[Federal Register Volume 62, Number 40 (Friday, February 28, 1997)]
[Rules and Regulations]
[Pages 9103-9110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-4870]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 22
[CC Docket No. 90-6; FCC 96-56]
Amendment of Part 22 of the Commission's Rules To Provide for
Filing and Processing of Applications for Unserved Areas in the
Cellular Service and To Modify Other Cellular Rules
AGENCY: Federal Communications Commission.
ACTION: Further memorandum opinion and order on reconsideration.
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SUMMARY: In this Memorandum Opinion and Order on Reconsideration, the
Commission denies the petitions for reconsideration and petitions for
partial reconsideration of the Commission's Third Report and Order and
Memorandum Opinion and Order on Reconsideration 57 FR 53446, November
10, 1992 in this Docket.
FOR FURTHER INFORMATION CONTACT: Ramona Melson, Commercial Wireless
Division, Wireless Telecommunications Bureau, (202) 418-7240.
SUPPLEMENTARY INFORMATION: This Further Memorandum Opinion and Order on
Reconsideration in CC Docket No. 90-6, adopted on February 13, 1996 and
released on January 31, 1997, is available for inspection and copying
during normal business hours in the FCC Reference Center, Room 575,
2000 M Street N.W, Washington, D.C. The complete text may also be
purchased from the Commission's copy contractor, International
Transcription Service, Inc. 2100 M Street, N.W., Suite 140, Washington,
D.C. 20037, (202) 857-3800. Synopsis of Further Memorandum Opinion and
Order on Reconsideration
I. Introduction
1. By these actions, we respond to petitions for reconsideration
and partial reconsideration of the Third Report and Order on
Reconsideration and Memorandum Opinion and Order on Reconsideration 58
FR 27213, May 7, 1993 in this docket. Applicants Against Lottery Abuses
(AALA) and the Committee for Effective Cellular Rules (CECR) have filed
petitions for reconsideration of the Third Report and Order, 58 FR
27213, May 7, 1993 and Cellular Information Systems, Inc., Debtor in
Possession (CIS), has filed a petition for partial reconsideration (CIS
Petition) of the Third Report and Order 58 FR 27213, May 7, 1993. In
addition, we have before us five petitions for reconsideration and
three petitions for partial reconsideration of our Memorandum Opinion
and Order on Reconsideration 58 FR 11799, March 1, 1993. We also
received a request by PetroCom and Coastel for expedited action on the
CIS petition (PetroCom/Coastel Request). For the reasons stated below,
we deny the requests for reconsideration and partial reconsideration of
the Third Report and Order and the Memorandum Opinion and Order 58 FR
27213, May 7, 1993. We dismiss the request for expedited action as
moot.
2. As a related matter, we note that PetroCom and Coastel
(collectively, ``petitioners'') filed petitions for review with the
United States Court of Appeals for the District of Columbia Circuit
challenging Sections 22.903(a) and 22.903(d)(1) of the Commission's
rules. Petitioners contend, inter alia, that the Commission promulgated
a consent requirement for de minimis extensions under Section
22.903(d)(1) without providing proper notice and opportunity for
comment as required under the Administrative Procedure Act (APA), 5
U.S.C. Sec. 553. On May 13, 1994, the court denied the petition with
respect to petitioners' claim that proper notice and comment was not
provided because another party, CIS, had already filed a petition for
reconsideration with the Commission alleging similar violations and the
petition had not yet been resolved. This Further Memorandum Opinion and
Order addresses the notice and comment issues raised by the CIS
petition and the comments filed by petitioners in support of the CIS
petition. Other issues raised by petitioners and the court will be
addressed in separate orders.
II. Background
3. The first licensee of a cellular radio system authorized on a
channel block in
[[Page 9104]]
each cellular market is afforded a five-year ``build-out'' period
during which it has the exclusive right to construct and operate
cellular facilities on its channel block within the market. We
initiated this proceeding to adopt rules for the acceptance, processing
and selection of applications for new cellular systems proposing
service to unserved areas. In our First Report and Order and Memorandum
Opinion and Order on Reconsideration 56 FR 58503, November 20, 1991 in
this docket, we established rules and procedures for processing and
granting applications to operate cellular systems in areas as yet
unserved upon expiration of the five-year ``build-out'' period. On the
same day that we adopted the First Report and Order 56 FR 58503,
November 20, 1991, we also adopted a Further Notice of Proposed Rule
Making 56 FR 58529, November 20, 1991 in this docket which proposed
changes to various cellular rules and requested additional comments on
a number of issues, as a result of earlier comments filed in this
docket and not resolved by the First Report and Order 56 FR 58503,
November 20, 1991. On April 9, 1992, we released our Second Report and
Order 57 FR 13646, April 17, 1992 in this docket, in which we adopted
rules to determine the boundaries of Cellular Geographic Service Areas
(CGSAs) by the use of a mathematical formula, with the objective of
creating boundaries that would more closely approximate actual service
to the public. The Second Report and Order 57 FR 13646, April 17, 1992
also modified the authorizations of existing cellular systems to
redefine the boundaries of their CGSAs in accordance with the new
standard. Our Third Report and Order and Memorandum Opinion and Order
on Reconsideration 58 FR 27213, May 7, 1993 in this docket dealt with a
variety of issues governing our licensing of cellular radio facilities,
specifically those issues set forth in the Further Notice 56 FR 58529,
November 20, 1991 not previously addressed in the Second Report and
Order 57 FR 13646, April 17, 1992. The Third Report and Order 58 FR
27213, May 7, 1993 also disposed of ten petitions for reconsideration
of our First Report and Order 56 FR 58503, November 20, 1991. Petitions
for reconsideration of the Second Report and Order 57 FR 13646, April
17, 1992 were addressed in the 1993 Memorandum Opinion and Order on
Reconsideration 58 FR 11799, March 1, 1993 in this docket.
