[Federal Register Volume 62, Number 169 (Tuesday, September 2, 1997)]
[Rules and Regulations]
[Pages 46211-46214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-23187]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 90

[PR No. 89-552; FCC 97-225]


Use of the 220-222 MHz Band by the Private Land Mobile Radio 
Service

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this Fourth Report and Order, the Commission repeals the 
``40-mile rule'' for all nationwide and non-nationwide Phase I 220 MHz 
Service licensees. The 40-mile rule provides that no Phase I 220 MHz 
licensee may be authorized to operate a station in a particular service 
category within 40 miles of an existing system authorized to that 
licensee in the same category unless ``the licensee can demonstrate 
that the additional system is justified on the basis of its 
communications requirements.'' This action is needed because the 40-
mile rule no longer serves its original purpose and repeal of the rule 
is expected to promote competition among all commercial mobile radio 
service providers.

EFFECTIVE DATE: October 2, 1997.

FOR FURTHER INFORMATION CONTACT: Eli Johnson, 202-418-1310.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Fourth Report and 
Order in PR Docket No. 89-552, FCC 97-225, adopted June 23, 1997, and 
released August 25, 1997. The complete text of the Fourth Report and 
Order is available for inspection and copying during normal business 
hours in the FCC Reference Center (Room 239), 1919 M Street, N.W., 
Washington, D.C., and also may be purchased from the

[[Page 46212]]

Commission's copy contractor, International Transcription Service, Inc. 
at (202) 857-3800, 1231 20th Street, N.W., Washington, D.C. 20036.

Synopsis of the Fourth Report and Order

    1. By this Fourth Report and Order, the Commission repeals the 
``40-mile rule'' contained in Section 90.739(a) of the Commission's 
Rules for all nationwide and non-nationwide Phase 1 220 MHz Service 
licensees. The Commission finds that, in light of the changes to the 
220 MHz Service adopted in the Third Report and Order in this 
proceeding (62 FR 16004, April 3, 1997) the 40-mile rule is unnecessary 
and no longer serves its original purpose of preventing the warehousing 
of spectrum.
    2. The 40-mile rule currently provides that no Phase I 220 MHz 
licensee may be authorized to operate a station in a particular service 
category within 40 miles of an existing system authorized to that 
licensee in the same category unless ``the licensee can demonstrate 
that the additional system is justified on the basis of its 
communications requirements (47 CFR Sec. 90.739(a)).'' The Commission 
adopted the 40-mile rule in a 1991 Report and Order (56 FR 19598, April 
29, 1991). At that time, 220 MHz licenses were awarded on a first-come, 
first-served basis with mutually exclusive applications filed on the 
same day assigned through a random selection process. Thus, the 40-mile 
rule was intended to prevent licensees from acquiring more spectrum 
than they needed within a particular geographic area and then 
warehousing that spectrum for possible future use.
    3. The Third Report and Order in this proceeding adopted a new 
licensing scheme for the 220-222 MHz band. Instead of being assigned on 
a first-come, first-served basis, in the future 220 MHz licenses will 
be initially awarded through competitive bidding based on Commission 
designated channel blocks and geographical areas. The only way to 
acquire a 220 MHz Service license, therefore, will be to purchase it 
through an auction or to acquire it through transfer or assignment from 
another licensee. In either case, 220 MHz Service licenses will be 
assigned to entities that have shown their willingness to pay market 
value for the licenses. Thus, the Third Report and Order did not limit 
the number of licenses that may be acquired by one entity, and the 
Commission allows licensees to place stations anywhere within a 
licensee's geographically licensed area. On April 5, 1996, the SMR 
Advisory Group, L.C. (SMR Group) filed ex parte comments in the 220 MHz 
proceeding, urging the Commission to eliminate the 40-mile rule with 
respect to all existing and future 220 MHz licensees.
    4. The Commission agrees with SMR Group that we should eliminate 
the 40-mile rule for all Phase I 220 MHz Service licensees. We conclude 
that, as applicable to Phase I licensees, the 40-mile rule represents 
an unnecessary regulatory burden. We believe that effective use of the 
spectrum can be achieved by relying on market conditions to control 
whether a licensee acquires a 220 MHz Service license because of 
current demand for more spectrum or an anticipated need for additional 
spectrum. Our decision to repeal the 40-mile rule applies to all Phase 
I 220 MHz licensees, including non-commercial entities, licensees 
providing commercial services, and 220 MHz public safety licensees.

