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                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554

In the Matter of                )
                                )
Revision of Part 2 of the Commission's Rules)
Relating to the Marketing and Authorization) ET Docket No. 94-45
of Radio Frequency Devices      )  RM-8125


                  MEMORANDUM OPINION AND ORDER
                    (Proceeding Terminated)


   Adopted:  May 14, 1998               Released:  May 28, 1998

By the Commission:


                          INTRODUCTION

     1.  In response to a Petition for Reconsideration and Clarification in this proceeding filed by
Ericsson, Inc. ("Ericsson"), the Commission is amending the importation regulations that apply to
transmitters operating in the authorized radio services.  Specifically, it is relaxing the rules regarding
the number of radio frequency (RF) devices that can be imported, prior to receiving a grant of
equipment authorization, for the purpose of testing and evaluation or demonstration at industry trade
shows.  Currently, only 200 units may be imported for testing and evaluation and only ten units may
be imported for demonstrations at trade shows unless specific written authorization is first obtained
from the Chief, Compliance Division, Compliance and Information Bureau.  For imported devices
designed solely to be operated under the provisions of a license issued by the Commission within one
of the allocated radio services, these limits are being increased to 2000 units for devices imported for
testing and evaluation and to 200 units for devices imported for demonstrations at trade shows.  The
Commission believes that this increase will provide marketing parity between products that are
domestically manufactured and those that are imported.  The Commission also is granting in part and
denying in part the request by Ericsson to eliminate the licensing requirements for manufacturers that
operate transmitters for evaluation or demonstration at trade shows.  Manufacturers operating
equipment for demonstration or evaluation purposes will be permitted to operate the equipment under
the authority of a local FCC licensed service provider on the condition that the licensee gives the
manufacturer permission to operate in this manner and accepts responsibility for the operation of the
equipment.  Otherwise, the manufacturer would be required to obtain a special temporary
authorization (STA) or an experimental license.

                           BACKGROUND

     2.  On February 3, 1997, the Commission adopted a Report and Order (Order) in this
proceeding.  Among other changes, this Order amended the marketing rules to permit operation of
unlicensed RF devices prior to obtaining an equipment authorization or making a determination of
compliance with the applicable rules.  These products may be operated for any of the following
purposes:  1) compliance testing; 2) demonstrations at a trade show; 3) demonstrations at an
exhibition conducted at a business, commercial, industrial, scientific, or medical location, but
excluding locations in a residential environment; 4) evaluation of product performance and
determination of customer acceptability at the manufacturer's facilities during developmental, design
or pre-production states; and 5) evaluation of product performance and determination of customer
acceptability where customer acceptability of an RF device cannot be determined at the
manufacturer's facilities because of size or unique capability of the device, provided the device is
operated at a business, commercial, industrial, scientific, or medical user's site, but not at a residential
site, during the development, design or pre-production stages.  Devices that operate in an authorized
service will continue to require a license prior to operation.

     3.  In this proceeding, Ericsson and Northern Telecom Inc. suggested that devices being
marketed or operated under the new rules should be permitted to be imported in unlimited quantities. 
The Commission disagreed.    Under the current rules, RF devices that have not been authorized may
only be imported in limited quantities for testing and evaluation or for demonstrations at industry
trade shows.  The Commission stated that such a change would permit the importation of an
unlimited number of products that have not been tested to demonstrate compliance with the
standards.  It added that if such imported products were later found to be non-compliant with the
rules, it might be impossible to recover them, with the result that significant interference problems
could develop for other radio operations.  Accordingly, the Commission retained its existing
regulations regarding the importation of RF products.  It added that the relaxation of the marketing
rules would still provide foreign manufacturers with sufficient flexibility to display and promote their
products.  The Commission also added a reminder in 47 CFR  2.803(h) that the importation
conditions continue to apply to imported products.


