[Federal Register Volume 59, Number 159 (Thursday, August 18, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-19990]


[[Page Unknown]]

[Federal Register: August 18, 1994]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 22 and 90

[GN Docket No. 94-90, FCC 94-202]

 

Eligibility for the Specialized Mobile Radio Services and Radio 
Services in the 220-222 MHz Land Mobile Band and Use of Radio Dispatch 
Communications

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rule making.

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SUMMARY: In this Notice of Proposed Rule Making (NPRM), the Commission 
proposes to eliminate the rules that now prohibit wireline telephone 
carriers from holding licenses in the Specialized Mobile Radio (SMR) 
service and the commercial 220-222 MHz land mobile band. The NPRM also 
proposes to eliminate the current prohibition on the provision of 
dispatch service by cellular licensees and other licensees in the 
Public Mobile Services.

DATES: Comments are due by September 21, 1994 and reply comments are 
due by October 6, 1994.

ADDRESSES: Federal Communications Commission, Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT:
Kathleen O'Brien Ham or Susan McNeil, Private Radio Bureau, Land Mobile 
and Microwave Division, (202) 632-2443.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's NPRM 
in GN Docket No. 94-90, adopted August 2, 1994 and released August 11, 
1994. The full text of Commission decisions are available for 
inspection and copying during normal business hours in the FCC Docket 
Branch (Room 230), 1919 M Street, N.W., Washington, DC. The complete 
text of this decision may also be purchased from the Commission's copy 
contractor, International Transcription Service, Inc., (202) 857-3800, 
2100 M Street, N.W., Washington, DC 20554.

Synopsis of the Notice of Proposed Rule Making

I. Background

A. Wireline Restrictions

    1. When the Commission established the SMR service in 1974, it 
elected to prohibit wireline telephone common carriers from holding SMR 
base station licenses. Because of the dominance of the established 
wireline carriers in the 1970's, the Commission viewed the prohibition 
on wireline entry as consistent with promoting competition in the 
fledgling SMR industry. The Commission has also stated that the 
wireline prohibition was intended to ensure that SMRs would be 
available as a business opportunity for small entrepreneurs and to 
reduce incentives for wireline carriers to engage in discriminatory 
interconnection practices.
    2. When 220-222 MHz service was established in 1991, the Commission 
adopted an identical restriction on wireline eligibility for commercial 
licenses in that service. The Commission indicated that the rationale 
for excluding wirelines from SMR licensing also served as the basis for 
the 220 MHz limitation.
    3. In 1986, the Commission issued a Notice of Proposed Rule Making 
in PR Docket No. 86-3 that proposed to eliminate the SMR wireline 
restriction. The proceeding was terminated in 1992 on the grounds that 
the record has become stale. The Commission stated that the wireline 
restriction should be retained at least until the Commission could more 
fully evaluate ``the competitive potential of private land mobile 
services vis-a-vis common carrier land mobile providers'' so as ``to 
preserve a climate favorable to the continued development of private 
land mobile competitors.''

B. Dispatch Prohibition

    4. The Commission currently prohibits common carriers licensed 
after January 1, 1982, including all cellular licensees, from offering 
dispatch services. The Commission has since construed the prohibition 
on dispatch services to include any transmission on cellular 
frequencies that routes communications through a dispatcher, as opposed 
to through a cellular switch (i.e., with no intervention by a 
dispatcher). On the other hand, the Commission has allowed ``dispatch-
type'' communications to be offered through the cellular switched 
network as long as the communication is not directly between a 
dispatcher and end user.

