[Federal Register Volume 60, Number 57 (Friday, March 24, 1995)]
[Rules and Regulations]
[Pages 15490-15495]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7295]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 22 and 90
[GN Docket No. 94-90, FCC 95-98]
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: Final rule.
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SUMMARY: In this Report and Order (Order), the Commission eliminates
rules that prohibit wireline telephone carriers from holding licenses
in the Specialized Mobile Radio (SMR) service and the commercial 220-
222 MHz land mobile band. The Order also eliminates the prohibition on
the provision of dispatch service by cellular licensees, other
licensees in the Public Mobile Services, and licensees in the Personal
Communications Services (PCS). After reviewing the record, the
Commission finds that these restrictions no longer serve the public
interest and should be eliminated.
EFFECTIVE DATES: Sections 22.577 and 22.901 rule changes will be
effective April 24, 1995. Sections 90.603 and 90.703 rule changes will
be effective March 24, 1995.
FOR FURTHER INFORMATION CONTACT:
Sue McNeil, Wireless Telecommunications Bureau, Commercial Radio
Division, (202) 418-0620.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's Order
in GN Docket No. 94-90, adopted March 7, 1995 and released March 7,
1995. 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 20037.
Synopsis of the Report and Order
I. Background
1. When the Commission established the SMR service in 1974, it
elected to prohibit wireline telephone common carriers from holding SMR
base station licenses. The Commission has stated that the wireline
prohibition was intended to ensure that the provision of SMR service
would be available as a business opportunity for small entrepreneurs
and to reduce incentives for wireline common carriers to engage in
discriminatory interconnection practices. In 1986, the Commission
proposed to eliminate the SMR restriction after receiving several
requests from wireline carriers for waiver of Section 90.603(c). The
Commission observed that the original rationale for establishing the
restriction may no longer apply. The Commission subsequently granted
several conditional waivers to wireline carriers seeking to acquire SMR
stations.
2. In 1992, the Commission terminated the proceeding on grounds
that the record had become stale and stated that the restriction should
be retained until the Commission could more fully evaluate the
competitive impact of allowing wireline providers into the SMR
marketplace. The Commission terminated all waivers that had been
previously granted, but gave waiver recipients an opportunity to
rejustify their waiver grants. Southwestern Bell Corporation
(Southwestern Bell), Bell Atlantic Enterprises International Inc. (Bell
Atlantic), and US West Paging, Inc. (US West) filed requests to
rejustify the waiver grants that had been terminated pursuant to the
Termination Order (57 Fed. Reg. 32450 (July 22, 1992)). In addition,
RAM Mobile Data USA Limited (RAM Mobile), Cass Cable TV, Inc. (Cass
Cable), and American Paging, Inc. (API) subsequently have sought
waivers of the wireline prohibition. The Commission issued a public
notice requesting public comment regarding the waiver requests on April
12, 1994. In addition, BellSouth has filed an appeal of the
Commission's Termination Order, which is pending before the D.C.
Circuit.
3. In 1991, the Commission adopted an analogous restriction for the
newly established commercial 220 MHz service that prevents wireline
carriers from holding licenses in that service as well. The
Commission's rationale for excluding wireline carriers from 220 MHz was
the same as its original rationale for excluding wireline carriers from
SMR licensing.
4. The Omnibus Budget Reconciliation Act of 1993 (Budget Act)
amended the Communications Act and prescribed comprehensive regulatory
changes for the mobile services marketplace. The legislative history of
the Budget Act identified the Commission's ban against wireline
carriers holding SMR licenses as a regulation that should be reviewed
by the Commission. The Commission thus proposed to eliminate its
restrictions that prohibit wireline telephone common carriers from
holding SMR and commercial 220 MHz licenses on the grounds that the
restrictions may no longer be necessary and that competition would be
promoted by their elimination.
5. At the same time, the Commission also proposed to eliminate the
prohibition on the provision of dispatch service by common carriers,
including cellular licensees, other licensees in the Public Mobile
Service, and PCS licensees. The prohibition, which was originally
enacted by Congress as part of the 1982 amendments to the
Communications Act, prohibited common carriers licensed after January
1, 1982, including all cellular licensees, from offering dispatch
services. In the Budget Act, Congress retained the statutory ban, thus
potentially applying it to all CMRS providers, but granted the
Commission authority to repeal the ban by regulation in whole or in
part. In the Notice of Proposed Rule Making (59 Fed. Reg. 42563 (Aug.