Final Regulatory Flexibility Analysis

    5. As required by Section 603 of the Regulatory Flexibility Act of 
1980, 5 U.S.C. Sec. 603 (RFA), an Initial Regulatory Flexibility 
Analysis (IRFA) was incorporated in the Third Notice of Proposed 
Rulemaking (60 FR 46564, September 7, 1995) in this proceeding that 
considers the impact on small entities of the proposed changes being 
contemplated for the 220 MHz Service. The Commission sought written 
public comments on the proposals contained in that Notice of Proposed 
Rulemaking, including the IRFA. The Secretary sent a copy of that 
Notice of Proposed Rulemaking, including the IRFA, to the Chief Counsel 
for Advocacy of the Small Business Administration in accordance with 
Section 603(a) of the RFA.
    6. As required by the RFA, the Commission has prepared a Final 
Regulatory Flexibility Analysis (FRFA). The Secretary shall send a copy 
of the FRFA, along with the Fourth Report and Order, to the Chief 
Counsel for Advocacy of the Small Business Administration in accordance 
with Section 603(a) of the RFA. The FRFA is set forth below:
    7. Purpose of Rule Change: Repeal of the 40-mile rule for Phase I 
220 MHz licensees will allow for a more efficient use of the 220 MHz 
Service. It also eliminates unnecessary regulatory burdens on existing 
220 MHz licensees, enhances the competitive potential of 220 MHz 
Service in the mobile marketplace, and the development of spectrally 
efficient technologies. This decision will promote economic opportunity 
and ensure that new and innovative technologies are readily accessible 
to the American people.
    8. Summary of Issues Raised by the Public Comments in Response to 
the IRFA: The commenters did not raise any issues specifically with 
respect to the IRFA. We have, however, considered the economic impact 
of our decision to repeal the 40-mile rule for Phase I licensees who 
are small entities by considering the comments that were submitted by 
small businesses on the Commission's proposal. Eliminating the 40-mile 
rule for Phase I licensees reduces regulatory burden for all Phase I 
licensees, including small businesses. This conclusion is supported by 
the fact that all of the comments that were received on the 
Commission's proposal supported repeal of the rule.
    9. Description and Estimate of the Small Entities Involved: For the 
purposes of this Fourth Report and Order, the RFA defines a ``small 
business'' to be the same as a ``small business concern'' under the 
Small Business Act, 15 U.S.C. Sec. 632, unless the Commission has 
developed one or more definitions that are appropriate to its 
activities.1 Under the Small Business Act, a ``small 
business concern'' is one that: (1) is independently owned and 
operated; (2) is not dominant in its field of operation; and (3) meets 
any additional criteria established by the Small Business 
Administration (SBA).2
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    \1\ See 5 U.S.C. Sec. 601(3) (incorporating by reference the 
definition of ``small business concern'' in 5 U.S.C. Sec. 632).
    \2\ 15 U.S.C. Sec. 632.
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    10. There are approximately 2,800 Phase I 220 MHz licensees, many 
of whom may be small entities, and at least six equipment manufactures, 
three of whom may be small businesses, that are subject to the 
elimination of the 40-mile rule for Phase I licensees.
    11. The Commission has not developed a definition of small entities 
applicable to 220 MHz Phase I licensees, or equipment manufacturers for 
purposes of this FRFA, and since the RFA amendments were not in effect 
until the record in this proceeding was closed, the Commission did not 
request information regarding the number of small businesses that are 
associated with the 220 MHz Service. To estimate the number of Phase I 
licensees and the number of 220 MHz equipment manufacturers that are 
small businesses we shall use the relevant definitions provided by the 
Small Business Administration (SBA).
    12. There are approximately 2,800 non-nationwide Phase I licensees 
and 4 nationwide licensees currently authorized to operate in the 220 
MHz band. To estimate the number of such entities that are small 
businesses, we

