# Before the

# Federal Communications Commission

**Washington, D.C. 20554**

In the Matter of )

)

Amendment of Part 90 of the Commission's ) PR Docket No. 93-144

Rules to Facilitate Future Development of )

SMR Systems in the 800 MHz Frequency )

Band )

)

)

**MEMORANDUM OPINION AND ORDER ON REMAND**

> Adopted: December 17, 1999 Released: December 23, 1999

By the Commission:

1.  In this *Memorandum Opinion and Order on Remand*, we address the
    construction requirements imposed on incumbent licensees in the 800
    MHz Specialized Mobile Radio (SMR) service that have received
    authorizations to construct wide-area systems. This action is taken
    in response to the order by the United States Court of Appeals for
    the District of Columbia Circuit in *Fresno Mobile Radio, Inc., et
    al. v. Federal Communications Commission*,[^1] which remanded for
    further consideration our prior decision to maintain the requirement
    that incumbent licensees who had received "extended implementation"
    authorizations must construct and operate all sites at all
    frequencies within a certain period or lose the unconstructed
    frequencies.[^2] For the reasons described herein, we will allow
    incumbent wide-area 800 MHz SMR licensees who were within their
    construction periods at the time of the *Fresno* decision to apply
    construction requirements similar to those given to Economic Area
    licensees in the 800 MHz band.

## I. BACKGROUND

# A. Construction Requirements for Incumbent Wide Area 800 MHz SMR Licensees

2.  Prior to December 1995, when the Commission amended its 800 MHz SMR
    rules to provide for geographic area licensing,[^3] 800 MHz SMR
    licenses were awarded on a site-by-site, channel-by-channel basis.
    Licensees of conventional SMR systems were required to construct and
    operate their systems within eight months, while licensees of
    trunked systems had one year to construct and commence
    operation.[^4] If a licensee failed to construct and begin operation
    on all authorized frequencies at a particular site, the
    unconstructed frequencies would automatically cancel.[^5]
    Recognizing that a number of SMR licensees were using multiple
    contiguous site-specific licenses to create wide-area systems, the
    Commission in 1991 began granting these licensees extended
    implementation (EI) authority to construct their systems, whereby
    the licensee would have up to five years to construct all of the
    facilities within the wide-area "footprint" established by its
    licenses.[^6] At the end of the EI period, any frequency licensed at
    a specific site within the footprint that was not fully constructed
    and in operation would cancel automatically.[^7]

3.  In 1993, Congress amended Section 332 of the Communications Act of
    1934, created a new category of mobile services known as commercial
    mobile radio services (CMRS), and directed that providers of
    substantially similar CMRS services be governed by comparable
    regulation.[^8] Consequently, the Commission initiated the *CMRS*
    proceeding to adopt rules implementing the new statutory
    framework.[^9] In that proceeding, the Commission determined that
    interconnected SMR services fell within the new CMRS
    classification.[^10] The Commission further concluded that
    interconnected 800 MHz SMR licensees competed (or had the potential
    to compete) with other existing and planned wide-area CMRS
    providers, such as cellular and broadband PCS licensees, and,
    therefore, should be subject to comparable regulation.[^11]
    Consequently, the Commission adopted a new, geographic-based
    licensing scheme for the 800 MHz band with contiguous spectrum
    blocks throughout defined service areas awarded to single licensees
    on an exclusive basis. [^12] The Commission also determined that
    with respect to CMRS systems licensed on a wide-area basis, the
    record generally supported use of longer construction periods
    combined with flexible coverage requirements that required licensees
    to provide coverage only to a fixed percentage of their licensing
    areas in order to retain the license for the entire area.[^13]

4.  While seeking comment on the new geographic-based licensing scheme
    for 800 MHz SMR service, the Commission also questioned how the
    prior procedure of granting extended implementation authority to
    site-based 800 MHz licensees with wide-area systems would fit into
    the new licensing scheme.[^14] Specifically, the Commission asked
    whether existing EI licensees should maintain their original
    extended implementation periods or have their construction periods
    accelerated unless they demonstrated that their construction to date
    was consistent with their original implementation plan and that the
    plan was still in the public interest.[^15]

5.  In December 1995, the Commission adopted a new wide-area licensing
    scheme by creating geographic-based licenses (Economic Area, or EA,
    licenses) for the upper 200 channels of the 800 MHz SMR band.[^16]
    As part of the new licensing scheme, the Commission adopted
    construction and coverage requirements for EA licensees similar to
    those required of broadband PCS and 900 MHz SMR licensees.[^17]
    Specifically, the Commission required EA licensees on the upper 200
    channels to construct their systems within five years of
    licensing.[^18] The Commission also imposed "interim coverage
    requirements," which required an EA licensee to provide coverage to
    one-third of the population within its licensing area within three
    years after the initial license grant and to two-thirds of the
    population by the end of the five-year construction period.[^19] In
    addition, in order to decrease the possibility of non-competitive
    spectrum warehousing, the Commission required EA licensees in the
    upper 200 channels to construct and maintain operation of 50 percent
    of the total channels of their respective spectrum blocks in at
    least one location in their EAs within three years of initial
    license grant.[^20] Moreover, the Commission decided against
    adopting a substantial service benchmark for EA licensees in the
    upper 200 channels.[^21]