18, 1994)), the Commission tentatively concluded that the prohibition
was outdated and that its repeal would promote competition. Thirty-two
(32) comments and twelve (12) reply comments were filed in response to
the proposals in this proceeding. [[Page 15491]]
II. Discussion
A. Licensee Eligibility in SMR and Commercial 220 MHz Service
6. Background. In the Notice, we tentatively concluded that the SMR
and commercial 220 MHz wireline ownership restrictions are no longer
appropriate in today's competitive mobile services marketplace. As
described in the Notice, there were several reasons for this tentative
conclusion. First, we observed that the risk of wireline carriers being
able to cause competitive harm if allowed to enter the SMR market has
diminished in recent years. We indicated that the breakup of AT&T and
the rapid introduction of new mobile service options have combined to
create an environment in which wireline carrier participation in mobile
services has the potential to increase competition rather than impede
it.
7. In the Notice, we also drew comparisons to PCS, noting that we
have already concluded that wireline entry into PCS will produce
economies of scope for that service, which will promote its rapid
development and yield a broader array of PCS services at lower costs to
consumers. We indicated that similar benefits could result from
allowing wireline entry into the SMR and commercial 220 MHz services.
8. We also tentatively concluded that the restrictions no longer
are necessary to safeguard against competitive concerns that the LECs
may (1) discriminate in the offering of interconnection to non-
affiliated SMR licensees or (2) use their market power in the local
exchange market to cross-subsidize SMR services and undercut their
competitors. We indicated that existing statutory and regulatory
safeguards probably were sufficient to prevent LECs from engaging in
these discriminatory activities. In particular, the Commission has
found that, pursuant to Section 201 of the Communications Act, it is in
the public interest to require LECs to provide reasonable
interconnection to commercial mobile radio service (CMRS) providers. We
also noted that independent accounting and structural safeguards exist
and would apply to wireline participants in the SMR market to prevent
cross-subsidization. We did, however, seek comment on the effectiveness
of applying these existing safeguards to wireline carriers entering
these services.
9. We made additional observations as well. We indicated that
wireline entry was unlikely to chill further development of the service
since SMR spectrum has been licensed fully in most metropolitan areas.
As a result, we stated that wireline entry into the SMR service would
likely occur through acquisitions that are subject to Commission
review. Similarly, we reasoned that wireline entry into commercial 220
MHz likely would be gradual and subject to case-by-case review by the
Commission as part of the application process. We also asked whether
commercial 220 MHz services were sufficiently disparate from any LEC
offering to make negligible any ability these carriers might have to
exert undue market power or restrain trade. This was the analysis we
used to justify LEC entry into narrowband PCS. We further noted that
wireline participation could promote opportunities for additional entry
of small, rural telephone companies and could infuse new capital and
expertise into the mobile services marketplace.
10. Also, while we generally concluded that the wireline
restrictions were outmoded, we questioned whether there was any
justification for continuation of the restrictions for either or both
of the SMR and commercial 220 MHz services. Finally, we deferred
consideration of whether there was a need to restrict cellular
eligibility for SMR or commercial 220 MHz licensing pending a decision
in GN Docket No. 93-252 to impose a spectrum cap on CMRS providers.
11. Comments. All but two commenting parties support our proposal
to permit wireline telephone common carriers to hold SMR and commercial
220 MHz licenses. Many commenters maintain that eliminating the
restrictions in the SMR service would facilitate competition and that
increased competition would thereby benefit consumers through lower
prices and expanded choices. Commenters also agree that our proposal is
consistent with our efforts to achieve regulatory symmetry by providing
identical eligibility requirements for all CMRS licensees. In addition,
several commenters note that changes in the SMR marketplace during the
time since the service was established eliminate the need for wireline
eligibility restrictions. Finally, commenting parties generally agree
that existing accounting and interconnection safeguards will adequately
prevent cross-subsidization and discrimination. The Commission was
encouraged to enforce these existing safeguards rigorously.
12. Most parties who expressly commented on commercial 220 MHz
service generally support lifting the prohibition on wireline entry for
the same reasons set forth in support of lifting the restrictions on
wireline entry into SMR service. AMTA, however, opposes lifing the
restrictions at this time. AMTA contends that the commercial 220 MHz
service is still in its infancy, and that its competitive potential is
largely unknown.