III. Discussion
A. Petitions for Reconsideration of the Third Report and Order Lottery
Rules
4. In the Third Report and Order 58 FR 27213, May 7, 1993, we
adopted Sections 22.927 and 22.928 of our rules. Under these rules, an
applicant or a petitioner may receive only the legitimate and prudent
expenses incurred in prosecuting its application or pleading in
exchange for agreeing to withdraw a mutually exclusive cellular
application or a pleading. AALA argues that with a rule limiting the
settlement amount that can be paid to petitioners seeking denial or
dismissal of applications, the Commission should at a minimum reinstate
the procedure used in the Metropolitan Statistical Area cellular
licensing process for the selection and ranking of multiple selectees
in cellular lotteries. AALA contends that the settlement limitations
will remove all incentive for private parties to assist in checking
lottery abuse. As a result, according to AALA, the rules adopted ``will
deter not just frivolous petitions, but those meritorious petitions
that have proven helpful to the Commission in its enforcement
functions.'' AALA argues that ranking multiple selectees is the only
alternative which provides the necessary incentive for private parties,
through the petition to deny process, to assist the Commission in
policing lottery abuses. McCaw urges the Commission to reject AALA's
proposal, because history has shown that ranking lottery winners will
lead to the filing of frivolous applications ``submitted by entities
that figure they have nothing to lose.'' AALA responds to McCaw,
contending that the settlement cap imposed on a would-be filer of a
frivolous petition would ensure that the petitioner would have nothing
to gain because ``the very best such a petitioner could hope for is to
break even.''
5. Section 309(d) of the Communications Act provides that any party
in interest may file with the Commission a petition to deny challenging
the grant of an application. The petition must contain specific
allegations of fact sufficient to show that the petitioner is a party
in interest and that a grant of the application would be prima facie
inconsistent with the public interest, convenience and necessity. 47
U.S.C. Sec. 309(d). Our obligation under the Communications Act is to
provide the forum and mechanism for the filing of those petitions by
parties with standing. By establishing limitations on settlements, we
did not intend to encourage or discourage the filing of petitions to
deny. Notwithstanding limitations on settlements, we have no basis for
concluding that meritorious petitions will not continue to be filed by
those parties desiring corrective or appropriate action on defective or
otherwise non-grantable applications. Further, our experience with
lotteries has taught us that ranking applicants for initial cellular
systems encourages the filing of frivolous petitions to deny. Moreover,
in the future we intend to use competitive bidding to select from among
mutually exclusive cellular unserved area applications filed on or
after July 26, 1993, as well as most other applications for Part 22
licenses. Thus, we do not plan to make much use of lottery procedures
in the future. In light of the foregoing, we deny AALA's petition.
Standards for De Minimis Extensions
6. Section 22.903(d)(1), as adopted in the Second Report and Order
57 FR 13646, April 17, 1992, allowed an applicant to propose Service
Area Boundary (SAB) extensions into adjacent Metropolitan Statistical
Areas (MSAs) or Rural Service Areas (RSAs), if such extensions were:
(1) de minimis; and (2) demonstrably unavoidable for technical reasons
of sound engineering design. The Third Report and Order 58 FR 27213,
May 7, 1993 modified Section 22.903(d)(1) to allow only those
extensions that meet the two foregoing requirements and that do not
extend into the CGSA of any other licensee's cellular system on the
same channel block (unless the other licensee consents to the
extension), or into any adjacent MSA or RSA on a channel block for
which the five year fill-in period has expired (i.e., into areas that
are unserved and may be applied for only pursuant to the licensing
process described in Section 22.949 of the Commission's rules).
7. CIS argues that the circumstances under which de minimis
extensions are permitted under Section 22.903(d)(1) will not serve the
public interest. CIS argues that the rule will make it more difficult
for carriers to cover their markets and create the seamless cellular
coverage the Commission has long encouraged. CIS claims that under the
former version of the rule section, there was little incentive for a
neighboring carrier to challenge a de minimis extension, unless that
carrier had ``specific concerns'' or the extension significantly
affected the market. CIS asserts that the new rule adds a layer of
negotiation, and perhaps litigation, to most de minimis applications.
Thus, CIS argues, if a licensee wants to propose a de minimis
extension, it first must determine whether that extension
[[Page 9105]]
overlaps with the adjacent carrier's CGSA and if it does, negotiate for
consent to that extension. CIS contends that if consent is not
forthcoming, it is possible that the carrier requesting consent will be
unable to build facilities with de minimis extensions in that area.
According to CIS, the new rule essentially treats extensions as
mutually exclusive with existing or proposed CGSAs. CIS believes our
adoption of Section 22.903(d)(1) is not needed if the principles
underlying our mutual exclusivity rules and original de minimis
extension rules were followed. The net result of the new rule, CIS
alleges, is to favor the earlier-licensed market over the later-
licensed market and to favor well-financed carriers over less
financially secure carriers, because the well-financed carriers are
more likely to win the ``race to the border'' created by the new rule.
CIS also maintains that, prior to the rule revision, extensions that
overlapped a neighbor's CGSA did not require consent during the first
ten years of cellular licensing, whereas such consent now is required.
CIS contends that requiring such consent will cause some licensees to
be treated differently than others have been treated in the past, even
though there has been no change in the justification underlying the
Commission's published rules and policies concerning de minimis
extensions.
