**Before the**

**[Federal Communications Commission]{.smallcaps}**

**Washington, D.C.**

In the Matter of )

)

Interconnection and Resale Obligations ) CC Docket No. 94-54

Pertaining to Commercial Mobile )

Radio Services )

)

Personal Communications Industry )

Association\'s Broadband Personal )

Communications Services Alliance\'s Petition )

for Forbearance for Broadband )

Personal Communications Services )

)

Forbearance from Applying Provisions of the ) WT Docket No. 98-100

Communications Act to Wireless )

Telecommunications Carriers )

)

Further Forbearance from ) GN Docket No. 94-33

Title II Regulation for Certain Types of )

Commercial Mobile Radio Services )

**[Memorandum Opinion and Order]{.smallcaps}**

**[on Reconsideration]{.smallcaps}**

**Adopted:** September 15, 1999 **Released:** September 27, 1999

By the Commission: Commissioners Furchtgott-Roth and Powell concurring
in part, dissenting in part and issuing separate statements.

**TABLE OF CONTENTS**

Paragraph

I.INTRODUCTION

II.BACKGROUND

III.DISCUSSION

A.Retention of Resale Rule

B.Sunset of Resale Rule

1.Procedural Arguments Against Sunset

2.Statutory Criteria and Hush-A-Phone Decision

3\. Elimination of Sunset Provision

C.Application of Resale Rule to Bundled Packages

D.Modifications to Scope of Resale Rule

1.Exclusion for Certain C, D, E, and F Block Licensees

2.Exclusion for Certain SMR Providers

E.Proposed Amendments to Resale Rule

1.Reasonableness of Restrictions

2.Limited Capacity

3.Data Offerings

4.Access to Proprietary Matter

F.Forbearance

IV.PROCEDURAL MATTERS

A.Regulatory Flexibility Act

B.Authority

C.Further Information

V.ORDERING CLAUSES

Appendix A--List of Parties

Appendix B--Final Rules

Appendix C--Supplemental Final Regulatory Flexibility Act Analysis

**I. INTRODUCTION**

On June 12, 1996, the Commission adopted a *First Report and Order* in
this docket, promulgating a rule that prohibits certain providers of
Commercial Mobile Radio Services (CMRS) from restricting the resale of
their services during a transitional period.[^1] This resale rule, which
previously had applied only to cellular providers, was extended to
broadband personal communications services (PCS) and certain specialized
mobile radio (\`\`covered SMR\'\') services.[^2] The Commission decided
to sunset this resale rule five years after the date of the award of the
last group of initial licenses for broadband PCS, which the Commission
subsequently determined to be November 25, 1997.[^3] Accordingly, the
resale rule is currently set to expire at the close of November 24,
2002.

Upon reconsideration here, we generally affirm our decisions in the
*First Report and Order* to extend the cellular resale rule[^4] to
include certain broadband PCS and SMR providers and to sunset the rule
as of November 24, 2002. However, we are modifying our initial decision
in three key respects. First, we are removing customer premises
equipment (CPE) and CPE in bundled packages from the scope of the resale
rule. Second, we are revising the scope of the resale rule to exclude
all C, D, E, and F block PCS licensees that do not own and control and
are not owned and controlled by cellular or A or B block PCS licenses.
Third, we are exempting from the rule all SMR (and other CMRS) providers
that do not utilize in-network switching facilities. In addition, we are
clarifying certain other aspects of the resale rule.

We also deny a Petition for Reconsideration of our denial of a request
for forbearance from the resale rule filed by the Broadband Personal
Communications Services Alliance of the Personal Communications Industry
Association (PCIA), pursuant to Section 10(a) of the Communications Act
(Act).[^5]

**II. BACKGROUND**

The CMRS Resale Proceeding was initiated in 1994 by a Notice of Proposed
Rulemaking and Notice of Inquiry addressing a broad range of CMRS
regulatory issues, including resale.[^6] The Commission\'s proposal
concerning resale was refined in a subsequent *Second NPRM*.[^7] In the
*Second NPRM*, the Commission tentatively concluded that the existing
obligation of cellular providers to permit unrestricted resale should be
extended to other CMRS providers, absent a showing that resale would not
be technically feasible or economically reasonable for a specific class
of CMRS providers.[^8]

In the *First Report and Order*, the Commission extended the resale rule
to providers of broadband PCS and certain "covered" SMR services in
order to promote competition in the wireless telephony market.[^9] The
resale rule bars carriers from unreasonably restricting the resale of
their services, subject to the five-year sunset provision.[^10] Thus, no
carrier may offer like communications services to a reseller at less
favorable prices, or on less favorable terms or conditions, than are
available to similarly situated customers, absent reasonable
justification. In addition, no carrier may directly or indirectly
restrict resale in a manner that is unreasonable in light of the
policies enunciated in the *First Report and Order*.[^11]

In the *First Report and Order*, the Commission analyzed the costs and
benefits of the proposed rule with respect to each class of providers,
and concluded that the potential benefits of the rule with respect to
broadband PCS and covered SMR providers exceeded its potential
costs.[^12] The Commission found that other CMRS services, including
paging services, were subject to relatively mature competition and that
a resale rule was unnecessary for these services.[^13] The Commission
decided to sunset the resale rule at the end of the five-year period
following the award of the last group of broadband PCS li­cens­es, based
on its finding that there will be sufficient competitive development of
broadband PCS and covered SMR service at that point to obviate the need
for a resale rule in the cellular, broadband PCS, and covered SMR
markets.[^14] In the *First Report and Order*, the Commission also found
that the resale rule should apply to bundled packages that include
non-Title II components[^15] and to services that include proprietary
equipment or technology.[^16] In addition, the Commission eliminated a
prior exception in the cellular resale rule under which cellular
li­censees had been permitted to restrict resale by competing, fully
operational cellular licensees in the same geographic market.[^17]
Before us now are eight petitions for reconsideration or clarification
of the *First Report and Order*, eleven oppositions or comments on these
petitions, and six reply comments. A list of petitioners and commenting
parties (together with short form references used to cite the filing
parties in this Order) appears at Appendix A.

The CMRS Forbearance Proceeding was initiated by a Petition for
Forbearance filed by PCIA on May 22, 1997, pursuant to Section 10 of the
Act.[^18] In that Petition, PCIA requested, *inter alia*, that we
forbear from the CMRS resale rule with respect to broadband PCS
providers. The Petition was subsequently designated as an initiative to
be considered under the Commission\'s 1998 biennial review of
regulations pursuant to Section 11 of the Act,[^19] and denied, as it
relates to CMRS resale, on July 2, 1998, in the *Forbearance Memorandum
Opinion and Order*.[^20] A list of commenting parties (together with
short form references used to cite the filing parties in this Order)
appears at Appendix A.

**III. DISCUSSION**

**A. Retention of Resale Rule**

Several petitioners request that we reconsider our extension of the
resale rule to broadband PCS and covered SMR providers,[^21] arguing
that the costs of the resale rule outweigh its benefits and that
com­petition among CMRS providers makes a resale rule unnecessary.[^22]
These parties largely reiterate arguments that were made in response to
the *Second NPRM* and were considered and rejected in the *First Report
and Order*.[^23] We do not find that circumstances have changed since
the adoption of the *First Report and Order* in a way that would warrant
elimination of the resale rule. We continue to believe that, as a
general matter, the benefits of the resale rule outweigh its costs
during this transitional period as the marketplace becomes more
competitive, and we therefore have decided to retain the rule with
certain modifications and clarifications.

In the *First Report and Order* the Commission undertook an analysis of
the costs and benefits associated with the proposed extension of the
resale rule and concluded that prohibiting restrictions on resale
confers a number of public benefits in markets that are less than fully
competitive.[^24] The Commission noted that the economic literature
regarding resale price maintenance indicates that prohibiting resale
restrictions may reduce the likelihood of systematic price
discrim­ination and cartel behavior.[^25] With respect to the wireline
telecommunications industry, in particular, the Commission noted that
prohibiting resale restrictions had promoted the public interest in a
number of ways.[^26]

Focusing on wireless services, the Commission determined that resale can
accelerate the devel­opment of competition by facilitating "one-stop
shopping" and by permitting new entrants to begin offering service to
the public be­fore their own facilities have been completed.[^27] The
Commission concluded that an appropriately targeted resale rule can
achieve these benefits at relatively limited cost, because the rule does
not require providers to structure their operations or offerings in any
particular way, such as providing special service packages for resale or
establishing wholesale prices that include margins for resellers.[^28]
In the *Forbearance Memorandum Opinion and Order* adopted a year ago,
the Commission, while applying the specific statutory criteria of
Section 10 of the Act, effectively reaffirmed its conclusions concerning
the benefits for competition and consumers associated with resale and
concluded that the resale rule continues to be in the public
interest.[^29]

We observe that new entry is continuing to occur and that competition,
in general, is gradually increasing in the mobile telephony market.
However, we do not believe that competitive conditions in the CMRS
marketplace differ qualitatively from those that obtained one year ago.
Hence, we conclude that public interest benefits continue to result from
a resale requirement sufficient to warrant its retention until the
elimination of the resale rule in 2002.

**B. Sunset of Resale Rule**

Those parties advocating retention of the resale rule contend that we
should refrain from sunsetting the rule at the end of the five-year
period because the market for cellular and substitute services is not
yet fully competi­tive and will remain at this level for the foreseeable
future,[^30] and because the costs of the re­sale rule in an
insufficiently competitive market are minimal in comparison to its
competitive benefits.[^31] These parties also propound several
procedural arguments for eliminating the sunset provision. We address
these arguments below.

**1.Procedural Arguments Against Sunset**

NWRA asserts that the sunset for cellular providers was promulgated
without sufficient notice because the Commission failed to indicate in
either the first or the second notice of proposed rulemaking that it was
considering the adoption of a sunset provision for the cellular resale
requirement.[^32] We reject this contention and conclude that the
adoption of the resale rule was consistent with the notice and comment
requirements established by the Administrative Procedure Act.[^33]

An agency may promulgate a final rule that differs from the one
initially pro­posed, and it may incorporate suggestions from commenting
parties, if the final rule is a "logical outgrowth" of the proposed
rule.[^34] The *Second NPRM* indicated clearly that the Commission was
trying to promote competition in the CMRS market and that the resale
obligations of CMRS provid­ers, includ­ing cellu­lar licensees, would
depend on the state of competi­tion in particu­lar mar­kets.[^35] We agree
with the argument advanced by BANM that the Commission provided
sufficient notice for establishing a sunset provision because the
*Second NPRM* clearly raised the question of whether the rule should be
abolished entirely.[^36] The sunset provision was a logical outgrowth of
this original proposal, since it is based upon the Commission\'s
conclusion that the development of competitive conditions obviates the
need for a resale requirement.

It was also clear that the Commission contemplated refraining from a
resale requirement in markets where it would be unnecessary, *i.e.*,
where competition exists.[^37] Comments filed in response to the *Second
NPRM* demonstrate that the proposal in fact alerted parties that the
cellular resale rule was being reviewed in the proceeding. Several
commenters argued that the cellular resale policy should not be
extended, but rather should be eliminated or reexamined.[^38]
Consequently, we conclude that any suggestion that the sunset provision
was promulgated without sufficient notice in the *Second NPRM* is
without merit.

Finally, even if we assume *arguendo* that the *Second NPRM* did not
provide sufficient notice, any such deficiency has been cured by the
fact that parties opposing the sunset of the cellular resale rule have
had an opportunity to raise their objections thoroughly in this
reconsideration proceeding.[^39] The Commission has considered these
arguments in reaching its decision to uphold the sunset provision in
this Memorandum Opinion and Order.

**2.Statutory Criteria and Hush-A-Phone Decision**

Citing the D.C. Circuit\'s decision in *Hush-A-Phone*,[^40] NWRA asserts
that any restriction on resale violates Sections 201(b) and 202(a) of
the Communications Act,[^41] unless the restricting party proves that
resale would cause public harm. NWRA contends that the Commission\'s
reliance on *Hush-A-Phone* in its early resale decisions has created a
subscriber right to be free from any restrictions on resale so long as
it creates no concrete "public detriment," and that application of a
cost-benefit analysis by the Commission in the *First Report and Order*
was an arbitrary departure from precedent.[^42] NWRA also contends that
the resale policy cannot be abandoned, even if the Commission finds that
there are insufficient public benefits, because *Hush-A-Phone* entitles
members of the public to use a carrier\'s services and facilities in
ways that are privately beneficial without being publicly
detrimental.[^43] NWRA reasons that we may not abandon our resale policy
under Sections 201(b) and 202(a) of the Act because resale is privately
beneficial to resellers and the *First Report and Order* failed to
identify a specific public detriment attributable to a resale rule.[^44]

We disagree with NWRA that Sections 201(b) and 202(a) of the
Communications Act, the *Hush-A-Phone* decision, or subsequent
Commission decisions require the Commission to impose resale obligations
on CMRS providers or prevent our abolishing the resale rule at the end
of the prescribed five-year period. Both Sections 201(b) and 202(a)
establish a "just and reasonable" standard against which the charges,
practices, classifications, regulations, and services of carriers, as
well as any discrimination or preferences by carriers in such areas, are
measured. The Commission applied this standard in determining to extend
the resale rule to CMRS providers other than cellular providers, and in
deciding to sunset the rule at the end of the five-year period.