13. SMR WON is the only commenting party to oppose lifting the
wireline prohibition for both SMR and commercial 220 MHz services.
Specifically, SMR WON expresses concern that eliminating the
restriction would harm traditional SMR operators that would not be able
to compete against the market power of wireline common carriers.
Moreover, SMR WON alleges that existing safeguards have been
ineffective in preventing wireline carriers from exercising their
monopoly power and financial strength to the detriment of competition
in the cellular marketplace. Therefore, SMR WON urges that no changes
in the wirline restriction should be made except as part of
comprehensive legislation addressing the monopoly power of the LECs.
14. Decision. We amend our rules to permit wireline telephone
common carriers to acquire SMR and commercial 220 MHz licenses without
restriction and dismiss pending waiver requests as moot. Eliminating
the wireline prohibition is likely to yield substantial public
benefits. Commenters echoed our view that permitting wireline common
carriers to acquire SMR and commercial 220 MHz licenses will allow the
realization of significant economies of scope and provide a new source
of capital that will yield a broader array of services at lower costs
to consumers. Repealing the wireline prohibition also will stimulate
competition and promote opportunities for additional entry of numerous
small wireline carriers, particularly in rural areas, in addition to
the large wireline carriers. Moreover, we note that the record supports
our view that changes in the wireless marketplace, including our
efforts to achieve regulatory symmetry among comparable mobile
services, obviate the need for the wireline restrictions. Finally, we
believe that existing regulatory safeguards will prevent wireline
common carriers from engaging in anti-competitive conduct.
15. We expect that wireline participation in the provision of SMR
and commercial 220 MHz services will benefit the consumer.
Specifically, allowing LECs to participate in SMR and commercial 220
MHz services will likely produce significant economies of scope by
allowing wireline carriers to combine related services so that they may
be provided at less cost than providing them separately. We expect
[[Page 15492]] that because of their existing wireline infrastructure,
LECs will be likely to achieve technical efficiencies in spectrum use
that will result in lower costs. Such economies can promote more rapid
development of technology and yield a broader range of services at
lower costs to consumers.
16. We expect that wireline entry also will benefit competition by
providing an additional source of capital and expertise in the mobile
services marketplace. Allowing wireline entry will give SMR providers
the ability to draw upon this capital and expertise as they move from
stand-alone analog to wide-area networks. Despite AMTA's opposition, we
reach a similar conclusion with respect to participation by wireline
carriers in the commercial 220 MHz service. We observe that access to
the capital and technical expertise of wireline carriers may be
important to the commercial 220 MHz service at its critical stage of
technological development. SNET notes, for example, that wireline
carriers can ``quickly allocate resources, including existing
infrastructure, into wireless services that will speed the deployment
of services, produce innovative service offerings, promote competition
and produce competitive rates for consumers.'' We also note that
commercial 220 MHz, like PCS, is a new, developing service, and we have
elected to allow wireline carriers to participate fully in both the
narrowband and broadband PCS services. Moreover, we observe that
commercial 220 MHz service resembles narrowband PCS in that it is a
two-way, narrowband service that is technically distinct from other
service offerings provided by LECs. In the Narrowband PCS First Report
and Order (59 FR 9100 (Feb. 25, 1994)), we concluded that the
dissimilarity between narrowband PCS and LEC service offerings provided
additional justification for allowing wireline entry. We conclude that
the same rational supports our conclusion with respect to commercial
220 MHz service.
17. Wireline participation also could promote opportunities for
additional entry of small entrepreneurs, such as rural telephone
companies, in the SMR service. As the record in this proceeding
suggests, small wireline carriers in rural communities are well
positioned to provide SMR and commercial 200 MHz services in areas that
presently are unserved or underserved. Eliminating the wireline
restrictions would allow these providers to offer cost-effective
services to rural customers by building on their existing
infrastructure and presence in the market. We disagree with SMR WON's
allegation that wireline participation would impede competition,
especially in rural communities. As commenters (including rural telcos)
point out, wireline entry will bring new or additional SMR services to
underserved rural areas, not merely replace existing small SMR
operators. Additional opportunities for small business entry into the
SMR business, including participation by small LECs, are being
considered as part of the commission's competitive bidding proceeding.
