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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Applications of ) ) J & W MOBILE RADIO ASSOCIATION ) File No. 508383 ) to Provide Private Land Mobile Radio Service in ) the 900 MHz Band in Dayton, Ohio; ) ) NATIONAL MOBILE RADIO ASSOCIATION ) File Nos. 019283; 504714; 504759; ) 504760 and 507238 to Provide Private Land Mobile Radio Service in ) the 900 MHz Band in Various Locations ) Throughout the United States; ) ) R & S COMMUNICATIONS INC. ) File Nos. 503696; 503742; 504009; 504010; ) 504057; 504058; 504441; 504960; 507239; to Provide Private Land Mobile Radio Service in ) 507240 and 507241 the 900 MHz Band Service in Various Locations ) Throughout the United States. ) ORDER Adopted: January 21, 2000 Released: January 25, 2000 By the Chief, Public Safety and Private Wireless Division, Wireless Telecommunications Bureau: I. INTRODUCTION 1. Under consideration are a total of seventeen applications for 900 MHz trunked Business Category channels in the Private Land Mobile Radio Service filed by R & S Communications, Inc. (R&S), National Mobile Radio Association, Inc. (NMRA) and J & W Mobile Radio, Inc. (J&W) (collectively, Applicants). For the reasons stated herein, we dismiss each of the referenced applications as inconsistent with the Commission's Rules and policies concerning not-for-profit, cost-based shared cooperatives. II. BACKGROUND 2. The Applicants propose a total of seventeen systems in the Eastern United States at locations ranging from Florida to Ohio. Eleven of the systems are proposed by R&S, five by NMRA and one by J&W. Ten channels are requested in the typical system and the Applicants represent that typically there will be 1,000 users per system. All of the subject applications propose interconnection with the Public Switched Network and request authorizations in the Business Radio Service. The Applicants propose to operate the systems as cooperatives in accordance with section 90.603 of the Commission's Rules. 3. At the request of the former Land Mobile Branch (Branch), the Applicants furnished proposed user agreements and the Applicants' corporate documents. The user agreements are identical for all Applicants. The corporate documents reflect that two of the three members of the boards of directors of NMRA and R&S are the same individuals and that the proposed system users will not be members of the cooperatives. All of the Applicants list the same Brooklyn, New York location as the applicant address on the application form and list the same telephone number which, at least during the course of the pendency of the subject applications, has been answered "Welcome to your global communications supplier." Further, we note that NMRA has identified itself in prior Commission proceedings as "an organization representing licensees of Specialized Mobile Radio (SMR) systems." 4. In addition to the corporate documents, the Branch requested that the Applicants furnish, inter alia, the identity of users who would be served by the proposed cooperatives. Each applicant has indicated that it has not identified prospective users of the systems and that users will be solicited only after its system or systems have been licensed and placed in operation. Moreover, each of the Applicants asserts that it need not comply with the Branch request for the identity of proposed users because the Commission's application form does not require such information. III.DISCUSSION 5. Section 90.603(b) of the Commission's Rules provides for licensing of: "Any person proposing to provide communications service to any person eligible for licensing under Subparts B, C, D, or E of this part on a not-for-profit, cost-shared basis." Such licensing entities are often referred to as "cooperatives," in which users who do not hold licenses themselves but who would otherwise be eligible to become licensed on the relevant spectrum share a common Private Land Mobile Radio (PLMR) facility which is licensed to the cooperative entity. The cooperative which is licensed to serve such users must apportion system costs among the users pursuant to a written sharing agreement and must operate on a strict not-for-profit basis if the licensed facilities operate on frequencies above 800 MHz. The Commission presumes that cooperatives are Private Mobile Radio Service (PMRS) providers. However, the presumption is a rebuttable one if, considering all of the circumstances, the arrangement is not a bona fide not-for-profit enterprise. 6. The Commission recently decided issues similar to those raised by the Applicants when it denied an Application for Review submitted by Viking Dispatch Services (VDS). In Viking, VDS contended that denial of its applications by the Wireless Telecommunications Bureau (Bureau) for its failure to provide sufficient assurance that the proposed systems would operate on a non-profit, cost- shared basis and its failure to justify the number of channels requested was inconsistent with the facts and effectively applied a new policy without adequate notice. The Commission found those arguments regarding the non-profit nature of its proposal to be unpersuasive in that VDS' characterization in its By- laws and other corporate instruments of the proposed system as non-profit were not determinative of that status. We reach the same conclusion in this matter and reiterate that we evaluate each application on a case-by-case basis. 7. The applicants seek to operate a mobile system to serve the communications requirements of other entities. Neither the substance of their applications nor their corporate documents (articles of incorporation, by-laws and other material submitted to the Commission) suggest a rationale for the Applicants' putting substantial capital at risk in the hope that, at best, users will materialize and the investment will be recovered with no gain realized. Under these circumstances, we find that the subject applications raise a substantial question of whether the Applicants have proposed bona fide not-for-profit cost-shared systems or whether their proposals are inherently commercial in nature. 8. As the Commission noted in its Viking decision, given the totality of the circumstances, we believe that the Applicants' proposals must be subject to stricter scrutiny to ensure that they are in compliance with the Commission's Rules. In this regard, we believe that the interrelationship of the Applicants is relevant to a determination of whether they propose a shared non-profit system as contemplated by the Commission's Rules. Their interrelationship raises questions regarding the non- profit nature of this venture. The boards of directors for NMRS and R&S share common members. The Applicants list the same address and refer to themselves as a "global communications supplier." These entities propose to fully construct and operate the systems, at significant capital expense, without any assistance from future, yet-to-be-identified users. Against this backdrop, we believe that the proposals are entrepreneurial pursuits, particularly in view of the considerable expenditures necessary to implement such a communications system. 