8. We find that CIS's arguments are not persuasive. The cellular
radio industry has matured to the point where many licensees have CGSAs
that have reached the borders of their respective MSAs or RSAs. In such
an environment, ``border wars'' may become more common. Nevertheless,
our rules do not favor either earlier-licensed carriers or better-
financed carriers. Rather, any licensee, regardless of when it was
licensed or how well it is financed, is entitled to protection within
its CGSA, and conversely, must not cause interference by extensions
into the CGSAs of other licensees, unless the parties agree to accept
the intrusion. It is in the interest of cellular licensees to find
mutually beneficial ways to accommodate their respective needs in
providing service within their respective CGSAs.
9. Our current rule requiring consent for any SAB extensions into a
licensee's CGSA is consistent with our previous policies protecting a
licensee's reliable service area. Prior to the adoption of our Second
Report and Order 57 FR 13646, April 17, 1992, de minimis contour
extensions overlapping a neighbor's CGSA did not require prior consent
from the neighbor. At that time, the CGSA was the area within an MSA or
RSA that an applicant for an initial cellular system intended to serve,
so it was possible for contours to extend into a neighbor's CGSA
without causing interference to the neighbor's reliable service area.
Furthermore, (as discussed infra at para. 14), all such contour
extensions were subject to a standard authorization condition that
required a licensee to change frequencies or ``pull back'' its service
area boundary, if a current or future adjacent licensee encountered
interference caused by any such extension. Pursuant to the Second
Report and Order 57 FR 13646, April 17, 1992, the CGSA now represents
the actual service area. Since the CGSA now is the current, rather than
planned, service area, any extension into an adjacent CGSA would amount
to an incursion into that licensee's actual service area. Thus, before
and after the adoption of the Second Report and Order 57 FR 13646,
April 17, 1992, a cellular licensee's reliable service area has been
protected from overlap with the reliable service areas of neighboring
cellular licensees by the standard pull back condition. The changes we
made in the Third Report and Order 58 FR 27213, May 7, 1993 allow the
parties to agree to have overlapping contours without imposing the pull
back requirement.
10. Therefore, we conclude that the standards set forth in Section
22.903(d)(1) of the rules concerning de minimis SAB extensions into
adjacent MSAs and RSAs serve the public interest and are consistent
with our previous policies protecting a licensee's reliable service
area.
Alleged Due Process Violations and Lack of Notice Under APA
11. In its petition, CIS argues that the Commission provided no
notice that Section 22.903(d)(1) would be amended by the Third Report
and Order 58 FR 27213, May 7, 1993, and thus violated the notice and
comment requirements of the Administrative Procedures Act (APA).
Similarly, PetroCom and Coastel argue that the Initial NPRM 55 FR 4882,
February 12, 1990 and the First Report and Order 56 FR 58503, November
20, 1991 in this proceeding stated that the Commission was adopting no
new requirements affecting the extension applications of existing
cellular licensees. PetroCom and Coastel claim that no reasonable
reader of the Commission's Initial NPRM 55 FR 4882, February 12, 1990
could have inferred that the Commission would change the ``de minimis
extension regulation as it applied to existing cellular licensees.''
12. In addition, CIS, PetroCom, and Coastel contend that the only
reference to contour extensions applicable to licensees seeking to
expand their existing system boundaries is the proposal to codify a
standard authorization condition that requires a licensee to change
frequencies or ``pull back'' its service area boundary, if a current or
future adjacent licensee encounters interference caused by a de minimis
extension. The three petitioners conclude that the Commission provided
no notice that it planned to change existing policy by requiring a
licensee seeking to extend its contour into a neighboring licensee's
CGSA to obtain the neighboring licensee's consent to that extension.
CIS also argues that the Commission did not provide a reasoned
explanation for the obligations adopted in the rules. CIS alleges that,
by not providing sufficient notice or a reasonable basis for the new
rule, we have violated due process.
13. As CIS acknowledges, proposed rules do not have to be identical
to the final adopted rules, but important changes must be a ``logical
outgrowth'' of the proceeding. Thus, courts have taken the view that
changes from the original proposals in a rule making do not require an
additional round of notice and comments where the final rules represent
a ``logical outgrowth'' of the proposals. We believe that the rule
changes implemented in the Third Report and Order 58 FR 27213, May 7,
1993 are well grounded in our previous rules and policies, and that
these changes were an outgrowth of the issues raised at the initiation
of this proceeding to modify the CGSAs of existing and new cellular
systems.
14. A cellular licensee's service area has been protected from the
contour extensions of other licensees by a standard license condition
utilized prior to the adoption of the First Report and Order 56 FR
58503, November 20, 1991 in this proceeding. The condition was
implemented as part of the Commission's longstanding policy of
protecting a cellular licensee's actual service area. Prior to the
adoption of the First Report and Order 56 FR 58503, November 20, 1991,
carriers granted a de minimis extension into an adjacent MSA or RSA had
been subject to a standard condition requiring that the extension be
``pulled back,'' if it caused interference to the protected service
area of the adjacent MSA or RSA. The Initial NPRM 55 FR 4882, February
12, 1990 in this proceeding proposed to codify this standard condition
and the First Report and Order 56 FR 58503, November 20, 1991 adopted
this condition as Section 22.902(d)(4) of the rules. Thus, both
[[Page 9106]]
prior to and after the adoption of the Second Report and Order 57 FR
13646, April 17, 1992, a cellular licensee's reliable service area was
protected by the standard pull back condition. A reasonable reader of
the Further Notice 56 FR 58529, November 20, 1991 which proposed to
establish the CGSA in the manner ultimately adopted in the Second
Report and Order 57 FR 13646, April 17, 1992, could have anticipated
that the Commission would continue to protect a licensee's service area
from interference by other licensees.