SMR WON erroneously suggests that our reference to our efforts to help
small businesses successfully compete at auctions reveals that our real
motivation for permitting wireline entry is to raise more funds at
auction. Rather, we repeal the wireline prohibition because the record
overwhelmingly indicates that wireline participation would serve the
public interest by promoting competition, lowering costs, and expanding
consumer choice. Moreover, we note that Congress specifically prohibits
us from exercising our auction authority for the primary purpose of
raising revenues.
18. Additionally, as we tentatively concluded in our Notice, the
wireline restrictions are outmoded in view of recent regulatory changes
in the mobile services marketplace. The Budget Act mandated that
similar mobile services receive comparable regulatory treatment and
divided all mobile services into two categories, CMRS and private
mobile radio service (PMRS). In our CMRS Second Report and Order (59 FR
18493 (April 19, 1994)), we concluded that certain private mobile radio
services, including SMR and commercial 220 MHz licensees, would be
subject to reclassification as CMRS if they provide ``interconnected
service.'' To the extent that SMR and commercial 220 MHz licensees
qualify as CMRS providers, the principles of regulatory symmetry
suggest that they should be subject to regulations similar to those
imposed on cellular carriers, PCS licensees and other CMRS providers.
Elimination of Secs. 90.603(c) and 90.703(c) thereby furthers our
objective to apply a symmetrical, consistent set of regulations
governing CMRS by establishing identical wireline eligibility
requirements for all CMRS providers.
19. As we observed in our Notice, the mobile services industry also
has undergone substantial changes that obviate the need for the
wireline restrictions. The record shows that the competitive concerns
that led to the SMR eligibility restrictions are no longer applicable
in the current competitive marketplace. The SMR industry has matured
significantly since it was established in 1974. As AMTA points out, SMR
channels already are in service in most large urban areas. Wireline
carriers therefore will be largely limited to acquiring existing
businesses, and all such transfers would be subject to Commission
review. We will consider the competitive impact of any transfer to a
wireline carrier as part of our public interest determination. In
addition, we note that wireline SMR acquisitions will be subject to our
CMRS spectrum cap, which restricts the amount of cellular, broadband
PCS and SMR spectrum that any one entity may acquire in a geographic
market. This acts as a competitive safeguard by limiting all wireline
carriers from exerting undue market power in these services.
Furthermore, we observe that the spectrum cap will also limit cellular
licensees' ability to exercise market power and we therefore do not
believe that additional restrictions on cellular participation are
warranted.
20. Moreover, customer demand and the desire to offer ``seamless''
communications services has fostered the development of wide-area
systems in both the 800 MHz and 900 MHz band. Wide-area licensees have
aggregated spectrum across large regions, and are poised to offer
services competitive with larger CMRS providers, such as cellular and
PCS. For these reasons, we are not persuaded by SMR WON's argument that
the SMR market is still relatively immature. These systems do not
continue to require the same degree of regulatory nurturing that may
have been appropriate during the early days of this service. In
addition, we note that artificial eligibility restraints may hinder the
growth of wide-area systems and their ability to compete with cellular
and other CMRS licensees.
21. In addition, we conclude that existing regulatory safeguards
are sufficient to prevent possible discrimination and cross-
subsidization. We note that wireline telephone companies are required
to provide reasonable interconnection upon request. As evidence of the
infrequency of interconnection problems, we are unaware of any pending
complaints alleging discriminatory interconnection filed by
unaffiliated cellular providers against wireline carriers with cellular
affiliates. We emphasize, however, that we agree with AMTA and ITA/CICS
that the public interest is best served by strongly enforcing our
policies and statutory requirements with respect to the interconnection
obligations of LECs.
22. Additionally, independent accounting and structural safeguards
exist to protect against cross- [[Page 15493]] subsidization of
services and discriminatory pricing. In the CMRS docket, we determined
that our 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 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 in accordance with specified valuation
methodologies. Since most SMRs and commercial 220 MHz licensees fall
inside the CMRS definition (and are not rate-regulated), these existing
and applicable accounting rules should deter cross-subsidization
problems. We also note that the largest LECs are subject to price caps,
which provides additional assurances that no cross-subsidization will
occur. Finally, we observe that the Commission adopted the same
approach concerning structural separations and accounting safeguards in
our PCS proceeding. We therefore decline to impose structural
separation requirements in addition to those already imposed on certain
dominant telephone carriers (i.e., BOCs) that provide cellular service.
