[Federal Register Volume 59, Number 159 (Thursday, August 18, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-19990]
[[Page Unknown]]
[Federal Register: August 18, 1994]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 22 and 90
[GN Docket No. 94-90, FCC 94-202]
Eligibility for the Specialized Mobile Radio Services and Radio
Services in the 220-222 MHz Land Mobile Band and Use of Radio Dispatch
Communications
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rule making.
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SUMMARY: In this Notice of Proposed Rule Making (NPRM), the Commission
proposes to eliminate the rules that now prohibit wireline telephone
carriers from holding licenses in the Specialized Mobile Radio (SMR)
service and the commercial 220-222 MHz land mobile band. The NPRM also
proposes to eliminate the current prohibition on the provision of
dispatch service by cellular licensees and other licensees in the
Public Mobile Services.
DATES: Comments are due by September 21, 1994 and reply comments are
due by October 6, 1994.
ADDRESSES: Federal Communications Commission, Washington, D.C. 20554.
FOR FURTHER INFORMATION CONTACT:
Kathleen O'Brien Ham or Susan McNeil, Private Radio Bureau, Land Mobile
and Microwave Division, (202) 632-2443.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's NPRM
in GN Docket No. 94-90, adopted August 2, 1994 and released August 11,
1994. The full text of Commission decisions are available for
inspection and copying during normal business hours in the FCC Docket
Branch (Room 230), 1919 M Street, N.W., Washington, DC. The complete
text of this decision may also be purchased from the Commission's copy
contractor, International Transcription Service, Inc., (202) 857-3800,
2100 M Street, N.W., Washington, DC 20554.
Synopsis of the Notice of Proposed Rule Making
I. Background
A. Wireline Restrictions
1. When the Commission established the SMR service in 1974, it
elected to prohibit wireline telephone common carriers from holding SMR
base station licenses. Because of the dominance of the established
wireline carriers in the 1970's, the Commission viewed the prohibition
on wireline entry as consistent with promoting competition in the
fledgling SMR industry. The Commission has also stated that the
wireline prohibition was intended to ensure that SMRs would be
available as a business opportunity for small entrepreneurs and to
reduce incentives for wireline carriers to engage in discriminatory
interconnection practices.
2. When 220-222 MHz service was established in 1991, the Commission
adopted an identical restriction on wireline eligibility for commercial
licenses in that service. The Commission indicated that the rationale
for excluding wirelines from SMR licensing also served as the basis for
the 220 MHz limitation.
3. In 1986, the Commission issued a Notice of Proposed Rule Making
in PR Docket No. 86-3 that proposed to eliminate the SMR wireline
restriction. The proceeding was terminated in 1992 on the grounds that
the record has become stale. The Commission stated that the wireline
restriction should be retained at least until the Commission could more
fully evaluate ``the competitive potential of private land mobile
services vis-a-vis common carrier land mobile providers'' so as ``to
preserve a climate favorable to the continued development of private
land mobile competitors.''
B. Dispatch Prohibition
4. The Commission currently prohibits common carriers licensed
after January 1, 1982, including all cellular licensees, from offering
dispatch services. The Commission has since construed the prohibition
on dispatch services to include any transmission on cellular
frequencies that routes communications through a dispatcher, as opposed
to through a cellular switch (i.e., with no intervention by a
dispatcher). On the other hand, the Commission has allowed ``dispatch-
type'' communications to be offered through the cellular switched
network as long as the communication is not directly between a
dispatcher and end user.
II. Discussion
A. Licensee Eligibility in SMR and 220 MHz Commercial Service
5. In evaluating its present wireline restrictions, the Commission
tentatively concludes that there is no longer a need for the SMR
wireline ban or the commercial 220 MHz wireline restriction in today's
competitive mobile service marketplace. First, the Commission notes
that the risk of wireline carriers being able to cause competitive harm
if allowed to enter the SMR market has diminished in recent years. When
the SMR wireline ban was adopted 20 years ago, mobile services were in
their infancy and telecommunications was dominated by wireline carriers
under the control of AT&T. Since that time, the breakup of AT&T and the
rapid growth of mobile services have combined to create an environment
in which wireline carrier participation in mobile services, including
participation by the post-divestiture BOCs, has the potential to
increase competition rather than impede it.