15. We believe that the changes to Section 22.903(d)(1) reflect a
logical and necessary step in redetermining the CGSA of each cellular
licensee. In the Second Report and Order 57 FR 13646, April 17, 1992,
we revised Section 22.903(a) to determine the CGSA based on a
licensee's authorized service area, because the method proposed in the
Initial NPRM 55 FR 4882, February 12, 1990 underestimated the service
area boundaries. Both the Initial NPRM 55 FR 4882, February 12, 1990
and the Further Notice 56 FR 58529, November 20, 1991 in this
proceeding explained that a central purpose of this proceeding was to
make a licensee's CGSA more closely approximate its authorized service
area.
16. The modification of a licensee's CGSA to more closely
approximate its service area under Section 22.903(a) means that any
non-consensual extension into a licensee's CGSA on the same channel
block would constitute interference from which the licensee and its
customers have a right to be protected, pursuant to Section 22.911 of
our rules. Our modification of the text of Section 22.903(d)(1)
regarding SAB extensions encroaching upon the CGSA of another licensee
was necessitated by the change in methodology to determine the CGSA and
our existing interference protection rule under Section 22.911. Thus,
we modified Section 22.903(d)(1) to prohibit de minimis extensions into
the CGSA of a carrier on the same channel block in an adjacent market
without the consent of the neighboring licensee. Such changes do not
violate due process, nor were the changes without notice, as CIS,
Petrocom and Coastel allege.
17. CIS, PetroCom, and Coastel also assert that the Third Report
and Order 58 FR 27213, May 7, 1993 mislabeled the Commission's
modification of Section 22.903(d)(1) of its Rules as a
``clarification.'' They claim that the modification of the referenced
rule was more than a clarification, noting that the term
``clarification'' implies that no substantive change to the rule is
being made.
18. We do not dispute that our modification of Section 22.903(d)(1)
involved a revision of that rule, and we did not intend, by the
language we used in the Third Report and Order 58 FR 27213, May 7,
1993, to suggest otherwise. The revision of Section 22.903(d)(1) simply
reinforced a concept which already was stated in the introductory
paragraph of Section 22.903, as revised by the Second Report and Order
57 FR 13646, April 17, 1992, namely, that because the method of
determining the CGSA is changed to reflect a licensee's authorized
service area, the CGSA is protected from interference caused by all
other licensees, just as cellular licensees' service areas had been
protected from interference in the past by the standard pull back
condition. Once we modified the CGSA to be a licensee's authorized
protected service area, no incursions into the CGSA could be allowed
under our standard policy against interference, unless the carrier
causing the SAB extension received consent from the affected licensee.
19. We also had to modify Section 22.903(d)(1) to prohibit
extensions into an adjacent MSA or RSA for which the five-year build-
out period had expired, to be consistent with our unserved area rules.
Sections 22.903(d)(3)(i) through 22.903(d)(3)(iii) provided that, with
respect to cellular systems proposed for unserved areas, the service
area boundaries (SABs) of the proposed cells must not extend into the
CGSA of any other licensee's cellular system on the same channel block,
except for permissible contract extensions, or into any adjacent MSA or
RSA where the five-year build-out period had expired. The same concern
about interference created by SAB extensions into adjacent CGSAs that
applies to unserved area applicants also applies to proposed extensions
into CGSAs by existing licensees. The rights of unserved area
applicants would be compromised if we allowed a licensee in an adjacent
MSA or RSA to extend its service contour into the unserved area of an
MSA or RSA for which the build-out period had expired without complying
with the unserved area licensing procedures.
20. Therefore, we conclude that the Commission gave adequate notice
for the changes the Third Report and Order 58 FR 27213, May 7, 1993
made in Section 22.903(d)(1) of the rules, that those changes were well
grounded in our previous rules and policies, and that the changes were
a logical outgrowth of the issues raised in this proceeding.
Contour Extensions During Phase I Processing
21. In the Third Report and Order 58 FR 27213, May 7, 1993, we
modified our policies for allowing applicants for unserved areas to
propose SAB extensions during Phase I of our application processing
procedures for all markets in which the five-year build-out period has
expired. Specifically, we determined that initial applications filed in
Phase I would not be allowed to propose any extensions into adjacent
MSAs or RSAs, even if those extensions were de minimis or contract
extensions. In prohibiting contour extensions in these circumstances,
we explained that this restriction would simplify and expedite our
licensing process and would remove a possible source of litigation as
to whether such extensions were permissible. We stated that
applications proposing such extensions would be dismissed as defective.
We added language to effectuate our policy change to Section
22.902(b)(4)(i) of the rules and appropriately revised the language of
Sections 22.903(d)(3)(ii) through Sections 22.903(d)(3)(iv).
22. CECR asserts that the Commission erred in making the foregoing
rule changes. CECR argues that the First Report and Order 56 FR 58503,
November 20, 1991 clearly delineated the circumstances under which
contract extensions are permissible: where a contract exists,
extensions are valid, and if no contract exists, the extension
application is deemed defective. Thus, claims CECR, permitting contract
extensions cannot serve as a possible source of litigation. CECR also
argues that former Section 22.903(d)(3)(ii) of the rules explicitly
explained the situations in which unserved area applications can
propose de minimis extensions, and served to eliminate any confusion
over the validity of proposed extensions, thus greatly reducing the
possibility for litigation.
23. We shall not revise our rules concerning SAB extensions by
Phase I applicants for unserved areas. As we stated earlier, our
purpose in not permitting Phase I requests for extensions was to
provide a simple and expeditious means of licensing unserved area
applicants in Phase I. In addition, we believe that our Phase I
licensing rules should be consistently applied across all markets.