We note, however, that we intend to enforce our existing safeguards
vigorously in this area and are prepared to take additional steps, if
necessary, to protect against cross-subsidization of services and
discriminatory pricing.
23. In sum, the rapid growth of mobile services, regulatory changes
and evolving competition in the mobile services industry justify the
repeal of the restrictions on wireline telephone common carriers
holding licenses in the SMR and commercial 220 MHz services.
Accordingly, we eliminate these rules today. In addition, we dismiss
requests for waivers filed by Southwestern Bell, Bell Atlantic, US
West, RAM Mobile, Cass Cable and API. These requests are mooted by our
decision to eliminate the wireline restriction.
B. Common Carrier Dispatch Prohibition
24. Background. In the Notice, the Commission tentatively concluded
that eliminating the dispatch ban would enhance competition and thereby
provide consumers with greater choice, more innovative service
offerings, and lower prices. Commenters were invited to address the
competitive consequences of permitting all CMRS providers\1\ to offer
dispatch services. As an alternative, however, the Commission solicited
comment on whether it should delay repeal of the rule until August 10,
1996 (3 years from the date the Budget Act amendments became law),
allow CMRS licensees (other than SMRs) to provide dispatch only on a
secondary basis, or impose a limit on the amount of system capacity
that non-SMR CMRS licensees may devote to dispatch service. The
Commission requested comment on whether these measures were needed to
prevent any anti-competitive impact that may result from participation
by all CMRS providers in the market, with particular focus on cellular
entry into dispatch. In addition, the Commission requested comment on
whether mobile common carriers that are not land-based (i.e., aviation,
marine, and mobile satellite licensees who provide common carrier
service) should be permitted to offer dispatch service. Noting that
these categories of licensees previously were not prohibited from
offering dispatch service under Section 332, we tentatively concluded
that Congress did not intend to extend the dispatch ban to non-land
mobile licensees when it amended that section in 1993. Instead, the
Commission reasoned that Congress meant simply to repeat and
incorporate its old prohibition against common carrier land mobile
service providers offering dispatch service without modification and to
give the Commission authority to repeal the prohibition in whole or in
part.
\1\The Budget Act provides that:
[a] common carrier (other than a person that was treated as a
provider of a private land mobile service prior to the enactment of
the Omnibus Budget Reconciliation Act of 1993) shall not provide any
dispatch service on any frequency allocated for common carrier
service, except to the extent such dispatch service is provided on
stations licensed in the domestic public land mobile radio service
before January 1, 1982. The Commission may by regulation terminate,
in whole or in part, the prohibition contained in the preceding
sentence if the Commission determines that such termination will
serve the public interest.
Budget Act at Sec. 6002(b)(2), 47 U.S.C. 332(c)(2). Most CMRS
licensees are thereby prohibited from offering dispatch service,
unless the Commission determines that termination of this
prohibition will serve the public interest.
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25. Comments. Most commenters support our view that eliminating the
dispatch prohibition would promote competition in the dispatch service
and thereby provide customers with expanded choices and lower prices.
In addition, many commenters observe that the dispatch prohibition is
inconsistent with our efforts to achieve regulatory symmetry because it
allows SMRs to provide a service that other CMRS providers, such as
cellular licensees, may not. Moreover, several commenting parties note
that recent technological improvements obviate any concern that land
mobile licensees' common carrier service obligations would be
compromised by the provision of dispatch service. Noting the
significant benefits that would stem from permitting all CMRS licensees
to provide dispatch services, most commenters requested that the
Commission eliminate the prohibition immediately and without
restriction.
26. Several parties, however, urged the Commission to retain the
dispatch prohibition. Many proponents of the prohibition argue that
certain CMRS licensees, such as cellular providers, would chill
competition by forcing small dispatch providers out of the market
through below-cost pricing. To the extent that CMRS licensees seek to
offer dispatch service, commenters advocate that they do so on SMR
frequencies.
