**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of )

)

Amendment of the Commission\'s ) WT Docket No. 96-6

Rules to Permit Flexible )

Service Offerings in the )

Commercial Mobile Radio Services )

**SECOND REPORT AND ORDER**

AND ORDER ON RECONSIDERATION

**Adopted: July 6, 2000 Released: July 20, 2000**

By the Commission:

**I. INTRODUCTION**

1 In this proceeding the Commission has sought to provide commercial
mobile radio service (CMRS) carriers with maximum flexibility in the
uses of CMRS spectrum. In the *First Report and Order and Further Notice
of Proposed Rulemaking*,[^1] the Commission amended its rules to allow
CMRS carriers to provide fixed wireless services on a co-primary basis
with commercial mobile services. In this Order we determine that,
because of the evolving nature of fixed wireless services, we will
decide the regulatory treatment of such services on a case-by-case
basis. We also amend our rules to clarify that fixed wireless services
provided pursuant to section 22.901(d) of the Commission's rules[^2] are
not subject to the requirements for incidental communications services
set out in section 22.323 of the Commission's rules, and eliminate the
notification requirement from section 22.323.[^3]

**II. BACKGROUND**

2 In this proceeding the Commission has addressed the extent to which
fixed services may be provided by CMRS providers. In the *First Report
and Order*, the Commission found that many CMRS carriers were seeking to
provide a wide range of fixed wireless service offerings to consumers
and that in many instances the carriers proposed to combine fixed and
mobile technologies into integrated service packages. The Commission
therefore concluded that CMRS providers should have the flexibility to
provide fixed services on a co-primary basis with commercial mobile
services.[^4] The Commission reasoned that this rule change would allow
the carriers greater flexibility to provide innovative wireless services
to meet consumer demands. The Commission also concluded that permitting
fixed services on a co-primary basis with mobile services would
stimulate wireless competition in the local exchange market.[^5]

3 The Commission's decision to allow co-primary fixed use of CMRS
spectrum raised the related issue of how such fixed service offerings
should be classified for regulatory purposes. In the initial NPRM in
this proceeding, the Commission stated that it did not want to
discourage the development of integrated fixed and mobile networks by
subjecting carriers to multiple layers of regulation.[^6] Therefore, the
Commission initially proposed to treat fixed wireless local loop
services as an integral part of the CMRS services offered by a CMRS
provider, so long as the carrier otherwise offered interconnected,
for-profit mobile service to the public.[^7] In the *FNPRM*, however,
the Commission concluded that the regulatory issue of whether fixed
services would be classified as CMRS required further development of the
record and more specific analysis related to particular fixed service
offerings.[^8]

4 On September 30, 1996, BellSouth Corporation (BellSouth) filed a
petition for partial reconsideration or clarification of the *First
Report and Order*.[^9] BellSouth argues that section 22.323 of the
Commission's rules,[^10] which permits Part 22 (Public Mobile Services)
licensees to provide incidental communications services when certain
enumerated criteria are met, is inconsistent with the *First Report and
Order.* BellSouth requests that the Commission (1) issue an *Erratum*
eliminating the rule, (2) reconsider its decision not to eliminate the
rule, or (3) issue a declaratory ruling stating that section 22.323 is
inapplicable to CMRS licensees providing co-primary fixed services
pursuant to section 22.901 or the *First Report and Order.*[^11]

III\. DISCUSSION

A. Regulatory Treatment of Fixed Wireless Service Provided by CMRS
Carriers

5 [Background]{.underline}. In the *FNPRM*, the Commission proposed
establishing a rebuttable presumption that fixed services offered over
frequency bands licensed to CMRS providers would be treated for
regulatory purposes as CMRS.[^12] The Commission sought comment on
factors to evaluate when considering a challenge to a presumption that a
fixed wireless service should be treated as CMRS. In addition, the
Commission sought comment on the proposal that any fixed wireless
service provided by a CMRS provider be treated as CMRS until such time
as the service constitutes a substitute for land line telephone exchange
service in a substantial portion of a state.[^13]

6 Twenty-one parties filed comments on the *FNPRM*, and nine parties
filed reply comments.[^14] Most commenters reject a case-by-case
approach and urge us to adopt a \"bright-line\" test of whether
particular services will be treated as CMRS.[^15] The commenters,
however, differ on the nature of the bright-line test to be applied.
Most carriers argue that we should broadly define CMRS to include
virtually any fixed services that carriers provide in addition to or in
conjunction with their mobile service offerings.[^16] Other commenters,
particularly state regulatory agencies, oppose any inclusion of fixed
wireless services within the definition of CMRS.[^17]