Phase I of the unserved area licensing process has ended for most of
the MSAs and many of the RSAs. By the end of calendar year 1995, the
five-year build-out period for most RSAs will have ended. The revisions
suggested by CECR only would confuse the unserved area
[[Page 9107]]
licensing process by changing the rules after many of the markets have
been subject to restricted SAB extension rules in the Phase I unserved
licensing process.
24. We note that the prohibition against having SAB extensions
beyond the borders of a particular MSA or RSA only applies to initial
Phase I applications. Once a Phase I initial unserved area application
has been granted, the licensee can file one Phase I major modification
application and that application may propose de minimis or contract
extensions. The application is not subject to competing applications.
In addition, Phase II applications may propose a CGSA covering more
than one cellular market, which includes de minimis and contract
extensions. Thus, the prohibition against SAB extensions beyond the
borders of a particular MSA or RSA is narrowly defined to include only
initial Phase I unserved area applications.
System Information Update Maps
25. CECR asserts that the Commission erred by neglecting to
recognize that System Information Update (SIU) maps are more than
informational filings, because they define the rights of third parties,
i.e., potential unserved area applicants. CECR argues, as it did in its
petition for reconsideration of the First Report and Order 56 FR 58503,
November 20, 1991, that the Commission should establish procedures by
which interested parties may challenge SIU maps prior to the filing of
unserved area applications. McCaw argues that CECR already has argued
this issue unsuccessfully and has shown no reason why its argument
warrants further Commission consideration. McCaw argues that this
portion of CECR's petition should be dismissed as repetitive. CECR also
observes that the Third Report and Order 58 FR 27213, May 7, 1993
provided that parties aggrieved by the licensee's depiction of its CGSA
informally may request the Commission to correct the maps under Section
1.41 of the Commission's Rules. CECR contends that this procedure is
illusory because the Commission has no obligation or timetable to
resolve an informal challenge, and therefore can continue to license
unserved areas within the challenged market during the pendency of the
informal challenge. CECR also challenges on due process grounds the
procedures established for challenging SIU maps, stating that they
force unserved area applicants ``to place their own applications at
risk in order to challenge a licensee's improper SIU map.'' Further,
CECR claims that licensees should not be allowed to base their SIU maps
on cell sites that violate state law.
26. We find that CECR's arguments are not sufficiently compelling
to warrant revision to our rules. Section 22.947(c) of our rules, 47
CFR Sec. 22.947(c), requires a licensee of a cellular system to file
with the Commission 60 days before the end of its five-year build out
period a system information update (SIU) consisting of a full size map,
a reduced map, and an exhibit showing technical data relevant to
determining the system's CGSA. These materials must accurately depict
the cell locations and coverage of the system at the end of the five-
year build-out period. Although SIU materials, especially the maps, are
required so that potential applicants may know which areas within a
particular market already are served, it is important to note, as we
did in the Third Report and Order 58 FR 27213, May 7, 1993, that the
SIU maps are more in the nature of pictorial aids for potential
unserved area applicants. The SIUs are not a declaration of the
cellular service rights of licensees. As set forth in the Second Report
and Order 57 FR 13646, April 17, 1992, the position of the CGSA
boundaries officially will be determined by the geographical
coordinates of cell sites and the authorized facilities for the
relevant cells which are contained in the Commission's station license
files. Further, as we stated in the Third Report and Order, these maps
will not require any Commission action, since they are not submitted
for approval. The manner in which the SIU maps are drawn is determined
by the new mathematical formula for determining service areas set forth
in Section 22.911(a) of our rules. We expect that licensees will
accurately depict their CGSAs using the prescribed formula, and that
errors will be the exception and not the rule.
27. It is not necessary to delay the filing, processing, and
granting of unserved area applications in order to afford potential
litigants the opportunity to challenge SIUs. Applicants who believe
that reported adjacent CGSAs are in error or have been misdepicted may
file applications, pursuant to the requirements of the unserved area
rules, for areas they believe constitute at least 130 square kilometers
(50 square miles), and state in their applications why they disagree
with the depictions or representations of adjacent CGSAs. Once such an
applicant has become a tentative selectee, if it has made a prima facie
case that an adjacent licensee has misdepicted its CGSA, that licensee
will have the burden of responding to any allegations concerning the
depiction of its CGSA, and the Commission will resolve the dispute.
Further, we have noted that interested parties may file informal
requests for Commission action to correct SIU maps pursuant to Section
1.41 of the Rules. As to the state law concerns raised by CECR, if a
licensee has constructed cellular facilities that violate relevant
state law, any member of the public can notify the appropriate state
authority, which then can impose appropriate sanctions.
Phase I Processing Procedures
28. In the Third Report and Order 58 FR 27213, May 7, 1993, we
explained that, during Phase I of our processing procedures for
unserved area applications, an existing licensee may file an
application to expand its existing CGSA in any manner or, in the
alternative, apply for a new non-contiguous CGSA in an unserved portion
of its market. Either of the applications would be considered to be a
single unserved area application. CECR requests that we clarify that
the Third Report and Order 58 FR 27213, May 7, 1993 allows an existing
licensee to file either an initial Phase I unserved area application to
expand its existing CGSA, or an application specifying a new non-
contiguous CGSA within its market, but not both. CECR's request has
been rendered moot by the changes to Section 22.949(a)(1)(ii) of the
rules, which became effective after the release of the Third Report and
Order 58 FR 27213, May 7, 1993. The rule section now expressly
prohibits applicants from filing more than one Phase I initial
application for any cellular market.