27. Several commenters request that if we elect to eliminate the
prohibition, we phase it out on August 10, 1996 or allow non-SMR CMRS
licensees to provide service only on a secondary basis. As a separate
matter, several commenters request the Commission to clarify that the
dispatch prohibition did not extend to non-land mobile common carrier
licensees.
28. Decision. We amend our rules to permit all mobile service
common carriers to provide dispatch service.\2\ The record demonstrates
that repeal of the dispatch ban will enhance competition and thereby
provide consumers with expanded choice and lower prices. Moreover, we
agree with commenters that retention of the ban is inconsistent with
our efforts to establish a regulatory framework which provides similar
services with symmetrical requirements. We also note that recent
technological developments, including digitalization, have minimized
any concerns that using common carrier spectrum for dispatch would
impair the licensees' capacity to provide common carrier service
because digital technologies allow spectrum to be used more
efficiently. Because of the significant public benefits that we expect
by eliminating the prohibition, we decline to impose a sunset provision
and permit all CMRS licensees to provide dispatch upon the effective
date of these rule changes, and without restriction.
\2\We note that we are not allowing cellular and other Part 22
licensees to provide stand-alone PMRS service, an issue that will be
resolved on reconsideration of our CMRS Second Report and Order. See
CMRS Third Report and Order, 59 Fed. Reg. 59945 (Nov. 21, 1994).
Rather, by this action we will permit Part 22 licensees to provide
non-interconnected dispatch service, so long as their dispatch users
also have the ability to utilize interconnected service if they
choose. [[Page 15494]]
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29. In eliminating the dispatch prohibition, we expect to enhance
competition by permitting new types of CMRS providers to enter the
commercial dispatch service. We believe that increased competition in
dispatch service will, in turn, yield significant public benefits. We
note that there seems to be a scarcity of spectrum capacity available
for dispatch service, as users below 512 MHz strongly supported the
Commission's proposals to make more efficient use of the spectrum in
those bands and demand exists for most licenses in the 800 and 900 MHz
bands. Moreover, we agree with commenters that the introduction of new
competitors has the potential to lower costs to subscribers, increase
availability of choices, and improve the quality of service. Several
commenters maintain that allowing CMRS providers to provide dispatch in
addition to other mobile services will satisfy consumers' growing
demand for integrated services that are customized to fit their
individual needs. AirTouch notes, for example, that its market research
reveals that consumers want service packages to include text messaging,
vehicle location, alpha-numeric paging, fax, dispatch, and mobile
voice. In addition, we observe that eliminating the dispatch ban may
lower the cost of multifunction equipment since a greater number of
CMRS licensees will be able to provide dispatch service. Moreover, as
McCaw and East Otter Tail suggest, eliminating the dispatch prohibition
will make service available in areas where current options are limited.
In particular, we expect that the elimination of the dispatch
prohibition will benefit rural communities by facilitating competition
in underserved areas and will allow some rural subscribers to obtain
low-cost dispatch service from a third-party service provider for the
first time.
30. Commenters seeking to retain the dispatch ban argue that
allowing CMRS providers, particularly cellular licensees, to offer
dispatch services actually would have an anti-competitive impact on the
dispatch market. Noting that cellular carriers have significant
resources and spectrum, opponents claim that cellular carriers will
impermissibly underprice their service (by subsidizing the dispatch
service with cellular revenues) in order to drive SMR operators out of
business. To prevent any anti-competitive conduct, several commenters
suggest that all CMRS providers be required to provide dispatch on
frequencies designated for SMR service.
31. We are unpersuaded that any dispatch providers are likely to
engage in anticompetitive conduct. To sustain a predatory pricing
scheme, a dispatch provider must be able to price its services below
its own costs and the costs of its competitors in order to drive
competition out of the market. The dispatch provider must then raise
its prices above a competitive level and effectively preclude potential
competitors from entering or re-entering the market. We consider this
possibility highly unlikely because the entire CMRS market is
expanding, with a number of competitors expected to enter the
marketplace in the near term. As a result, the two cellular providers
in each market are expected to compete with other CMRS service
providers, including SMR and PCS licensees, in providing a host of
services in addition to dispatch. These providers will also compete
with private mobile radio service (PMRS) providers, including
businesses that elect to operate their own systems, in the provision of
dispatch service. It is therefore unlikely that cellular carriers would
benefit by engaging in any anticompetitive pricing scheme for
particular services in order to eliminate competitors. Rather, market
share likely will be based on quality, price, and the availability of
other service options to satisfy a customer's individual needs. We
note, however, that we will continue to study the dispatch market
carefully and can take appropriate enforcement action if licensees
engage in anticompetitive conduct. Moreover, we observe that the
Department of Justice also has authority to take enforcement action
against carriers that engage in predatory pricing.