We conclude that NWRA has misconstrued the obligations imposed by
Sections 201(b) and 202(a) of the Act, has overstated the reach of the
decision in *Hush-A-Phone*, and has misinterpreted the Commission\'s
earlier decisions in maintaining that these decisions created a
subscriber right to be free from any restrictions on resale so long as
it entails no "public detriment." Our position has recently been
affirmed by the Sixth Circuit Court of Appeals in the *Cellnet*
decision. The court in *Cellnet* specifically stated as follows:[^45]

We reject the notion that the *Hush-a-Phone* decision set out a "public
detriment/private benefit" test for FCC action . . . . The justness and
reasonableness requirements set out in §§ 201 and 202 remain the
criteria for FCC action. Thus, the *Hush-a-Phone* decision neither set
forth other, more restrictive principles, nor did it recognize the
existence of a customer\'s right to resell services as long as such was
not publicly detrimental.

Based upon our review of the record and our reading of the *Cellnet*
decision, we conclude that the statutory arguments advanced by NWRA and
its construction of the *Hush-A-Phone* case are without merit.

**3.Elimination of Sunset Provision**

NWRA, CRA and Connecticut Telephone argue that the "sunset" provision
should be eliminated from the resale rule because the rule promotes
substantial benefits at minimal cost in markets that are not perfectly
competitive[^46] and may not be sufficient­ly competitive in five
years.[^47] Connecticut Telephone points out that a resale rule is
necessary because many resellers that are small businesses lack the
resources to file case-by-case complaints under Section 208 and wait for
those complaints to be resolved.[^48]

The Petitioners fail to present any new facts or arguments to per­suade
us that the deci­sion to sun­set the resale rule made by the Commission in
the *First Re­port and Order* should be revised in any way. Moreover, the
*Cellnet* decision upheld the reasonableness of our conclusions in the
*First Report and Order* that "as markets become more competitive, the
benefits to be attained through a resale rule generally dimin­ish be­cause
carriers have less oppor­tunity and in­centive anticompetitively to
restrict resale"[^49] and that "the competitive development of broadband
PCS service will obviate the need for a resale rule in the cellular and
broadband PCS market sector."[^50] We therefore affirm our decision to
terminate the resale rule at the end of the sunset period.[^51]

Although we have acted in this Order to maintain the sunset of the
resale rule, our decision to do so should not be construed as a lack of
commitment to ensuring compliance with the resale obligation during the
period in which it is in force. On the contrary, we intend to take
effective and expeditious enforcement action against any carrier that
fails to comply with its obligations under the resale rule.[^52]

We note in this regard that resellers have asserted, in this and other
proceedings, that carriers subject to the resale rule have refused to
make resale arrangements available to prospective resellers.[^53] We
find this particularly troubling because a substantial number of CMRS
resellers are small businesses, and Congress has signalled its support
for small business entry into the telecommunications industry, *inter
alia*, by charging the Commission in Section 257 of the Communications
Act with responsibility for removing regulatory barriers to market entry
by small businesses. The resale rule represents another means to
facilitate CMRS market entry by such firms.

We are also cognizant of the fact that, in addition to simple refusals
to offer resale agreements, violations of the resale requirements may
take a variety of forms, including a carrier\'s unreasonable refusal to
offer resellers the same bundled packages of airtime and enhanced
services or the same volume discounts that the carrier offers to its
retail customers. In light of the various means by which the purposes of
the resale rule may be frustrated or circumvented by the practices of
covered carriers, we intend to look closely at allegations of
unreasonable restrictions on resale and to resolve expeditiously
complaints about whether the challenged restriction on resale is
reasonable. In this way, we seek to ensure the viability of the resale
rule in the CMRS market during this transitional period, which we
believe will help to foster competition and facilitate service to the
public.

In the first instance, we intend to initiate a stepped-up mediation
program under which we will first attempt to resolve any formal or
informal complaints filed by a reseller through negotiation. We believe
that an informal negotiation process will help to facilitate a rapid
resolution of disputes regarding resale, if such resolution is possible
on a voluntary basis. In those instances where the parties cannot reach
agreement or where negotiation does not appear to be a viable approach,
we will expedite the complaint proceeding, to the fullest extent
possible, in order to ascertain whether the carrier in question is
acting in derogation of the resale rule requirement. We intend to
conduct both the mediation and any ensuing formal complaint proceeding
on an expedited basis. In cases in which we determine that a violation
of the rule has occurred, we intend to impose rigorous enforcement
measures, including, in appropriate cases, the revocation of licenses
and the imposition of forfeiture penalties.

**C. Application of Resale Rule to Bundled Packages**

AT&T and PCIA petition us to reverse our decision in the *First Report
and Order* that the resale rule applies to bundled packages of services
such as customer premises equipment or enhanced services.[^54] These
petitioners argue that the resale rule is based on Sec­tions 201 and 202
of the Communications Act[^55] and can­not be ex­tended to CPE and other
com­po­nents of bun­dled pack­ages that are not regu­lated under Title II of
the Act.[^56] They also argue that competitive conditions in the CPE and
enhanced services markets favor the exclusion of bundled services from
the scope of the resale rule;[^57] that it is not clear how a provider
could circumvent the rule by restricting the resale of bundled
packages;[^58] that applying the resale rule to bundled packages deters
carriers from offering creative packages desired by consumers;[^59] and
that the Commission provided no notice to parties that the resale
requirement might be extended to bundled packages.[^60]

Arguments that the scope of the resale rule is overbroad because it
extends to non-Title II services are inapt. In the *First Report and
Order*, the Commission rejected this argument[^61] and specifically
cited its Title III licensing authority as part of its jurisdictional
authority for the resale rule.[^62] No party has challenged our explicit
invocation of Title III as a basis for imposing the resale rule.

We also find no merit in the claim that the proposals and tentative
conclusions adopted in the *Second NPRM* gave insufficient notice to
enable us to prescribe a general resale requirement that includes CPE
(or enhanced services) in bundled packages.[^63] While it is true that
the *Second NPRM* did not specifically discuss bundled packages, the
Commission was unambiguous in "tentatively \[concluding\] that a
mandatory *general resale requirement* is necessary because it will
serve as an effective means of promoting competition in the CMRS
marketplace."[^64] The Commission gave no indication in the *Second
NPRM* that it presumed that bundled packages combining services with CPE
or enhanced services would be *excluded* from the proposed general
resale requirement. Indeed, the policy adopted in the *First Report and
Order* with respect to bundled packages merely parallels that initially
adopted with respect to cellular carriers.[^65] Moreover, AT&T raised
the bundling issue in its comments, presumably because it thought the
Commission was considering the issue.[^66]

Nevertheless, while we find the Petitioners\' procedural arguments
unconvincing, we have decided, on substantive grounds, to eliminate CPE
and CPE in bundled packages from the scope of the resale rule.[^67]
Initially, we were concerned that, absent a resale rule,
facilities-based providers could offer packages with artificially high
prices for the service component and cross-subsi­dize the CPE component
with those service revenues.[^68] While anticompetitive
cross-subsidization may be a theoretical possibility, there is no
evidence in the record that it is occurring in the CMRS marketplace. Nor
is there evidence that resellers are prevented from obtaining CPE from
sources other than CMRS carriers or from negotiating with equipment
manufacturers for discounted prices. Smaller resellers have alternatives
to obtain CPE volume discounts comparable to those available to large
resellers and facilities-based carriers. For example, firms in other
industries have formed buying consortia. The provision of CPE below cost
to attract new customers appears to be, at least in this marketplace, a
legitimate promotional strategy that benefits, rather than harms, the
public interest. As such, it is essentially a marketing expense that
should be borne independently by resellers and facilities-based carriers
alike. Were we to, in essence, exempt resellers from an expense borne by
facilities-based carriers, we could discourage marketing strategies that
reduce costs to consumers.

We retain the rule, however, for bundled packages that include enhanced
services, because, at least as CMRS enhanced services are presently
provided, neither subscribers nor resellers can purchase the service
component of the bun­dle from one provider and the enhanced services
component of the bundle from another pro­vid­er.[^69] Although AT&T and
others argue that the market for enhanced services is competitive,[^70]
MCI points out that the technology that allows a reseller to provide
enhanced services resides pre­dominantly in the mobile carrier\'s network
rather than in the mobile CPE. Absent extension of the resale rule to
bundled packages, a provider could unilaterally deny a reseller
contractual access to its enhanced services, and the reseller would be
unable to recreate a bundle that includes these services. A reseller\'s
ability to bundle packages of basic and enhanced services is essential
to maintaining a competitive position in the CMRS market. We are
confirmed in this conclusion by comments filed in several other
Commission proceedings concerning the competitive edge accorded a
provider that can offer a unique blend of services and "one stop
shopping" to its customers.[^71] Thus, in order to be meaningful in the
present CMRS marketplace, a resale rule must encompass bundled enhanced
services.

**D. Modifications to the Scope of the Resale Rule**

Parties in both proceedings have suggested modifications to the scope of
the resale rule.[^72] The Commission\'s decision in the *First Report
and Order* to extend the cellular resale rule to other CMRS providers
was based on its conclusion that the benefits of the mandatory CMRS
resale rule will continue to exceed its costs so long as mobile voice
and data markets are not yet fully competitive. We have employed that
cost/benefit methodology today to fine tune the scope of the resale rule
so as to eliminate from its coverage those providers or services for
which the analysis suggests that the rule is unnecessary.

**1.Exclusion for Certain C, D, E, and F Block PCS Licensees.**

Disparities among CMRS providers significantly affect the benefits and
costs of applying a resale rule to particular classes of CMRS
licensees.[^73] Our review of the record convinces us that the benefits
that might accrue as a result of imposing resale obligations on C, D, E,
and F block PCS licensees are outweighed, at this time, by the burdens
such obligations impose on these carriers. No significant benefits
accrue from subjecting smaller, new entrant competitors with limited
network infrastructure and minimal market share to the requirements of
the resale rule. Unlike more established firms, new entrants have little
or no incentive to restrict resale unreasonably, and little, if any,
excess capacity. Therefore, imposing a resale rule on them produces few,
if any, public benefits. More established firms, especially those in a
market in which competition is not fully established,[^74] may have some
ability and incentive to restrict resale unreasonably. Thus, subjecting
them to a resale rule does provide public benefits.

The A and B blocks are several times more built out than the C, D, E, or
F blocks. Service has been rolled out in the A and B blocks in 164 and
in 214 of the 493 Basic Trading Areas (BTAs), respectively. The build
out for the other blocks is as follows: C (35 BTAs), D (86 BTAs), E (56
BTAs), and F (40 BTAs). This disparity in network buildout is reflected
in population data, as well. The A-block and B-block broadband PCS
provider networks reach 71.5 percent and 78.9 percent of the U.S.
population, respectively. The population coverages of the C, D, E, and F
broadband PCS networks are: 6.7, 36.0, 21.0, and 11.3 percent,
respectively.[^75] As a consequence, the A and B block licensees are the
more likely of the broadband PCS block licensees to have capacity to
resell, whereas the C, D, E, and F block licensees have the greater need
to purchase capacity for resale, due to their relative underdevelopment.
Thus, we conclude that there are benefits from subjecting A and B block
licensees to the resale rule and to exempting licensees in the C, D, E,
and F blocks, whose minimal development and incentive to restrict resale
suggest that a resale requirement for them would be of limited, if any,
utility.

However, we believe that a distinction must be made among C, D, E, and F
block licensees to account for the fact that many cellular and A and B
block licensees also own licenses in the C, D, E, and F blocks.[^76]
Thus, we are excluding from the coverage of the resale rule only those
C, D, E, and F block PCS licensees that do not own and control and are
not owned and controlled by firms also holding cellular, A or B block
licenses.[^77] Such an approach exempts smaller, new entrant competitors
that have little market share and little or no incentive to restrict
resale unreasonably, while continuing to cover facilities-based
broadband PCS providers that are more extensively built out and that
might otherwise have the ability and the incentive to restrict
resale.[^78]

The smaller C, D, E, and F block firms suffer a number of additional
factors, beyond lack of buildout, that minimize the benefits of
subjecting them to a resale requirement. First, the cellular and, to a
lesser extent, the A and B block PCS carriers, enjoy a first mover
advantage of having built out capacity earlier, when there were fewer
competitors and thus less competition in the mobile telephony market.
During the 1970s, the Commission allocated 50 megahertz of spectrum in
the 800 MHz frequency band for two competing cellular systems in each
market and licensed these systems throughout the 1980s. The first
cellular providers launched service in 1983. A and B block broadband PCS
licenses were auctioned beginning in December 1994. The first broadband
PCS carrier launched service in November 1995. In contrast, the first
auctions of C, D, E, and F PCS blocks commenced in the summer of 1996
(the first C-block auction) and were not completed until April 15, 1999.
In the battle for subscribers, their late entry pits the C, D, E, and F
block firms against far larger, more numerous, and more deeply
entrenched rivals than their predecessors confronted.

Second, with the exception of the C block firms, these small firms have
smaller spectrum blocks\--10 megahertz for D, E, and F block firms, as
opposed to 30 megahertz for A and B block firms and 25 megahertz for
cellular carriers. Less spectrum, all things being equal, means less
capacity, which may constrain the ability of the D, E, and F licensees
to offer innovative products and to efficiently utilize technologies
that require large amounts of bandwidth. Conversely, having
two-and-one-half and three times as much spectrum, respectively, confers
certain market and operational advantages upon incumbent cellular and A
and B block PCS carriers that increase the benefits to be expected from
subjecting them to a resale requirement.