II. Discussion

A. Licensee Eligibility in SMR and 220 MHz Commercial Service

    5. In evaluating its present wireline restrictions, the Commission 
tentatively concludes that there is no longer a need for the SMR 
wireline ban or the commercial 220 MHz wireline restriction in today's 
competitive mobile service marketplace. First, the Commission notes 
that the risk of wireline carriers being able to cause competitive harm 
if allowed to enter the SMR market has diminished in recent years. When 
the SMR wireline ban was adopted 20 years ago, mobile services were in 
their infancy and telecommunications was dominated by wireline carriers 
under the control of AT&T. Since that time, the breakup of AT&T and the 
rapid growth of mobile services have combined to create an environment 
in which wireline carrier participation in mobile services, including 
participation by the post-divestiture BOCs, has the potential to 
increase competition rather than impede it.
    6. In the Broadband PCS docket, the Commission recently concluded 
that wireline entities should be allowed to hold broadband PCS licenses 
without restriction (except to the extent such entities also hold 
cellular interests). In that proceeding, the Commission determined that 
wireline participation would produce significant economies of scope 
between wireline and PCS networks, which, in turn, would promote rapid 
development of PCS and yield a broader array of PCS services at lower 
costs to consumers. The Commission has similarly concluded that LECs 
should be allowed to participate in the provision of narrowband PCS 
service without restriction. The Commission notes that its conclusions 
with respect to wireline entry into broadband and narrowband PCS are 
also potentially applicable to SMR and 220 MHz commercial service.
    7. The Commission also questions whether the wireline restriction 
continues to be necessary to protect against competitive harm. THe 
wireline restrictions have served to eliminate any incentive for LECs 
to: (1) Discriminate in the offering of interconnection to 
nonaffiliated SMR licensees, or (2) use their market power in the local 
exchange market to cross-subsidize SMR services, thereby undercutting 
potential competition. Even if the wireline prohibition is eliminated, 
however, other regulatory safeguards exist and can be enforced to 
prevent wireline from engaging in these forms of anti-competitive 
behavior.
    8. With respect to discrimination in interconnection, Section 201 
of the Communications Act mandates that a carrier must provide 
reasonable interconnection to any carrier that requests it. In 
addition, Section 332(c)(1)(B) of the Communications Act, as amended by 
the Budget Act, requires the Commission pursuant to Section 201 to 
order common carriers to interconnect with CMRS providers (which 
includes any SMR or commercial 220 MHz licensee utilizing 
interconnection) on reasonable request. In its Order implementing this 
provision, the Commission determined that LECs should provide 
reasonable interconnection to all CMRS providers in a manner that is 
consistent with past requirements for cellular providers. In addition, 
the Commission requires LECs to offer interconnection to PMRS 
providers.
    9. The Commission also notes that independent accounting safeguards 
exist to protect against cross-subsidization in the event of wireline 
entry into the SMR service. In the CMRS docket, the Commission 
indicated that the joint cost and affiliate transaction rules would 
apply to all CMRS providers with LEC affiliates. These rules require 
LECs to maintain procedures to separate the costs of the regulated 
activities from those of their activities that are classified as 
nonregulated for federal accounting purposes, and to account for their 
transactions with their nonregulated affiliates. Since most SMRs and 
commercial 220 MHz licensees fall inside the CMRS definition, these 
existing and applicable accounting rules should help prevent cross-
subsidization.
    10. Another reason for eliminating the wireline prohibition is that 
the SMR industry is sufficiently well-established that wireline entry 
is unlikely to chill further development of the service. Although SMR 
operations today are still relatively small in comparison to cellular 
operations, most available SMR spectrum has been licensed in 
metropolitan areas. Thus, any threat that wirelines might obtain a 
substantial portion of SMR spectrum and thereby hinder the development 
of SMR service by non-wireline carriers is substantially diminished. As 
a practical matter, wirelines are likely to be largely limited to 
entering the SMR business by acquiring existing SMR businesses, and all 
such transfers would be subject to Commission review under existing 
transfer and control rules.
    11. The Commission reached a similar tentative conclusion with 
respect to wireline participation in commercial 220 MHz service. 
Although 220 MHz service was established more recently than SMR, 
substantial licensing has occurred and the service is closed to new 
applicants for the time being. Thus, wireline entry into commercial 220 
MHz service would be likely to be gradual as the service develops, and 
would be subject to case-by-case review by the Commission. In addition, 
a more open eligibility policy may be suitable because of the 
narrowband nature of 220 MHz service. In establishing regulations for 
the licensing of narrowband PCS, for example, the Commission concluded 
that LECs should be allowed to participate in the provision of 
narrowband PCS service without restriction. The Commission reasoned 
that narrowband PCS was sufficiently disparate from any LEC offering to 
make negligible any ability these carriers might have to exert undue 
market power or restrain trade. The Commission solicits comment on 
whether a similar conclusion is justified in the case of 220 MHz 
service.
    12. Additionally, repeal of the wireline ban could promote 
opportunities for small entrepreneurs as well as infuse new capital and 
expertise into the mobile services marketplace. In its request for rule 
making, Polar Communications suggested that the overwhelming majority 
of companies shut out of the SMR business by the wireline ban are 
small, rural telephone companies with capitalizations that are small in 
comparison to many dominant SMR operators. Repeal of the ban could 
therefore serve to further competition in the SMR market by increasing 
the number of small business participants in the service. Future 
auctions of SMR spectrum could provide additional opportunities for 
small business entry into SMRS through competitive bidding incentives 
established for small businesses, minorities, and rural telephone 
companies.
    13. In addition, wireline entry could infuse new capital and 
expertise into the mobile services marketplace. The SMR industry is in 
transition, evolving from stand-alone analog to wide-area networks. 220 
MHz is also at an important stage of technological development. During 
this time frame, wirelines can be a key source of capital and expertise 
for the development of new technological advances that will benefit 
these services.
    14. The Commission concludes that the wireline restrictions have 
been outmoded by changes in the mobile services marketplace since 1974 
and that there may be cause to eliminate these restrictions. Commenters 
are nevertheless invited to present any views that justify retaining 
the wireline restrictions. In particular, the Commission is interested 
in any concerns commenters may have about the potential ability of 
wirelines to unfairly influence competition in the mobile services 
marketplace. In addition, commenters may wish to address the 
alternative of retaining the restrictions for one service and not the 
other.
    15. In proposing to allow wirelines to enter the SMR and commercial 
220 MHz markets, the Commission emphasizes its intent to vigorously 
enforce statutory and regulatory safeguards discussed above that 
prohibit wirelines from engaging in discriminatory interconnection 
practices. Commenters are encouraged to address how to best achieve 
this objective.
    16. Also, assuming the wireline restrictions are repealed, the 
Commission seeks comment on whether existing accounting safeguards 
applicable to LECs with CMRS operations are sufficient to protect 
against cross-subsidization and discriminatory pricing, or whether 
structural separation requirements should also be imposed. In the 
Broadband PCS Second Report and Order, the Commission confirmed that 
the accounting safeguards would apply to PCS but concluded that no new 
subsidiary rules should be required because it would seriously 
undermine the ability of LECs to take advantage of their potential 
economics of scope and would jeopardize other public interest benefits 
of wireline participation in PCS. Commenters should address whether 
added structural separation requirements would similarly undermine the 
potential public interest benefits of wireline entry into the SMR and 
commercial 220 MHz markets.
    17. Finally, assuming that the wireline restriction is eliminated, 
the issue arises whether there is a need to impose other eligibility 
restrictions on SMR and commercial 220 MHz applicants to address 
present day competitive concerns. In particular, the Commission has 
recognized in other contexts that it cannot yet determine that cellular 
licensees lack market power in the mobile services market. The 
Commission will defer consideration of whether this market power is 
sufficient to justify restrictions on cellular eligibility for SMR or 
220 MHz licensing pending a decision in General Docket 93-252 on a 
proposal to impose a general limit on the amount of spectrum that any 
CMRS licensee may acquire in a given geographic market.