32. We also do not believe that limiting dispatch service to SMR
frequencies would be an efficient use of spectrum. To the extent that
any CMRS providers have excess spectrum, we want to encourage them to
develop innovative uses for it that are responsive to consumer demand,
including dispatch service. Moreover, restricting dispatch service to
SMR frequencies would limit competition by creating an artificial
scarcity of spectrum available to provide dispatch service.
33. Permitting all CMRS licensees to provide dispatch service also
is consistent with our efforts to achieve regulatory symmetry among
comparable services. As many commenters point out, the dispatch
prohibition allows SMR licensees to offer services that its CMRS
competitors cannot. Elimination of the dispatch prohibition will help
to equalize the regulatory requirements applicable to all mobile
service providers by allowing competing operators to offer the same
portfolio of service options and packages. This result is required by
Congress' mandate that comparable mobile services receive similar
regulatory treatment.
34. In addition, we note that recent technological developments
undermine the original justification for the dispatch prohibition. When
Congress adopted the dispatch prohibition, it sought to ensure that
common carriers did not misuse frequencies by devoting them to dispatch
use. The development of new technologies, including digitalization,
have minimized any concerns that using common carrier spectrum for
dispatch would impair the licensees' capacity to provide common carrier
service because digital technologies allow spectrum to be used more
efficiently. Moreover, the mobile services marketplace will ensure that
spectrum is not used inefficiently for dispatch service if consumer
demand demonstrates that alternative uses are more desirable.
35. Because of the significant public benefits that we expect by
eliminating the prohibition, we decline to impose a sunset provision
and permit CMRS licensees to provide dispatch without restriction. We
agree with commenters that establishing a sunset period would delay the
introduction of new competition without providing any benefit to
consumers. Commenters favoring a sunset period maintain that they need
an opportunity to adjust to common carrier obligations without
disruption by new competitors. We note, however, that our intent in
establishing the three-year transition period was to provide private
carriers that will be reclassified as CMRS an opportunity to prepare
for new regulatory requirements, not to shield them from new sources of
competition. We are unpersuaded, therefore, that a sunset provision is
needed to protect SMR licensees. Moreover, we observe that to the
extent that non-SMR CMRS licensees will need to construct or modify
their systems before they will be able to offer dispatch services, SMR
providers will have an opportunity to adjust to new competitors. We
also decline to limit non-SMR CMRS licensees' participation to
providing dispatch on a secondary basis. There is no evidence in the
record that restricting their participation in this manner would
provide any benefit to consumers.
III. Procedural Matters
36. Final Regulatory Flexibility Analysis. Pursuant to the
Regulatory Flexibility Act of 1980, an Initial Regulatory Flexibility
Analysis (IRFA) was incorporated in the Notice. Written comments on the
IRFA were requested, although none were received. The Commission has
prepared the following [[Page 15495]] Final Regulatory Flexibility
Analysis (FRFA) of the expected impact of the proposed rule changes on
small entities.
I. Reason for Action. This Report and Order eliminates the
restrictions contained in Sections 90.603(c) and 90.703(c) of the
Commission's rules that prohibit wireline telephone common carriers
from holding licenses in the SMR service and commercial 220 MHz band.
The Report and Order also permits all CMRS providers to offer dispatch
service in competition with SMR systems. The record in this proceeding
demonstrates that these restrictions are no longer necessary and should
be repealed.
II. Objectives. 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 action is authorized under Sections 3(n),
4(i), 303(r), 332(c) and 332(d) of the Communications Act of 1934, as
amended, 47 U.S.C. Secs. 153(n), 154(i) and 303(r), 332(c) and 332(d).
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 rule changes
contained in the Report and Order. We expect that several small
entities will benefit by eliminating the wireline restrictions and
dispatch prohibition because it will provide these entities and
additional opportunity to participate in the provision of these
services.
