FCC: The Local Multipoint Distribution Service

Published by the Government Accountability Office on 1997-10-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Office of the General Counsel


      October 1, 1997

      The Honorable John McCain
      The Honorable Ernest F. Hollings
      Ranking Minority Member
      Committee on Commerce, Science, and Transportation
      United States Senate

      The Honorable Thomas J. Bliley, Jr.
      The Honorable John D. Dingell
      Ranking Minority Member
      Committee on Commerce
      House of Representatives

      Subject:   Federal Communications Commission: The Local Multipoint Distribution

      Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report
      on a major rule promulgated by the Federal Communications Commission
      (Commission), entitled "The Local Multipoint Distribution Service" (CC Docket
      No. 92-297; FCC 97-323). We received the rule on September 17, 1997. It was
      published in the Federal Register as a final rule on September 17, 1997. 62 Fed.
      Reg. 48787.

      The final rule modifies the competitive bidding rules adopted in the Second Report
      and Order1 in CC Docket No. 92-297 by: (1) not making installment payments
      available; (2) adopting an additional "very small business" category and
      redesignating as "entrepreneurs" the existing category of entities with average gross
      revenues for the preceding 3 years of more than $40 million but not more than
      $75 million; and (3) adopting a bidding credit of 45 percent for very small

       This major rule was the subject of our report to Congress entitled "Redesignating
      the 27.5-29.5 GHz Frequency Band, Reallocating the 29.5-30.0 GHz Frequency Band,
      and Establishing Rules and Policies for Local Multipoint Distribution Service and for
      Fixed Satellite Services." (OGC-96-44, B-274381, Sept. 13, 1996)

businesses and increasing the bidding credits available to small businesses and
entrepreneurs to 35 percent and 25 percent, respectively (from their previous
respective levels of 25 percent and 15 percent).

Enclosed is our assessment of the Commission's compliance with the procedural
steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the
rule. Our review indicates that the Commission complied with the applicable

If you have any questions about this report, please contact James Vickers, Assistant
General Counsel, at (202) 512-8210. The official responsible for GAO evaluation
work relating to the Federal Communications Commission is John Anderson,
Director of Transportation Issues. Mr. Anderson can be reached at (202) 512-2834.

Robert P. Murphy
General Counsel


cc: Mr. Peter W. Herrick
    AMD-Performance Evaluation and
     Records Management
    Federal Communications Commission

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       ANALYSIS UNDER 5 U.S.C. § 801(a)(1)(B)(i)-(iv) OF A MAJOR RULE
                                ISSUED BY
                    (CC Docket No. 92-297; FCC 97-323)

(i) Cost-benefit analysis

The Commission, in its report to our Office, states that it was not required to
prepare and did not prepare a cost-benefit analysis of the final rule.

(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C. §§ 603-605,
607, and 609

The Commission prepared a Final Regulatory Flexibility Analysis (FRFA) in
connection with the Second Report and Order which this rule revises. Therefore,
the Commission incorporates the prior FRFA into this rulemaking and supplements
it by addressing the impact of the matters considered in this final rule.

The Commission discusses the impact of the category of "very small businesses"
that is established in the final rule. While the Commission cannot accurately
predict how many entities will qualify for this status, in the FRFA it utilized the
estimate of the number of applicants that are small businesses for Multipoint
Distribution Service (MDS), which uses the same standards as the Local Multipoint
Distribution Service. The number of applicants for the MDS auction totaled 154, of
which 141 (92 percent) were small businesses. For the broadband PCS F Block
auction, which had a "very small business" category, 53.9 percent of the applicants
were very small businesses.

In order to further minimize the impact on small entities, the Commission has
already eliminated installment payment plans, it has determined that the raising of
bidding credits for small entities and the addition of the above-mentioned category
of "very small business" will ensure provision of the new services to the public and
assist small entities.

(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform
Act of 1995, 2 U.S.C. §§ 1532-1535

As an independent regulatory agency, the Commission is not subject to title II of the
Unfunded Mandates Reform Act of 1995.

(iv) Other relevant information or requirements under acts and executive orders

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.

The final rule was promulgated using the notice and comment procedures in
5 U.S.C. § 553. The Commission issued a notice of proposed rulemaking by
publication in the Federal Register on April 7, 1997. 62 Fed. Reg. 16514.

The comments the Commission received in response to this notice and any actions
it took as a result of the comments are discussed in the final rulemaking order.

Paperwork Reduction Act, 44 U.S.C. §§ 3501-3520

The final rule does not contain any new or modified information collection
requirements subject to review by the Office of Management and Budget under the
Paperwork Reduction Act.

Statutory authorization for the rule

The final rule was promulgated pursuant to sections 4(i), 303(r) and 309(j) of the
Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 303(r) and 309(j).

Executive Order No. 12866

The rule, promulgated by an independent regulatory agency, is not subject to the
review requirements of Executive Order No. 12866.

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