7 [Discussion]{.underline}. In the *First Report and Order*, we observed
that CMRS spectrum has the potential to be used for a variety of fixed
as well as mobile services. The potential for fixed uses of such
spectrum is confirmed by the record in this proceeding. The record also
underscores the potential for the development of wireless services on
CMRS spectrum that combine fixed and mobile functionalities.
Increasingly, CMRS providers can offer their mobile customers services
such as data transmission, Internet access, and facsimile transmission,
which are traditionally associated with fixed service. The deployment of
third generation and other advanced wireless services is likely to
expand the potential for CMRS carriers to offer new and innovative fixed
and integrated fixed/mobile services. At this point, however, the
development of fixed and fixed/mobile services on CMRS spectrum is at
too early a stage for us to anticipate how the future evolution of fixed
and mobile services will occur, how they might be integrated, or the
variety of services that will develop. Thus, we believe it is
inappropriate to establish a bright-line test. Any such test that we
might adopt at this time would be based on assumptions and criteria that
could soon be made obsolete by developments in technology and the
marketplace. In that event, a bright line test could cause more
regulatory uncertainty than it resolves and might even limit or
discourage the development of these services. Accordingly, we conclude
that for the time being it is better to use a case-by-case approach to
determine whether any particular service offering is CMRS. In the event
that case-by-case review proves ineffective, we are open to revisiting
the possibility of establishing a bright-line test in the future.

8\. We also do not adopt the rebuttable presumption proposed in the
*FNPRM.* Just as we find the evolving nature of wireless services makes
it inappropriate to adopt a bright-line test, we also find that the
ongoing changes in technology and services make it difficult to set out
in advance factors that we should consider in establishing such a
presumption or otherwise determining the regulatory treatment of any
particular fixed wireless or integrated fixed/mobile service. To the
extent that a party requires a determination of whether or not a
particular service that includes a fixed wireless component should be
treated as CMRS, that party should petition the Commission for a
declaratory ruling.

B. Section 22.323 of the Commission's Rules

9\. [Background]{.underline}. Section 22.323, which was adopted prior to
this proceeding, states the general conditions under which Part 22
licensees may provide "incidental" communications services other than
the mobile service for which they are primarily licensed.[^18] Section
22.323 permits a Public Mobile radio service licensee "to provide other
communications services incidental to the primary mobile service"
provided that (1) the costs of the incidental service are not borne by
subscribers who do not use the service, (2) the quality of the primary
service does not materially deteriorate, (3) the provision of the
incidental service is not inconsistent with the Communications Act or
Commission rules, and (4) the licensee notifies the Commission before
providing the incidental service.[^19] In the *CMRS Second Report and
Order*, the Commission determined that ancillary, auxiliary, and
incidental services provided by CMRS providers would be regulated as
CMRS.[^20]

10\. In its petition, BellSouth argues that the continued application of
section 22.323 is inconsistent with the *First Report and Order*.[^21]
BellSouth contends that the requirements in section 22.323, particularly
the notification requirement, are contrary to the increased flexibility
given to CMRS carriers to provide fixed wireless services and serve no
practical purpose.[^22] BellSouth requests that the Commission eliminate
the rule or, alternatively, clarify that section 22.323 does not apply
to any co-primary fixed services offered pursuant to the *First Report
and Order.*[^23] Most commenters support BellSouth's request.[^24] GTE
agrees that section 22.323 should not apply to cellular licensees
providing co-primary fixed service pursuant to section 22.901(d) of the
Commission's rules,[^25] but believes that section 22.323 should be
retained for application to air-to-ground services.[^26] RTG and St.
Cloud do not oppose clarifying that section 22.323 does not apply to
service offered by cellular carriers pursuant to section 22.901(d), but
oppose eliminating section 22.323. They contend that even in light of
the increased flexibility granted to CMRS carriers to provide fixed
wireless services, section 22.323 should be maintained because there are
regulatory distinctions between fixed wireless services provided on a
co-primary basis and fixed services that are "incidental" to mobile
services. Most significantly, according to RTG and St. Cloud, the
Commission has previously determined that incidental services offered by
CMRS carriers fall within the statutory definition of mobile service and
are subject to CMRS regulation.[^27] BellSouth responds that in the
*First Report and Order* the Commission specifically reaffirmed that
ancillary, auxiliary, and incidental services offered by CMRS carriers
fall within the definition of mobile service and are subject to CMRS
regulation, and thus section 22.323 is not necessary to ensure that
incidental fixed services are regulated as CMRS.[^28]

11\. [Discussion]{.underline}. Prior to the initiation of this
proceeding, the Commission's rules allowed certain categories of CMRS
providers to offer "ancillary," "auxiliary," or "incidental" services in
addition to their primary mobile service offerings.[^29] Among these
rules was section 22.323, which allowed Part 22 licensees to provide
incidental services provided that they complied with certain safeguards
to protect their mobile service customers. In the *First Report and
Order*, the Commission revised its rules to enable CMRS providers to
offer a far broader array of fixed services even if they did not fall
within pre-existing definitions of ancillary, auxiliary, or incidental
services.[^30] In the case of cellular carriers, this was accomplished
by amending section 22.901 of the rules to specifically allow provision
of fixed services on a co-primary basis.[^31] The Commission did not,
however, delete or revise section 22.323 as it applies to incidental
services, nor did it seek comment on the issue in the *FNPRM*.