6.  In addition to creating rules for the new EA licensees, the
    Commission also concluded that continuation of the prior site-based
    extended implementation licensing process would be contrary to the
    new wide-area licensing plan because the EA licensees were required
    to meet construction requirements based on population coverage and
    channel usage, regardless of incumbent presence.[^22] The Commission
    reasoned that if an incumbent SMR licensee could hold certain
    channels unconstructed for a number of years, the EA licensee would
    be prevented not only from directly utilizing these frequencies
    (*i.e*., by buying them at auction) but also from acquiring them
    from the incumbent due to the prohibition against the transfer of
    unconstructed facilities. [^23] In addition, the Commission noted
    that some incumbent licensees who had obtained extended
    implementation authority several years previously had not
    constructed any facilities, possibly resulting in spectrum
    warehousing.[^24]

7.  To address these concerns, the Commission decided to stop accepting
    new applications for extended implementation authority and dismissed
    all pending applications.[^25] The Commission also required
    licensees who had previously obtained EI authorizations to rejustify
    their authorizations by demonstrating that continuing to maintain
    their extended time to construct their facilities was warranted and
    in the public interest.[^26] If a wide-area licensee's
    rejustification of EI authority was found sufficient, the Commission
    would give the licensee two years from the decision to construct and
    begin operation, or maintain its original construction deadline,
    whichever was earlier.[^27] If the rejustification was not approved,
    the licensee's EI authorization would be terminated, and the
    licensee would be given six months from the termination date to
    complete construction of its site-based facilities.[^28] In May and
    November 1997, the Wireless Telecommunications Bureau (Bureau) acted
    on the rejustification submissions filed by thirty-seven wide-area
    licensees.[^29] Of the thirty-seven submissions, the Bureau approved
    thirty-one, including the rejustification submission of Southern
    Company, one of the petitioners in *Fresno Mobile Radio, Inc. v.
    F.C.C*. The Bureau rejected the remaining six rejustification
    submissions because these licensees had not constructed any
    facilities during the period of extended implementation.[^30]

8.  In the *800 MHz Reconsideration Order* adopted in June 1997,[^31]
    the Commission generally affirmed the EA licensing system it had
    adopted for the upper 200 channels.[^32] The Commission also
    affirmed its decision that rejustified EI licensees would receive a
    maximum of two years to complete construction of their facilities,
    and that any site-specific license within a licensee's wide-area
    "footprint" that was not constructed by the two-year deadline would
    be automatically cancelled, with the unconstructed frequencies
    reverting to the EA licensee.[^33] The Commission rejected the claim
    made by Southern that the two-year construction requirement for
    site-based EI licensees, which required full construction of all
    facilities, was unfairly discriminatory in comparison to the
    five-year build-out period for EA licensees, which required only
    partial coverage of the EA licensing area.[^34] The Commission
    explained that the two-year construction period for EI incumbent
    licensees was appropriate because incumbents were authorized to
    build and operate only at particular sites on specified channels,
    whereas EA licensees were licensed to build multiple sites
    throughout a Commission-defined geographical area.[^35] The
    Commission added that the competitive bidding process for EA
    licensees provided incentives for EA licensees to build out quickly,
    thus reducing the likelihood that a longer construction period would
    lead to spectrum warehousing.[^36] On September 26, 1997, Southern
    petitioned the United States Court of Appeals for the District of
    Columbia for review of the Commission's decision in the *800 MHz
    Reconsideration Order* not to give incumbent wide-area SMR licensees
    the same construction requirements given to EA licensees.

**B. *Fresno Mobile Radio, Inc. et al. v. F.C.C*.**

9.  On February 5, 1999, in *Fresno Mobile Radio, Inc. v. F.C.C.,* the
    United States Court of Appeals for the District of Columbia held
    that the Commission had not adequately explained why incumbent
    wide-area SMR licensees were not allowed to apply the same coverage
    requirements as EA licensees, cellular licensees, or PCS licensees,
    given that they are substantially similar CMRS providers.[^37]
    Because both incumbent and EA licensees must build a multitude of
    sites throughout an entire geographic area, the court decided that
    the Commission's view that these licensees are licensed differently
    "elevates form over function."[^38] The court also rejected the
    Commission's argument that EA licensees who must pay for their
    licenses at auction have a greater incentive to construct than
    incumbent licensees who acquired their licenses for free. [^39] A
    licensee, the court held, has the same incentive to construct no
    matter how it acquires the license if "the additional revenue it
    expects to earn from doing so exceeds the additional cost it must
    incur to do so." [^40] The court found the Commission had not fully
    considered whether incumbent wide-area licensees are sufficiently
    different from 800 MHz EA licensees, cellular licensees and PCS
    licensees to justify the different requirements, and therefore,
    remanded the matter to the Commission to reconsider the issue.[^41]
    In the interim, the court ordered that Southern Company should not
    be denied the benefit of the more liberal construction requirements
    applicable to EA licensees.[^42]

