Report No. DC-2638 ACTION IN DOCKET CASE August 9, 1994 REGULATORY FRAMEWORK FOR CMRS COMPLETED (GN DOCKET 93-252) The Commission has completed the initial implementation of its Congressional mandate to establish a consistent, symmetrical regulatory scheme to govern similar commercial mobile radio services. The regulatory framework adopted today facilitates the future evolution of mobile services and marks an important step in the Commission's efforts to enhance competition among mobile service providers, promote the continuing development of new and innovative service offerings, and ensure that economic forces, rather than regulation, shape the mobile services marketplace. Last year, in the Omnibus Budget Reconciliation Act of 1993 (Budget Act), Congress created a new regulatory classification called "commercial mobile radio services" (CMRS) to ensure that similar mobile services are accorded similar regulatory treatment. In the Second Report and Order in this proceeding, the Commission reclassified certain services that traditionally had been licensed and regulated under the private radio provisions of the Commission's rules as CMRS. These include: Specialized Mobile Radio Service, Private Paging Service, Business Radio Service, and 220-222 MHz Land Mobile Services. The Budget Act directed the Commission to revise its rules to ensure that reclassified services are "subjected to technical requirements that are comparable to the technical requirements that apply to licensees that are providers of substantially similar common carrier services." In the Third Report and Order adopted today, the Commission analyzed the nature of competition among CMRS services to determine the reclassified private services and existing common carrier services that should be considered "substantially similar" for purposes of devising comparable technical and operational rules. The Commission concluded that virtually all CMRS services are actually or potentially competitive with each other to some degree, and that the range of services that are deemed substantially similar for purposes of establishing comparable technical requirements should therefore be defined broadly. (over) -2- The Order also addressed the issue of imposing a cap on the amount of CMRS spectrum that licensees may aggregate in a given geographic area in order to prevent potentially anticompetitive aggregation of CMRS spectrum. The Commission concluded that it is unnecessary to establish the broad spectrum cap applicable to all CMRS services that was proposed in the May, 1994, Further Notice of Proposed Rulemaking, in order to preserve competitive opportunities in the CMRS marketplace. Instead, the Commission concluded that this goal may be achieved by capping at 45 MHz the total amount of PCS, cellular and SMR spectrum in which a single entity may have an attributable interest. The Commission adopted an attribution rule for SMR spectrum that takes into account the unique licensing parameters of that service; the Commission stated, for example, that in the 800 MHz SMR service, it will attribute a maximum of 10 MHz of SMR spectrum to an entity when determining compliance with this cap. The Commission stated that this more limited spectrum cap is sufficient to foster competition in the CMRS as a whole. The Commission additionally reviewed the technical and operational provisions in Part 90 and Part 22 of its rules to determine the rule changes required to promote regulatory symmetry and foster a competitive CMRS marketplace. The Order concluded that substantially similar services must be subject to comparable technical and operational rules unless there is a reasonable basis for retaining differences in existing rules, either because they do not appear to distort competition in the CMRS market or because the cost of conforming the rules outweighed the benefit that might be gained. In particular, the Commission concluded that the channel assignment rules for 900 MHz Specialized Mobile Radio (SMR) should be amended to provide for licensing of wide-area systems based upon Major Trading Areas (MTAs). The Order provided for licensing of all 200 channels in blocks of 10 channels and stated that eligibility for MTA-based licenses would be open to existing licensees and new entrants. The Order also concluded that for these channel blocks, competitive bidding procedures would be used to resolve mutually exclusive applications. The Commission found that licensing of the 900 MHz band on a wide-area basis would enhance the ability of SMR providers to compete with cellular and PCS. The Order also held that incumbent SMR licensees generally should be permitted to continue operating under their current authorizations and that MTA-based licensees would be required to protect incumbents or negotiate mergers, buyouts, swaps or similar arrangements on a voluntary basis. -3- The Commission also concluded that licensing of 800 MHz SMR systems on a wide-area basis is appropriate. The Commission stated that it would shortly issue a Further Notice of Proposed Rule Making in its 800 MHz docket (PR Docket 93-144) to ensure that the interests of existing licensees and potential entrants are fully considered. Specifically, the Commission stated it would seek further comment on: (1) designating 200 contiguous SMR channels for MTA licensing based on 50-channel blocks; (2) licensing the remaining 80 SMR channels under existing rules; and (3) allowing incumbents to continue operating on existing channels. The Commission concluded that competitive bidding procedures should be used for selecting among mutually exclusive initial applications in the 800 MHz band. The Commission further decided that in light of the changes to be implemented in 800 MHz licensing, acceptance of new 800 MHz SMR applications (including SMR applications for General Category channels) will be suspended, effective immediately, until new licensing rules are adopted. The Commission concluded that service area definitions and channel assignment rules applicable to licensing of 220 MHz and private paging services should not be changed at this time, but stated that such issues would be separately addressed in future proceedings. The Commission declined to make fundamental alterations to its existing rules regulating co-channel interference, adjacent channel interference, or antenna height and transmitter power, because differences among existing rules governing substantially similar services have minimal competitive impact and making them uniform at this time would likely be disruptive and costly. The Commission also adopted a uniform 12-month construction requirement for CMRS licensees, except in the case of wide-area services where multi-year construction will be permitted subject to coverage requirements. The Order additionally eliminated all user eligibility restrictions for CMRS providers; eliminated most restrictions on permissible uses for CMRS providers; revised CMRS station identification requirements; and applied the Equal Employment Opportunity obligations currently applicable to Part 22 licensees to all CMRS licensees. (over) -4- Finally, the Commission concluded that CMRS license applicants should be subject to uniform rules and procedures under the common carrier licensing provisions of Title III of the Communications Act of 1934, as amended. Accordingly, the Commission adopted conforming amendments to its rules to achieve this result. The Commission held that these rules will apply to applicants that provide or propose to provide service that meets the CMRS definition. Specifically, the Commission: adopted a single uniform application form for all CMRS and PMRS (Private Mobile Radio Service) applicants in all terrestrial services; adopted a 30-day filing window and competitive bidding for selection among mutually exclusive initial applications; and extended the Part 22 public notice and petition to deny procedures to CMRS providers. Action by the Commission August 9, 1994, by Third Report and Order (FCC 94-212). Chairman Hundt, Commissioners Quello, Barrett, Ness, and Chong. -FCC- News Media contact: Rosemary Kimball at (202) 418-0500. Private Radio Bureau contact: David Furth at (202) 634-2443. Common Carrier Bureau contact: Nancy Boocker at (202) 418- 1300. Office of Plans and Policy contact: Greg Rosston at(202)418- 2044.