Report No. DC-2634         ACTION IN DOCKET CASE             August 2, 1994


     FCC PROPOSES TO ELIMINATE RULES BANNING WIRELINES FROM SMR AND
    COMMERCIAL 220 MHz SERVICES AND PROHIBITING COMMON CARRIERS FROM
                   ENGAGING IN RADIO DISPATCH SERVICE
                           (GN DOCKET NO. 94-90)

     The FCC today proposed 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.  Additionally, the Commission sought
comment on a proposal to eliminate its current prohibition on
common carriers providing radio dispatch service.  The Commission
said that "the proposed rule changes represent a significant step
toward eliminating potentially outmoded regulation, promoting
competition in the mobile services marketplace and enhancing
consumer choice."   

     The Commission currently prohibits wireline telephone
companies who provide local exchange service from holding SMR or
commercial licenses in the 220 MHz band.  The wireline ban on SMR
licenses was adopted when the service was first created in 1974,
based on the Commission's view that wireline entry could
otherwise restrain competition in the fledgling SMR industry.  
 
     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 commercial
220 MHz limitation.  

     In proposing to repeal the wireline exclusion, the
Commission cited dramatic changes in the mobile services
marketplace since the first ban on SMR licensing was adopted in
1974, as well as changes to the Communications Act, which may
cause the restrictions to be outmoded. 

      In particular, in light of ongoing efforts to restructure
its regulatory scheme for mobile services, and to establish PCS
and other new forms of competition, the Commission indicated
there is a need to examine whether the existing wireline
restrictions serve a useful purpose in today's marketplace. 


                                  (over)

                                    -2-

     The Commission has acknowledged the evolving role of
wirelines in the mobile services arena in its recent PCS
proceedings.  In those proceedings, the Commission determined
that allowing wireline carriers to participate in broadband and
narrowband PCS 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. In its proposal today, the
Commission observed that its conclusions with respect to wireline
entry into PCS are also potentially applicable to SMR and 220 MHz
commercial service.

     In addition, the Commission questioned whether the wireline
restrictions are still necessary to protect against competitive
harm.  The Commission observed that other regulatory safeguards
exist and can be enforced to protect against wirelines with SMR
or commercial 220 MHz affiliates from engaging in discriminatory
interconnection practices, or cross-subsidizing services in order
to undercut competition.  

     In light of the above factors, the Commission proposed to 
eliminate its wireline eligibility restrictions in both the SMR
and 220 MHz services, but seeks comment on whether there are any
grounds for retaining the rules for one or both services.  

     With respect to the common carrier dispatch prohibition,
Congress in the 1993 Budget Act recently gave the Commission the
discretion to terminate this statutory restriction in whole or in
part. The Commission believes it should reevaluate the
prohibition in light of current competitive conditions in the
mobile services marketplace. The Commission noted that in other
proceedings parties have already indicated that repeal of the
dispatch ban could potentially enhance competition in the
dispatch market and provide consumers with expanded choice at
lower cost.  The Commission therefore seeks comment on the state
of competition in the dispatch market in order to determine
whether an outright repeal or sunset of the ban is justified.

     Action by the Commission August 2, 1994, by Notice of
Proposed Rulemaking (FCC 94-202).  Chairman Hundt, Commissioners
Quello, Barrett, Ness, and Chong.

                                   -FCC-

     News Media contacts: Patricia A. Chew and Susan Sallet at
(202) 418-0500.
     Private Radio Bureau contacts: Kathleen O'Brien Ham and Sue
McNeil at(202)634-2443.