B. Petitions for Reconsideration of the Memorandum Opinion and Order
Alleged Lack of Notice Under APA
29. The Memorandum Opinion and Order 58 FR 11799, March 1, 1993 in
this proceeding established that interference occurs when subscriber
traffic is captured in a home market by an adjacent market system, due
to contour extensions into the home market's CGSA, and that cellular
licensees are entitled to protection from this type of interference. A
cellular licensee may continue to operate existing facilities that
produce a service area boundary extension into a subsequently-
authorized portion of the CGSA of another cellular system on the same
channel block until the licensee of that system requests that the SAB
extension be removed from its CGSA. When such a request is received,
the adjacent market system operator is obligated to pull back the SAB
[[Page 9108]]
extensions by reducing the transmitting power or antenna height (or
both) at the offending cell site locations, or obtain written consent
from the other licensee to permit the SAB extension.
30. Five petitions for reconsideration and three petitions for
partial reconsideration of the Memorandum Opinion and Order 58 FR
11799, March 1, 1993 were filed. These petitions allege, inter alia,
that our adoption of Section 22.903(f) of the rules, 47 CFR 22.903(f),
violated the notice and comment requirements for rule making
proceedings under Section 553 of the APA, 5 U.S.C. Sec. 553, and the
notice and hearing provisions of Sections 309 and 316 of the
Communications Act of 1934, 47 U.S.C. Secs. 309 and 316, and former
Section 22.100(b)(4) of the Commission's rules.
31. New Par, CIS and the Joint Petitioners claim that the
Commission gave no public notice it was contemplating the rule changes
incorporated in new Section 22.903(f), and therefore the Commission did
not comply with Section 553 of the APA, 5 U.S.C. Sec. 553, which
requires an agency to give adequate written notice and opportunity to
comment on proposals in rule making proceedings. New Par claims that
the Commission provided no notice that it even was considering a change
to the standard by which interference and SAB extensions would be
evaluated. CIS also argues that there is no mention of the new
substantive obligations imposed by Section 22.903(f) on licensees
either in the Further Notice 56 FR 58529, the First Report and Order 56
FR 58503, November 20, 1991, or the Second Report and Order 57 FR
13646, April 17, 1992 in this proceeding.
32. New Par and the Joint Petitioners assert that prior to the
adoption of Section 22.903(f), the Commission's rules concerning
interference between cellular licensees provided that remedial action
was required only where actual, as opposed to theoretical, electrical
interference occurred. New Par argues that former Section 22.100(b)(ii)
stated that the Commission ``will only consider complaints of
interference which significantly interrupt or degrade a radio
service,'' and former Section 22.902(a) provided that, in the event
``harmful interference'' occurs that two or more cellular licensees
cannot resolve themselves, the Commission may require a licensee to
make system changes ``necessary to avoid such interference.'' In
contrast, New Par argues, Section 22.903(f) assumes that interference
exists where licensee SABs overlap and requires the entire removal of
SAB extensions without regard to whether the complaining party's
service in fact has experienced a significant degradation and without
regard to whether the removal of such extensions might result in
harmful effects on service to the public in either licensee's market.
33. We reject petitioners' argument that our adoption of Section
22.903(f) did not comport with the notice and comment requirements of
the APA. We have reasonably and consistently placed the public on
notice of our intention to change the standards for measuring cellular
service areas in our continuing efforts to provide seamless cellular
service with the least amount of interference to licensed carriers. The
matters at issue in this docket encompassed the manner in which service
area contours were to be calculated and the implications for existing
systems if the defined contours changed. Section 22.903(f) reflects a
logical outgrowth of this debate.
34. As previously discussed (supra at para. 14), the Initial NPRM
55 FR 4882, February 12, 1990 and Further Notice 56 FR 58529, November
20, 1991 in this proceeding made clear that we intended to change the
method by which a CGSA is determined. Ultimately, the Second Report and
Order 57 FR 13646, April 17, 1992 established that the CGSA is the
geographic area the Commission considers served by a cellular system
and the area within which a cellular system is entitled to protection.
A companion issue raised in evaluating the boundaries of the CGSA was
the potential for interference caused by the extension of newly-
redefined SABs outside a licensee's MSA or RSA into the CGSA of a
neighboring cellular system on the same channel block. Based upon the
comments we received, we concluded that capture of subscriber traffic
is a form of interference. Thus, we were compelled to amend our rules
to provide protection to cellular licensees against such interference.
Alleged Notice and Hearing Rights Under the Communications Act and the
Commission's Rules
35. The Joint Petitioners and New Par contend that the Commission
cannot order (or allow an adjacent licensee to require) licensees to
pull back authorized contour extensions (including new SABs created by
the new formula adopted in the Second Report and Order 57 FR 13646,
April 17, 1992) without complying with the notice and hearing
requirements of Sections 309 and 316 of the Communications Act and
Section 22.100(b)(4) of the Commission's rules.
36. New Par argues that each SAB extension authorized by the
Commission is conditioned upon the licensee not causing interference to
adjacent licensees and that any action requiring a licensee to withdraw
its SAB from areas where its RF signals in fact do not significantly
degrade or disrupt other radio service is a modification of that
licensee's authorization. According to New Par, Sections 309 and 316 of
the Communications Act require the Commission to conduct a hearing to
determine whether and to what extent interference exists each time it
wishes to order an authorized contour extension to be ``pulled back.''
New Par also contends that Section 22.100(b)(4) of the rules codifies
the foregoing theory by providing that the Commission may order
cellular system modifications to eliminate alleged interference only
after notice and opportunity for hearing.