10. In light of the *Fresno* decision, the Bureau temporarily suspended
    the construction timetable for incumbent 800 MHz licensees whose EI
    rejustifications were approved by the Bureau in 1997.[^43] The
    Bureau then sought comment on whether the Commission should retain
    existing EI construction requirements, adopt new construction
    requirements for EI licensees that would be comparable to EA
    licensees' requirements, or consider some other alternative.[^44]
    The Bureau asked that parties who supported the Commission's
    decision explain fully why the agency's approach was reasonable, and
    that those advocating new construction requirements provide details
    on what the new requirements should be.[^45] The Bureau specifically
    asked that suggestions for new construction requirements take into
    account the differences in the ways the Commission licensed
    wide-area 800 MHz systems, and address how coverage should be
    determined, when the construction period should start and how long
    it should run, and if constructing a minimum number of frequencies
    would be necessary for a licensee to be considered to be "providing
    coverage." [^46] In response, we received six comments and three
    reply comments.[^47]

# II. DISCUSSION

11. None of the comments received in response to the Bureau's *Comment
    PN* support the Commission's decision in the *800 MHz
    Reconsideration Order* to maintain the existing construction
    requirements for incumbent wide-area SMR licensees (*i.e*.,
    requiring build-out of all authorized sites on all
    frequencies).[^48] In its comments, Southern points to the *CMRS*
    proceeding as evidence that the Commission has already determined
    that all CMRS licensees should have similar coverage requirements,
    and that there is no rational basis for singling out incumbent
    wide-area 800 MHz SMR licensees as the only CMRS providers that are
    not entitled to flexible coverage requirements.[^49] Nextel adds
    that maintaining site-by-site requirements not only violates
    regulatory parity, but is also inconsistent with the real-world
    operating parameters of integrated wide-area systems that use
    multiple low-power, low-site cells.[^50] In fact, Nextel contends,
    requiring a wide-area SMR licensee to construct and operate every
    licensed channel at every licensed site can result in intra-system
    interference and prevent efficient frequency re-use. [^51]

12. On the basis of the record, we conclude that SMR licensees granted
    extended implementation authority are sufficiently similar to EA
    licensees that they should have similar flexibility with respect to
    construction requirements. The record on remand demonstrates that
    incumbent wide-area SMR licensees such as Southern do provide
    service that is similar, if not identical, to that provided by EA
    licensees and other CMRS providers. Recognizing that these licensees
    may have constructed their systems in accordance with the
    requirements in place at the time (*i.e*., site-by-site,
    frequency-by-frequency), we will give eligible wide-area SMR
    licensees the option of complying with the terms of their EI
    authorizations or applying the EA construction requirements to their
    wide-area systems. We believe that giving incumbent wide-area SMR
    licensees the choice between applying the site- and
    frequency-specific requirements and the EA coverage requirements
    establishes reasonable parity between incumbent wide-area SMR
    licensees and EA licensees, without prejudicing the interests of
    either, and will provide the 800 MHz service with a degree of
    certainty for both current and future EA licensees.

13. **Construction Period.** When an eligible wide-area licensee elects
    to apply the EA construction requirements to its system, the
    five-year construction period shall begin from the grant date of its
    extended implementation authority ("EI grant") because that date is
    most analogous to the initial grant date of an EA license. We note
    that most comments favored starting the five-year period from the
    effective date of this proceeding.[^52] However, in light of the
    fact that all of the current EI incumbents have already had several
    years to build out their systems, we believe that adding five more
    years to their build-out periods on a cumulative basis would give
    incumbent wide-area SMR licensees an inequitable advantage over EA
    licensees. Moreover, eligible EI licensees will not be harmed by
    having the five years run from the date of EI grant because this
    alternative is still more flexible than the rules they have been
    operating under, which required them to construct all sites on all
    frequencies. Under the more flexible EA requirements, an eligible EI
    licensee will now be able to leave certain sites and frequencies
    unconstructed for potential future use. Finally, starting the EA
    construction period from the grant of EI authority provides a degree
    of certainty for EA licensees in the upper 200 channels that will
    soon be coming on their own three-year benchmark (which must be met
    regardless of the level of incumbency) and for bidders in the future
    auction of EA licenses in the lower 230 channels. A start date
    sometime after the EI grant would create an unnecessary level of
    uncertainty and give EI licensees more than what EA licensees have.
    Therefore, we will start the construction period for those eligible
    licensees who choose the EA construction requirements from the date
    of EI grant.

14. Because we will start the construction period from the date of EI
    grant, which for all eligible EI licensees occurred more than three
    years ago, we will not require EI licensees to meet the interim
    three-year coverage requirement. Instead, we believe that the public
    interest will be satisfied by requiring that the eligible wide-area
    licensee meet the ultimate construction requirements that EA
    licensees must meet. Therefore, an eligible wide-area SMR licensee
    that elects to apply the EA construction requirements must have
    constructed and placed into operation a sufficient number of base
    stations to provide coverage to at least two-thirds of the
    population of its wide-area system within five years of EI grant
    plus the tolling period described below. In addition, a wide-area
    licensee exercising this option must demonstrate that it has
    constructed fifty percent of its total authorized upper 200 channels
    within its wide-area system. On the other end of the spectrum, an
    incumbent wide-area licensee that is authorized for frequencies in
    the lower 230 channels and chooses the EA requirements may elect to
    demonstrate that it is providing substantial service within five
    years of EI grant, in lieu of the specific population coverage
    requirements, for those frequencies.[^53]