B. Common Carrier Dispatch Prohibition

    18. The Commission proposes to amend its rules to permit all mobile 
service common carriers to provide dispatch service. A number of 
parties have indicated in the past that repeal of the dispatch ban 
would enhance competition in the dispatch market and thereby provide 
consumers with expanded choice. The Commission tentatively agrees with 
these views and therefore is included to repeal the present prohibition 
entirely. Commenters should address the Commission's conclusion that 
repeal of the dispatch ban will lead to more innovative service 
offerings and lower costs for dispatch customers. The Commission also 
seeks comment on whether repeal of the ban will increase opportunities 
for dispatch customers to obtain service from commercial vendors as an 
alternative to relying on internal systems or systems shared with other 
eligible users.
    19. The Commission also encourages commenters to provide data on 
the current state of competition in the dispatch market, including the 
level of participation by small businesses. Commenters are also asked 
to address the potential for participation in the dispatch market by 
mobile service common carriers, including (1) types of dispatch 
services that common carrier licensees are most likely to offer, (2) 
any technical advantages or disadvantages to offering dispatch service 
on a common carrier mobile service system, and (3) the effect of common 
carrier entry on competition in the dispatch market. Commenters should 
further consider whether common carriers operating in the dispatch 
market could engage in discriminatory pricing or cross-subsidization 
activities that would place dispatch competitors at a disadvantage.
    20. If the Commission concludes that immediate lifting of the 
dispatch prohibition could have an anti-competitive impact, one 
alternative would be to ``sunset'' the rule at some point in the 
future. For example, the Commission could delay repeal of the rule 
until August 10, 1996, three years from the date the Budget Act 
amendments became law. This effective date would coincide with the 
conclusion of the three year transition period provided in the Budget 
Act for existing private land mobile licensees to adjust to regulation 
as CMRS providers. A sunset provision would also effectively defer 
cellular participation in the dispatch market and thereby give the 
Commission more time to evaluate information concerning the state of 
competition in the dispatch market. The Commission seeks comment on 
this alternative.
    21. Another alternative to outright repeal of the ban on common 
carrier dispatch service would be to allow mobile common carrier 
licensees to provide dispatch service only on a secondary basis or to 
impose a limit on the amount of system capacity that common carrier 
licensees may devote to dispatch service. Consumers appear to identify 
cellular as primarily a two-way service, therefore cellular providers 
may in any case be reluctant to divert system capacity from voice to 
dispatch service. On the other hand, if dispatch evolves from a 
primarily analog service to a primarily digital service, cellular 
licensees may have ample capacity to provide both radiotelephone and 
dispatch. In light of these factors, the Commission seeks comment on 
whether imposing limits on cellular dispatch is necessary or practical.
    22. Finally, the Commission asks commenters to consider the 
treatment of dispatch offered by common carriers other than land mobile 
service providers, e.g. aviation, marine, and mobile satellite 
licensees who provide common carrier service. These categories of 
common carriers were not previously prohibited from offering dispatch 
service under old Section 332 of the Communications Act, which applied 
only to land mobile services. Because Section 332 as amended applies to 
all mobile services, however, an issue arises whether these categories 
of licensees now fall within the scope of the prohibition absent 
further Commission action. The Commission believes that Congress did 
not intend to extend the dispatch ban to non-land mobile licensees but 
meant simply to repeat and incorporate its old prohibition against 
common carrier land mobile service providers offering dispatch without 
modification and to give the Commission authority to repeal the 
prohibition in whole or in part. The Commission seeks comment on this 
view.