6. In the Broadband PCS docket, the Commission recently concluded
that wireline entities should be allowed to hold broadband PCS licenses
without restriction (except to the extent such entities also hold
cellular interests). In that proceeding, the Commission determined that
wireline participation would produce significant economies of scope
between wireline and PCS networks, which, in turn, would promote rapid
development of PCS and yield a broader array of PCS services at lower
costs to consumers. The Commission has similarly concluded that LECs
should be allowed to participate in the provision of narrowband PCS
service without restriction. The Commission notes that its conclusions
with respect to wireline entry into broadband and narrowband PCS are
also potentially applicable to SMR and 220 MHz commercial service.
7. The Commission also questions whether the wireline restriction
continues to be necessary to protect against competitive harm. THe
wireline restrictions have served to eliminate any incentive for LECs
to: (1) Discriminate in the offering of interconnection to
nonaffiliated SMR licensees, or (2) use their market power in the local
exchange market to cross-subsidize SMR services, thereby undercutting
potential competition. Even if the wireline prohibition is eliminated,
however, other regulatory safeguards exist and can be enforced to
prevent wireline from engaging in these forms of anti-competitive
behavior.
8. With respect to discrimination in interconnection, Section 201
of the Communications Act mandates that a carrier must provide
reasonable interconnection to any carrier that requests it. In
addition, Section 332(c)(1)(B) of the Communications Act, as amended by
the Budget Act, requires the Commission pursuant to Section 201 to
order common carriers to interconnect with CMRS providers (which
includes any SMR or commercial 220 MHz licensee utilizing
interconnection) on reasonable request. In its Order implementing this
provision, the Commission determined that LECs should provide
reasonable interconnection to all CMRS providers in a manner that is
consistent with past requirements for cellular providers. In addition,
the Commission requires LECs to offer interconnection to PMRS
providers.
9. The Commission also notes that independent accounting safeguards
exist to protect against cross-subsidization in the event of wireline
entry into the SMR service. In the CMRS docket, the Commission
indicated that the joint cost and affiliate transaction rules would
apply to all CMRS providers with LEC affiliates. These rules require
LECs to maintain procedures to separate the costs of the regulated
activities from those of their activities that are classified as
nonregulated for federal accounting purposes, and to account for their
transactions with their nonregulated affiliates. Since most SMRs and
commercial 220 MHz licensees fall inside the CMRS definition, these
existing and applicable accounting rules should help prevent cross-
subsidization.
10. Another reason for eliminating the wireline prohibition is that
the SMR industry is sufficiently well-established that wireline entry
is unlikely to chill further development of the service. Although SMR
operations today are still relatively small in comparison to cellular
operations, most available SMR spectrum has been licensed in
metropolitan areas. Thus, any threat that wirelines might obtain a
substantial portion of SMR spectrum and thereby hinder the development
of SMR service by non-wireline carriers is substantially diminished. As
a practical matter, wirelines are likely to be largely limited to
entering the SMR business by acquiring existing SMR businesses, and all
such transfers would be subject to Commission review under existing
transfer and control rules.
11. The Commission reached a similar tentative conclusion with
respect to wireline participation in commercial 220 MHz service.
Although 220 MHz service was established more recently than SMR,
substantial licensing has occurred and the service is closed to new
applicants for the time being. Thus, wireline entry into commercial 220
MHz service would be likely to be gradual as the service develops, and
would be subject to case-by-case review by the Commission. In addition,
a more open eligibility policy may be suitable because of the
narrowband nature of 220 MHz service. In establishing regulations for
the licensing of narrowband PCS, for example, the Commission concluded
that LECs should be allowed to participate in the provision of
narrowband PCS service without restriction. The Commission reasoned
that narrowband PCS was sufficiently disparate from any LEC offering to
make negligible any ability these carriers might have to exert undue
market power or restrain trade. The Commission solicits comment on
whether a similar conclusion is justified in the case of 220 MHz
service.
12. Additionally, repeal of the wireline ban could promote
opportunities for small entrepreneurs as well as infuse new capital and
expertise into the mobile services marketplace. In its request for rule
making, Polar Communications suggested that the overwhelming majority
of companies shut out of the SMR business by the wireline ban are
small, rural telephone companies with capitalizations that are small in
comparison to many dominant SMR operators. Repeal of the ban could
therefore serve to further competition in the SMR market by increasing
the number of small business participants in the service. Future
auctions of SMR spectrum could provide additional opportunities for
small business entry into SMRS through competitive bidding incentives
established for small businesses, minorities, and rural telephone
companies.
13. In addition, wireline entry could infuse new capital and
expertise into the mobile services marketplace. The SMR industry is in
transition, evolving from stand-alone analog to wide-area networks. 220
MHz is also at an important stage of technological development. During
this time frame, wirelines can be a key source of capital and expertise
for the development of new technological advances that will benefit
these services.