15. **Effect of Tolling on Construction Deadline.** By this *Memorandum
    Opinion and Order*, we hereby terminate the temporary suspension of
    the construction timetable for incumbent wide-area 800 MHz SMR
    licensees that was instituted by the Bureau's *Tolling PN*. For all
    licensees entitled to relief under this decision, we will add 321
    days to their construction periods, representing the amount of time
    between the *Fresno* decision and the release of this order.
    Therefore, the applicable construction deadline for any eligible
    incumbent wide-area SMR licensee that elects to apply the EA
    coverage requirements shall be five years from the date of EI grant
    plus 321 days. Likewise, the applicable construction deadline for
    incumbent wide-area SMR licensees that do not elect the EA
    requirements shall be 321 days after the EI deadline established in
    the *800 MHz Rejustification Orders*.

16. **Certification Filing.** An incumbent wide-area 800 MHz SMR
    licensee that was within its construction period at the time of the
    *Fresno* decision must certify in a filing with the Bureau that it
    either met the EA construction requirements, as set out herein, or
    complied with the terms of its EI authorization. In addition to the
    certification, if a licensee chooses to meet the EA requirements for
    frequencies in the lower 230 channels using the substantial service
    option, it must demonstrate in the same filing with the Bureau how
    it is providing substantial service. All filings must be made within
    fifteen (15) days after the licensee's applicable construction
    deadline, as defined *supra*, or sixty (60) days after the
    publication of this *Memorandum Opinion and Order on Remand* in the
    Federal Register, whichever is later.[^54]

17. **Class of Licensees Affected.** The *Fresno* court ordered that the
    petitioner in the case, Southern Company, not be denied the benefit
    of EA-type construction requirements while the matter is pending
    before the Commission.[^55] The court did not, however, indicate
    what, if any, class of similar licensees should be accorded interim
    coverage requirements if the Commission reversed its decision. For
    the reasons discussed below, we extend the relief contained in this
    order to all 800 MHz licensees, such as Southern, who were granted
    extended implementation authority and were within their construction
    period at the time of the *Fresno* decision.

18. Two of the commenters, Chadmoore and Mobile Relays, respectively,
    urge the Commission to apply EA-type construction requirements to
    either an expanded or a narrower class of licensees. Chadmoore
    argues that the Commission should extend the new construction
    requirements retroactively to any 800 MHz SMR incumbent licensee
    that has ever sought EI authority, whether or not it was
    granted.[^56] Chadmoore argues that had such licensees been given
    the same liberal coverage requirements applicable to EA licensees,
    their licenses would not have been cancelled.[^57] Chadmoore urges
    the Commission to reinstate these licenses and allow the licensees
    to demonstrate that they have met the interim coverage
    requirements.[^58] Conversely, Mobile Relays urges the Commission to
    limit EA-type construction requirements to 800 MHz SMR frequencies
    held by wide-area licensees that have requested wide-area
    authorizations as part of a plan to convert and upgrade existing,
    analog SMR systems.[^59]

19. We conclude that all 800 MHz SMR licensees that have been granted
    extended implementation and were within their construction periods
    at the time of the *Fresno* decision should be given the opportunity
    to apply EA-type requirements. We decline to apply the EA-type
    construction requirements retroactively, as Chadmoore suggests. This
    would require reinstating licenses that have previously reached the
    expiration of their construction periods and been cancelled for
    failure to construct, in most cases over two years ago. We do not
    believe that reinstating these licenses would be in the public
    interest. First, reinstatement would be a windfall to licensees who
    have already had a full opportunity to construct under the prior
    rules, and have neither sought additional time to construct nor
    justified an extension. Second, the cancellation of these licenses
    has already been relied upon by EA licensees in the upper 200
    channels, who in many instances may have constructed and begun
    operation on those frequencies. Third, as to the lower 230
    frequencies, which will be auctioned in the coming year,
    reinstatement of cancelled licenses would create significant
    uncertainty for potential EA licensees because they would have to
    wait several years for the reinstated incumbent to meet its
    build-out requirement before they would know what spectrum in their
    EAs they could use. We believe these considerations are contrary to
    our goal of using EA licensing to improve the efficiency of the SMR
    licensing process and to expedite the development of wide-area SMR
    service.

20. We agree with Mobile Relays's suggestion that the relief in *Fresno*
    apply only to SMR frequencies. The *Fresno* court's decision
    specifically involves SMR frequencies,[^60] and the construction
    status of non-SMR frequencies, including Business and
    Industrial/Land Transportation frequencies converted under
    inter-category sharing for SMR use, is beyond the scope of this
    proceeding.[^61] However, we disagree with Mobile Relays's argument
    that relief should be limited only to EI licensees who are
    converting from analog to digital systems. We see no basis either in
    the record or in our rules for such a limitation.

