NEWSReport No.  WT 95-10  WIRELESS TELECOM ACTION              May 24, 1995

       800 MHZ SMR LICENSEES ALLEGING FRAUD ARE GRANTED ADDITIONAL
                        FOUR MONTHS TO CONSTRUCT

     The Commission has granted licensees in the 800 MHz Specialized Mobile Radio
(SMR) service that were allegedly the victims of a fraudulent marketing scheme a four-month
construction extension to build their stations and begin operation.  The four-month extension
places these licensees in the same posture as other Part 90 Commercial Mobile Radio Service
(CMRS) licensees whose 8-month construction period was extended to a 12-month
construction deadline in the Third Report and Order in General Docket No. 93-252.  

     The Commission's action is in response to petitions filed by Daniel R. Goodman,
Receiver, and Dr. Robert Chan, brought on behalf of approximately 4,000 individuals
(Goodman/Chan Petitioners) who obtained 800 MHz SMR licenses on General Category
channels by using the services of one of four SMR application companies that now are the
subject of an enforcement action brought by the Federal Trade Commission (FTC).  On
January 14, 1994, the assets of the four SMR application companies were frozen and David
Goodman was appointed Receiver.

     The four companies (Receivership Companies) aggressively used TV infomercials and
telemarketing to promote SMR licenses as a lucrative investment opportunity.  The usual
service offered by the Receivership Companies consisted of assisting individuals in the
preparation of SMR applications for a substantial fee (normally $7,000 per application).  The
Receivership Companies typically induced potential customers to purchase these services by
representing that SMR licenses have great value that can be recouped through subsequent
resale of the licenses, but did not disclose the obligations to which each licensee was subject
under the Commission's rules. 

     The FCC has taken steps to protect the public against such deception and
misinformation by issuing a public "Consumer Alert" regarding SMR licensing.  Among
other things, the alert indicated that SMR licenses could be obtained directly from the FCC
for a minimal fee, that licensees were required to construct facilities within a specified time
frame (which was then 8 months and is now 12 months) or lose their licenses, and that
licenses could not be sold or transferred prior to construction.  The Commission has also
developed a consumer information packet, which is sent to individuals who contact the
Commission after being solicited by SMR application companies.  Also, the Commission has
cooperated with the FTC, the Federal Bureau of Investigation and the Securities and
Exchange Commission in their investigations of such companies.

                                  (over)

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     The Goodman/Chan Petitioners  sought to be excused from the eight-month
construction requirement because they allegedly were the victims of fraud by the
Receivership Companies and needed time to arrange to transfer their licenses to "legitimate"
SMR operators.  The Commission stated that Petitioners' arguments did not relieve licensees
of their responsibility to understand and comply with the Commission's rules, and that other
remedies existed for redress of the licensees' fraud claims. 

     Nevertheless, the Commission said that for equitable reasons, it would allow the
Goodman/Chan Petitioners the same 12 months to construct their stations as is afforded other
similar SMR licensees.  Such relief was warranted because the construction requirements for
SMRs licensed in the General Category channels -- and all CMRS providers licensed under
Part 90 -- changed during the pendency of the Goodman and Chan requests.  The
Commission emphasized that its decision should not be construed as a diminution of its
resolve to enforce the 12-month construction period that applies to General Category and
other Part 90 CMRS licensees.  

     Action by the Commission May 22, 1995, by Memorandum Opinion and Order (FCC
95-211).  Chairman Hundt, Commissioners Barrett, Ness and Chong, with Commissioner
Quello concurring in the result and issuing a statement.

                                  - FCC -
     

News Media contact: Stacey Reuben Mesa at (202) 418-0654.
Wireless Telecommunications Bureau contacts: David Furth and Kathleen O'Brien Ham at
(202) 418-0620.