12\. In light of BellSouth's petition for reconsideration, we conclude
that there is a need to clarify the relationship between incidental
services provided under section 22.323 and co-primary fixed services
offered pursuant to section 22.901(d) as amended in the *First Report
and Order.* Therefore, we will amend our rules to clarify that CMRS
providers who provide fixed services on a co-primary basis pursuant to
section 22.901(d) are not subject to the requirements of section 22.323.
In light of this clarification, we decide not to eliminate section
22.323 as it applies to incidental services at this time. In the
*FNPRM,* we noted that our decision to allow CMRS licensees to offer
fixed services on a co-primary basis did not alter in any way our
regulatory treatment of ancillary, auxiliary, or incidental fixed
services that had been provided by CMRS providers under our rules.[^32]
Therefore, we conclude that it is not inconsistent with the *First
Report and Order* to retain the rules that apply to these types of
services.

13\. We will, however, modify section 22.323 by eliminating the
notification requirement. The predecessor of section 22.323 was adopted
in 1983 to replace the Commission's previous practice of individually
reviewing requests by Part 22 licensees to provide incidental
services.[^33] At that time, we considered whether to require prior
approval of these service offerings, but determined that notification
would fully protect all parties.[^34] We now conclude that the
notification requirement serves no useful purpose. Although the
requirement may have been necessary under the duopoly regime to permit
monitoring of the use of scarce cellular spectrum, we believe that such
close monitoring is unnecessary today in light of additional allocations
of spectrum and greater competition. We also find close monitoring to be
inconsistent with the premises of flexibility underlying this
proceeding. Furthermore, we disagree with the commenters who argue that
the notification requirement is helpful in persuading state commissions
that their incidental services constitute CMRS and thus are exempt from
regulation.[^35] Because the existing requirement involves only
notification, and not Commission review or approval, we do not
understand how the fact of notification alone is evidence that a service
falls within section 22.323. Consistent with our other recent efforts to
streamline regulations and reduce burdens by eliminating unnecessary
notifications, [^36] we therefore delete the notification requirement of
section 22.323.[^37]

14\. Finally, even with the clarification of the rules and the deletion
of the notification requirement, we consider it reasonable to question
whether section 22.323 remains necessary or appropriate as presently
constituted. In particular, we question whether the remaining conditions
on the provision of incidental services can or should be enforced in the
increasingly competitive and deregulated CMRS market. As noted above,
however, some commenters argue that a rule specifically authorizing
incidental services in Part 22 remains necessary in at least some
applications. We also find that there is not an adequate record in this
proceeding to assess the potential effect of eliminating section 22.323
in its entirety or of eliminating the remaining conditions on providing
incidental service while retaining the authorizing rule. In order to
develop a more complete record, therefore, we will consider whether to
delete, amend, or replace section 22.323 as part of our upcoming
biennial review of all regulations that apply to providers of
telecommunications service.[^38]

**IV. CONCLUSION**

15\. We find that due to the evolving nature of fixed wireless services,
a case-by-case determination of the regulatory treatment of a fixed
wireless or integrated fixed/mobile service would best serve the public
interest at this time. We also grant the BellSouth petition for partial
reconsideration or clarification to the extent that we amend section
22.901(d) to clarify that fixed wireless services provided pursuant to
section 22.901(d) are not subject to the requirements of section 22.323
for incidental communications services, and we amend section 22.323 to
eliminate the notification requirement.

#  **PROCEDURAL ISSUES**

##  {#section .unnumbered}

##  **A. Regulatory Flexibility Analysis** {#a.-regulatory-flexibility-analysis .unnumbered}

16\. The Supplemental Final Regulatory Flexibility Analysis pursuant to
the Regulatory Flexibility Act, 5 U.S.C. § 604, is contained in Appendix
D.

##  {#section-1 .unnumbered}

**B. Paperwork Reduction Act Analysis**

17\. This Order has been analyzed with respect to the Paperwork
Reduction Act of 1995, Pub. L. No. 104-13. A change notification on Form
83-I will be provided to the Office of Management and Budget upon
release of this Order.

**VI.** **ORDERING CLAUSES**

18\. Accordingly, IT IS ORDERED that this Second Report and Order IS
ADOPTED and WT Docket No. 96-6 IS TERMINATED.