21. **Area of Coverage.** When determining if an eligible wide-area SMR
    licensee has met a specific coverage requirement (*i.e*., covering
    one-third or two-thirds of the population), the population should be
    measured using the licensee's wide-area "footprint" as established
    in the licensee's rejustification submission. We agree with Nextel
    that this will permit wide-area licensees to continue construction
    and operation based on the boundaries used to design their systems.
    [^62] Furthermore, we adopt Southern's suggestion that a wide-area
    licensee compute population covered within its footprint on a county
    basis using 1990 U.S. Census information.[^63] In cases where the
    footprint does not align with county boundaries, a wide-area
    licensee should include the entire population of the county if the
    licensee covers any portion of it. We agree with Southern that this
    will ensure that there will be no underreporting of population,
    while at the same time providing a method that can readily be
    verified.[^64]

22. **Minimum Number of Frequencies.** As noted earlier, an EA licensee
    in the upper 200 channels of the 800 MHz band must construct and
    operate fifty percent of the total channels included in its spectrum
    block in at least one location in its respective EA-based service
    area within three years of initial license grant and retain such
    channel usage for the remainder of the five-year construction period
    ("channel use requirement").[^65] We will require that wide-area
    licensees that elect to apply the EA construction requirements also
    meet such a requirement for those frequencies within their extended
    implementation authority that are in the upper 200 channels. This
    requirement was adopted to prevent spectrum warehousing, and is
    meant to guarantee that at least fifty percent of the channels are
    in operation somewhere within the licensee's service area. [^66] We
    note that the responses to the Bureau's *Comment PN* generally
    disfavor imposing the channel use requirement for incumbent
    wide-area licensees.[^67] However, we interpret the channel use
    requirement for EA licensees in the upper 200 channels differently
    than the comments suggest. Instead of requiring fifty percent of the
    licensee's authorized channels to be constructed and in operation at
    one site, we interpret the requirement to mean that a licensee must
    construct and operate fifty percent of the channels throughout its
    licensed area, so that the aggregate number of channels in use is
    fifty percent of those authorized. The licensee may choose to meet
    the channel use requirement at one site, but may also choose to use
    any number of sites (but at least one site). Based on this
    interpretation, we believe that incumbent wide-area licensees are
    capable of meeting this requirement. Therefore, those incumbent
    wide-area licensees that do elect to apply EA construction
    requirements must also meet the same channel use requirement for
    their upper 200 channel frequencies that EA licensees in the upper
    200 channels must meet.[^68]

23. In addition to the channel use requirement imposed on upper 200
    channel EA licensees, Mobile Relays recommends that the Commission
    require that incumbent wide-area licensees demonstrate service by a
    minimum of two frequencies at each site.[^69] We agree with the
    reply comments, however, that there is no justification for the
    two-frequency minimum,[^70] and that it would not provide regulatory
    parity between wide-area and EA licensees. [^71] Incumbent wide-area
    licensees, therefore, need only demonstrate coverage by constructing
    and operating one frequency at each site, with the exception, noted
    *supra*, of the channel use requirement for frequencies in the upper
    200 channels.

# III. CONCLUSION

24. On February 5, 1999, the United States Court of Appeals for the
    District of Columbia remanded back to the Commission the decision
    not to extend EA-type construction requirements to incumbent
    wide-area 800 MHz SMR licensees that had been granted extended
    implementation. Any incumbent wide-area 800 MHz licensee that was
    still in its construction period as of the date of that decision may
    choose to apply either the existing site-by-site,
    frequency-by-frequency construction requirements or the EA
    construction requirements. Those licensees who choose the latter
    must certify in a filing with the Commission their compliance with
    the requirements within the later of fifteen days from their
    applicable construction benchmarks or sixty days from the effective
    date of this decision. Such a certification should include
    compliance with the channel use requirement, if applicable, and a
    demonstration of substantial service, if elected.

# 

# 

# IV. PROCEDURAL MATTERS

# A. Regulatory Flexibility Act

25. To assist the public in determining the possible impact on small
    entities of the requirements adopted in this *Memorandum Opinion and
    Order on Remand*, the Commission has prepared a Supplemental Final
    Regulatory Flexibility Analysis (Supplemental FRFA), set forth in
    Appendix B. The Office of Public Affairs, Reference Operations
    Division, will send a copy of the *Memorandum Opinion and Order on
    Remand*, including this Supplemental FRFA, to the Chief Counsel for
    Advocacy of the Small Business Administration, in accordance with
    the Regulatory Flexibility Act.[^72]

**B. Paperwork Reduction Act of 1995 Analysis**

26. This *Memorandum Opinion and Order on Remand* contains a modified
    information collection that the Commission is submitting to the
    Office of Management and Budget requesting clearance under the
    Paperwork Reduction Act of 1995.

**C. Further Information**

27. For further information concerning this *Memorandum Opinion and
    Order on Remand*, contact William W. Kunze, Commercial Wireless
    Division, Wireless Telecommunications Bureau at (202) 418-0620.

# V. ORDERING CLAUSES

28. Accordingly, IT IS ORDERED that incumbent wide-area 800 MHz SMR
    licensees eligible for relief as described herein must comply with
    the terms of their extended implementation authorizations or apply
    the alternative construction requirements described herein. This
    action is taken pursuant to the authority of section 4(i) of the
    Communications Act of 1934, as amended, 47 U.S.C. § 154(i).