Third, the smaller C, D, E, and F block firms are likely to encounter
greater difficulty raising capital to finance build out. Many of the
cellular and A and B block licensees are owned or controlled by very
large telecommunications companies, including all the Bell companies,
GTE, AT&T, Sprint, and Vodafone, which have ready access to capital
markets. Even when compared to cellular, A, or B block licensees not
affiliated with major carriers, C, D, E, and F licensees generally
operate at a disadvantage in raising capital, because, when evaluating
credit- and investment-worthiness, lenders and investors examine asset
holdings, past revenues, and future profitability. As a general matter,
compared to cellular and A and B block PCS carriers, the newer C, D, E,
and F block firms will have fewer assets and shorter revenue streams.
Moreover, because they face entrenched competitors, the expected profits
of C, D, E, and F block firms are likely to be lower, from an
investor\'s perspective. This combination of factors may tend to make it
more difficult for C, D, E, and F firms to raise debt and equity capital
and increases the benefits of promoting a vigorous resale environment to
enable them to commence operations and establish a track record prior to
building out their own facilities.

Although competing CMRS providers will be treated differently under this
approach, regulatory asymmetry is less an issue where, as here, there
are continuing disparities among members of the regulated class that
justify their being treated differently. In crafting this exception to
the resale rule, we have used the C, D, E, and F license blocks as a
surrogate for factors such as new entrant status, extent of network
buildout, access to capital, and firm size. For the reasons discussed
above, we believe that they constitute a reasonable surrogate for these
factors in the context of today\'s CMRS marketplace. Accordingly, we
believe the exemption from the resale requirement for smaller C, D, E,
and F block licensees is a sensible, administratively efficient
refinement of the resale rule during this transitional period.

Since the resale rule will sunset for all carriers in three years and
the difference in treatment is only for a transitional period,
eliminating the resale rule immediately for smaller C, D, E, and F block
PCS licensees accords with the Commission\'s two primary objectives in
imposing a resale rule, both in the wireline and the wireless telephony
market. Resale increases competition by creating a highly competitive
secondary market for the service in question and mitigates the headstart
advantage of earlier licensing by facilitating market entry for
later-licensed competitors. Given the limited build out for many small
C, D, E, and F block broadband PCS providers, their exemption from the
resale requirement will have minimal negative effect on the secondary
market for wireless telephony. Correspondingly, a resale rule for A and
B block broadband PCS licensees (and for cellular providers) will help
to mitigate the substantial competitive advantages enjoyed by the
earlier-licensed cellular and A and B block broadband PCS licensees.

Nor will the resultant regulatory asymmetry prove inequitable for
wireless telephony providers that continue to be subject to the rule.
The limited capacity and/or limited build out of the smaller C, D, E,
and F block licensees makes it unlikely that eliminating the resale rule
for them will grant them a significant competitive advantage over those
wireless telephony providers that remain subject to the rule, until the
general sunset in November 2002.[^79]

Finally, we do not believe that excepting C, D, E, and F block licensees
from the resale rule undercuts our general conclusion that a CMRS resale
rule is currently warranted. To the contrary, the information specified
above regarding the relatively low network buildout of C, D, E, and F
block licensees demonstrates how beneficial a resale obligation imposed
only on the more established carriers could be to enhancing the state of
competition in the CMRS market.

**2.Exclusion for Certain SMR Providers**

The *First Report and Order* limited the scope of the resale rule to
provid­ers of Specialized Mobile Radio Services in the 800 MHz and 900
MHz bands that hold geo­graph­ic area licens­es and offer real-time,
two-way switched voice service that is interconnected with the PSTN and
to Incum­bent Wide Area SMR Licensees that provide such services.[^80] On
reconsideration, Nextel continues to argue that the resale rule should
not apply to SMR providers because they have limited capacity and are
particularly susceptible to fraud.[^81] If SMR providers are to continue
to be subject to the resale rule, both AMTA and Nextel urge us to limit
the term "covered SMR" to systems that have an in-network switch­ing
facili­ty,[^82] arguing that these are the only SMR systems that directly
compete with cellular and broadband PCS for mass consumer two-way voice
customers.[^83] SBTI argues that the term "covered SMR" should exclude
carriers who operate in a non-cellular configuration and offer only
dispatch services to the vast majority of their customers, but who might
nevertheless be covered by the resale rule if the interconnected service
they provide to such customers is measured by minutes of use.[^84]

Nextel also asks us to clarify that the definition of covered SMR
applies on a system-by-system basis, and not uniformly to all of an
operator\'s systems, some of which may offer covered service and some of
which may not.[^85] In the alternative, AMTA and PCIA ask us to define
the term "covered SMR" in terms of a minimum number of mobile units, for
ease of administration.[^86]

*In-Network Switching Capacity.* The Commission\'s decision in the
*First Report and Order* to exclude some SMR providers from the resale
rule was based on its conclusion that these providers would not compete
directly with providers of cellular service and broadband PCS. Because
the transitional resale rule was intended to promote competition among
cellular, broadband PCS, and similar services, the Commission concluded
that the costs of extending the rule to SMR providers outside of the
covered category exceeded the benefits.[^87] Thus, in the *First Report
and Order,* the Commission applied the resale rule only to SMR providers
that hold geographic area licenses or that are Incumbent Wide Area SMR
licensees.[^88] On reconsideration, we now conclude that our objective
with respect to SMR[^89] is best achieved by limiting the resale rule to
reach only those SMR providers that offer real-time, two-way switched
service that is interconnected with the public switched network (PSTN)
utilizing an in-network switching facility that enables the provider to
reuse frequencies and accomplish seamless hand-off of subscriber calls.
In so doing, we have abandoned our previous criterion, which was based
on a carrier\'s license authority, in favor of a technical and
operational criterion, *i.e.*, in-network switching capacity, which more
closely parallels our intention to cover only those SMR carriers that
compete directly with providers of cellular service and broadband PCS.

We agree with AMTA, Nextel and SBTI that the "covered SMR" definition
adopted in the *First Report and Order* is overinclusive with respect to
certain types of SMR systems. The current rule requires all geographic
area or wide-area SMR licensees to comply with the resale rule if they
provide real-time two-way interconnected voice service. As petitioners
point out, however, this brings within the "covered SMR" definition any
SMR provider with a geographic or wide-area license that provides any
form of interconnected two-way voice service. Thus, SMR providers that
primarily offer traditional dispatch services but also offer limited
interconnection capability are potentially subject to the resale rule as
currently drafted. We believe that this result is inconsistent with our
determination that the costs of extending the rule to providers that do
not compete with traditional cellular and broadband PCS providers in the
mass consumer market would exceed the benefits. We do not believe that
it serves the public interest to extend our explicit rule against
unreasonable resale restrictions to carriers offering only
geographically or functionally limited services, such as dispatch, that
are unlikely to be attractive to resellers in any event.

We conclude, as has been suggested by several petitioners and as we have
recently found in two other proceedings,[^90] that an important
indicator of a provider\'s ability to compete with traditional cellular
and broadband PCS providers is whether the provider\'s system has
"in-network" switching capability, which allows a provider to hand off
calls seamlessly without manual subscriber intervention. In-network
switching facilities also accommodate the reuse of frequencies in
different portions of the same service area. Frequency reuse enables an
SMR provider to offer interconnected service to a larger group of
customers and to compete directly with cellular and broadband PCS in the
mass consumer market. Without in-network switching, a carrier is
unlikely to offer the types of high-volume services, including volume
discounts, that make resale attractive and procompetitive. We therefore
adopt in-network switching capability as a criterion for coverage under
the resale rule.

Although there may be limited practical significance to extending the
exclusion for SMR systems lacking in-network switching capacity to
cellular and broadband PCS providers, we conclude that they should be
treated consistently with SMR providers to the extent they do not
utilize an in-network switching facility or do not meet other elements
of our coverage test. SMR services excluded from coverage under our
definition, such as traditional dispatch services, can be provided using
cellular or broadband PCS spectrum as well as SMR spectrum.[^91] Indeed,
the possibility that providers will offer these services over cellular
or broadband PCS frequencies has been increased by recent rule changes
and proposals allowing licensees to disaggregate their spectrum.[^92] We
agree with AT&T, BANM, and Cable & Wireless[^93] that it would be unfair
to continue to exclude SMR providers offering these services, but
continue to subject comparably situated cellular and broadband PCS
providers to the requirements of the resale rule. As we did in the
contexts of number portability and E911, we therefore extend our
modified "covered SMR" definition to providers of similar service over
cellular and broadband PCS spectrum as well.[^94]

*Other Proposed Exemptions for SMR*. We reject the alternative proposal
that the resale rule exclude providers or systems that serve fewer than
a particu­lar number of mo­bile units. The reasonableness of the numerical
thresholds offered by PCIA and AMTA is unsupported by the record.
More­over, we conclude that the num­ber of sub­scribers to a system is not
a reli­able indica­tor of the system\'s capaci­ty or its ability to compete
with cellu­lar and broad­band PCS provid­ers. As a result, arbitrarily
defin­ing "cov­ered" systems based solely on the number of units served
could exclude providers of mobile telephony services that com­pete in
markets where competitive conditions are insufficient to protect against
unreasonable restrictions on resale. We seek to develop a definition
that covers providers based on the functional nature of the service they
provide. A definition based solely on the size of a system without
regard for the types of services provided would be arbitrary and
incompatible with our policy objectives.

We also reject Nextel\'s contention that [all]{.underline} SMR providers
should be excluded from the requirements of the resale rule. There are
two general types of services presently offered over SMR spectrum:
traditional dispatch service (typically used to enable businesses to
communicate among employees) and cellular-type service (mobile telephony
services traditionally provided to the general public). Some SMR
operators, such as Nextel, also offer a type of dispatch service package
that Nextel calls \`\`Direct Connect,\'\' and that consists of several
different functionalities. The Direct Connect feature, itself, offers
members of each group subscribing to the service package one-to-one or
one-to-many communications among members of the subscriber group.[^95]
In addition, Direct Connect is packaged with other services, including
text and numeric messaging, voice mail, and digital cellular-type
service.[^96]

Without distinguishing in its arguments among these functionalities and
their various usage demands, Nextel continues to argue on
reconsideration that capacity constraints on SMR spectrum mandate
continuing technical control over an SMR system and its end users that
cannot accommodate the disjunction between the system operator and the
end user that middlemen like resellers create, without significant costs
to system integrity. Nextel argues that the geographically-licensed SMR
spectrum over which it provides service is highly encumbered and that
relocation is just beginning. Nextel argues, further, that an SMR
provider must integrate the use of this type of spectrum with that
allocated on a site-specific basis, as well as integrating its analog
services with its digital offerings.

These arguments have already been made and rejected in this
proceeding.[^97] The problem of transitioning from analog to digital
service is not unique to SMR.[^98] Moreover, as the Commission indicated
in the *First Report and Order*, it is unclear how SMR providers would
lose control over their daily operations if their services were
purchased by parties intending to resell the services rather than being
purchased by end users.[^99] In particular, we note that Nextel is
rapidly moving away from traditional dispatch service with the
introduction of its four-function Direct Connect service package.[^100]
While the coverage and usage demands placed on the system by this
four-function package are potentially greater than traditional dispatch,
it is not clear, and Nextel does not adequately explain, why a reseller
of such a package would place any greater or more unpredictable demands
upon Nextel\'s system than Nextel itself does, in offering this service
to its own retail customers. Nextel\'s readiness and ability to market
its Direct Connect service package, as well as the rate at which it is
adding retail customers,[^101] suggest that the capacity is available to
do so. Under these circumstances, we find unconvincing Nextel\'s
arguments against permitting a reseller to purchase Nextel\'s Direct
Connect service package for resale, or permitting a reseller to acquire
the billing data and other information necessary for traditional resale.

*System-By-System Application*. Finally, we agree with Nextel\'s
assertion that the definition of "covered" services for resale purposes
should be applied on a system-by-system basis. Therefore, we clarify
that if a licensee provides "covered" services on systems in certain
areas of the country, and provides only traditional dispatch service on
systems in other areas of the country, only the "covered" systems would
be subject to the resale rule.[^102] Thus, the rule against unreasonable
restrictions on resale will not apply to a reseller seeking to offer
service in a geographic area where a carrier provides only traditional
dispatch service, provided that the geographic area in question is
clearly identified by the carrier.

**E. Proposed Amendments to Resale Rule**

**1. Reasonableness of Restrictions**

PCIA argues that the resale rule should be amended to clarify that only
"unreasonable" restrictions on resale are prohibited.[^103] PCIA asserts
that, although the text of the resale rule states that each carrier
"must permit unrestricted resale of its service,"[^104] the
Commission\'s existing resale policies and the text of the *First Report
and Or­der* indicate that only *unreasonable* restrictions are
prohibited.[^105] PCIA\'s request is unopposed in the record. On the
other hand, TRA asks us to clarify that a carrier\'s refusal to provide
a reseller with electronic billing tapes constitutes an unreasonable
restriction on resale and that an absolute refusal to discuss resale
with a potential reseller constitutes a *per se* violation of the rule.

We agree that we should clarify the Commission\'s resale rule in order
to make the text of the rule consistent with existing Commission policy.
This change in the rule would clari­fy that the reasonableness standard
continues to apply in the resale con­text. Accordingly, we amend the
rule, as set forth in Appendix B, to prohibit restrictions on resale,
unless the carrier demonstrates that the restriction is reasonable.
However, we do not deem it advisable to delineate in the rule itself
what bases we might consider reasonable for denying resale.
Reasonability determinations are fact-specific, by their very nature,
and are better made in the context of a complaint proceeding. However,
absent some extraordinary circumstances, we conclude that an absolute
refusal either to respond to or address what options, if any, are
available to a reseller would constitute an unreasonable restriction on
resale. We also wish to clarify, but cannot here resolve definitively
for each carrier, the issue of billing tapes. To the extent that
electronic billing tapes are available, or could be made available
without significant alterations to a carrier\'s billing systems, we
would expect that a carrier would provide access to them for a reseller
as part of its responsibilities under the resale rule, and we would
likely find it a violation of the resale rule should the carrier fail to
do so. On the other hand, carriers are not required to undertake major
alterations to their billing systems to accommodate reseller requests.