                   PETITION FOR RECONSIDERATION

     4.  On April 7, 1997, Ericsson filed its Petition for Reconsideration and Clarification. 
Ericsson requests that the Commission reconsider its quantity limits on RF equipment that is imported
for testing and evaluation or for demonstration at trade shows.  Ericsson states that 47 CFR 
2.803(e) was crafted to provide all manufacturers, both domestic and foreign, with greater flexibility
to test, evaluate and demonstrate RF devices prior to receiving a grant of equipment authorization
in order to allow the manufacturers to promote their products in a more competitive and
technologically advancing marketplace.  Ericsson argues that removing the limits placed on imported
devices, i.e., eliminating 47 CFR  2.803(h), 2.1204(a)(3) and 2.1204(a)(4), is consistent with the
liberalized marketing rules adopted in the Order and would ensure that there was no unreasonable
discrimination against imported equipment that could be viewed as a barrier to trade.  Ericsson
indicates that manufacturers in today's competitive marketplace are being requested by numerous
licensees and prospective operators, who have won licenses in auctions, to demonstrate products. 
Thus, Ericsson believes that the limitations on a manufacturer's ability to import an unlimited number
of devices for product demonstrations at customer locations or trade shows unfairly restricts the
ability of foreign manufacturers to compete with domestic manufacturers.  Ericsson adds that, should
the Commission choose not to eliminate the limits on imported devices, it should exempt certain
categories of imported equipment from those limits, namely base station transceivers and
portable/mobile devices used in the Cellular Radiotelephone Service and the Personal
Communications Services (PCS) under 47 CFR Parts 22 and 24, respectively, since these products
have an excellent record of compliance, are manufactured by companies that take the Commission's
rules very seriously, and can be easily traced to a responsible party.

     5.  Ericsson also requests that the Commission eliminate its requirement that manufacturers
obtain a license to operate transmitters for demonstrations at trade shows, demonstrations at an
exhibition, or evaluation of product performance.  Ericsson states that requiring manufacturers to
continue to obtain special temporary authorizations (STA's) or experimental licenses before operating
the equipment negates the benefits the changes to the rules were intended to provide.  Ericsson adds
that the requirement to obtain a license before operating should apply only to entities that intend to
provide services using the product rather than to entities, like manufacturers, that only intend to
demonstrate the products at trade shows, etc.

     6.  Comments on Ericsson's petition were filed by Siemens Business Communication Systems,
Inc. ("SBCS") on May 9, 1997.  SBCS states that if the Commission's concern was to minimize
potential interference from non-compliant prototype devices, it would limit the number of prototype
devices produced domestically.  It adds that with the auctioning of "thousands" of PCS and other
wireless licenses, the number of potential operators has "exploded" and is likely to increase as
additional auctions are held.  However, the existing limits on importation do not allow foreign
manufacturers to adequately demonstrate their prototype products to this growing number of
providers.  For example, SBCS indicates that each of the MTA operators for a PCS system typically
requests 50 or more prototype handsets to perform their internal evaluation, quickly exceeding the
Commission's 200 unit limit on importation.  Accordingly, SBCS requests that the Commission at
least increase the import limits to 2,000 units for products imported for testing and evaluation and
to 50 units for products imported for display and operation at trade shows.  SBCS also agrees with
Ericsson that the licensing requirements should not apply to demonstrations at trade shows as this
is an unnecessary regulatory burden.  SBCS adds that manufacturers can not always plan their
customer tests with sufficient notice to obtain an STA or experimental license on a timely basis.

     7.  A late filed comment was received and accepted from Bosch Telecom GMBH ("Bosch")
on June 13, 1997.  Bosch states that the restrictions on the number of devices imported for testing
and evaluation or for demonstrations will distort competition and create unreasonable discrimination
that could be viewed as a barrier to trade.  Bosch adds that it is necessary for manufacturers to be
able to demonstrate their products concurrently to multiple potential customers throughout the U.S. 
Further, as a result of a desire to ensure low barriers to entry within the U.S. market and to promote
free trade within the U.S., Bosch believes that foreign manufacturers have traditionally had unique
incentives to manufacture equipment that meets the Commission's technical standards.  It adds that
the importation limits are unreasonably discriminatory and anti-competitive, and unfairly deny
American consumers full access to global available technologies, are beyond the scope of this
proceeding, and serve no legitimate regulatory purpose.