37. We reject the petitioners' argument that the Commission must
comply with the notice and hearing requirements of Sections 309 and 316
of the Communications Act each time a licensee is directed to pull back
authorized contour extensions. Those provisions provide for a hearing
process before Commission modification of a particular license. The
sections do not deprive the Commission of its authority to establish
rules of general applicability to an industry through its rule making
authority.
38. It is well established that licenses may be modified through
rule making proceedings without affording parties an adjudicatory
hearing, if the generic rules otherwise are procedurally and
substantively valid. In WBEN Inc. v. United States, 396 F.2d 601 (2d
Cir. 1968), cert. denied, 393 U.S. 914 (1968), the Court held that the
Commission need not engage in evidentiary hearings required for
modification of a particular license, explaining that,
[W]hen, as here, a new policy is based upon the general
characteristics of an industry, rational decision is not furthered
by requiring an agency to lose itself in an excursion into detail
that too often obscures fundamental issues rather than clarifies
them.
Once a rule has been adopted, there is no need to hold a hearing each
time that rule is applied. Our Memorandum Opinion and Order 58 FR
11799, March 1, 1993 makes clear that Section 22.903(f)(2)(i) allows
the Commission (or an adjacent licensee) to require a licensee to
``pull back'' an authorized SAB extension into the adjacent licensee's
CGSA. Thus, there is no need for a hearing each time Section
22.903(f)(2)(i) or its replacement, Section 22.911(d), is enforced.
[[Page 9109]]
39. We find that the hearing procedure under Section 22.100(b)(4)
of our rules is inapplicable to rule changes made through our rule
making authority. Section 22.100(b)(4) requires that interference
between base stations that have been properly authorized shall be
``resolved'' by the licensees. The rule section also states that if the
licensees cannot resolve the interference, the Commission, ``after
notice and opportunity for hearing,'' may order whatever changes in
equipment or operation it deems necessary. Hearings under Section
22.100(b)(4) would be involved only if the carriers could not comply
with the directive of the rule section to resolve interference
problems. Such hearings would not be required between cellular
licensees because cellular licensees have always been licensed on the
condition that licensees must ``pull back'' any contour that interferes
with a neighboring cellular system and Section 22.911(d) provides a
specific remedy for resolving the interference problem at hand. We also
observe that the Commission has been given the power recently to make
changes in the frequencies, authorized power, and the times of
operation of any station without conducting a hearing.
Standards for Determining Permissible SAB Extensions
40. The Joint Petitioners, New Par, Sussex, and CIS argue that the
adoption of Section 22.903(f)(1) of the rules regarding capture is
inconsistent with the Commission's goal of achieving nationwide
seamless cellular service. New Par, Sussex, and CIS note that the
Memorandum Opinion and Order 58 FR 11799, March 1, 1993 states that
overlapping SAB contours actually promote a seamless environment and
that SAB extension ``pullbacks'' should be used only as a last resort.
CIS and Sussex argue that the new rule is contrary to basic principles
of cellular system design and will restrict the ability of licensees to
provide adequate coverage within their markets, thus undermining the
original purpose of the Commission's de minimis extension policy. CIS
claims that the rule will discourage the development of seamless
cellular coverage at the borders between markets.
41. Joint Petitioners argue that Section 22.903(f) undermines the
Commission's stated goals of creating a ``level playing field'' for all
cellular licensees and devising rules and policies to encourage
informal agreements between licensees to resolve boundary disputes. New
Par, McCaw, and the Joint Petitioners claim that Section 22.903(f)
neither requires good faith negotiations among adjacent licensees nor
enables an extending licensee to rebut the presumption of interference
in the form of capture of subscriber traffic. McCaw and New Par assert
that the rule appears to conflict with the Memorandum Opinion and
Order, 58 FR 11799, March 1, 1993 which states that progress toward
achieving the Commission's goal of establishing ``rules and policies
that will lead to the efficient provision of nationwide seamless
cellular service to the public'' will depend in large part upon the
success of informal negotiations between cellular licensees on
``mutually agreeable arrangements of facilities that provide an
efficient juncture between adjacent systems.'' New Par argues that
later-licensed carriers will have the ability and incentive to force
neighboring licensees to consent to otherwise unwarranted extensions,
because of the earlier-licensed carrier's inability to suffer the loss
of service that would result from an SAB pull-back. Joint Petitioners
similarly conclude that existing operators may be forced to curtail
service from previously authorized facilities ``largely at the whim''
of subsequent licensees.
42. New Par argues that the institution of the presumption that
subscriber capture occurs in every case where an SAB overlaps with a
CGSA is arbitrary and capricious and results in removing from the
Commission its statutory obligation to resolve service issues
consistent with the public interest. McCaw opposes the rule because it
has the practical effect of precluding SAB extensions where no
subscriber traffic capture actually occurs. Sussex argues that an
administrative agency cannot create a presumption which operates to
deny a fair opportunity to rebut it without violating the due process
clauses of the Fifth and Fourteenth Amendments. Consequently, Sussex
argues that the U.S. Constitution will not allow the Commission to
impose an automatic requirement to remove SAB overlap without first
granting the encroaching carrier the opportunity to show: (1) that
there is no subscriber capture, or (2) that the capture does not result
from SAB overlap.
43. McCaw and New Par recommend modifications to Section 22.903(f)
as follows: (1) require licensees protesting SAB extensions to
demonstrate that these extensions cause actual interference, prior to
mandating system modification; and (2) continue to promote good faith
negotiations of such boundary disputes on an informal basis prior to
having to ``pull back'' authorized SAB extensions. Sprint agrees with
McCaw and New Par that boundary questions should be settled with good
faith negotiations on an informal basis. The Joint Petitioners also
urge that Section 22.903(f)(2)(i) be modified to make rebuttable the
presumption of subscriber capture, where an SAB extension has been
authorized into an adjacent licensee's CGSA during the latter
licensee's five-year fill-in period.