29. IT IS FURTHER ORDERED that incumbent wide-area 800 MHz SMR licensees
    eligible for relief as described herein must certify in a filing
    with the Wireless Telecommunications Bureau their compliance with
    the construction requirements as described herein within the later
    of fifteen days after the licensee's applicable construction
    deadline or sixty days after publication of this *Memorandum Opinion
    and Order on Remand* in the Federal Register.

30. IT IS FURTHER ORDERED that the temporary suspension of the
    construction timetable for incumbent wide-area SMR licensees as set
    forth in *Public Notice* DA 99-698 released April 15, 1999, is
    terminated.

31. IT IS FURTHER ORDERED that the Commission's Consumer Information
    Bureau, the Reference Information Center, SHALL SEND a copy of this
    *Memorandum Opinion and Order on Remand*, 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 THE PARTIES**

#### Comments

American Mobile Telecommunications Association, Inc. (AMTA)

Chadmoore Wireless Group, Inc. (Chadmoore)

Mobile Relays, Inc. (Mobile Relays)

Nextel Communications, Inc. (Nextel)

Southern Company (Southern)

William R. Miller d/b/a Russ Miller Rental (Russ Miller)

#### Reply Comments

Chadmoore Wireless Group, Inc. (Chadmoore)

Nextel Communications, Inc. (Nextel)

Southern Company (Southern)

#### Ex Parte Filings

Southern Company (Southern)

**APPENDIX B**

**SUPPLEMENTAL FINAL REGULATORY FLEXIBILITY ANALYSIS**

To assist the public in determining the possible impact on small
entities of the provisions in this *Memorandum Opinion and Order on
Remand*, the Commission has prepared this Supplemental Final Regulatory
Flexibility Analysis (Supplemental FRFA).

A.  **Need for, and Objectives of, the *Memorandum Opinion and Order on
    Remand***

This *Memorandum Opinion and Order on Remand* was initiated by order of
the United States Court of Appeals for the District of Columbia in the
case of *Fresno Mobile Relays, Inc. v. Federal Communications
Commission* (*Fresno*). [^73] In *Fresno*, the court stated that the
Commission had not adequately explained why incumbent wide-area 800 MHz
SMR licensees granted extended implementation (EI) must construct and
operate all frequencies at all sites or lose the unconstructed
frequencies, while Economic Area (EA) 800 MHz SMR licensees need only
provide coverage to a certain percentage of the population within their
licensed areas. This *Memorandum Opinion and Order on Remand* allows
incumbent wide-area 800 MHz SMR licensees who were within their
construction periods at the time of the *Fresno* decision to choose
between complying with the terms of their EI authorizations or applying
construction requirements similar to those given to EA licensees.
Therefore, this *Memorandum Opinion and Order on Remand* (1) gives the
incumbent licensees greater flexibility to leave certain sites and
frequencies unconstructed (for potential future use), (2) establishes
reasonable regulatory parity between incumbent wide-area licensees and
EA licensees in the 800 MHz SMR service, without prejudicing the
interests of either, and (3) provides the 800 MHz SMR service with a
degree of certainty for both current and future EA licensees.

# Summary of Significant Issues Raised by Public Comment in Response to the Initial Regulatory Flexibility Analysis

As noted above, this *Memorandum Opinion and Order on Remand* was
initiated by order of the United States Court of Appeals for the
District of Columbia. Therefore, there was no Initial Regulatory
Flexibility Analysis.

# Description and Estimate of the Number of Small Entities to Which Rules Will Apply

The Regulatory Flexibility Act (RFA) directs agencies to provide a
description of and, where feasible, an estimate of the number of small
entities that may be affected by our rules.[^74] The RFA generally
defines the term \"small entity\" as having the same meaning as the
terms \"small business,\" \"small organization,\" and \"small
governmental jurisdiction.\"[^75] In addition, the term \"small
business\" has the same meaning as the term \"small business concern\"
under the Small Business Act.[^76] 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).[^77] A small
organization is generally \"any not-for-profit enterprise which is
independently owned and operated and is not dominant in its
field.\"[^78] The provisions adopted in this *Memorandum Opinion and
Order on Remand* will apply to approximately 30 - 35 current incumbent
800 MHz SMR operators, most of which may be considered small entities.

B.  Description of Projected Reporting, Recordkeeping, and Other
    Compliance Requirements

This *Memorandum Opinion and Order on Remand* gives eligible wide-area
800 MHz SMR licensees the option of complying with the terms of their EI
authorizations or applying EA-type construction requirements to their
wide area footprints. If a licensee chooses the former, it need only
comply with the requirements already imposed by the Commission's rules.
If an eligible licensee chooses the latter, it must determine if it
meets the coverage requirement and the channel use requirement (if
applicable). The licensee must then certify compliance with these
requirements in a filing with the Wireless Telecommunications Bureau
(Bureau) at its applicable construction deadline. For certain authorized
frequencies (*i.e*., the Lower 230 channels), in lieu of the specific
coverage requirements, an eligible licensee may demonstrate that it is
providing substantial service. If a licensee chooses this option, it
must provide in a filing with the Bureau a description of how it is
providing substantial service.