**2. Limited Capacity**

Nextel contends that, if the resale rule continues to apply to SMR
providers, it should be amended to clarify that resale restrictions
based on limited capacity are reasonable and are therefore permitted
under the rule.[^106] Nextel claims that it may need to deny resale in
some circumstances due to capacity limitations in order to maintain
service during its transition from analog to digital.[^107]

As an initial matter, we note that the *First Report and Order*
indicated clearly that no provider is required to add capacity in order
to accommodate a reseller.[^108] We do wish to add, however, that
virtually all CMRS carriers are adding capacity to their systems in one
form or another, as this is a rapidly growing market, and, in that
sense, all could claim to be facing capacity constraints to a certain
degree. Obviously, a generalized assertion of capacity limitations,
where capacity is actively being brought on line and service is being
aggressively marketed to retail customers (including high volume
customers), would not provide an adequate basis to deny service to
resellers. Beyond this, we decline to make a blanket determination as to
what capacity limitation or evidence thereof might constitute reasonable
grounds to restrict resale based on the speculative factual scenario
presented by Nextel. Such a spe­cific factual determination would more
appropriately be made in the context of a complaint filed pursuant to
Section 208 of the Act.[^109] There, we would be better able to develop
a complete factual record, examine the specific concerns of all parties,
and render a fully informed decision based on the facts. Accordingly, we
reject Nextel\'s proposed clarification to the rule.

**3. Data Offerings**

AT&T seeks an exemption from the resale rule for data services provided
using cellular or broadband PCS spectrum. It points out that such
services are presently subject to the resale rule, whereas data services
offered by SMR providers are exempt, and contends that such disparate
treatment is inequitable and that a comparable exemption should be
created for data services provided by cellular and PCS carriers.[^110]
In addition, several parties argue that the resale rule should not be
applied to data services because the data services market is nascent and
no carrier has a competitive advantage.[^111]

The Commission determined in the *First Report and Order* that it would
be imprudent to distinguish between voice and data services offered by
broadband PCS and cellular providers and that both should be subject to
the resale rule. It exempted data services offered by SMR providers
based on its finding that they do not compete with data services
provided by cellular and PCS providers.[^112]

We continue to believe it imprudent to distinguish between data services
and other services offered using CMRS spectrum. Such a rule would be
difficult to enforce because there are no usage restrictions applicable
to CMRS licensees, and it would be difficult to determine, as an
enforcement matter, whether a particular licensee was using its spectrum
to transmit voice or data. Given this fact, and the parties\' failure to
explain sufficiently the relevance of their argument, we also decline to
create an exception for data services based on the nascency of the
wireless data mar­ket.

With respect to SMR services, we now conclude that excluding data
services from the resale rule would likely create enforcement problems
because it can be difficult to determine whether a carrier is offering
voice or data services over digital transmission facilities. Thus, we
have decided to extend the resale rule to data services offered using
SMR spectrum to the same extent that it applies to voice services.[^113]
In so doing, we reject RAM\'s argument that data-only SMR services
should be excluded from the resale rule either because they do not
compete directly with cellular and broadband PCS or because their
inclusion might discourage interconnection.[^114] Nor do we find any
evidence in the record that permitting unrestricted resale is infeasible
for CMRS data services or more costly than for voice services.[^115]
Thus, we have determined to apply the resale rule to providers of
real-time, two-way switched data service that is interconnected with the
PSTN and that is offered over cellular, broadband PCS, or SMR spectrum
utilizing an in-network switching facility.[^116]

**4. Access to Proprietary Matter**

PCIA requests that we clarify that the resale rule does not require
unrestricted resale of services that include proprietary technologies
and products.[^117] PCIA contends that a resale requirement would reduce
the incentive for carriers to innovate by diminishing the competitive
advantages yielded by their investment.[^118]

We decline to adopt the clarification proposed by PCIA. No party has
submitted evidence to support an exception to the resale rule for
services that are offered through proprietary equipment or technol­ogy.
Absent a more focused showing on this issue, we decline to adopt a
general \`\`proprietary technology\'\' exception to the resale rule,
which would likely prove difficult, and unnecessarily burdensome, to
administer during the remaining three-year life of the rule.

We emphasize that under the CMRS resale rule, a carrier is not required
to offer a reseller wholesale prices (prices lower than those offered to
the carrier\'s retail customers) or special packages or configurations
of services tailored to the reseller\'s demands. Rather, a carrier is
required only to allow a reseller to purchase, at nondiscriminatory
prices, those services that the carrier is offering to its own retail
customers. Under these conditions, it is unclear how prohibiting
restrictions on the resale of proprietary infor­ma­tion or technol­ogy
would eliminate a licensed provider\'s financial incentive to develop
innovative new products.

We have given due consideration to assertions that the resale rule could
afford opportunities for resellers to reap benefits from carriers\'
development and marketing of innovative products to the detriment of
carriers\' incentives to develop and market services in an innovative
manner. This concern is grounded in the economic literature, which
illustrates that the transitory excess return that a firm may reap by
developing an innovative or unique service or process is the primary
motivation for firms to compete by innovation.[^119] However, we cannot
ignore MCI\'s observation that proprietary components of services are
ubiquitous in the CMRS marketplace, despite a resale policy of long
standing. The question, then, is the degree to which innovation may be
or has been discouraged, and we must balance that cost against the
benefit to the public of maintaining a resale rule until carriers can be
expected to adopt resale as a necessary means to increase distribution
of their services in a competitive CMRS market.

We conclude, based on our analysis of the record before us, that, were
we to allow carriers to restrict resale of services that include
proprietary technologies before sufficient competition develops, the
exception could severely restrict the opportunities for resale. Such an
exemption could prevent resellers from doing anything more than
reselling minutes using the underlying carrier\'s equipment.[^120]
Moreover, we note that, in the *Forbearance Memorandum Opinion and
Order*, we concluded that "the obligation to permit resale \[does not\]
significantly discourage \... facilities-based carriers from innovating
in a market that has not achieved sufficient competition."[^121] We
affirm that conclusion today and conclude that, on balance, it is not
appropriate to create the type of exception from the resale rule that
PCIA seeks.

**F.Forbearance**

PCIA argues in its Petition for Reconsideration of the *Forbearance
Memorandum Opinion and Order* that the resale rule should be sunset
immediately for [all]{.underline} CMRS providers. It contends that
forbearance from the CMRS resale rule is consistent with the three
prongs of the forbearance test,[^122] and that the record does not
contain the evidentiary support required by the Administrative Procedure
Act (APA) to sustain the Commission\'s conclusions concerning the costs
and benefits of imposing a resale rule or its determination to deny
PCIA\'s request for forbearance from the rule.[^123]

Noting the Commission\'s finding in the *CMRS Second Report and Order*
that, \`\`in a competitive market, market forces are generally
sufficient to ensure the lawfulness of rate levels, rate structures, and
terms and conditions of service,\'\'[^124] PCIA argues that the variety
of innovative service and marketing packages available to different
customer segments establishes that the CMRS market is competitive and is
already producing all of the benefits that would arguably be promoted
through continued enforcement of the resale rule. PCIA contends that
those allegations of abuses referred to in the *Forbearance Memorandum
Opinion and Order*[^125] were based on complainants\' misunderstanding
of the resale requirement, and cites two reports in support of its
position and referred to by the Commission in the Third Annual CMRS
Competition Report, finding that PCS prices are between 10 and 15
percent and 17 to 20 percent below cellular prices.[^126]

PCIA also contends that the analytic criteria established in the
*Forbearance Memorandum Opinion and Order*[^127] for evaluating future
forbearance requests on a market-by-market basis are unnecessarily
complex, impermissibly vague under APA standards, and ignore Section
10\'s underlying legislative purpose to provide a pro-competitive,
deregulatory national policy framework. PCIA alleges that requiring
elaborate cost benefit analyses is administratively inefficient and may
discourage carriers from filing forbearance petitions specific to their
markets. Should the Commission continue to refuse to forbear from the
CMRS resale rule, PCIA recommends that it grant automatic forbearance
from the resale rule in markets where a minimum of four competitors
exists.[^128]

We agree with those opposing PCIA\'s petition for reconsideration that
competition in the wireless telephony market is not yet at a state where
the resale obligation should be eliminated, and conclude that it should
be retained for the remainder of the transitional period, until it
sunsets on November 24, 2002.[^129] We addressed the forbearance issues
raised by PCIA just last year. Since that time, competition in CMRS
industries has continued to grow.[^130] However, we do not view
competitive conditions in the CMRS marketplace as qualitatively
different from those that obtained one year ago; *i.e*., competition
continues to be a \`\`work in progress,\'\' as the marketplace evolves
from the tight duopoly that prevailed only a few years ago to a state of
full competition, which we anticipate will prevail in a few years. The
situation has not changed so dramatically in the last year to cause us
to reverse course on the continued utility of the resale rule in this
market. Rather, we see the gradual, but steady, growth of competition in
these markets as confirming our decision to maintain the rule at
present, but sunset it at a specific time in the future, based on our
expectations that competition will develop in these markets over time
sufficient to support the elimination of the rule. Hence, we deny
PCIA\'s petition for reconsideration.

We also disagree that the market-by-market forbearance criteria set
forth in the *Forbearance Memorandum Opinion and Order* are
unnecessarily complex, impermissibly vague or overly burdensome.[^131]
In that Order, we recognized that conditions in some geographic markets
may support forbearance, although the rule might still be needed in
other markets. In consequence, we stated that we would consider several
factors in weighing a market-specific forbearance request, including
\`\`the state of facilities‑based competition, the extent of resale
activity within the relevant market, the immediate prospects for future
development of additional facilities‑based competition, \[and\] the
value of service to previously unserved or underserved
markets.\'\'[^132]

We continue to believe that the present approach provides a necessary
degree of flexibility for disposing of market-specific forbearance
requests, both with respect to the parameters of the market and the
criteria indicative of adequate competition. It would be difficult to
establish a meaningful bright-line test to be applied across the board
in all forbearance proceedings. Furthermore, the near-term sunset of the
rule provides an additional reason to retain the present
market-by-market approach to forbearance requests respecting resale.

**IV. PROCEDURAL MATTERS**

**A. Regulatory Flexibility Act**

As required by the Regulatory Flexibility Act, 5 U.S.C. § 604, the
Commission has prepared a Supplemental Final Regulatory Flexibility
Analysis (Supplemental FRFA) of the possible impact on small entities by
the policies and rules adopted in this Order on Reconsideration. The
Supplemental FRFA is contained in Appendix C.

**B. Authority**

This action is taken pursuant to Sections 1, 4(i), 4(j), 10, 201, 202,
303(r), 309, 332, and 403 of the Communications Act, 47 U.S.C. §§ 1,
4(i), 4(j), 160, 201, 202, 303(r), 309, 332, 403.

**C. Further Information**

For further information regarding this Order, contact Jane Phillips or
Stacy Jordan, Wireless Telecommunications Bureau, Policy Division, at
(202) 418-1310.

**V. ORDERING CLAUSES**

Accordingly, IT IS ORDERED that the rule amendments and clarifications
appearing in Appendix B and discussed herein ARE ADOPTED and SHALL BE
EFFECTIVE 60 days after publication of a summary of this Order in the
Federal Register.

IT IS FURTHER ORDERED that the Petitions for Reconsideration filed by
AT&T Corp., the Personal Communications Industry Association, the
American Mobile Telecommunications Association, and Nextel
Communications, Inc. in CC Docket No. 94-54 ARE GRANTED to the extent
indicated herein and otherwise ARE DENIED.

IT IS FURTHER ORDERED that the Petition for Reconsideration or
Clarification filed by Small Business in Telecommunications, Inc. in CC
Docket No. 94-54 IS ACCEPTED to the extent such Petition seeks
clarification, and otherwise IS REJECTED as a late-filed Petition for
Reconsideration.

IT IS FURTHER ORDERED that the Petitions for Reconsideration or
Clarification filed by the Cellular Resellers Association, Connecticut
Telephone and Communications Systems, Inc., the National Wireless
Resellers Association, and Small Business in Telecommunications, Inc.,
ARE DENIED.

IT IS FURTHER ORDERED that the Petition for Reconsideration filed by the
Personal Communications Industry Association pertaining to WT Docket No.
98-100 and GN Docket No. 94-33 IS GRANTED to the extent indicated herein
and otherwise IS DENIED.