VII. Significant Alternatives Minimizing the Impact on Small
Entities Consistent with the Stated Objectives. The Notice in this
proceeding solicited comments on whether to eliminate the wireline
eligibility restrictions and the dispatch prohibition. No significant
alternatives were presented in the comments.
37. Ordering Clauses. Accordingly, IT IS ORDERED, that Part 22 of
the Commission's Rules ARE AMENDED as set forth below and are effective
April 24, 1995. It is further ordered that Part 90 of the Commission's
Rules are amended as set forth below and are effective upon March 24,
1995.\3\
\3\We note that the Administrative Procedure Act allows the
rules to become effective immediately because we are relieving a
restriction rather than imposing one. See 5 U.S.C. 553(d)(1). We
believe that it is appropriate for these rules to take effect
immediately upon publication in the Federal Register in light of the
pending requests for waiver, discussed infra.
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38. It is further ordered that the Petitions for Waiver filed by
Southwestern Bell, Bell Atlantic, US West, RAM Mobile, Cass Cable, and
API are dismissed as moot.
List of Subjects
47 CFR Part 22
Public mobile services; Radio.
47 CFR Part 90
Private land mobile services; Radio.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Amendatory Text
Parts 22 and 90 of Chapter I of Title 47 of the Code of Federal
Regulations are amended as follows:
PART 22--PUBLIC MOBILE SERVICE
1. The authority citation for part 22 continues to read as follows:
Authority: Sections 4, 303, 307, and 332, 48 Stat. 1066, 1082,
as amended; 47 U.S.C. 154, 303, 307 and 332, unless otherwise noted.
2. Section 22.577 is amended by revising the heading, the
introductory text, the introductory text of paragraph (a) and
paragraphs (a)(1), (a)(2), (b) and (d), to read as follows:
Sec. 22.577 Dispatch service.
Carriers licensed under this subpart may provide dispatch service
in accordance with the rules in this section.
(a) Installation without prior FCC approval. A station licensee may
install or remove dispatch points for subscribers without obtaining
prior FCC approval. A station licensee may install or remove dispatch
transmitters for subscribers without applying for specific
authorization, provided that the following conditions are met.
(1) Each dispatch transmitter must be able to transmit only on the
mobile channel that is paired with the channel used by the base
station.
(2) The antenna of the dispatch transmitter must not exceed the
criteria in Sec. 17.7 of this chapter that determine whether the FAA
must be notified of the proposed construction.
* * * * *
(b) Notification. Licensees must notify the FCC (FCC Form 489)
whenever a dispatch transmitter is installed pursuant to paragraph (a)
of this section. The notification must include the name and address of
the subscriber(s) for which the dispatch transmitter was installed, the
location of the dispatch transmitter, the height of antenna structure
above ground and above mean sea level, the channel(s) used, and the
call sign and location of the base station.
* * * * *
(d) Dispatch transmitters requiring authorization. A dispatch
transmitter that does not meet all of the requirements of paragraph (a)
of this section may be installed only upon grant of an application for
authorization therefor (FCC Form 600).
* * * * *
3. Section 22.901 is amended by revising paragraph (c) to read as
follows:
Sec. 22.901 Cellular service requirements and limitations.
* * * * *
(c) Dispatch service. Cellular systems may provide dispatch
service.
* * * * *
PART 90--PRIVATE LAND MOBILE RADIO SERVICES
4. The authority citation for part 90 continues to read as follows:
Authority: Sections 4, 303, and 332, 48 Stat. 1066, 1082, as
amended; 47 U.S.C. 154, 303 and 332, unless otherwise noted.
5. Section 90.603(c) is revised to read as follows:
Sec. 90.603 Eligibility.
* * * * *
(c) Any person eligible under this part and proposing to provide on
a commercial basis base station and ancillary facilities as a
Specialized Mobile Radio Service System operator, for the use of
individuals, federal government agencies and persons eligible for
licensing under subparts B, C, D, or E of this part.
6. 47 CFR 90.703(c) is revised to read as follows:
Sec. 90.703 Eligibility.
* * * * *
(c) Any person eligible under this part proposing to provide on a
commercial basis, station and ancillary facilities for the use of
individuals, federal government agencies and persons eligible for
licensing under subparts B, C, D, or E of this part.
[FR Doc. 95-7295 Filed 3-23-95; 8:45 am]
BILLING CODE 6712-01-M