III. Procedural Matters

    23. Initial Regulatory Flexibility Analysis. Pursuant to Section 
603 of the Regulatory Flexibility Act, the Commission has prepared an 
Initial Regulatory Flexibility Analysis (IRFA) of the expected impact 
of the proposed rule changes on small entities. Written public comments 
are requested on the IRFA.
    I. Reason for Action. This rule making proceeding was initiated to 
solicit comment on proposals to amend Sections 90.603(c), 90.703, 
22.519(a) and 22.911(d) of the Commission's rules. The basic proposals 
are (1) Repeal the ban on wireline telephone carrier eligibility for 
Specialized Mobile Radio Service (SMR) and commercial 220-222 MHz 
(commercial 220 MHz) land mobile service and (2) permit all commercial 
mobile service providers to offer dispatch service in competition with 
SMR systems.
    II. Objectives. In making the above proposals, the Commission 
intends to promote competition, growth and innovation at a time when 
the mobile services marketplace is undergoing regulatory changes.
    III. Legal Basis. The proposed action is authorized under Sections 
3(n), 4(i), 303(r), 332(c), and 32(d) of the Communications Act of 
1934, 47 U.S.C. 153(n), 154(i) and 303(r), 332(c) and 332(d), as 
amended.
    IV. Reporting, Recordkeeping and Other Compliance Requirements. 
None.
    V. Federal Rules Which Overlap, Duplicate or Conflict With Rules. 
None.
    VI. Description, Potential Impact, and Number of Small Entities 
Involved. Many small entities could be affected by the proposals 
contained in the Notice. The full extent of the impact cannot be 
predicted until the issues presented in this proceeding are resolved. 
The Commission will evaluate comments in response to the Notice and 
will set forth its findings on the impact of the rule changes on small 
entities in the Final Regulatory Flexibility Analysis.
    VII. Significant Alternatives Minimizing the Impact on Small 
Entities Consistent with the Stated Objectives. The Notice solicits 
comments on the alternative described above. Any additional significant 
alternatives presented in the comments will also be considered.
    24. Ex Parte Rules/Non-Restricted Proceeding. This is a non-
restricted notice and comment rule making proceeding. Ex parte 
presentations are permitted except during the Sunshine Agenda period, 
provided that they are disclosed as provided in the Commission's rules. 
See generally 47 CFR 1.1202, 1.1203, 1.120(a).
    25. Comment Period. For filing requirements, see generally 47 CFR 
1.415, 1.419. To file formally in this proceeding, participants must 
file an original and four copies of all comments, reply comments, and 
supporting materials. If you want each Commissioner to receive a 
personal copy of your comments, you must file an original and nine 
copies. Send comments and reply comments to the Office of the 
Secretary, Federal Communications Commission, Washington, D.C. 20554. 
In addition, commenters are requested to submit courtesy copies to the 
Chief, Land Mobile and Microwave Division, Private Radio Bureau, 2025 M 
Street, N.W., Room 5202, Washington, D.C. 20554. Comments and reply 
comments will be available for public inspection during regular 
business hours in the FCC Reference Center (Room 239) at the 
Commission's headquarters at 1919 M Street, N.W., Washington, D.C.
    26. Paperwork Reduction Act: No significant impact.

List of Subjects

47 CFR Part 22

    Public mobile services; Radio.

47 CFR Part 90

    Private land mobile services; Radio.
William F. Caton,
Acting Secretary.
[FR Doc. 94-19990 Filed 8-17-94; 8:45 am]
BILLING CODE 6712-01-M