IT IS FURTHER ORDERED that the Office of Public Affairs, Reference
Operations Division, shall send a copy of this Order on Reconsideration,
including the Supplemental Final Regulatory Flexibility Analysis, to the
Chief Counsel for Advocacy of the Small Business Administration.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

**Appendix A**

**LIST OF PARTIES IN CC DOCKET NO. 94-54**

**Petitions for Reconsideration or Clarification:**

American Mobile Telecommunications Association, Inc. (AMTA)

AT&T Corp. (AT&T)

Cellular Resellers Association (CRA)

Connecticut Telephone and Communications Systems, Inc. (Connecticut
Telephone)

National Wireless Resellers Association (NWRA)

Nextel Communications, Inc. (Nextel)

Personal Communications Industry Association (PCIA)

**Petition for Reconsideration or Clarification (Filed August 30,
1996):**

Small Business in Telecommunications, Inc. (SBTI)

**Oppositions and Comments to Petitions for Reconsideration or
Clarification:**

ARDIS Company (ARDIS)

AT&T

Bell Atlantic NYNEX Mobile, Inc. (BANM)

Cable & Wireless, Inc. (Cable & Wireless)

Cellular Telecommunications Industry Association (CTIA)

MCI Telecommunications Corporation (MCI)

NWRA

Paging Network, Inc. (PageNet)

RAM Mobile Data USA Limited Partnership (RAM)

Rural Cellular Association (RCA)

Telecommunications Resellers Association (TRA)

**Reply Comments:**

AT&T

GTE Service Corporation (GTE)

PCIA

RAM

Sprint Spectrum L.P. (Sprint)

TRA

**LIST OF PARTIES IN WT DOCKET NO. 98-100 AND GN DOCKET NO. 94-33**

**Petition for Reconsideration**

Broadband Personal Communications Services Alliance of the Personal
Communications Industry Association (PCIA)

**Oppositions to Petition for Reconsideration**

America One Communications, Inc. (America One)

Telecommunications Resellers Association (TRA)

**Reply Comment**

PCIA

**Appendix B**

**FINAL RULES**

Part 20 of Chapter 1 of Title 47 of the Code of Federal Regulations is
amended as follows:

1\. Section 20.12 is amended by revising paragraphs (a) and (b) to read
as follows:

**§ 20.12 Resale and roaming**.

\(a\) *Scope of Section*. This section is applicable as follows:

\(1\) *Scope of Resale Requirement*. Paragraph (b) of this section,
concerning resale, is applicable to the following, if such providers
offer real-time, two-way switched voice or data service that is
interconnected with the public switched network and utilizes an
in-network switching facility that enables the provider to reuse
frequencies and accomplish seamless hand-offs of subscriber calls:

\(i\) Providers of Broadband Personal Communications Services (Part 24,
Subpart E of this chapter), except those C, D, E, and F block PCS
licensees that do not own and control and are not owned and controlled
by firms also holding cellular, A or B block licenses.

\(ii\) Providers of Cellular Radio Telephone Service (Part 22, Subpart H
of this chapter); and

\(iii\) Providers of Specialized Mobile Radio Services (Part 90, Subpart
S of this chapter).

\(2\) *Scope of Roaming Requirement*. Paragraph (c) of this section,
concerning roaming, is applicable only to providers of Broadband
Personal Communications Services (Part 24, Subpart E of this chapter),
providers of Cellular Radio Telephone Service (Part 22, Subpart H of
this chapter), providers of Specialized Mobile Radio Services in the 800
MHz and 900 MHz bands that hold geographic licenses and offer real-time,
two-way voice service that is interconnected with the public switched
network (included in Part 90, Subpart S of this chapter) and Incumbent
Wide Area SMR Licensees.

\(b\) *Resale*. The resale requirement is applicable as follows:

\(1\) Each carrier identified in paragraph (a)(1) of this section shall
not restrict the resale of its services, including enhanced services,
unless the carrier demonstrates that the restriction is reasonable.

\(2\) The resale requirement shall not apply to customer premises
equipment, whether or not it is bundled with services subject to the
resale requirement in this paragraph.

\(3\) This paragraph shall cease to be effective five years after the
last group of initial licenses for broadband PCS spectrum in the
1850-1910 and the 1930-1990 MHz bands is awarded; *i.e.*, at the close
of November 24, 2002.

2\. Section 20.12 is further amended by revising the first clause in
paragraph (c) to read as follows:

\(c\) *Roaming*. Each licensee identified in paragraph (a)(2) of this
section must provide mobile radio service upon request to all
subscribers in good standing to the services of any carrier subject to
this section, \*\*\*

**Appendix C**

**SUPPLEMENTAL FINAL REGULATORY FLEXIBILITY ANALYSIS**

As required by the Regulatory Flexibility Act, 5 U.S.C. § 604
(RFA),[^133] a Final Regu­latory Flexibility Analysis (FRFA) was
incorporated into the *First Report and Order* issued in this
proceeding.[^134] The Commission\'s Supplemental Final Regulatory
Flexibility Analysis (Supplemental FRFA) in this Memorandum Opinion and
Order on Reconsideration and Order Denying Petition for Forbearance
(*Order on Reconsideration*) contains information additional to that
contained in the FRFA and is limited to matters raised on
reconsideration with regard to the *First Report and Order* and
addressed in this *Order on Reconsideration*. This Supplemental FRFA
conforms to the RFA.

**I. Need for and Purpose of This Action**

In this *Order on Reconsideration*, the Commission affirms its decision
to extend the cellular resale rule to broadband personal communications
services (PCS) and certain specialized mobile radio (SMR) providers, and
to sunset the rule in five years. However, the Commission has exempted
from customer premises equipment (CPE) from the scope of the resale rule
and has modified its initial decision with respect to broadband PCS
providers and SMR providers. In addition to exempting bundled CPE, the
Commission has excluded from the coverage of the resale rule all C, D,
E, and F block PCS licensees that do not own and control and are not
owned and controlled by firms also holding cellular, A or B block
licenses. On the other hand, the Commission has expanded the scope of
the resale rule to include SMR providers that offer real-time, two-way
data service that is interconnected with the public switched network
(PSTN). However, the Commission has excluded from coverage any SMR
provider offering real-time, two-way PSTN-interconnected voice or data
service that does not utilize an in-network switching facility. The
Commission has adopted a comparable scope of coverage for cellular and
broadband PCS providers that do not utilize in-network switching
facilities. Thus, as a result of the modifications adopted in the *Order
on Reconsideration*, the resale rule will now apply to all SMR providers
(as well as cellular and certain broadband PCS providers) that offer
real-time, two-way switched service (voice or data) that is
interconnected with the PSTN, so long as the provider utilizes an
in-network switching facility.

By resolving the pending petitions for reconsideration or clarification
of the *First Report and Order*, the actions taken in this *Order on
Reconsideration* will affirm and clarify the Commission\'s CMRS resale
policy, which is intended to help bring the benefits of competition to
the market for these services while the market is in transition to a
fully competitive state. In addition, the Commission\'s resale policy is
intended to help promote competition by allowing new entrants to enter
the marketplace quickly by reselling their competitors\' services during
the time needed to construct their own facilities.

**II. Summary of Significant Issues Raised by the Public**

**in Response to the Final Regulatory Flexibility Analysis**

No petitions for reconsideration were filed in direct response to the
FRFA. In petitions for reconsideration or clarification, however, and in
responsive pleadings, as well, some issues were raised that might affect
small entities.[^135] Specifically, some commenters argued that the term
covered SMR should be limited to systems that have an in-network
switch­ing facili­ty or that serve at least a minimum number of mobile
units, *e.g.*, at least 100,000 mobile units that provide real-time,
two-way interconnect­ed voice services or that serve at least 20,000 or
more subscribers nationwide.

Several other commenters contended, however, that the number of units
served bears no necessary relation to the purposes of limiting SMR
coverage and that coverage should be determined based on services that
compete with SMR providers. Other commenters contended that SMR systems
should be subject to the same rules as cellular and broadband PCS in
order to preserve regulatory parity in the CMRS market, and that, if
small SMR systems are excluded from the rule, small cellular and
broadband PCS systems should also be excluded.

**III. Description and Estimates of the Number of Entities Affected**

**by This Order on Reconsideration**

The RFA directs agencies to provide a description of and, where
feasible, an estimate of, the number of small entities that may be
affected by the proposed rules, if adopted.[^136] The RFA generally
defines the term \`\`small entity\'\' as having the same meaning as the
term \`\`small business.\'\' [^137] In addition, the term \`\`small
business\'\' has the same meaning as the term \`\`small business
concern\'\' under the Small Business Act.[^138] A small business concern
is one which: (1) is independently owned and operated; (2) is not
dominant in its field of operation; and (3) satisfies any additional
criteria established by the Small Business Administration (SBA).[^139]

*SMR Licensees.* Pursuant to 47 C.F.R. § 90.814(b)(1), the Commission
has defined \`\`small business\'\' for purposes of auctioning 900 MHz
SMR licenses,[^140] 800 MHz SMR licenses for the upper 200
channels,[^141] and 800 MHz SMR licenses for the lower 230
channels[^142] as a firm that has had average annual gross revenues of
\$15 million or less in the three preceding calendar years. This small
business size standard for the 800 MHz and 900 MHz auctions has been
approved by the SBA. The rule amendment adopted in this *Order on
Reconsideration* affects geographic and wide area SMR providers that
were not previously subject to the resale rule because they do not offer
real-time, two-way PSTN-interconnected voice service. Such SMR providers
will now be subject to the CMRS resale rule if they offer real-time,
two-way voice or data service that is interconnected with the public
switched network, provided they use an in-network switching facility.

Sixty winning bidders for geographic area licenses in the 900 MHz SMR
band qualified as small business under the \$15 million size standard.
It is not possible to determine which of these licensees were not
covered by the previous rule but intend to offer real-time, two-way
PSTN-interconnected voice or data service utilizing an in-network
switching facility. Therefore, we conclude that the number of 900 MHz
SMR geographic area licensees affected by this rule modification is at
least 60.

The auction of the 525 800 MHz SMR geographic area licenses for the
upper 200 channels began on October 28, 1997, and was completed on
December 8, 1997. Ten winning bidders for geographic area licenses for
the upper 200 channels in the 800 MHz SMR band qualified as small
businesses under the \$15 million size standard. It is not possible to
determine which of these licensees were not covered by the previous rule
but intend to offer real-time, two-way PSTN-interconnected voice or data
service utilizing an in-network switching facility. Therefore, we
conclude that the number of 800 MHz SMR geographic area licensees for
the upper 200 channels affected by this rule modification is at least
ten.

The Commission has determined that 3325 geographic area licenses will be
awarded in the 800 MHz SMR auction for the lower 230 channels.[^143]
Because the auction of these licenses has not yet been conducted, there
is no basis to estimate how many winning bidders will qualify as small
businesses under the Commission\'s \$15 million size standard. Nor is it
possible to determine which of these licensees would not have been
covered by the previous rule but will offer real-time, two-way
PSTN-interconnected voice or data service utilizing an in-network
switching facility. Therefore, we conclude that the number of 800 MHz
SMR geographic area licensees for the lower 230 channels that may
ultimately be affected by this rule modification is at least 3325.

With respect to licensees operating under extended implementation
authorizations, approximately 6800 such firms provide 800 MHz or 900 MHz
SMR service. However, we do not know how many of these were not covered
by the previous rule but intend to offer real-time, two-way
PSTN-interconnected voice or data service utilizing an in-network
switching facility or which of this subset qualify as small businesses
under the \$15 million size standard.[^144] We assumed, for purposes of
the FRFA, and continue to assume for purposes of this Supplemental FRFA,
that *all* of the remaining existing authorizations are held by
licensees qualifying as small businesses under the \$15 million size
standard. Of these, we assume, for purposes of our evaluations and
conclusions in this Supplemental FRFA, that *none* of these licensees
was covered by the previous rule but that *all* of them intend to offer
real-time, two-way PSTN-interconnected voice or data service utilizing
an in-network switching facility. Therefore, we conclude that the number
of SMR licensees operating in the 800 MHz and 900 MHz bands under
extended implementation authorizations that may be affected by this rule
modification is up to 6800.

*Cellular Licensees*. Neither the Commission nor the SBA has developed a
definition of small entities applicable to cellular licensees.
Therefore, the applicable definition of a small entity is the definition
under the SBA rules applicable to radiotelephone (wireless) companies.
This provides that a small entity is a radiotelephone company employing
no more than 1,500 persons.[^145] According to the Bureau of the Census,
only twelve radiotelephone firms from a total of 1,178 such firms which
operated during 1992 had 1,000 or more employees.[^146] Therefore, even
if all twelve of these firms were cellular telephone companies, nearly
all cellular carriers were small businesses under the SBA\'s definition.
In addition, we note that there are 1,758 cellular licenses; however, a
cellular licensee may own several licenses. In addition, according to
the most recent *Trends in Telephone Service* data, 732 carriers
reported that they were engaged in the provision of either cellular
service or Personal Communications Service (PCS) services, which are
placed together in the data.[^147] We do not have data specifying the
number of these carriers that are not independently owned and operated
or have more than 1,500 employees, and thus are unable at this time to
estimate with greater precision the number of cellular service carriers
that would qualify as small business concerns under the SBA\'s
definition. Consequently, we estimate that there are fewer than 732
small cellular service carriers that may be affected by the policies
adopted in this *Order on Reconsideration*.

*Broadband Personal Communications Service (PCS).* The broadband PCS
spectrum is divided into six frequency blocks designated A through F,
and the Commission has held auctions for each block. The Commission
defined "small entity"for Blocks C and F as an entity that has average
gross revenues of less than \$40 million in the three previous calendar
years.[^148] For Block F, an additional classification for "very small
business" was added and is defined as an entity that, together with its
affiliates, has average gross revenues of not more than \$15 million for
the preceding three calendar years.[^149] These regulations defining
"small entity" in the context of broadband PCS auctions have been
approved by the SBA.[^150] No small businesses within the SBA-approved
definition bid successfully for licenses in Blocks A and B. There were
90 winning bidders that qualified as small entities in the Block C
auctions. A total of 93 small and very small business bidders won
approximately 40 percent of the 1,479 licenses for Blocks D, E, and
F.[^151] Based on this information, we conclude that the number of small
broadband PCS licensees will include the 90 winning C Block bidders and
the 93 qualifying bidders in the D, E, and F blocks, for a total of 183
small entity PCS providers as defined by the SBA and the Commission\'s
auction rules.