14. The Commission concludes that the wireline restrictions have
been outmoded by changes in the mobile services marketplace since 1974
and that there may be cause to eliminate these restrictions. Commenters
are nevertheless invited to present any views that justify retaining
the wireline restrictions. In particular, the Commission is interested
in any concerns commenters may have about the potential ability of
wirelines to unfairly influence competition in the mobile services
marketplace. In addition, commenters may wish to address the
alternative of retaining the restrictions for one service and not the
other.
15. In proposing to allow wirelines to enter the SMR and commercial
220 MHz markets, the Commission emphasizes its intent to vigorously
enforce statutory and regulatory safeguards discussed above that
prohibit wirelines from engaging in discriminatory interconnection
practices. Commenters are encouraged to address how to best achieve
this objective.
16. Also, assuming the wireline restrictions are repealed, the
Commission seeks comment on whether existing accounting safeguards
applicable to LECs with CMRS operations are sufficient to protect
against cross-subsidization and discriminatory pricing, or whether
structural separation requirements should also be imposed. In the
Broadband PCS Second Report and Order, the Commission confirmed that
the accounting safeguards would apply to PCS but concluded that no new
subsidiary rules should be required because it would seriously
undermine the ability of LECs to take advantage of their potential
economics of scope and would jeopardize other public interest benefits
of wireline participation in PCS. Commenters should address whether
added structural separation requirements would similarly undermine the
potential public interest benefits of wireline entry into the SMR and
commercial 220 MHz markets.
17. Finally, assuming that the wireline restriction is eliminated,
the issue arises whether there is a need to impose other eligibility
restrictions on SMR and commercial 220 MHz applicants to address
present day competitive concerns. In particular, the Commission has
recognized in other contexts that it cannot yet determine that cellular
licensees lack market power in the mobile services market. The
Commission will defer consideration of whether this market power is
sufficient to justify restrictions on cellular eligibility for SMR or
220 MHz licensing pending a decision in General Docket 93-252 on a
proposal to impose a general limit on the amount of spectrum that any
CMRS licensee may acquire in a given geographic market.
B. Common Carrier Dispatch Prohibition
18. The Commission proposes to amend its rules to permit all mobile
service common carriers to provide dispatch service. A number of
parties have indicated in the past that repeal of the dispatch ban
would enhance competition in the dispatch market and thereby provide
consumers with expanded choice. The Commission tentatively agrees with
these views and therefore is included to repeal the present prohibition
entirely. Commenters should address the Commission's conclusion that
repeal of the dispatch ban will lead to more innovative service
offerings and lower costs for dispatch customers. The Commission also
seeks comment on whether repeal of the ban will increase opportunities
for dispatch customers to obtain service from commercial vendors as an
alternative to relying on internal systems or systems shared with other
eligible users.
19. The Commission also encourages commenters to provide data on
the current state of competition in the dispatch market, including the
level of participation by small businesses. Commenters are also asked
to address the potential for participation in the dispatch market by
mobile service common carriers, including (1) types of dispatch
services that common carrier licensees are most likely to offer, (2)
any technical advantages or disadvantages to offering dispatch service
on a common carrier mobile service system, and (3) the effect of common
carrier entry on competition in the dispatch market. Commenters should
further consider whether common carriers operating in the dispatch
market could engage in discriminatory pricing or cross-subsidization
activities that would place dispatch competitors at a disadvantage.
20. If the Commission concludes that immediate lifting of the
dispatch prohibition could have an anti-competitive impact, one
alternative would be to ``sunset'' the rule at some point in the
future. For example, the Commission could delay repeal of the rule
until August 10, 1996, three years from the date the Budget Act
amendments became law. This effective date would coincide with the
conclusion of the three year transition period provided in the Budget
Act for existing private land mobile licensees to adjust to regulation
as CMRS providers. A sunset provision would also effectively defer
cellular participation in the dispatch market and thereby give the
Commission more time to evaluate information concerning the state of
competition in the dispatch market. The Commission seeks comment on
this alternative.
21. Another alternative to outright repeal of the ban on common
carrier dispatch service would be to allow mobile common carrier
licensees to provide dispatch service only on a secondary basis or to
impose a limit on the amount of system capacity that common carrier
licensees may devote to dispatch service. Consumers appear to identify
cellular as primarily a two-way service, therefore cellular providers
may in any case be reluctant to divert system capacity from voice to
dispatch service. On the other hand, if dispatch evolves from a
primarily analog service to a primarily digital service, cellular
licensees may have ample capacity to provide both radiotelephone and
dispatch. In light of these factors, the Commission seeks comment on
whether imposing limits on cellular dispatch is necessary or practical.