                             DECISION

     8.  Import limits.  Part 2 of the Commission's rules generally prohibits the importation and
marketing of equipment before it has been authorized as required.  However, up to 200 units may be
imported routinely, prior to equipment authorization, for the purpose of testing and evaluation, and
up to ten units may be imported routinely for demonstration at a trade show.  Higher quantities may
be imported if specific written authorization is obtained from the Commission.  In the Order, the
Commission chose not to amend its rules limiting the importation of RF devices because of the
difficulties sometimes associated with identifying the party that is responsible for complying with the
rules, e.g., the importer.  Our concern is the potential for harmful interference that could be caused
to other users of the spectrum should large quantities of non-compliant equipment be imported and
operated.  With many products, especially low-power, unlicensed, consumer devices, the name of the
responsible party may not be on the product.  Thus, it may not be possible to trace a product to a
specific importer or to have a product be recalled should it later be found to be a source of harmful
interference.

     9.  We continue to believe that limits on the number of unauthorized devices that may be
imported routinely for testing and evaluation or display at a trade show are necessary.  These limits
do not pose a significant barrier to foreign trade. In most cases, the current limits permit foreign
manufacturers to routinely import sufficient quantities of unauthorized equipment to meet legitimate
needs for testing and evaluation and display at trade shows.  Further, manufacturers can generally
obtain permission to import as many units as they need by filing a brief and simple request.  It is
expected that the staff would be able to respond to such requests in a prompt manner.

     10.  Ericsson has made a compelling argument that the current limits are inappropriate for
equipment intended for use in authorized radio services where a license to operate is required to be
obtained from the Commission. In some authorized radio services, such as the Personal
Communications Services, there are several hundred licensees, each of which may be interested in
evaluating small quantities of sample base and mobile units before making larger purchases.  This
could result in frequent requests for permission to import a higher number of such units.  In order to
reduce this administrative burden, we are amending the rules to allow the routine importation of up
to 2000 units for test and evaluation and up to 200 units for display at trade shows, but only for
equipment intended to be operated in an authorized radio service and under a Commission-issued
license.  There is little risk that such equipment will be marketed or placed into permanent operation
before it has been authorized as required because the equipment will remain within the control of
either the manufacturer or a licensee.  Further, such equipment normally is labelled with the name of
the manufacturer, facilitating identification of the responsible party.

     11.  Licensing requirements.  The Communications Act requires that a station license be
obtained prior to the operation of an RF transmitter.  A product operated by a manufacturer has the
potential to cause interference to licensed services already operating in the vicinity.  This potential
is minimized by careful coordination of the operating frequency, power and location of the transmitter
with other licensed services.  This coordination is assured through the current rules that require STA's
or experimental licenses.  If the coordination is not performed, there is a significant risk that operation
of the device will cause interference to existing spectrum users.  The source of such interference
would be difficult to locate.  Accordingly, the Commission does not agree with Ericsson that the
requirement to obtain a license, where currently required, should be eliminated for equipment
manufacturers.

     12.  STA's and experimental licenses are available to equipment manufacturers.  The
Commission recognizes that a manufacturer may not always have sufficient time to obtain such a
license from the Commission for a product demonstration.  We believe that these timing problems
will be ameliorated upon the completion of the proceeding in ET Docket No. 96-256 which will
streamline Part 5 of the rules and permit us to expedite the granting of STA's.  In the interim, and
as an alternative to obtaining a Part 5 license, such timing problems can be eliminated by permitting
the equipment manufacturer to operate under the authority of a local licensed service provider.  The
operating parameters for this license have already been addressed.  If the manufacturer operates
equipment that complies with these existing parameters, there would be no increase in the potential
for interference to other spectrum users.  Accordingly, the Commission is amending its regulations
to permit a manufacturer to operate its product for demonstration or evaluation purposes under the
authority of a local FCC licensed service provider.  The licensee must grant permission to the
manufacturer to operate in this manner.  Further, the licensee would continue to remain responsible
for complying with all of the operating conditions and requirements associated with its license.


                        PROCEDURAL MATTERS

     13.  Final Regulatory Flexibility Analysis.  As required by Section 603 of the Regulatory
Flexibility Act (RFA), 5 U.S.C.  603, an Initial Regulatory Flexibility Analysis (IRFA) was
incorporated in the Notice of Proposed Rule Making (Notice) in ET 94-45.  The Commission sought
written Comments on the proposals in the Notice including the IRFA.  No commenting parties raised
issues specifically in response to the IRFA and a Final Regulatory Flexibility Analysis (FRFA) as
included in the Report and Order in this proceeding.  The rules adopted in this Memorandum Opinion
and Order (MO&O) provide clarification and further relaxation of the marketing regulations adopted
in the Report and Order.  We therefore certify, pursuant to Section 605(b) of the RFA, that the rules
adopted in this MO&O do not have a significant economic impact on a substantial number of small
entities.