19. IT IS FURTHER ORDERED that pursuant to sections 1, 2, 4, and 405 of
    the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 152,
    154, and 405, the Petition for Partial Reconsideration or
    Clarification filed by the BellSouth Corporation is GRANTED to the
    extent discussed herein and is otherwise DENIED.

20. IT IS FURTHER ORDERED that pursuant to sections 1, 2, and 4 of the
    Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 152, and
    154, sections 22.323 and 22.901 of the Commission's rules, 47 C.F.R.
    §§ 22.323 and 22.901, ARE AMENDED as set forth in Appendix C,
    effective 30 days after publication of a summary of this Second
    Report and Order and Order on Reconsideration in the Federal
    Register.

21. IT IS FURTHER ORDERED that the Commission's Consumer Information
    Bureau, Reference Information Center, SHALL SEND a copy of this
    SECOND REPORT AND ORDER AND 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 COMMENTERS ON FNPRM

[Comments]{.underline}

1\. AirTouch Communications, Inc. (AirTouch)

2\. AT&T Corporation (AT&T)

3\. Bell Atlantic Corporation, NYNEX Corporation and Bell Atlantic NYNEX
Mobile, Inc. (Bell Atlantic)

4\. BellSouth Corporation (BellSouth)

5\. Cellular Telecommunications Industry Association (CTIA)

6\. CommNet Cellular, Inc. (CommNet)

7.  GTE Service Corporation (GTE)

8.  Metricom, Inc. (Metricom)

9\. Motorola, Inc. (Motorola)

10\. National Association of Regulatory Utility Commissioners (NARUC)

11\. National Telephone Cooperative Association (NTCA)

12\. Nextel Communications, Inc. (Nextel)

13\. State of New York Department of Public Service (NYDPS)

14\. Omnipoint Corporation (Omnipoint)

15\. Pacific Telesis Group (Pacific)

16\. Public Utilities Commission of Ohio (PUCO)

17\. Personal Communications Industry Association (PCIA)

18 Rural Cellular Association (RCA)

19\. Rural Telecommunications Group (RTG)

20\. Sprint Spectrum L.P. d/b/a Sprint PCS (Sprint)

21\. US West, Inc. (US West)

22\. Western Wireless Corporation (WWC)

[Reply Comments]{.underline}

1\. AT&T Corporation (AT&T)

2\. Cellular Telecommunications Industry Association (CTIA)

3.  Comcast Corporation (Comcast)

4.  Metricom, Inc. (Metricom)

5.  National association of Regulatory Utility Commissioners (NARUC)

6\. Omnipoint Corporation (Omnipoint)

7\. Pacific Telesis Group (Pacific)

8\. Personal Communications Industry Association (PCIA)

9\. Rural Telecommunications Group (RTG)

10\. 360 Communications Company (360)

11\. Vanguard Cellular Systems, Inc. (Vanguard)

**APPENDIX B**

**LIST OF COMMENTERS ON BELLSOUTH PETITION**

[Comments]{.underline}

1.  AirTouch Communications Inc. (AirTouch)

2.  AT&T Wireless Services, Inc. (AT&T)

3.  Cellular Mobile Systems of St. Cloud (St Cloud)

4.  Cellular Telecommunications Industry Association (CTIA)

5.  GTE Service Corporation (GTE)

[Reply Comments]{.underline}

1.  BellSouth Corporation (BellSouth)

2.  Cellular Telecommunications Industry Association (CTIA)

3.  Rural Telecommunications Group (RTG)

APPENDIX C

FINAL RULES

AMENDMENTS TO THE CODE OF FEDERAL REGULATIONS

Part 22 of Title 47 of the Code of Federal Regulations is amended as
follows:

**PART 22 -- PUBLIC MOBILE SERVICES**

1.  The authority citation for part 22 continues to read as follows:

> 47 U.S.C. 154, 222, 303, 309, and 332.

2.  Section 22.323 is revised by adding the word "and" at the end of
    subsection (b), deleting

> "; and" and adding a period at the end of subsection (c), and deleting
> subsection (d).

3\. Section 22.901 is revised to read as follows:

**Sec. 22.901 Cellular service requirements and limitations.**

Cellular system licensees must provide cellular mobile radiotelephone
service upon request to subscribers in good standing, including roamers,
as provided in Sec. 20.12 of this chapter. A cellular system licensee
may refuse or terminate service, however, subject to any applicable
state or local requirements for timely notification, to any subscriber
who operates a cellular telephone in an airborne aircraft in violation
of Sec. 22.925 or otherwise fails to cooperate with the licensee in
exercising operational control over mobile stations pursuant to Sec.
22.927.

\*\*\*

\(d\) Alternative technologies and co-primary services. Licensees of
cellular systems may use alternative cellular technologies and/or
provide fixed services on a co-primary basis with their mobile
offerings, including personal communications services (as defined in
Part 24 of this chapter) on the spectrum within their assigned channel
block. Cellular carriers that provide mobile services must make such
service available to subscribers whose mobile equipment conforms to the
cellular system compatibility specification (see Sec. 22.933).