9. We conclude that the proposal fails to meet the criteria for shared, non-profit use. Pursuant to Section 90.179(f) of the Commission's Rules, for-profit use above 800 MHz is permitted only by Specialized Mobile Radio (SMR), Private Carrier Paging (PCP), and Location and Monitoring (LMS) licensees. Section 90.603(b) permits the provision of communications services to Public Safety and Industrial/Business Pool eligibles only on a not-for-profit, cost-shared basis. We do not believe that this is the case under the facts presented here. Thus, to achieve its apparent objective of operating a mobile communications system under these circumstances, and without seeking a waiver of the Commission's Rules, the Applicants would have to operate as a commercial mobile radio service (CMRS) entity. 10. Because the proposals of the Applicants fail to substantiate the non-profit nature of their venture, we conclude that they are ineligible for grant of the subject license applications. Even had the Applicants provided justification for the requested number of channels, which they did not, the justification advanced was inherently commercial in nature, and not the type of justification required to support channels sought for PLMR use. Identifiable participants with existing communications needs are key components of a not-for-profit, cost-shared system. The policy of requiring entities to justify a need for the channels requested restricts existing or proposed cooperatives from requesting more channels than they actually need; and it assures that the proposed systems are not-for-profit. The Commission has held before that "identifiable participants with existing communications needs are the essence of a not-for-profit, cost-shared system." The Applicants' proposed cooperatives are not comprised of "identifiable participants" agreeing to pool their resources to obtain communications services more economically for their specialized internal communication needs. Instead, were the applications to be granted, the Applicants could load their proposed systems only by seeking out "customers" and offering them communications services for hire. Moreover, such cooperatives would be in competition for customers with CMRS providers and the services offered would be functionally indistinguishable from the CMRS providers' services. 11. We believe that the lack of specified users indicates that the proposal is entrepreneurial in nature. The Applicants' argument that they need not supply user information because the application form does not require it is unavailing and counter to the plain language of Section 308(b) of the Act: "The Commission at any time after the filing of such original application and during the term of any such licenses may require from an applicant or licensee further written statements of fact to enable it to determine whether such original application should be granted . . . ." Instead of providing the "identifiable participants" in their proposed cooperative, the Applicants rely on an unsubstantiated "build it and they will come" approach. Unfortunately this approach does not ensure that the large number of channels requested will be efficiently used, if used at all. We believe it is possible to develop a list of sincere and committed prospective users before an application is filed. Applicants for cooperative systems routinely furnish such information. Thus, because they have not provided user information, we find that the Applicants have not justified the number of channels sought. 12. In sum, the Applicants have not presented facts sufficient for us to conclude that a credible non-profit purpose underlies their applications. Instead, the facts and circumstances surrounding the applications support only the conclusion that they are a series of entrepreneurial enterprises which make economic sense only if evaluated in the context of a direct or indirect profit motive. Moreover, there is nothing in the Applicants' proposals to support a conclusion that the services supplied would be other than the functional equivalent of CMRS. IV. CONCLUSION 13. As discussed herein, we find that the Applicants have failed to demonstrate sufficiently that their proposed systems are in conformance with the Commission's Rules and precedent regarding not- for-profit, cost-shared systems. The Applicants also failed to demonstrate sufficiently their need for the number of channels requested. Contrary to Commission policy, they have refused to provide information on prospective users of their proposed systems except to allege that they will solicit subscribers once the stations are constructed and operational. Accordingly, we conclude that the subject applications must be dismissed. V. ORDERING CLAUSES 14. In view of the foregoing and pursuant to Sections 4(i) and 308 of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 308 and Section 1.934 of the Commission's Rules, 47 C.F.R.  1.934, the application of J&W Communications, Inc., filed on August 17, 1995 (File No. 508383) IS DISMISSED. 15. In view of the foregoing and pursuant to Sections 4(i) and 308 of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 308 and Section 1.934 of the Commission's Rules, 47 C.F.R.  1.934, the applications of National Mobile Radio Association, Inc. filed on June 14, 1995 (File No. 504714); June 15, 1995 (File No. 504760); January 19, 1996 (File No. 019283); July 31, 1995 (File No. 507238); and (File No. 504759) ARE DISMISSED. 16. In view of the foregoing and pursuant to Sections 4(i) and 308 of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 308 and Section 1.934 of the Commission's Rules, 47 C.F.R.  1.934, the applications of R&S Communications, Inc. filed on May 25, 1995 (File No. 503696); May 26, 1995 (File No. 503742); June 1, 1995 (File No. 504009); June 1, 1995 (File No. 504010); June 2, 1995 (File No. 504057); June 2, 1995 (File No. 504058); June 12, 1995 (File No.504441); June 19, 1995 (File No. 504960); July 31, 1995 (File No. 507239); 507240, and July 31, 1995 (File No. 507241) ARE DISMISSED. 17. This action is taken under delegated authority pursuant to Sections 0.131 and 0.331 of the Commission's Rules, 47 C.F.R.  0.131, 0.331. FEDERAL COMMUNICATIONS COMMISSION D'wana R. Terry Chief, Public Safety and Private Wireless Division Wireless Telecommunications Bureau