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

The action taken by this *Memorandum Opinion and Order on Remand* not
only gives eligible incumbent wide-area 800 MHz SMR licensees greater
flexibility to leave certain sites and frequencies unconstructed (for
potential future use), but also establishes reasonable parity between
incumbent wide-area licensees and EA licensees in the 800 MHz SMR
service. Eligible incumbent licensees need only report their compliance
with the construction requirements in the same fashion that EA 800 MHz
licensees do (*i.e*., in a certification and, if the substantial service
option is elected, a demonstration).

As described in this *Memorandum Opinion and Order on Remand*, we
declined to start the alternative five-year construction period from the
effective date of the proceeding, as a number of the licensees suggested
in comments filed in the 800 MHz proceeding (PR Docket 93-144).[^79] In
light of the fact that all of the current EI incumbents have already had
several years to build out their systems, the Commission decided that
adding five more years to their build-out periods on a cumulative basis
would give incumbent wide-area SMR licensees an inequitable advantage
over EA licensees. Therefore, the construction period shall start from
the dates of the individual licensees' grants of extended
implementation.

In addition, we declined to apply the EA-type construction requirements
retroactively, as a comment filed in the 800 MHz proceeding (PR Docket
93-144) suggested, because it would require reinstating licenses that
previously reached the expiration of their construction periods and were
cancelled for failure to construct, in most cases over two years
ago.[^80] Reinstating these cancelled licenses would not be in the
public interest. Therefore, the Commission will allow any incumbent
wide-area 800 MHz SMR licensee who was within its construction period at
the time of the *Fresno* decision to apply the alternative construction
requirements.

D.  Report to Congress

The Commission shall send a copy of this Supplemental Final Regulatory
Flexibility Analysis, along with this *Memorandum Opinion and Order on
Remand*, in a report to Congress pursuant to the Small Business
Enforcement Fairness Act of 1996, 5 U.S.C. § 801(a)(1)(A). A copy of
this Supplemental Final Regulatory Flexibility Analysis will also be
published in the Federal Register.

[^1]: *Fresno Mobile Radio, Inc., et al. v. Federal Communications
    Commission*, 165 F. 3d 965 (D.C. Cir., Feb. 5, 1999).

[^2]: *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, Implementation of Sections 3(n) and 322 of the
    Communications Act -- Regulatory Treatment of Mobile Services, GN
    Docket No 93-252, Implementation of Section 309(j) of the
    Communications Act -- Competitive Bidding, PP Docket No. 93-253*,
    Memorandum Opinion and Order on Reconsideration*, 12 FCC Rcd. 9972,
    9997, ¶ 81 (1997) (*800 MHz Reconsideration Order*).

[^3]: 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, Implementation of Sections 3(n) and 322 of the
    Communications Act -- Regulatory Treatment of Mobile Services, GN
    Docket No 93-252, Implementation of Section 309(j) of the
    Communications Act -- Competitive Bidding, PP Docket No. 93-253*,
    First Report and Order, Eighth Report and Order and Second Further
    Notice of Proposed Rulemaking*, 11 FCC Rcd. 1463 (1995) (*800 MHz
    Report and Order*).

[^4]: 47 C.F.R. § 90.631(f) (trunked systems given one year to
    construct); 47 C.F.R. § 90.633(d) (conventional systems given eight
    months to construct).

[^5]: *Id*.

[^6]: Initially, the Commission granted multi-year extended
    implementation periods to SMR licensees by waiver when the licensees
    met the waiver standard by demonstrating that their proposed systems
    differed sufficiently from conventional systems to make normal
    construction standards inapplicable. *See* Fleet Call, Inc.,
    *Memorandum Opinion and Order*, 6 FCC Rcd. 1533 (1991), *recon.
    dismissed*, 6 FCC Rcd 6989 (1991). In 1993, the Commission amended
    section 90.629 of the rules to allow SMR applicants to request up to
    five years to construct systems that required extended
    implementation because of wide-area coverage, size, or complexity.
    *See* Amendment of Part 90 of the Commission's Rules Governing
    Extended Implementation Periods, *Report and Order*, 8 FCC Rcd. 3975
    (1993). *See also* 47 C.F.R. § 90.629(e).

[^7]: *See* 47 C.F.R. § 90.629(e).

[^8]: *See* Omnibus Budget Reconciliation Act of 1993, Pub. L. No.
    103-66, Title VI, § 6002(b), 107 Stat. 312, 392 (1993), codified at
    47 U.S.C. § 332.

[^9]: *See* Implementation of Sections 3(n) and 332 of the
    Communications Act, GN Docket No 93-252, *Notice of Proposed
    Rulemaking*, 8 FCC Rcd. 7988 (1993).

[^10]: *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, 1448-58 (1994).

[^11]: *See* Implementation of Sections 3(n) and 332 of the
    Communications Act, GN Docket No 93-252, *Third Report and Order*, 9
    FCC Rcd. 7988, 8042-43 (1994).

[^12]: *Id*. at 8042, ¶ 94.