\(1\) Licensees must perform or obtain an engineering analysis to ensure
that interference to the service of other cellular systems will not
result from the implementation of co-primary fixed services or
alternative cellular technologies.

\(2\) Alternative technology and co-primary fixed services are exempt
from requirements for incidental communications services of Sec. 22.323,
the channeling requirements of Sec. 22.905, the modulation requirements
of Sec. 22.915, the wave polarization requirements of Sec. 22.367, the
compatibility specification in Sec. 22.933 and the emission limitations
of Secs. 22.357 and 22.917, except for emission limitations that apply
to emissions outside the assigned channel block.

APPENDIX D

SUPPLEMENTAL FINAL REGULATORY FLEXIBILITY ANALYSIS

As required by Section 604 of the Regulatory Flexibility Act, 5 U.S.C. §
604 (RFA), a Final Regulatory Flexibility Analysis (FRFA) for the *First
Report and Order* was incorporated in the *First Report and Order and
Further Notice of Proposed Rule Making* in WT Docket No. 96-6.[^39] The
Commission\'s Supplemental Final Regulatory Flexibility Analysis (SFRFA)
for this *Order on Reconsideration*[^40] 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 SFRFA conforms to the
RFA, as amended by the Contract With America Advancement Act of
1996.[^41]

**A. Need for, and Objectives of, the Order on Reconsideration**

The *Order on Reconsideration* modifies and clarifies aspects of the
regulatory regime governing the provision of co-primary fixed services
and ancillary, auxiliary, and incidental services under Part 22, as
established in the *First Report and Order.* Specifically, the
Commission clarifies that commercial mobile radio services (CMRS)
providers who provide fixed services on a co-primary basis pursuant to
section 22.901(d) of the rules are not subject to the requirements that
govern provision of ancillary, auxiliary, and incidental services under
section 22.323. The Commission also modifies section 22.323 by
eliminating the requirement that carriers notify the Commission when
providing ancillary, auxiliary, and incidental services. These actions
are intended to clarify the Commission's rules and to eliminate an
unnecessary notification requirement.

**B. Summary of Significant Issues Raised by Public Comments in Response
to the FRFA**

No petitions for reconsideration were filed in direct response to the
FRFA. In the petition for partial reconsideration or clarification and
in responsive pleadings, however, some issues were raised that might
affect small entities. Specifically, some commenters argued that
limiting the applicability of section 22.323, and in particular the
notification requirement, would eliminate regulatory burdens that could
deter CMRS providers, including small entities, from providing fixed
wireless services. Other commenters, however, argued that section 22.323
protects CMRS providers, including small entities, that provide
ancillary, auxiliary, and incidental services from unlawful attempts to
impose State regulation.[^42]

C.  **Description and Estimate of the Number of Small Entities to Which
    Rules Will Apply**

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 a rule. The RFA defines the term "small entity" as having
the same meaning as the terms "small business," "small organization,"
and "small business concern" under section 3 of the Small Business
Act.[^43] 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).[^44]

The rule changes effectuated by this *Order on Reconsideration* apply to
telecommunications service providers that are regulated under Part 22 of
the Commission's rules. These include providers of Cellular
Radiotelephone, Paging and Radiotelephone (Common Carrier Paging),
Air-Ground Radiotelephone, Offshore Radiotelephone, and Rural
Radiotelephone services. In addition, pursuant to section 90.493(b) of
the Commission's rules, paging licensees on exclusive channels in the
929-930 MHz bands are subject to the licensing, construction, and
operation rules set forth in Part 22.[^45] Since this rulemaking
proceeding applies to multiple services, we will analyze the number of
small entities affected on a service-by-service basis.

**1. Cellular**

Since the Commission does not define a small business with respect to
cellular services, we utilize the SBA's definition applicable to
radiotelephone companies -- *i.e.* an entity employing fewer than 1,500
persons.[^46] The size data provided by the SBA does not enable us to
make a meaningful estimate of the number of cellular providers which are
small entities because it combines all radiotelephone companies with 500
or more employees.[^47] We therefore use the 1992 Census of
Transportation, Communications, and Utilities, conducted by the Bureau
of the Census, which is the most recent information available. Data from
the Bureau of the Census' 1992 study indicates that only 12 out of a
total of 1,178 radiotelephone firms that operated during 1992 had 1,000
or more employees.[^48] Therefore, even if all twelve of these firms
were cellular telephone companies, nearly all cellular carriers were
small businesses under the SBA 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
*Telecommunications Industry Revenue* data, 804 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.[^49] 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 804 small cellular
service carriers that may be affected by the new rules.