     14.  The Commission will send a copy of this final certification, along with this Memorandum
Opinion and Order, in a report to Congress pursuant to the Small Business Regulatory Enforcement
Fairness Act of 1996, 5 U.S.C.  605(b).  This certification will also be published in the Federal
Register.


                         ORDERING CLAUSES

     15.  IT IS ORDERED that the Petition for Reconsideration and Clarification filed by Ericsson,
Inc., IS GRANTED, as described above, and IS DENIED in all other respects.  Further, IT IS
ORDERED that Part 2 of the Commission's Rules and Regulations IS AMENDED as shown in the
attached Appendix, effective 60 days from the date of publication of this amendment in the Federal
Register.  IT IS FURTHER ORDERED that this proceeding is TERMINATED.  This action is taken
pursuant to the authority contained in Sections 4(i), 301, 302, 303(f), (g), (l), and (r) of the
Communications Act of 1934, as amended, 47 USC  154(i), 301, 302, 303(f), (g), (l), and (r), 

     16.  For further information regarding this Memorandum Opinion and Order, contact the
Office of Engineering and Technology, John Reed, at (202) 418-2455.

                         FEDERAL COMMUNICATIONS COMMISSION



                         Magalie Roman Salas
                         Secretary                             APPENDIX

Title 47 of the Code of Federal Regulations, Part 2, is amended as follows:

     1.  The authority citation for Part 2 continues to read as follows:

AUTHORITY:  Sec. 4, 302, 303, and 307 of the Communications Act of 1934, as amended, 47
U.S.C. Sections 154, 302, 303 and 307, unless otherwise noted.

     2.  Section 2.803 is amended by revising paragraph (e)(3) to read as follows:

Section 2.803  Marketing of radio frequency devices prior to equipment authorization.

 *              *              *              *              *
                                
(e)(3)  The provisions of paragraphs (e)(1)(i), (e)(1)(ii), (e)(1)(iii), (e)(1)(iv) and (e)(1)(v) of this
section do not eliminate any requirements for station licenses for products that normally require a
license to operate, as specified elsewhere in this chapter.

(i)  Manufacturers should note that station licenses are not required for some products, e.g., products
operating under Part 15 of this chapter and certain products operating under Part 95 of this chapter.

(ii)  Instead of obtaining a special temporary authorization or an experimental license, a manufacturer
may operate its product for demonstration or evaluation purposes under the authority of a local FCC
licensed service provider.  However, the licensee must grant permission to the manufacturer to
operate in this manner.  Further, the licensee continues to remain responsible for complying with all
of the operating conditions and requirements associated with its license.

 *              *              *              *              *

3.  Section 2.1204 is amended by revising paragraphs (a)(3) and (a)(4) to read as follows:

Section 2.1204  Import conditions.

 *              *              *              *              *
(a)(3)  The radio frequency device is being imported in limited quantities for testing and evaluation
to determine compliance with the FCC Rules and Regulations or suitability for marketing.  The
devices will not be offered for sale or marketed.  The phrase "limited quantities," in this context
means:

(i)  2000 or fewer units, provided the product is designed solely for operation within one of the
Commission's authorized radio services for which an operating license is required to be issued by the
Commission; or

(ii)  200 or fewer units for all other products.

(iii)  Prior to importation of a greater number of units than shown above, written approval must be
obtained from the Chief, Enforcement Division, Compliance and Information Bureau, FCC.

(iv)  Distinctly different models of a product and separate generations of a particular model under
development are considered to be separate devices.

(a)(4)  The radio frequency device is being imported in limited quantities for demonstration at
industry trade shows and the device will not be offered for sale or marketed.  The phrase "limited
quantities," in this context means:

(i)  200 or fewer units, provided the product is designed solely for operation within one of the
Commission's authorized radio services for which an operating license is required to be issued by the
Commission; or

(ii)  10 or fewer units for all other products.

(iii)  Prior to importation of a greater number of units than shown above, written approval must be
obtained from the Chief, Enforcement Division, Compliance and Information Bureau, FCC.

(iv)  Distinctly different models of a product and separate generations of a particular model under
development are considered to be separate devices.

  *              *              *              *              *