**IV. Description of Projected Reporting, Recordkeeping,**

**and Other Compliance Requirements**

Neither the rule adopted in the *First Report and Order* nor the rule
modifications adopted in the *Order on Reconsideration* impose a
reporting or recordkeeping requirement. The resale rule does, however,
operate as a negative prohibition forbidding restrictions on the resale
of covered services. The only compliance costs likely to be incurred, as
a result, are administrative costs to ensure that an entity\'s practices
are in compliance with the rule.

**V. Steps Taken To Minimize Significant Economic**

**Impact on Small Entities, and Significant Alternatives Considered**

It is important to note, in the first instance, that the imposition of a
resale requirement confers substantial benefits on small entities,
because a substantial number of those wireless resellers it is designed
to protect are small.[^152] Moreover, the exemption from its
requirements for certain C, D, E and F block licensees also benefits
smaller entities because it exempts from the obligations of the resale
rule, smaller, new entrant competitors that have little market share and
little or no incentive to restrict resale unreasonably.

The Commission has also reduced the potential impact of the resale rule
on small entities by continuing to exclude from its requirements those
entities that have, traditionally, constituted the smallest of the SMR
licensees, *i.e.*, those licensees that do not provide services on an
interconnected basis. In the *Order on Reconsideration*, the Commission
has adopted an alternative definition of covered SMR that includes only
those systems that have an in-network switching facility. This exception
to coverage addresses the concerns of SMR providers that primarily offer
traditional dispatch services but whose offer of limited interconnection
capability might otherwise subject them to the resale rule as previously
drafted. Such a result would have been inconsistent with the
Commission\'s determination that only SMR providers that compete
directly with cellular and broadband PCS should be subject to the resale
rule, because an important indicator of a provider\'s ability to compete
with traditional cellular and broadband PCS providers is whether the
provider\'s system has "in-network" switching capability.

In evaluating the merits of those arguments made on reconsideration of
the *First Report and Order*, and electing to adopt the in-network
switching criterion, the Commission has rejected a definition of SMR
covered services that would ex­emp­t SMR provid­ers based on their
particu­lar number of mo­bile units or on capacity. The num­ber of
sub­scribers to an SMR system is not a reli­able indica­tor of the
system\'s capaci­ty. Nor is it a reliable indicator of a system\'s
ability to compete with cellu­lar and broad­band PCS provid­ers. Thus,
defining the term cov­ered SMR in terms of its number of subscribers or
its capacity could exempt from the resale requirement services that
com­pete in markets where competitive conditions do not yet sufficiently
protect against unreasonable restrictions on resale. As we observed in
the FRFA, our decision to extend the resale rule will not require any
carrier to expand its capacity or to change its system in order to
accommodate the desires of resellers.

**VI. Report to Congress**

The Commission will send a copy of this *Order on Reconsideration*,
including a copy of this Supplemental Final Regulatory Flexibility
Analysis, in a report to be sent to Congress pursuant to the Small
Business Regulatory Enforcement Fairness Act of 1996, [see]{.underline}

5 U.S.C. § 801(a)(1)(A). In addition, the *Order on Reconsideration* and
this Supplemental FRFA will be sent to the Chief Counsel for Advocacy of
the Small Business Administration. Finally, the *Order on
Reconsideration* and Supplemental FRFA (or summaries thereof) and will
be published in the Federal Register. *See* 5 U.S.C. § 604(b).

[^1]: ^?^ Interconnection and Resale Obligations Pertaining to
    Commercial Mobile Radio Services, CC Docket No. 94-54, First Report
    and Order, 11 FCC Rcd 18455 (1996) (*First Report and Order*),
    *aff\'d sub nom*. Cellnet Communications v. FCC, 149 F.3d 429 (6th
    Cir. 1998) (*Cellnet*).

[^2]: ^?^ *First Report and Order*, 11 FCC Rcd at 18459-60 (para. 7).

[^3]: ^?^ *Id.* at 18468-69 (para. 24). On July 2, 1998, a Public Notice
    was issued announcing that the five-year period had commenced as of
    November 25, 1997, the date on which the Commission completed its
    award of the last group of initial licenses for currently allocated
    broadband PCS spectrum. The Public Notice states that the resale
    rule will terminate at the close of November 24, 2002. Commencement
    of Five-Year Period Preceding Termination of Resale Rule Applicable
    to Certain Covered Commercial Mobile Radio Service Providers, CC
    Docket No. 94-54, 13 FCC Rcd 17427 (1998).

[^4]: ^?^ In the *Cellular Order*, the Commission established rules to
    authorize commercial cellular communications and extended the resale
    rule policy developed in the wireline telecommunications market to
    cellular service. Cellular Communications Systems, 86 FCC 2d 469
    (1981) (*Cellular Order*).

[^5]: ^?^ 47 U.S.C. § 160(a)(1)-(3). Personal Communications Industry
    Association\'s Broadband Personal Communications Services
    Alliance\'s Petition for Forbearance for Broadband Personal
    Communications Services; Biennial Regulatory Review - Elimination or
    Streamlining of Unnecessary or Obsolete CMRS Regulations;
    Forbearance from Applying Provisions of the Communications Act to
    Wireless Telecommunications Carriers, WT Docket No. 98-100; Further
    Forbearance from Title II Regulation for Certain Types of Commercial
    Mobile Radio Service Providers, GN Docket No. 94-33; GTE Petition
    for Reconsideration or Waiver of a Declaratory Ruling, MSD-92-14,
    Memorandum Opinion and Order and Notice of Proposed Rulemaking, 13
    FCC Rcd 16857 (1998) (*Forbearance Memorandum Opinion and Order*).

[^6]: ^?^ Equal Access and Interconnection Obligations Pertaining to
    Commercial Mobile Radio Services, CC Docket No. 94-54, Notice of
    Proposed Rulemaking and Notice of Inquiry, 9 FCC Rcd 5408 (1994)
    (*Interconnection NOI*).

[^7]: ^?^ Interconnection and Resale Obligations Pertaining to
    Commercial Mobile Radio Services, CC Docket No. 94-54, Second Notice
    of Proposed Rulemaking, 10 FCC Rcd 10666 (1995) (*Second NPRM*).

[^8]: ^?^ *Id.* at 10707-09 (paras. 83-87).

[^9]: ^?^ *First Report and Order*, 11 FCC Rcd at 18459-62 (paras. 7,
    10-12).

[^10]: ^?^ *Id*. at 18468-69 (para. 24); *see* 47 C.F.R. § 20.12.

[^11]: ^?^ *First Report and Order*, 11 FCC Rcd at 18462 (para. 12).

[^12]: ^?^ *See id.* at 18461-63 (paras. 10-14).

[^13]: ^?^ *Id.*

[^14]: ^?^ *Id.* at 18468-69 (para. 24).

[^15]: ^?^ *First Report and Order*, 11 FCC Rcd at 18471-72 (para. 31).

[^16]: ^?^ *Id.* at 18472 (para. 32).

[^17]: ^?^ *Id.* at 18471 (para. 30).

[^18]: ^?^ 47 U.S.C. § 160(a)(1)-(3).

[^19]: ^?^ 47 U.S.C. § 161.

[^20]: ^?^ *See* *Forbearance Memorandum Opinion and Order,* 13 FCC Rcd
    at 16872-80 (paras. 32-44).

[^21]: ^?^ *See, e.g.*, Nextel Petition at 1‑3; PCIA Petition at 2, 5.

[^22]: ^?^ PCIA identified those costs associated with the resale rule
    as administrative costs to review contracts for compliance and
    litigate disputes, deterrence of aggressive pricing and innovative
    marketing, impediments to negotiations, and technical costs of
    modifying certain technologies in order to facilitate proper resale
    billing without exposure to fraud. PCIA Petition at 9.

[^23]: ^?^ *See* *First Report and Order,* 11 FCC Rcd at 18460-61 (para.
    9); Nextel Petition at 2-3; PCIA Petition at 4-5. *See also* BANM
    Opposition at 5-6 & n.7; Sprint Reply Comments at 2-4.

[^24]: ^?^ *See First Report and Order*, 11 FCC Rcd at 18461-62 (para.
    10).

[^25]: ^?^ *Id.*

[^26]: ^?^ These benefits include: (1) en­courag­ing com­petitive pricing;
    (2) discouraging unjust, unreason­able, and unrea­sonably
    dis­criminato­ry carrier practic­es; (3) reducing the need for detailed
    regulatory interven­tion and the adminis­tra­tive expendi­tures and
    potential for market distortions that may accom­pany such
    interven­tion; (4) promot­ing innovation and the efficient deployment
    and use of telecommuni­cations facili­ties; (5) im­proving carrier
    management and marketing; (6) gener­at­ing increased research and
    devel­op­ment; and (7) affecting positively the growth of the mar­ket
    for telecom­munica­tions services. *Id.*

[^27]: ^?^ *See id.*

[^28]: ^?^ *Id.* at 18462-63 (para. 12).

[^29]: ^?^ *Forbearance Memorandum Opinion and Order*, 13 FCC Rcd at
    16874-75 (para. 35).

[^30]: ^?^ *See* MCI Opposition at 2; TRA Opposition at 6-9. Although
    MCI and TRA are the only parties who argue explicitly against
    immediate termination of the resale rule, this argument is implicit
    in the arguments of all parties who favor reconsideration of the
    sunset provi­sion.

[^31]: ^?^ MCI Opposition at 2; TRA Opposition at 6, 9-10.

[^32]: ^?^ NWRA Petition at 9-10; TRA Opposition at 9-10.

[^33]: ^?^ *See* 5 U.S.C. §§ 551-559.

[^34]: ^?^ *See, e.g.,* Small Refiner Lead Phase‑Down Task Force v. EPA,
    705 F.2d 506, 547 (D.C. Cir. 1983). *See also* International
    Harvester v. Ruckelshaus, 478 F.2d 615, 632 n.51 (D.C. Cir. 1973).

[^35]: ^?^ *See Second NPRM*, 10 FCC Rcd at 10709 (para. 86)
    (tentatively concluding that "a mandatory general resale requirement
    is necessary because it will serve as an effective means of
    promoting competition in the CMRS marketplace").

[^36]: ^?^ BANM Opposition at 4-5.

[^37]: ^?^ *Second NPRM*, 10 FCC Rcd at 10700 (para. 67) (discussing
    contentions of some commenters that no CMRS resale obligation is
    necessary because competition is sufficient to ensure consumer
    choice and prevent price discrimination).

[^38]: ^?^ *See*, *e.g.*, Western Wireless Corp. Comments on *Second
    NPRM* at 5; Nextel Comments on *Second NPRM* at 9, n.13; AMTA
    Comments on *Second NPRM* at 9, n.8. *See also* BANM Comments on
    *Second NPRM* at 11-12; AirTouch Comments on *Second NPRM* at 15-17.

[^39]: ^?^ *See* Reeder v. FCC, 865 F.2d 1298, 1305 (D. C. Cir. 1989);
    McLouth Steel Products Corp. v. Thomas, 838 F.2d 1317, 1323 (D. C.
    Cir. 1988) (citing Forester v. Consumer Products Safety Comm\'n, 559
    F.2d 774, 788 & n.19 (D. C. Cir. 1977), National Ass\'n of
    Farmworkers Organizations v. Marshall, 628 F.2d 604, 621-22
    (D.C.Cir. 1980), National Tour Brokers Ass\'n v. United States, 591
    F.2d 896, 901-02 (D. C. Cir. 1978)).

[^40]: ^?^ Hush-A-Phone Corp. v. United States, 238 F.2d 266 (D.C. Cir.
    1956) (*Hush-A-Phone*). In the *Hush-A-Phone* decision, the court
    overturned a Commission decision upholding the lawfulness of an AT&T
    tariff that prohibited subscribers from attaching a cup-like device
    to their telephones in order to ensure privacy.

[^41]: ^?^ 47 U.S.C. §§ 201(b), 202(a).

[^42]: ^?^ *See* NWRA Petition at 13-16.

[^43]: ^?^ *Id.* at 14-15.

[^44]: ^?^ *Id*. at 16.

[^45]: ^?^ *Cellnet*, 149 F.3d at 437.

[^46]: ^?^ NWRA Petition at 19-20; CRA Petition at 1-2; Connecticut
    Telephone Petition at 4-10; *see also* MCI Opposition at 2; TRA
    Comments at 12-14; TRA Reply Comments at 3-9.

[^47]: ^?^ NWRA Petition at 16-20; Connecticut Telephone Petition at
    8-10; *see also* Cable & Wireless Comments at 3-4; TRA Reply
    Comments at 3-4, 8. MCI suggests that the Commission commit itself
    to begin a new proceeding in four years in order to exam­ine the need
    for the resale rule. MCI Opposition at 2. *See also* TRA Reply
    Comments at 8 (advocating commencement of a new proceeding in five
    years).

[^48]: ^?^ Connecticut Telephone Petition at 7-8; *see also* Cable &
    Wireless Comments at 4; TRA Reply Comments at 8-9.

[^49]: ^?^ *First Report and Order*, 11 FCC Rcd at 18463 (para. 14).

[^50]: ^?^ *Id*. at 18468 (para. 24). We recognize that the court in
    *Cellnet* noted that "\[i\]f the FCC\'s predictions about the level
    of competition do not materialize, then it will of course need to
    reconsider its sunsetting provision in accordance with its
    continuing obligation to practice reasoned decision-making."
    *Cellnet*, 149 F.3d at 442.

[^51]: ^?^ We note, however, that resellers may still be able to file
    complaints under Section 208 of the Act alleging that certain
    restrictions on the resale of interstate CMRS violate Sections
    201(b) and 202(a).

[^52]: ^?^ *See* 47 U.S.C. §§ 151, 303 and 332.