**2. Paging**

The Commission has adopted, and the SBA has approved, a two-tier
definition of small businesses in the context of auctioning licenses in
the paging services. Under this definition, a small business is defined
as either (1) an entity that, together with its affiliates and
controlling principals, has average gross revenues for the three
preceding years of not more than \$3 million, or (2) an entity that,
together with affiliates and controlling principals, has average gross
revenues for the three preceding calendar years of not more than \$15
million. The Commission has estimated that as of January 1998, there
were more than 600 paging companies in the United States.[^50] We do not
have data specifying the number of these carriers that are not
independently owned and operated or meet the small business thresholds
set forth above, or the number of these carriers that are regulated
under Part 22 of the Commission's rules, and thus are unable at this
time to estimate with precision the number of affected paging carriers
that would qualify as small business concerns under our definition.
However, we estimate that the majority of existing paging providers
qualify as small entities under our definition. Consequently, we
estimate that there are up to approximately 600 currently licensed small
paging carriers that will be affected by the rules adopted in this
*Order on Reconsideration*. In addition, high bids were recently placed
at auction for 985 new geographic area paging licenses, and an
additional 15,645 geographic area paging licenses are expected to be
awarded following future auctions. In the recent auction, high bids were
placed on paging licenses by 55 entities that qualify as small
businesses under the Commission's definition. Licenses have been granted
to 51 of these entities, and the applications of the other four remain
pending. Thus, in addition to existing licensees, between 51 and 55
license winners in the recent auction will be affected small entities,
and up to 15,645 winners of paging licenses in future auctions will be
affected small entities.

**3. Air-Ground Radiotelephone Service**

The Commission has not adopted a definition of small business specific
to the Air-Ground radiotelephone service.[^51] Accordingly, we use the
SBA definition applicable to radiotelephone companies, *i.e.*, an entity
employing no more than 1,500 persons. There are approximately 100
licensees in the Air-Ground radiotelephone service, and the Commission
estimates that almost all of them qualify as small entities under the
SBA definition.

4.  **Offshore Radiotelephone Service**

This service operates on several ultra high frequency (UHF) TV broadcast
channels that are not used for TV broadcasting in the coastal area of
the states bordering the Gulf of Mexico. At present, there are
approximately 55 licensees in this service. The Commission has not
adopted a definition of small business specific to the Offshore
radiotelephone service. Accordingly, we use the SBA definition
applicable to radiotelephone companies, *i.e.*, an entity employing no
more than 1,500 persons. The Commission is unable at this time to
estimate the number of licensees that would qualify as small entities
under the SBA definition for radiotelephone communications. The
Commission assumes, for purposes of this SFRFA, that all of the 55
licensees are small entities, as that term is defined by the SBA.

5.  **Rural Radiotelephone Service**

The Commission has not adopted a definition of small entity specific to
the Rural Radiotelephone Service.[^52] A significant subset of the Rural
Radiotelephone Service is the Basic Exchange Telephone Radio Systems
(BETRS).[^53] We therefore use the SBA definition applicable to
radiotelephone companies; *i.e.*, an entity employing no more than 1,500
persons. There are approximately 1000 licensees in the Rural
Radiotelephone Service, and the Commission estimates that almost all of
them qualify as small entities under the SBA definition.

**D. Description of Reporting, Recordkeeping, and Other Compliance
Requirements**

The *Order on Reconsideration* does not impose any additional reporting,
recordkeeping, or other compliance requirements. The *Order on
Reconsideration* eliminates a requirement that Part 22 licensees notify
the Commission before providing incidental services. As a result, no
reporting or recordkeeping requirements remain under section 22.323 of
the Commission's rules.

**E. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered**

The *Order on Reconsideration* modifies section 22.901(d) to clarify
that fixed wireless services provided on a co-primary basis are not
subject to the requirements of section 22.323 for incidental
communications services. Clarifying that carriers providing fixed
wireless services on a co-primary basis pursuant to section 22.901(d)
need not comply with the requirements of section 22.323 will provide
further flexibility to CMRS carriers, including small entities, and is
consistent with the Commission's intent in the *First Report and Order*.
In addition, we amend section 22.323 to delete the requirement that
carriers notify the Commission when providing incidental services. This
change will reduce burdens on small entities and other providers subject
to Part 22 by eliminating an unnecessary notification requirement.

The Commission considered and rejected eliminating section 22.323
because it concluded that retaining section 22.323 is consistent with
its decision in the *First Report and Order* not to alter the regulatory
treatment of ancillary, auxiliary, and incidental fixed services that
had been provided by CMRS providers under the rules. However, the
Commission will consider the continued need for section 22.323 as part
of its upcoming biennial review of all regulations that apply to
providers of telecommunications service. The Commission also considered
and rejected refining the notification requirement in section 22.323,
finding that the notification requirement currently serves no useful
purpose and therefore should be eliminated.