22. Finally, the Commission asks commenters to consider the
treatment of dispatch offered by common carriers other than land mobile
service providers, e.g. aviation, marine, and mobile satellite
licensees who provide common carrier service. These categories of
common carriers were not previously prohibited from offering dispatch
service under old Section 332 of the Communications Act, which applied
only to land mobile services. Because Section 332 as amended applies to
all mobile services, however, an issue arises whether these categories
of licensees now fall within the scope of the prohibition absent
further Commission action. The Commission believes that Congress did
not intend to extend the dispatch ban to non-land mobile licensees but
meant simply to repeat and incorporate its old prohibition against
common carrier land mobile service providers offering dispatch without
modification and to give the Commission authority to repeal the
prohibition in whole or in part. The Commission seeks comment on this
view.
III. Procedural Matters
23. Initial Regulatory Flexibility Analysis. Pursuant to Section
603 of the Regulatory Flexibility Act, the Commission has prepared an
Initial Regulatory Flexibility Analysis (IRFA) of the expected impact
of the proposed rule changes on small entities. Written public comments
are requested on the IRFA.
I. Reason for Action. This rule making proceeding was initiated to
solicit comment on proposals to amend Sections 90.603(c), 90.703,
22.519(a) and 22.911(d) of the Commission's rules. The basic proposals
are (1) Repeal the ban on wireline telephone carrier eligibility for
Specialized Mobile Radio Service (SMR) and commercial 220-222 MHz
(commercial 220 MHz) land mobile service and (2) permit all commercial
mobile service providers to offer dispatch service in competition with
SMR systems.
II. Objectives. In making the above proposals, the Commission
intends to promote competition, growth and innovation at a time when
the mobile services marketplace is undergoing regulatory changes.
III. Legal Basis. The proposed action is authorized under Sections
3(n), 4(i), 303(r), 332(c), and 32(d) of the Communications Act of
1934, 47 U.S.C. 153(n), 154(i) and 303(r), 332(c) and 332(d), as
amended.
IV. Reporting, Recordkeeping and Other Compliance Requirements.
None.
V. Federal Rules Which Overlap, Duplicate or Conflict With Rules.
None.
VI. Description, Potential Impact, and Number of Small Entities
Involved. Many small entities could be affected by the proposals
contained in the Notice. The full extent of the impact cannot be
predicted until the issues presented in this proceeding are resolved.
The Commission will evaluate comments in response to the Notice and
will set forth its findings on the impact of the rule changes on small
entities in the Final Regulatory Flexibility Analysis.
VII. Significant Alternatives Minimizing the Impact on Small
Entities Consistent with the Stated Objectives. The Notice solicits
comments on the alternative described above. Any additional significant
alternatives presented in the comments will also be considered.
24. Ex Parte Rules/Non-Restricted Proceeding. This is a non-
restricted notice and comment rule making proceeding. Ex parte
presentations are permitted except during the Sunshine Agenda period,
provided that they are disclosed as provided in the Commission's rules.
See generally 47 CFR 1.1202, 1.1203, 1.120(a).
25. Comment Period. For filing requirements, see generally 47 CFR
1.415, 1.419. To file formally in this proceeding, participants must
file an original and four copies of all comments, reply comments, and
supporting materials. If you want each Commissioner to receive a
personal copy of your comments, you must file an original and nine
copies. Send comments and reply comments to the Office of the
Secretary, Federal Communications Commission, Washington, D.C. 20554.
In addition, commenters are requested to submit courtesy copies to the
Chief, Land Mobile and Microwave Division, Private Radio Bureau, 2025 M
Street, N.W., Room 5202, Washington, D.C. 20554. Comments and reply
comments will be available for public inspection during regular
business hours in the FCC Reference Center (Room 239) at the
Commission's headquarters at 1919 M Street, N.W., Washington, D.C.
26. Paperwork Reduction Act: No significant impact.
List of Subjects
47 CFR Part 22
Public mobile services; Radio.
47 CFR Part 90
Private land mobile services; Radio.
William F. Caton,
Acting Secretary.
[FR Doc. 94-19990 Filed 8-17-94; 8:45 am]
BILLING CODE 6712-01-M