[^53]: ^?^ For example, an NWRA survey submitted in the *PCIA
    Forbearance Proceeding* suggests that resellers may be encountering
    significant difficulties in their negotiations with broadband PCS
    carriers. NWRA sent its survey to 91 resellers. Of the 46 wireless
    resellers responding to the survey, 61 percent of the respondents
    reported that they had been unable to obtain resale arrangements
    with broadband PCS carriers within the past year. NWRA Forbearance
    Comments at 4, 19; 1997 Survey of Wireless Resellers, National
    Wireless Resellers Association, at 22. *See also* Letter from E.
    Kelley, Telecom Resellers Ass\'n, to D. Phythyon, Chief, Wireless
    Telecommunications Bureau, FCC, Dec. 10, 1997.

[^54]: ^?^ AT&T Petition at 2-4; PCIA Petition at 12-13; *see also* CTIA
    Comments at 1-2; GTE Reply Comments at 5-7; RAM Comments at 6 n.12;
    Sprint Spectrum Reply Comments at 4.

[^55]: ^?^ 47 U.S.C. §§ 201, 202.

[^56]: ^?^ PCIA Petition at 12-14; *see also* AT&T Opposition at 6; GTE
    Reply Comments at 6; Sprint Spectrum Reply Comments at 5.

[^57]: ^?^ AT&T Petition at 3-4; PCIA Petition at 16; *see also* CTIA
    Comments at 3; Sprint Spectrum Reply Comments at 6-7.

[^58]: ^?^ AT&T Petition at 3.

[^59]: ^?^ PCIA Petition at 15-16; *see also* AT&T Opposition at 6;
    Sprint Spectrum Reply Comments at 5-6.

[^60]: ^?^ PCIA Petition at 14-15.

[^61]: ^?^ *First Report and Order*, 11 FCC Rcd at 18471-72 (para. 31).

[^62]: ^?^ *See* *id.* at 18459-60 (para. 7) (citing 47 U.S.C.
    §§ 303(r), 309). Section 303(r) authorizes the Commission to make
    such rules and regulations as may be necessary to carry out the
    provisions of the Act insofar as it relates to radio communications.
    47 U.S.C. § 303(r). Section 309 authorizes the Commission to
    determine the conditions to be attached to radio licenses. 47 U.S.C.
    § 309.

[^63]: ^?^ PCIA Petition at 14-15.

[^64]: ^?^ *Second NPRM*, 10 FCC Rcd at 10709 (para. 86) (emphasis
    added).

[^65]: ^?^ *See* Bundling of Cellular Customer Premises Equipment and
    Cellular Service, CC Docket No. 91-34, Report and Order, 7 FCC Rcd
    4028, 4032 n.48 (1992) (*CMRS Bundling Order*) ("Any restrictions on
    resellers\' ability to buy packages of CPE and service on the same
    basis as other customer \[*sic*\] would be unlawful.") *See also* 5
    U.S.C. § 553(b)(3)(A) (the notice requirement of the Administrative
    Procedure Act is inapplicable to general statements of agency
    policy).

[^66]: ^?^ AT&T *Second NPRM* Comments at 28-31.

[^67]: ^?^ In consequence of our decision, a carrier offering basic
    service bundled with CPE and enhanced services such as voice mail,
    for example, would only be prohibited from unreasonably restricting
    resale of the basic service and the enhanced service components of
    the bundled package.

[^68]: ^?^ *See* NWRA Opposition at 2; TRA Opposition at 11-12; *see
    also* MCI Opposition at 2-5.

[^69]: ^?^ This discussion does not imply that there is no separate
    input market for enhanced ser­vices. The program­ming and assorted
    computer hardware that form the basis of the en­hanced service can be
    bought from a number of firms. However, these programs and assorted
    hardware are sold to CMRS providers rather than to resellers or to
    end users because this input is attached to the provider\'s network.

[^70]: ^?^ *See* AT&T Opposition at 6; AT&T Reply Comments at 6; CTIA
    Comments at 2; Sprint Reply Comments at 5-6. AT&T cites, in support,
    the Notice of Pro­posed Rulemaking issued in the *Computer III*
    inquiry. *See* AT&T Peti­tion at 3, citing Computer III Further
    Remand Proceedings: Bell Operating Company Provision of En­hanced
    Services, CC Docket No. 95-20, Notice of Proposed Rulemaking, 10 FCC
    Rcd 8360, 8384-85 (paras. 32-34) (1995) (*Computer III NPRM*).
    Although the Commission observed in the *Computer III NPRM* that the
    "enhanced services marketplace has traditionally been, and appears
    to remain, competitive in character," this statement was made in the
    context of wireline local exchange network facilities. The
    Commission did not address the competitiveness of enhanced services
    delivery through the use of *wireless* network facilities in the
    *Computer III NPRM*. *Computer III NPRM*, 10 FCC Rcd at 8381-82
    (para. 32).

[^71]: ^?^ For example, contrary to their assertions in the resale
    proceeding, several telecommunications providers argued in the *CPNI
    Rulemaking* that telecommunications services must be marketed
    together with CPE and enhanced services because to proceed otherwise
    "would be contrary to customer expectations, as well as detrimental
    to the goals of customer convenience and one-stop shopping." *See*
    Implementation of the Telecommunications Act of 1996:
    Telecommunications Carriers\' Use of Customer Proprietary Network
    Information and Other Customer Information, CC Docket No. 96-115;
    Implementation of the Non-Accounting Sections of Sections 271 and
    272 of the Communications Act of 1934, CC Docket No. 96-149, Second
    Report and Order and Further Notice of Proposed Rulemaking, 13 FCC
    Rcd 8061, 8120-21 (para. 76, n. 287) (1998) (footnotes omitted);
    *vacated* in U.S. West Inc. v. F.C.C., 10th Cir. No. 98-9518 (Aug.
    18, 1999) (*CPNI Rulemaking*); *see also* Implementation of the
    Telecommunications Act of 1996: Telecommunications Carriers\' Use of
    Customer Proprietary Network Information and Other Customer
    Information, CC Docket No. 96-115; Implementation of the
    Non-Accounting Sections of Sections 271 and 272 of the
    Communications Act of 1934, CC Docket No. 96-149, Order on
    Reconsideration and Petitions for Forbearance, FCC 99-223 (rel.
    Sept. 3, 1999).

[^72]: ^?^ *See, e.g.*, Nextel Petition at 1‑3; PCIA Petition at 2, 5.
    *Cf.* Connecticut Telephone Petition at 5-6; NWRA Petition at 11-12.

[^73]: ^?^ Comments filed in response to PCIA\'s initial request for
    forbearance revealed that broadband PCS licensees were split into
    two camps on whether the Commission should forbear from imposing a
    resale requirement. In that proceeding, earlier-licensed broadband
    PCS licensees (A and B block), on the one hand, argued that the CMRS
    market is sufficiently competitive at this time and that resale
    requirements are not required to insure that carriers do not act in
    an anticompetitive manner. *See* PrimeCo Comments regarding PCIA\'s
    Forbearance Petition at 3-4, SouthEast Comments regarding PCIA\'s
    Forbearance Petition at 2-3. On the other hand, later-licensed
    broadband PCS licensees (C, D, E, and F block) generally argued that
    new entrants into the broadband PCS market need the resale
    requirement in order to facilitate market entry and to help them to
    overcome the market head-start that A and B block licensees enjoy.
    *See* GWI Comments regarding PCIA\'s Forbearance Petition at 1-5,
    Northcoast Reply Comments regarding PCIA\'s Forbearance Petition at
    3.

[^74]: ^?^ In terms of subscribers, firms with cellular and/or A or B
    block PCS licenses account for over 95 percent of the CMRS mobile
    telephony market. *See* *Fourth Annual CMRS Competition Report*,
    Table 6, Appendix B.

[^75]: ^?^ *See* *Fourth Annual CMRS Competition Report*, Table 13C,
    page B-19.

[^76]: ^?^ For example, AT&T has a substantial number of D and E block
    licenses. SBC, Sprint, and BellSouth, and other major carriers are
    also D and E block licensees.

[^77]: ^?^ The concept of control is intended to include instances of
    both *de facto* and *de jure* control. Typically, *de jure* control
    is evidenced by ownership of 50.1 percent or more of an entity\'s
    voting interest, while *de facto* control is determined on a
    case-by-case basis after considering all of the circumstances.

[^78]: ^?^ In fact, the C, D, E, and F block licensees argued in the
    forbearance proceeding that reselling cellular analog services,
    rather than digital broadband PCS, would not constitute an effective
    entry strategy for them in today\'s marketplace and that requiring A
    and B block licensees to provide resale opportunities would increase
    the chances that at least one of the major competitors in each
    market would have a digital system compatible with that being built
    by the C, D, E, or F block licensee. *See* GWI Comments regarding
    PCIA\'s Forbearance Petition at 1-5; *see also* Northcoast Reply
    Comments regarding PCIA\'s Forbearance Petition at 3.

[^79]: ^?^ To the extent that a C, D, E, or F block licensee contends
    that it fits within the underlying rationale, but not the literal
    scope, of the exemption, the Commission will entertain requests for
    waiver from such carriers on a case-by-case basis. In evaluating the
    merits of an individual waiver request, the Commission may consider,
    for example, whether the petitioner\'s cellular, A and B block
    holdings are *de minimis*, and whether excluding the petitioner from
    the requirements of the resale rule would have an adverse impact on
    competition.

[^80]: ^?^ *First Report and Order*, 11 FCC Rcd at 18466 (para. 19).

[^81]: ^?^ Nextel Petition at 3-5.

[^82]: ^?^ AMTA Petition at 4-8; Nextel Petition at 7.

[^83]: ^?^ AMTA Petition at 5-7; Nextel Petition at 6-7.

[^84]: ^?^ SBTI Petition at 3-4. SBTI contends that these providers
    cannot compete realistically with cellular and broadband PCS in the
    mass market for real-time, two-way voice services, but appeal,
    instead, to a niche market of consumers who are interested only in
    local service. (SBTI\'s Petition for Reconsideration or
    Clarification has been rejected as late-filed, except to the extent
    that it seeks clarification. See para. , *infra*.) *See also* BANM
    Opposition at 9 n.15; RAM Opposition at 2 (opposing any redefinition
    of covered SMR that would include data-only services in the rule).

[^85]: ^?^ Nextel Petition at 7-8.

[^86]: ^?^ PCIA submits that coverage should be limited to SMR systems
    that serve at least 100,000 mobile units and provide real-time,
    two-way interconnect­ed voice services. PCIA Petition at 20-21. *See
    also* PCIA Reply at 9. AMTA urges us to limit coverage to SMR
    systems that serve at least 20,000 or more subscribers nationwide.
    AMTA Petition at 8-9.

[^87]: ^?^ *See First Report and Order*, 11 FCC Rcd at 18466 (para. 19).

[^88]: ^?^ The term "Incumbent Wide Area SMR Licensees" is defined in
    Section 20.3 of the Commission\'s Rules. 47 C.F.R. § 20.3.

[^89]: ^?^ *But see* discussion of SMR and other CMRS data services
    *infra*, at Section III E 3.

[^90]: ^?^ *See* Telephone Number Portability, CC Docket No. 95-116,
    Second Memorandum Opinion and Order on Reconsideration, 13 FCC Rcd
    21204, 21228-30 (paras. 52-57) (*Number Portability Second
    Reconsideration Order*); Revision of the Commission\'s Rules To
    Ensure Compatibility with Enhanced 911 Emergency Calling Systems, CC
    Docket No. 94-102, RM-8143, Memorandum Opinion and Order, 12 FCC Rcd
    22665, 22703-04 (para. 78) (*E911 Reconsideration Order*), *further
    recon. pending*.

[^91]: ^?^ *See* Amendment of the Commission\'s Rules To Permit Flexible
    Service Offerings in the Commercial Mobile Radio Services, WT Docket
    No. 96-6, First Report and Order and Further Notice of Proposed
    Rulemaking, 11 FCC Rcd 8965 (1996).

[^92]: ^?^ *See* Geographic Partitioning and Spectrum Disaggregation by
    Commercial Mobile Radio Services Licensees, WT Docket No. 96-148,
    Report and Order and Further Notice of Proposed Rulemaking, 11 FCC
    Rcd 21831 (1996).

[^93]: ^?^ AT&T Opposition at 5-6; BANM Opposition at 7-9; Cable &
    Wireless Opposition at 5.

[^94]: ^?^ *See Number Portability Second Reconsideration Order,* 13 FCC
    Rcd at 21229-30 (para. 54); *E911 Reconsideration Order*, 12 FCC Rcd
    at 22704-05 (para. 81). In the *E911 Reconsideration Order*, the
    Commission concluded that the E911 requirements should apply only to
    those cellular, broadband PCS, and SMR providers that provide
    real-time, two-way interconnected voice service, the networks of
    which utilize intelligent switching capability and offer seamless
    hand off to customers. That decision was based, in part, on the
    competitive consideration that systems without in-network switching
    typically offer different services from the mass market services
    traditionally provided by cellular and broadband PCS.

[^95]: ^?^ The Direct Connect feature of this package is similar to
    cellular service in that it could tie up capacity at any base
    station, anywhere in a metropolitan area, but is similar to
    traditional dispatch in that it does not use the PSTN.

[^96]: ^?^ The latter functionality enables a group member to place an
    ordinary, cellular-type call to recipients outside the group. In
    other words, it is basically a switched mobile telephony service,
    like traditional cellular service.

[^97]: ^?^ *See First Report and Order*, 11 FCC Rcd at 18467 (para. 20).