**F. Report to Congress**

The Commission shall send a copy of the *Order on Reconsideration*,
including 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* 5 U.S.C. § 801(a)(1)(A). In
addition, the Commission will send a copy of the *Order on
Reconsideration*, including the Supplemental Final Regulatory
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration. A copy of this *Order on Reconsideration* and
Supplemental Final Regulatory Flexibility Analysis (or summaries
thereof) will also be published in the Federal Register. *See* 5 U.S.C.
§ 604(b).

[^1]: 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). We shall refer to the *First
    Report and Order* portion of the item, 11 FCC Rcd at 8970-8982, as
    the *First Report and Order*. We shall refer to the *Further Notice
    of Proposed Rulemaking* portion of the item, 11 FCC Rcd at
    8982-8989, as the *FNPRM*.

[^2]: 47 C.F.R. § 22.901(d).

[^3]: 47 C.F.R. § 22.323.

[^4]: ^?^ *First Report and Order/FNPRM*, 11 FCC Rcd at 8977, ¶ 24. By
    not having any thresholds or ceilings on the relative levels of
    fixed or mobile services associated with the term \"co-primary,\"
    the Commission allowed providers to choose to provide exclusively
    fixed services, exclusively mobile services, or any combination of
    the two. *Id*.

[^5]: *Id.* at 8967, ¶ 3.

[^6]: Amendment of the Commission's Rules to Permit Flexible Service
    Offerings in the Commercial Mobile Radio Services , WT Docket No.
    96-6, *Notice of Proposed Rulemaking*, 11 FCC Rcd 2445, 2448-49, ¶¶
    16-18 (1996) (*citing* Implementation of Sections 3(n) and 332 of
    the Communications Act, GN Docket No. 93-252, *Second Report and
    Order,* 9 FCC Rcd 1411, 1424, ¶ 36 (1994))*.*

[^7]: *Id.*

[^8]: *First Report and Order/FNPRM*, 11 FCC Rcd at 8985, ¶ 47.

[^9]: *See* Wireless Telecommunications Bureau Seeks Comment on Petition
    for Partial Reconsideration or Clarification Filed by BellSouth
    Corporation, WT Docket 96-6, *Public Notice*, DA 97-2083 (rel. Sep.
    25, 1997).

[^10]: 47 C.F.R. § 22.323.

[^11]: BellSouth Petition at 4.

[^12]: *First Report and Order/FNPRM*, 11 FCC Rcd at 8987-88, ¶¶ 53-55.

[^13]: *Id.* at 8988-89, ¶ 56 (*citing* AT&T comments at 1-2; BellSouth
    comments at 4; GCI reply comments at 3).

[^14]: Appendix A provides the full and abbreviated names of the parties
    filing comments and reply comments on the *FNPRM*. Metricom filed
    both comments and reply comments, but subsequently withdrew them.
    *See* letter from M. Tamber Christian, counsel for Metricom, to
    Magalie Roman Salas, FCC, filed in WT Docket 96-6, dated Oct. 13,
    1998.

[^15]: ^?^ *See, e.g.*, CommNet comments at 2; NARUC comments at 5;
    Nextel comments at 9; NTCA comments at 3; NYDPS comments at 2; PCIA
    comments at 11-12; PUCO comments at 3; AT&T reply comments at 6;
    Omnipoint reply comments at 10; 360 reply comments at 4-5.

[^16]: ^?^ *See, e.g.*, Motorola comments at 4; Omnipoint comments at
    12; PCIA comments at 11-12; US West comments at 6; AT&T reply
    comments at 6.

[^17]: *See, e.g.,* NTCA comments at 3; NARUC comments at 5; NYDPS
    comments at 2; PUCO comments at 3.

[^18]: Revision and Update of Part 22 of the Public Mobile Radio
    Services Rules, CC Docket No. 80-57, *Report and Order*, 95 FCC 2d
    769, 816-19 (1983). The rule was originally adopted as 47 C.F.R. §
    22.308. It was subsequently moved to 47 C.F.R. § 22.323. *See*
    Revision of Part 22 of the Commission's Rules Governing the Public
    Mobile Services, CC Docket 92-115, *Report and Order*, 9 FCC Rcd
    6513, 6556 (1994).

[^19]: 47 C.F.R. § 22.323. Subsequent to the filing of the BellSouth
    petition the Commission amended the notification requirement of
    section 22.323 to require licensees to notify the Commission using
    FCC Form 601 prior to providing the incidental service. *See*
    Biennial Regulatory Review -- Amendment of Parts 0, 1, 13, 22, 24,
    26, 27, 80, 87, 90, 95, 97 and 101 of the Commission's Rules to
    Facilitate the Development and Use of the Universal Licensing System
    in the Wireless Telecommunications Services, WT Docket 98-20,
    *Report and Order,* 13 FCC Rcd 21027 (1998) (*ULS Order)*;
    *reconsideration granted in part and denied in part,* 14 FCC Rcd
    11145 (1999).