[[Page 46213]]

apply the definition of a small entity under SBA rules applicable to 
radiotelephone companies. This definition provides that a small entity 
is a radiotelephone company employing fewer than 1,500 
persons.3 However, the size data provided by the SBA do not 
allow us to make a meaningful estimate of the number of 220 MHz 
providers that are small entities because they combine all 
radiotelephone companies with 500 or more employees.4 We 
therefore use the 1992 Census of Transportation, Communications, and 
Utilities, conducted by the Bureau of the Census, which is the most 
recent information available. Data from the Bureau of the Census' 1992 
study indicate that only 12 out of a total 1,178 radiotelephone firms 
which operated during 1992 had 1,000 or more employees--and these may 
or may not be small entities, depending on whether they employed more 
or less than 1,500 employees.5 But 1,166 radiotelephone 
firms had fewer than 1,000 employees and therefore, under the SBA 
definition, are small entities. However, we do not know how many of 
these 1,166 firms are likely to be involved in the 220 MHz Service.
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    \3\ 13 CFR Sec. 121.201, Standard Industrial Classification 
(SIC) Code 4812.
    \4\ U.S. Small Business Administration 1992 Economic Census 
Employment Report, Bureau of the Census, U.S. Department of 
Commerce, Table 3, SIC Code 4812 (radiotelephone communications 
industry data adopted by the SBA Office of Advocacy).
    \5\ U.S. Bureau of the Census, U.S. Department of Commerce, 1992 
Census of Transportation, Communications, and Utilities, UC92-S-1, 
Subject Series, Establishment and Firm Size, Table 5, Employment 
Size of Firms; 1992, SIC Code 4812 (issued May 1995).
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    13. We anticipate that at least six radio equipment manufacturers 
will be affected by our decision in this proceeding. According to the 
SBA's regulations, a radio and television broadcasting and 
communications equipment manufacturer must have 750 or fewer employees 
in order to qualify as a small business concern.6 Census 
Bureau data indicate that there are 858 U.S. firms that manufacture 
radio and television broadcasting and communications equipment, and 
that 778 of these firms have fewer than 750 employees and would 
therefore be classified as small entities.7 We do not have 
information that indicates how many of the six radio equipment 
manufacturers associated with this proceeding are among these 778 
firms. However, because three of these manufacturers (Motorola, 
Ericsson and E.F. Johnson) are major, nationwide radio equipment 
manufacturers, we conclude that these manufacturers would not qualify 
as small business.
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    \6\ 13 CFR Sec. 121.201, (SIC) Code 3663.
    \7\ U.S. Dept. of Commerce, 1992 Census of Transportation, 
Communications and Utilities (issued May 1995), SIC category 3663.
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    14. Summary of the Projected Reporting, Recordkeeping, and Other 
Compliance Requirements: By repealing the 40-mile rule for all Phase I 
220 MHz licensees, the Commission reduces reporting, recordkeeping and 
compliance requirements. These licensees will no longer have to file a 
waiver request with the Commission in order to operate two systems in 
the same service category that are less than 40 miles apart. The 
Commission has found the 40-mile rule to no longer serve the public 
interest and by repealing this rule the Commission reduces unnecessary 
regulatory burden.
    15. Significant Alternatives and Steps Taken by Agency to Minimize 
the Significant Economic Impact on a Substantial Number of Small 
Entities Consistent With Stated Objects: The Commission's chief 
objectives in adopting the Fourth Report and Order are to ensure a 
regulatory plan for the 220 MHz Service that will allow for the 
efficient licensing and use of the service, to eliminate unnecessary 
regulatory burdens, to enhance the competitive potential of the 220 MHz 
Service in the mobile services marketplace, to provide a wide variety 
of radio services to the public, and to continue to provide a home for 
the development of spectrally efficient technologies. The action taken 
in the Fourth Report and Order achieves these objectives by repealing a 
Commission regulation that had previously been adopted. The elimination 
of the 40-mile rule for Phase I licensees demonstrates the Commission's 
commitment to continually review its regulations and eliminate rules 
that are outdated.
    16. The Commission received seven sets of comments on its tentative 
conclusion to repeal the 40-mile rule for Phase I licensees. All the 
comments support the elimination of the 40-mile rule for Phase I 
licensees. Five of the comments were submitted by what are mostly 
likely small businesses.
    17. In its comments, ComTech Communications, Inc. urges the 
Commission to repeal the 40-mile rule. ComTech argues that the rule is 
inconsistent with the Commission's 45 MHz CMRS spectrum cap, that 
regulatory parity requires the elimination of the rule and elimination 
of the rule will reduce administrative costs for Phase I licensees.
    18. Likewise, Securicor Radiocoms Ltd. urges the Commission to 
eliminate the 40-mile rule. Securicor argues that by eliminating the 
rule Phase I 220 MHz licensees can expand the availability and the 
diversity of their service offerings. In addition, Securicor states 
that elimination of the rule will permit Phase I 220 MHz licensees to 
realize the benefits of economies of scale and will enhance the ability 
of 220 MHz licensees to expand and participate in Phase II auctions. 
Securicor also argues that the 40-mile rule has outlived its 
usefulness.
    19. Incom Communications Corporation and Narrowband Network Systems 
argue that the 40-mile rule no longer serves a legitimate purpose and 
regulatory parity requires the elimination of the rule. Roamer One, 
Inc. concurs that the 40-mile rule no longer serves a valid regulatory 
purpose and requests that the Commission eliminate the rule on an 
expedited basis. E.F. Johnson Company, Inc. fully supports the 
elimination of the rule.
    20. American Mobile Telecommunications Association, Inc (AMTA) 
states that it strongly supports the Commission's conclusion to 
eliminate the 40-mile rule. AMTA argues that retaining the 40-mile rule 
is inconsistent with the Commission's rules governing other CMRS 
services and is inconsistent with the Commission's move toward flexible 
regulation.
    21. The Commission's decision to repeal the 40-mile rule for all 
Phase I 220 MHz licensees, therefore, is supported by the comments it 
received on its proposal.
    22. Report to Congress: The Commission shall send a copy of this 
FRFA, along with this Fourth Report and Order, in a report to Congress 
pursuant to 5 U.S.C. Sec. 801(a)(1)(A). A copy of this FRFA will also 
be published in the Federal Register.

