommunications Carriers (except Satellite). This 
industry comprises establishments engaged in operating and maintaining 
switching and transmission facilities to provide communications via the 
airwaves. Establishments in this industry have spectrum licenses and 
provide services using that spectrum, such as cellular services, paging 
services, wireless internet access, and wireless video services. The 
appropriate size standard under SBA rules is that such a business is 
small if it has 1,500 or fewer employees. For this industry, U.S. 
Census Bureau data for 2012 show that there were 967 firms that 
operated for the entire year. Of this total, 955 firms had employment 
of 999 or fewer employees and 12 had employment of 1,000 employees or 
more. Thus under this category and the associated size standard, the 
Commission estimates that the majority of wireless telecommunications 
carriers (except satellite) are small entities.
    60. Fixed Microwave Services. Microwave services include common 
carrier, private-operational fixed, and broadcast auxiliary radio 
services. They also include the Upper Microwave Flexible Use Service, 
the Millimeter Wave Service, Local Multipoint Distribution Service 
(LMDS), the Digital Electronic Message Service (DEMS), and the 24 GHz 
Service, where licensees can choose between common carrier and non-
common carrier status. At present, there are approximately 66,680 
common carrier fixed licensees, 69,360 private and public safety 
operational-fixed licensees, 20,150 broadcast auxiliary radio 
licensees, 411 LMDS licenses, 33 24 GHz DEMS licenses, 777 39 GHz 
licenses, and five 24 GHz licensees, and 467 Millimeter Wave licenses 
in the microwave services. The Commission has not yet defined a small 
business with respect to microwave services. The closest applicable SBA 
category is Wireless Telecommunications Carriers (except Satellite) and 
the appropriate size standard for this category under SBA rules is that 
such a business is small if it has 1,500 or fewer employees. For this 
industry, U.S. Census Bureau data for 2012 shows that there were 967 
firms that operated for the entire year. Of this total, 955 had 
employment of 999 or fewer, and 12 firms had employment of 1,000 
employees or more. Thus under this SBA category and the associated 
standard, the Commission estimates that the majority of fixed microwave 
service licensees can be considered small.
    61. The Commission does not have data specifying the number of 
these licensees that have more than 1,500 employees, and thus is unable 
at this time to estimate with greater precision the number of fixed 
microwave service licensees that would qualify as small business 
concerns under the SBA's small business size standard. Consequently, 
the Commission estimates that there are up to 36,708 common carrier 
fixed licensees and up to 59,291 private operational-fixed licensees 
and broadcast auxiliary radio licensees in the microwave services that 
may be small and may be affected by the rules and policies proposed 
herein. We note, however, that both the common carrier microwave fixed 
and the private operational microwave fixed licensee categories 
includes some large entities.
    62. All Other Telecommunications. The ``All Other 
Telecommunications'' category is comprised of establishments primarily 
engaged in providing specialized telecommunications services, such as 
satellite tracking, communications telemetry, and radar station 
operation. This industry also includes establishments primarily engaged 
in providing satellite terminal stations and associated facilities 
connected with one or more terrestrial systems and capable of 
transmitting telecommunications to, and receiving telecommunications 
from, satellite systems. Establishments providing internet services or 
voice over internet protocol (VoIP) services via client-supplied 
telecommunications connections are also included in this industry.'' 
The SBA has developed a small business size standard for ``All Other 
Telecommunications,'' which consists of all such firms with gross 
annual receipts of $32.5 million or less. For this category, U.S. 
Census Bureau data for 2012 shows that there were a total of 1,442 
firms that operated for the entire year. Of these firms, a total of 
1400 firms had gross annual receipts of under $25 million and 42 firms 
had gross annual receipts of $25 million to $49,999,999. Thus, the 
Commission estimates that a majority of ``All Other 
Telecommunications'' firms potentially affected by our actions can be 
considered small.
    63. Radio and Television Broadcasting and Wireless Communications 
Equipment Manufacturing. This industry comprises establishments 
primarily engaged in manufacturing radio and television broadcast and 
wireless communications equipment. Examples of products made by these 
establishments are: Transmitting and receiving antennas, cable 
television equipment, GPS equipment, pagers, cellular phones, mobile 
communications equipment, and radio and television studio and 
broadcasting equipment.'' The SBA has established a size standard for 
this industry of 1,250 employees or less. U.S. Census Bureau data for 
2012 shows that 841 establishments operated in this industry in that 
year. Of that number, 828 establishments operated with fewer than 1,000 
employees, 7 establishments operated with between 1,000 and 2,499 
employees and 6 establishments

[[Page 42098]]

operated with 2,500 or more employees. Based on this data, we conclude 
that a majority of manufacturers in this industry is small.

D. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements

    64. We expect the rules and procedures proposed in the 4th FNPRM 
will impose new or additional reporting or recordkeeping and/or other 
compliance obligations on small entities as well as other licensees 
with licenses in the 39 GHz band issued prior to the auction of new 
licenses proposed in the 4th FNPRM. The proposed rules and procedures 
would require parties with licenses in the 39 GHz band issued prior to 
the auction of new licenses proposed in the 4th FNPRM to provide 
certain information following the auction of the new licenses. 
Depending upon the licensee's individual circumstances, the information 
required may include directions regarding the cancellation of pre-
existing licenses, directions regarding a choice between satisfying 
winning bids for new licenses and receiving incentive payments, and 
directions regarding how any incentive payments are to be made.
    65. The projected reporting, recordkeeping, and other compliance 
requirements resulting from this proceeding would apply to all such 
licensees in the same manner. The Commission believes that applying the 
same rules equally to all entities in this context would promote 
fairness. We note that eight of the existing fourteen such licensees 
may be considered small entities. The Commission does not believe that 
the costs and/or administrative burdens associated with the rules would 
unduly burden small entities. Moreover, the proposed reverse auction 
would benefit any affected small entities by providing an opportunity 
to receive an incentive payment in exchange for spectrum usage rights.

E. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    66. The RFA requires an agency to describe any significant 
alternatives for small businesses that it has considered in reaching 
its proposed approach, which may include the following four 
alternatives (among others): (1) The establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rule for such small entities; (3) the 
use of performance rather than design standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for such small 
entities.
    67. The Commission does not believe that its proposed changes will 
have a significant economic impact on small entities. We believe that 
modifying the band plan from 200 megahertz to 100 megahertz channels in 
the 39 GHz, Upper 37 GHz, and 47 GHz bands will help small entities by 
making spectrum available in smaller license sizes that may be more 
attractive to small entities. We also believe the proposed mechanism 
for auctioning the 39 GHz and Upper 37 GHz bands would facilitate 
access to spectrum by small businesses and a wide variety of other 
entities, while preserving incumbent licensees' spectrum rights. 
However, to get a better understanding of costs and any burdens, we 
seek comment on whether any of the burdens associated with the proposed 
rules and policies can be minimized for small businesses. The 
Commission expects to more fully consider the economic impact and 
alternatives for small entities following the review of comments filed 
in response to the 4th FNPRM.

F. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    68. None.

IV. Ordering Clauses

    69. It is ordered, pursuant to the authority found in Sections 1, 
2, 3, 4, 5, 7, 301, 302, 303, 304, 307, 309, 310, and 316 of the 
Communications Act of 1934, 47 U.S.C. 151, 152, 153, 154, 155, 157, 
301, 302, 303, 304, 307, 309, 310, and 316, and Sec.  1.411 of the 
Commission's Rules, 47 CFR 1.411, that this 4th FNPRM is hereby 
adopted.
    70. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this 4th FNPRM, including the Initial Regulatory Flexibility 
Analysis, to the Chief Counsel for Advocacy of the Small Business 
Administration.

List of Subjects in 47 CFR Part 30

    Communications common carriers, Reporting and recordkeeping 
requirements, Communications equipment.

Federal Communications Commission.
Katura Jackson,
Federal Register Liaison Officer, Office of the Secretary.

Proposed Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission proposes to amend 47 CFR part 30 as follows:

PART 30--UPPER MICROWAVE FLEXIBLE USE SERVICE

0
1. The authority citation for part 30 continues to read as follows:

    Authority:  47 U.S.C. 151, 152, 153, 154, 301, 303, 304, 307, 
309, 310, 316, 332, 1302.

0
2. Amend Sec.  30.4 by:
0
a. Redesignating paragraphs (b) through (e) as paragraphs (c), (d), 
(f), and (g);
0
b. Adding and reserving new paragraphs (b) and (e); and
0
c. Revising redesignated paragraphs (d)(1), (f), and (g).
    The revisions and addition read as follows:


Sec.  30.4  Frequencies.

* * * * *
    (b) [Reserved]
* * * * *
    (d) * * *
    (1) New channel plan:

------------------------------------------------------------------------
                                                         Frequency band
                     Channel No.                          limits (MHz)
------------------------------------------------------------------------
1....................................................      38,600-38,700
2....................................................      38,700-38,800
3....................................................      38,800-38,900
4....................................................      38,900-39,000
5....................................................      39,000-39,100
6....................................................      39,100-39,200
7....................................................      39,200-39,300
8....................................................      39,300-39,400
9....................................................      39,400-39,500
10...................................................      39,500-39,600
11...................................................      39,600-39,700
12...................................................      39,700-39,800
13...................................................      39,800-39,900
14...................................................      39,900-40,000
------------------------------------------------------------------------

* * * * *

[[Page 42099]]

    (e) [Reserved]
    (f) 37-38.6 GHz band: 37,600-37,700; 37,700-37,800 MHz; 37,800-
37,900 MHz; 37,900-38,000 MHz; 38,000-38,100 MHz; 38,100-38,200 MHz; 
38,200-38,300 MHz; 38,300-38,400 MHz; 38,400-38,500 MHz, and 38,500-
38,600 MHz. The 37,000-37,600 MHz band segment shall be available on a 
site-specific, coordinated shared basis with eligible Federal entities.
    (g) 47.2-48.2 GHz band--47.2-47.3 GHz; 47.3-47.4 GHz; 47.4-47.5 
GHz; 47.5-47.6 GHz; 47.6-47.7 GHz; 47.7-47.8 GHz; 47.8-47.9 GHz; 47.9-
48.0 GHz; 48.0-48.1 GHz; and 48.1-48.2 GHz.

[FR Doc. 2018-17820 Filed 8-17-18; 8:45 am]
 BILLING CODE 6712-01-P