[^20]: *See* Implementation of Sections 3(n) and 332 of the
    Communications Act, GN Docket No. 93-252, *Second Report and Order*,
    9 FCC Rcd 1411, 1424, ¶ 36 (1994), *recon dismissed in part and
    denied in part*, 15 FCC Rcd. 5231 (2000).

[^21]: BellSouth petition at 1.

[^22]: *Id.* at 3.

[^23]: *Id.* at 4.

[^24]: *See* AirTouch comments at 1; AT&T comments at 1; CTIA comments
    at 3-5. Appendix B provides the full and abbreviated names of the
    parties filing comments and reply comments on the BellSouth
    petition.

[^25]: 47 C.F.R. § 22.901(d).

[^26]: GTE comments at 1, 4-5.

[^27]: St. Cloud comments at 4; RTG reply comments at 6.

[^28]: BellSouth reply comments at 3 (citing *First Report and Order*,
    11 FCC Rcd at 8985).

[^29]: ^29^ See First Report and Order, 11 FCC Rcd at 8968-69.

[^30]: ^30^ *Id.* at 8966.

[^31]: *Id.* at 9018. *See* 47 C.F.R. § 22.901(d).

[^32]: *FNPRM,* 11 FCC Rcd at 8985*, ¶* 48

[^33]: Revision and Update of Part 22 of the Public Mobile Radio
    Services Rules, CC Docket No. 80-57, *Report and Order*, 95 FCC 2d
    769, 816-819, ¶¶ 167-179 (1983).

[^34]: *Id.*at 819, ¶ 178.

[^35]: *See, e.g.,* St. Cloud comments at 6.

[^36]: *See, e.g., ULS Order,* 13 FCC Rcd at 21092, ¶ 146.

[^37]: The specific revisions to sections 22.323 and 22.901 appear in
    Appendix C. We note that the introductory paragraph of section
    22.901 was previously amended in 1996, but that due to an apparent
    administrative oversight this amendment has not been reflected in
    the published Code of Federal Regulations. *See* Interconnection and
    Resale Obligations Pertaining to Commercial Mobile Radio Services,
    CC Docket No. 94-54, *Second Report and Order and Third Notice of
    Proposed Rulemaking,* 11 FCC Rcd 9462 (1996), *recon. pending.* The
    text of section 22.901 that is reproduced in Appendix C includes
    this 1996 amendment.

[^38]: *See* 47 U.S.C. § 161.

[^39]: Amendment of the Commission\'s Rules to Permit Flexible Service
    Offerings in the Commercial Mobile Radio Services, *First Report and
    Order and Notice of Proposed Rule Making*, WT Docket No. 96-6, 11
    FCC Rcd 8965, 9021 (1996).

[^40]: We note that this SFRFA addresses only the matters considered in
    the *Order on Reconsideration* portion of the *Second Report and
    Order and Order on Reconsideration*. No FRFA is necessary for the
    *Second Report and Order* because we have decided not to make any
    change to the Commission's rules.

[^41]: 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) (CWAAA). Title II of the CWAAA is the Small
    Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)*.*

[^42]: *See Order on Reconsideration, supra*, ¶ 10.

[^43]: 5 U.S.C. § 601(3).

[^44]: 5 U.S.C. § 632.

[^45]: *See* 47 C.F.R. § 90.493(b).

[^46]: 13 C.F.R. § 121.201, Standard Industrial Classification (SIC)
    Code 4812.

[^47]: U.S. Small Business Administration 1992 Economic Census
    Employment Report, Bureau of the Census, U.S. Department of
    Commerce, SIC Code 4812 (radiotelephone communications industry data
    adopted by the SBA Office of Advocacy).

[^48]: U.S. Bureau of the Census, U.S. Department of Commerce, 1992
    Census of Transportation, Communications, and Utilities, UC92-S-1,
    Subject Series, Establishment and Firm Size, Table 5, Employment
    Size of Firms; 1992, SIC Code 4812 (issued May 1995).

[^49]: *Telecommunications Industry Revenue,* Figure 2.

[^50]: Implementation of Section 6002(b) of the Omnibus Budget
    Reconciliation Act of 1993, *Third Report*, 13 FCC Rcd 19746, 19792
    (1998).

[^51]: Air-ground radiotelephone service is defined in section 22.99 of
    the Commission's rules, 47 C.F.R. § 22.99.

[^52]: Rural Radiotelephone Service is defined in section 22.99 of the
    Commission's rules, 47 C.F.R. § 22.99.

[^53]: BETRS is defined in sections 22.757 and 22.729 of the
    Commission's rules, 47 C.F.R. §§ 22.757, 22.729.