Ordering Clauses

    23. Authority for issuance of this Fourth Report and Order is 
contained in Sections 4(i), 303(r), 309(j), and 332 of the 
Communications Act of 1934, 47 U.S.C. Secs. 154(i), 303(r), 309(j), 
332.
    24. Accordingly, it is ordered that Sec. 90.739 of the Commission's 
Rules, 47 CFR Sec. 90.739, is amended as set forth below, effective 
October 2, 1997.
    25. It is further ordered that the Secretary shall send a copy of 
this Fourth Report and Order, including the Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration in accordance with Section 603(a) of the 
Regulatory Flexibility Act, Public Law 96-354, 94 Stat. 1164, 5 U.S.C. 
Sec. 601 et seq. (1980).

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List of Subjects in 47 CFR Part 90

    Business and industry, Radio.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Rule Changes

    Part 90 of title 47 of the Code of Federal Regulations is amended 
as follows:

PART 90--PRIVATE LAND MOBILE RADIO SERVICES

    1. The authority citation for Part 90 continues to read as follows:
    Authority; Secs. 4, 251-2, 303, 309, and 332, 48 Stat. 1066, 1082, 
as amended; 47 U.S.C. 154, 251-2, 303, 309 and 332, unless otherwise 
noted.

    2. Section 90.739 is revised to read as follows:


Sec. 90.739  Number of systems authorized in a geographical area.

    There is no limit on the number of licenses that may be authorized 
to a single licensee.

[FR Doc. 97-23187 Filed 8-29-97; 8:45 am]
BILLING CODE 6712-01-P