[^98]: ^?^ All cellular carriers seeking to convert from analog to
    digital must make certain hardware and software changes in their
    systems to effect this conversion. Therefore, Nextel\'s argument
    that it should not have to be subjected to resale because it is
    converting from analog to digital is no more valid than a similar
    argument that would be raised by any cellular carrier. *Id*.

[^99]: ^?^ *Id.*

[^100]: ^?^ This four-function package consists of digital cellular-type
    service, text and numeric messaging, voice mail, and the Direct
    Connect function. In fact, we note that the term \`\`dispatch\'\' is
    noticeably absent from most, if not all, of Nextel\'s promotional
    materials.

[^101]: ^?^ Nextel reports that its number of customers increased in the
    first half of 1999 from 2.8 million to 3.6 million. *See* 7/16/99
    Comm. Daily (Pg. Unavail. Online).

[^102]: ^?^ *See Number Portability Second Reconsideration Order,* 13
    FCC Rcd at 21217 (para. 56); *E911 Reconsideration Order*, 12 FCC
    Rcd at 22705 (para. 82).

[^103]: ^?^ PCIA Petition at 11; *see also* AT&T Opposition at 7 n.18.

[^104]: ^?^ *See* 47 C.F.R. § 20.12.

[^105]: ^?^ PCIA Petition at 11.

[^106]: ^?^ Nextel Petition at 8.

[^107]: ^?^ *Id.* at 8-9.

[^108]: ^?^ *See* *First Report and Order*, 11 FCC Rcd at 18462-63
    (paras. 12-13).

[^109]: ^?^ 47 U.S.C. § 208. We also note that resellers would have the
    option of requesting the Commission to issue a declaratory ruling
    concerning the facts surrounding such a denial and the obligations
    that would apply pursuant to the Communications Act and the resale
    rule.

[^110]: ^?^ AT&T Petition at 4-5. ARDIS takes no position on whether
    cellular and broadband PCS data-only services should be excluded
    from the resale rule, but opposes any extension of the rule to
    additional SMR providers. ARDIS Opposition at 1. ARDIS contends that
    cellular and broadband PCS data services are not functionally
    similar to SMR data services because of the disparity in the amount
    of spectrum allocated to each, and that most non-covered SMR
    providers cannot realistically offer voice service and can offer
    only limited capacity for data service to a limited number of
    customers. *Id*. at 4-7. AT&T rejoins that, although cellular
    operators have more spectrum allotted to them than SMR licensees,
    they need to use most of that spectrum for voice, and thus typically
    use only about the same amount of spectrum for data services as SMR
    licensees. AT&T Reply Comments at 7-8, n.22.

[^111]: ^?^ *See* GTE Reply Comments at 8-9. *See also* AT&T Reply
    Comments at 8-9 (favoring a data services exemption because the
    service is only beginning to develop and a resale rule is especially
    likely to discourage beneficial innovation); RAM Comments at 6
    (arguing that an exception for data services would promote
    regulatory parity but should not include bundled voice and data
    packages).

[^112]: ^?^ *See* *First Report and Order*, 11 FCC Rcd at 18466 (para.
    19).

[^113]: ^?^ *See* the discussion of in-network switching capacity at
    Section III D 2, *supra*.

[^114]: ^?^ *See* RAM Opposition at 3-6. RAM argues that data-only SMR
    system operators might have a \`\`perverse incentive\'\' to
    eliminate interconnection in order to avoid their resale
    obligations. *Id*. at 6.

[^115]: ^?^ *Cf. Number Portability Second Reconsideration Order,* 13
    FCC Rcd at 21227-28 (para. 50) (citing RAM contention that number
    portability is infeasible for data-only systems because customers of
    these systems have no telephone number to port).

[^116]: ^?^ As a result of our decisions on reconsideration regarding
    the scope of the CMRS resale rule, it has been necessary to
    bifurcate paragraph (a) of Section 20.12, "Resale and roaming," to
    account for distinctions between resale and roaming regarding scope,
    and to effect a corresponding technical amendment to the
    cross-reference in the opening clause of the roaming rule in Section
    20.12(c), with respect to scope. *See* Appendix B, *infra*.

[^117]: ^?^ PCIA Petition at 16-18.

[^118]: ^?^ *Id*. at 17. *See also* AT&T Opposition at 6-7; GTE Reply
    Comments at 3-4; PCIA Reply Comments at 7.

[^119]: ^?^ *See generally* M. Kamien & N. Schwartz, *Market Structure
    and Innovation* 105-215 (1982); J. Reinganum, "The Timing of
    Innovation: Research, Development, and Diffusion," *The Handbook of
    Industrial Organization* 849-908 (1990) (eds. R. Schmalensee & R.
    Willig).

[^120]: ^?^ MCI Opposition at 3-4. In response, PCIA argues that the
    Commission has applied network disclosure requirements only in the
    presence of market power, and that such requirements would be
    inappropriate in a competitive environment, where they would impede
    full competition. PCIA Reply Comments at 8. We note that, even if
    PCIA\'s contentions are correct, its remarks about network
    disclosure requirements are irrelevant here, because the resale rule
    does not involve or impose network disclosure requirements.

[^121]: ^?^ *See Forbearance Memorandum Opinion and Order,* 13 FCC Rcd
    at 16879 (para. 42).

[^122]: ^?^ Section 10 requires forbearance if the Commission determines
    that: (1) enforcement of such regulation or provision is not
    necessary to ensure that the charges, practices, classifications, or
    regulations by, for, or in connection with that telecommunications
    carrier or telecommunications service are just and reasonable and
    are not unjustly or unreasonably discriminatory; (2) enforcement of
    such regulation or provision is not necessary for the protection of
    consumers; and (3) forbearance from applying such provision or
    regulation is consistent with the public interest.

[^123]: ^?^ 5 U.S.C. §§ 551-559. PCIA\'s forbearance request regarding
    resale initially applied only to broadband PCS providers. During the
    course of that proceeding, PCIA broadened its request to all CMRS
    providers, and has maintained that position on reconsideration. On
    July 2, 1998, the Commission denied the PCIA Forbearance Petition as
    it relates to resale, noting that PCIA had made no attempt to
    quantify those costs which it alleged are associated with imposition
    of the resale rule, and concluding that, in the absence of specific
    evidence that would contradict this conclusion, the administrative
    costs imposed by the resale rule do not outweigh its benefits. *See
    Forbearance Memorandum Opinion and Order* at para. 42. The
    Commission\'s consideration of administrative costs in conducting
    the cost benefit analysis in the *First Report and Order* has been
    upheld in *Cellnet*. *See* Discussion, at Part B, "Administrative
    Costs," *Cellnet*, 149 F.3d 429, 438 (1998).

[^124]: ^?^ Implementation of Sections 3(n) and 332 of the
    Communications Act; Regulatory Treatment of Mobile Services, Second
    Report and Order, 9 FCC Rcd 1411, 1478 (1994) (*CMRS Second Report
    and Order*).

[^125]: ^?^ *See Forbearance Memorandum Opinion and Order* at para. 38.

[^126]: ^?^ See Implementation of Section 6002(b) of the Omnibus
    Reconciliation Act of 1993; Annual Report and Analysis of
    Competitive Market Conditions With Respect to Commercial Mobile
    Services, Third Report and Order, 13 FCC Rcd 19746 (1998) (*Third
    Annual CMRS Competition Report*).

[^127]: ^?^ *See Forbearance Memorandum Opinion and Order,* 13 FCC Rcd
    at 16880 (para. 44).

[^128]: ^?^ PCIA Forbearance Petition at 23-25.

[^129]: ^?^ TRA Opposition to Forbearance Petition at 3-12; America One
    Opposition to Forbearance Petition at 4-7.

[^130]: ^?^ *See* *Fourth Annual CMRS Competition Report* at 19-22.

[^131]: ^?^ *Forbearance Memorandum Opinion and Order* at para. 44.
    Resale advocates allege that a bright line test keyed solely to a
    specified minimum number of competitors in a market would violate
    Section 10 because the level of competition is only one factor in a
    forbearance analysis, and the existence of a prescribed number of
    competitors is thus not dispositive of the question whether
    forbearance from a particular regulation is mandated under Section
    10(a). *See* TRA Opposition to Forbearance Petition at 13-14.

[^132]: ^?^ *Forbearance Memorandum Opinion and Order* at para. 44.

[^133]: ^?^ *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et.
    seq*., has been amended by the Contract With America Advancement Act
    of 1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAA). Title II
    of the CWAA is the Small Business Regulatory Enforcement Fairness
    Act of 1996 (SBREFA).

[^134]: ^?^ Interconnection and Resale Obligations Pertaining to
    Commercial Mobile Radio Services, CC Docket No. 94-54, First Report
    and Order, 11 FCC Rcd 18455 (1996), at Appendix B (*First Report and
    Order*). An Initial Regulatory Flexibility Analysis (IRFA) was
    incorporated in the Notice of Proposed Rulemaking and Notice of
    Inquiry in CC Docket No. 94-54. Equal Access and Interconnection
    Obligations Pertaining to Commercial Mobile Radio Services, CC
    Docket No. 94-54, FCC 94-145, Notice of Proposed Rulemaking and
    Notice of Inquiry, 9 FCC Rcd 5408 (1994) at Appendix B. The
    Commission\'s proposal concerning resale was refined in a Second
    Notice of Proposed Rulemaking *(Second NPRM*) issued in the same
    docket, and a second IRFA was incorporated in the *Second NPRM*.
    Interconnection and Resale Obligations Pertaining to Commercial
    Mobile Radio Services, CC Docket No. 94-54, Second Notice of
    Proposed Rulemaking, 10 FCC Rcd 10666 (1995) at Appendix B.

[^135]: ^?^ We discuss these issues further in Section V, *infra*.

[^136]: ^?^ 5 U.S.C. § 603(b)(3).

[^137]: ^?^ 5 U.S.C. § 601(6).

[^138]: ^?^ 5 U.S.C. § 601(3) (incorporating by reference the definition
    of \`\`small business concern\'\' in 15 U.S.C. 632). Pursuant to the
    RFA, the statutory definition of a small business applies \`\`unless
    an agency, after consultation with the Office of Advocacy of the
    Small Business Administration and after opportunity for public
    comment, establishes one or more definitions of such term which are
    appropriate to the activities of the agency and publishes such
    definition(s) in the Federal Register.\'\' 5 U.S.C. 601(3).

[^139]: ^?^ Small Business Act, 15 U.S.C. § 632 (1996).

[^140]: ^?^ *See* Amendment of Parts 2 and 90 of the Commission\'s Rules
    to Provide for the Use of 200 Channels Outside the Designated Filing
    Areas in the 896-901 MHz and the 935-940 MHz Bands Allotted to the
    Specialized Mobile Radio Pool, PR Docket No. 89-583, Second Order on
    Reconsideration and Seventh Report and Order, 11 FCC Rcd 2639
    (1995).

[^141]: ^?^ *See* Amendment of Part 90 of the Commission\'s Rules to
    Facilitate Future Development of SMR Systems in the 800 MHz
    frequency Band, PR Docket No. 93-144, First Report and Order, Eighth
    Report and Order, and Second Further Notice of Proposed Rulemaking,
    11 FCC Rcd 1463 (1995).

[^142]: ^?^ *See* Amendment of Part 90 of the Commission\'s Rules to
    Facilitate Future Development of SMR Systems in the 800 MHz
    frequency Band, PR Docket No. 93-144, Second Report and Order, 12
    FCC Rcd 19079 (1997).

[^143]: ^?^ *Id*.

[^144]: ^?^ Because the RFA amendments were not in effect until the
    record compiled in response to the *Second NPRM* was closed, the
    Commission did not request information regarding the number of small
    businesses in this category.

[^145]: ^?^ 13 C.F.R. §121.201, SIC code 4812.

[^146]: ^?^ *1992 Census,* Series UC92-S-1, at Table 5, SIC code 4812.

[^147]: ^?^ *Trends in Telephone Service*, Table 19.3 (Feb. 19, 1999).

[^148]: ^?^ *See* Amendment of Parts 20 and 24 of the Commission\'s
    Rules - Broadband PCS Competitive Bidding and the Commercial Mobile
    Radio Service Spectrum Cap, WT Docket No. 96-59; Amendment of the
    Commission\'s Cellular/PCS Cross-Ownership Rule, GN Docket 90-314,
    Report and Order, 11 FCC Rcd 7824, 7850-52 (paras. 57-60) (1996);
    *see also* Section 24.720(b) of the Commission\'s Rules, 47 C.F.R.
    §24.720(b).

[^149]: ^?^ *See Id.* at 7852 (para. 60).

[^150]: ^?^ *See, e.g.*, Implementation of Section 309(j) of the
    Communications Act \-- Competitive Bidding, PP Docket No. 93-253,
    Fifth Report and Order, 9 FCC Rcd 5532, 5581-84 (paras. 114-20)
    (1994).

[^151]: ^?^ FCC News, *Broadband PCS, D, E and F Block Auction Closes*,
    No. 71744 (released Jan. 14, 1997).

[^152]: ^?^ As the Commission noted in the *Order on Reconsideration,*
    an NWRA survey submitted in the *PCIA Forbearance Proceeding*
    suggests that resellers may be encountering significant difficulties
    in their negotiations with CMRS carriers. *See* NWRA Forbearance
    Comments at 4, 19; 1997 Survey of Wireless Resellers, National
    Wireless Resellers Association, at 22. *See also* Letter from E.
    Kelley, Telecom Resellers Ass\'n, to D. Phythyon, Chief, Wireless
    Telecommunications Bureau, FCC, Dec. 10, 1997.