44. CIS also recommends that former Section 22.903(d)(1) of the
rules, setting forth de minimis extension criteria, be modified to
allow a contour extension when the extension is necessary to compensate
for an existing extension from another cellular system. Sussex
recommends that the Commission allow carriers to install cells with
contour overlaps into adjacent carriers' CGSAs so long as the overlaps
are de minimis and are necessary to provide service within the
overlapping carrier's market area, regardless of whether the carrier
consents to the extension. Further, Sussex argues that any conflicts
arising from such overlaps be resolved through the frequency
coordination process and the requirement of inter-carrier cooperation.
In essence, Sussex asks that the Commission return to the means of
handling contour overlap which existed before the adoption of Section
22.903(f). Radiofone opposes Sussex's solution, fearing that
elimination of protection of CGSAs against intrusions from neighboring
carriers would lead to ``rampant interference, endless litigation and
disservice to the public.''
45. Before addressing the petitioners' arguments, we emphasize that
a cellular licensee has an obligation to serve the public wherever
demand exists within its market, and that cellular licensees therefore
have a duty to negotiate with each other in good faith regarding
agreements for SAB overlaps. Successful negotiations of such contracts
or agreements could be offered as evidence of performance in the public
interest when cellular licenses are considered for renewal, pursuant to
new Section 22.940 of our Rules. Conversely, failure to serve the
public due to failure to negotiate reasonable solutions to SAB overlap
problems with adjoining carriers could reflect negatively on a licensee
seeking renewal.
46. The language of former Section 22.903(f)(2)(i) was somewhat
ambiguous, because the first sentence stated that it is ``presumed''
that subscriber traffic is captured if a service area boundary (SAB) of
one cellular system extends into the CGSA of another operating cellular
system. Nevertheless, New Par and Sussex's arguments concerning the
creation of a
[[Page 9110]]
rebuttable presumption have been rendered moot by the removal of the
presumption language in rule Section 22.903(f). The Part 22 Rewrite
Order 59 FR 59502, November 17, 1992 transferred most of the language
of former Section 22.903(f) to current rule Section 22.911(d) and
changed some of the introductory language in the new rule. Section
22.911(d)(2)(i) expressly prohibits non-consensual contour extensions
from one cellular system into the CGSA of another cellular system. The
first sentence of Section 22.911(d)(2)(i) states: ``Subscriber traffic
is captured if an SAB of one cellular system overlaps the CGSA of
another operating cellular system''--(emphasis added). The new rule
removes any suggestion of a presumption created by the prior rule.
47. We observe that current Section 22.911(d)(2)(i) of our rules is
based upon predicted service areas as defined by an expert agency and
is designed to avoid litigation over the exact location of actual
interference. The idea of ``interference free'' service areas is a
constant in Part 22 of our rules. See, e.g., Sections 22.351, 22.537,
22.567, and 22.912(a) of our rules. 47 CFR 22.351, 22.537, 22.567 and
22.912(a). In order to ensure uniformity and simplicity in
administering our rules, and to prevent potentially endless litigation,
we must rely on objective, rather than subjective standards for the
protection of services. Section 22.911(d)(2)(i) provides a simple,
objective standard to determine when capture occurs, and encourages
parties to reach agreement on the resulting effects of SAB overlap.
48. We also reject CIS's request that Section 22.903(d)(1) [now
22.912(a)] of the rules be modified to allow a cellular licensee to
extend service contour into an adjoining market to compensate for the
adjoining licensee's extension into the licensee's market. Absent
agreement between the affected parties, licensees are entitled to
operate in their service areas free from co-channel and first adjacent
channel interference and from capture of subscriber traffic by adjacent
systems on the same channel block. 47 CFR 22.911(d) (formerly
22.903(f)).
49. Our goal is to provide nationwide seamless cellular service to
the public. As we indicated in the Memorandum Opinion and Order, 58 FR
11799, March 1, 1993 rather than require the total elimination of SAB
extensions, or mandate reciprocal SAB extensions as suggested by CIS, a
better result in most cases is some degree of SAB overlap between
systems with the location of balanced signal strengths negotiated
informally between the adjacent licensees on the same channel block. We
believe informal negotiations between parties in determining mutually
agreeable arrangements between adjacent systems will achieve the most
expeditious and effective resolution of service boundary issues. Thus,
promoting negotiation between parties eliminates possible protracted
administrative and court proceedings, and provides incentives for
cellular providers to come to agreement on boundary issues arising from
the convergence of expanding systems. In sum, permitting market forces
to drive resolution of these issues will effectuate seamless cellular
service nationwide more quickly than the proposals offered by
petitioners.
IV. Ordering Clause
50. Accordingly, pursuant to Sections 4(i), 303(r) and 405(a) of
the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r),
and 405(a), It is ordered that the petitions for reconsideration and
partial reconsideration of the Third Report and Order and Memorandum
Opinion and Order on Reconsideration 58 FR 27213, May 7, 1993 in this
docket, and the Memorandum Opinion and Order on Reconsideration, 58 FR
11799, March 1, 1993 Are denied, and the ``Request to Expedite Action
and Comments in Support of Cellular Information Systems, Inc.'' Is
dismissed as moot.
List of Subjects in 47 CFR Part 22
Communications common carriers, Radio.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 97-4870 Filed 2-27-97; 8:45 am]
BILLING CODE 6712-01-P