[^13]: *Id*. at 8076, ¶ 179. We noted that this approach had been used
    for cellular service and had recently been adopted for broadband and
    narrowband PCS. *Id*.

[^14]: *Id*. at 7997, ¶ 47.

[^15]: *Id*.

[^16]: *800 MHz Report and Order*, 11 FCC Rcd. at 1479-80. The \" upper
    200 channels \" consist of 200 paired channels (Channel Nos.
    401-600) at 816-821/861-866 MHz. The "lower 230 channels" are a
    combination of the General Category channels and "lower 80"
    channels. The General Category channels consist of 150 paired
    channels (Channel Nos. 1-150) at 806-809.750/851-854.750 MHz. The
    \"lower 80\" channels consist of 80 paired channels at
    811-815.700/856-860.700 MHz (Channels Nos. 201-208, 221-228,
    241-248, 261-268, 281-288, 301-308, 321-328, 341-348, 361-368, and
    381-388).

[^17]: *Id*. at 1521, ¶ 104.

[^18]: *Id*. The Commission noted that the five-year construction period
    is shorter than that imposed on PCS systems, but concluded that it
    was the most appropriate time period for the 800 MHz SMR service
    because incumbent SMR licensees were able to request up to five
    years to construct a wide-area system and a substantial level of
    construction already existed in the 800 MHz band. *Id*. Moreover,
    the five-year construction period would apply to all of the
    licensee's stations within the EA spectrum block, including any
    stations previously subject to an earlier construction deadline.
    *Id*. The Commission recognized that this may give some EA licensees
    more time to construct certain facilities than otherwise might have
    been allowed, but nonetheless concluded that EA licensees should
    have this flexibility. *Id*.

[^19]: *See* 47 C.F.R. § 90.685(b).

[^20]: *800 MHz Report and Order* at 1529, ¶ 121. *See also* 47 C.F.R. §
    90.685(c).

[^21]: *800 MHz Report and Order* at 1529, ¶ 120.

[^22]: *Id*. at 1524.

[^23]: *Id*.

[^24]: *Id*. at 1525.

[^25]: *Id*. at 1524-25. The Commission's dismissal of the pending EI
    applications was upheld by the U.S. Court of Appeals for the
    District of Columbia Circuit. *See Chadmoore Communications, Inc. v.
    FCC*, 113 F.3d 235 (D.C. Cir., 1997).

[^26]: *Id*. at 1525. Specifically, a licensee seeking to retain EI
    authority was required to: (1) indicate the duration of its EI
    period (including commencement and termination date); (2) provide a
    copy of its implementation plan, as originally submitted and
    approved by the Commission, and any Commission-approved
    modifications thereto; (3) demonstrate its compliance with 47 C.F.R.
    § 90.629 if authority was granted pursuant to that provision,
    including confirmation that it had filed annual certifications
    regarding fulfillment of its implementation plan; and (4) certify
    that all facilities covered by the EI authority proposed to be
    constructed as of the adoption date of the *800 MHz Report and
    Order* were fully constructed and that service to subscribers had
    commenced. *Id*. The Commission then delegated the Bureau with the
    authority to review and take appropriate action upon such showings.
    *Id*.

[^27]: *Id*.

[^28]: *Id*.

[^29]: *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, Implementation of Sections
    3(n) and 322 of the Communications Act -- Regulatory Treatment of
    Mobile Services, GN Docket No 93-252, Implementation of Section
    309(j) of the Communications Act -- Competitive Bidding, PP Docket
    No. 93-253*, Order*, 13 FCC Rcd. 1533 (WTB 1997), *recon*., 12 FCC
    Rcd. 18349 (WTB 1997) (collectively, *800 MHz Rejustification
    Orders*).

[^30]: *Id*.

[^31]: 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, Implementation of Sections 3(n) and 322 of the
    Communications Act -- Regulatory Treatment of Mobile Services, GN
    Docket No 93-252, Implementation of Section 309(j) of the
    Communications Act -- Competitive Bidding, PP Docket No. 93-252*,
    Memorandum Opinion and Order on Reconsideration*, 12 FCC Rcd. 9972
    (1997) (*800 MHz Reconsideration Order*).

[^32]: Also in June 1997, the Commission adopted the same basic
    construction requirements for EA licensees in the lower 230
    channels: one-third coverage within three years, two-thirds within
    five years. *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, Implementation of Sections
    3(n) and 322 of the Communications Act -- Regulatory Treatment of
    Mobile Services, GN Docket No 93-252, Implementation of Section
    309(j) of the Communications Act -- Competitive Bidding, PP Docket
    No. 93-253*, Second Report and Order*, 12 FCC Rcd. 19079, 19094-95,
    ¶ 34. (1997) (*800 MHz Second Report and Order*). The Commission
    decided, however, to allow EA licensees in the lower 230 channels to
    demonstrate substantial service within five years of license grant
    in lieu of the specific coverage requirements. *Id*. Moreover, the
    Commission declined to adopt a channel usage requirement for
    licensees in the lower 230 channel block. *Id*. *See also* 47 C.F.R.
    § 90.685(b).

[^33]: *800 MHz Reconsideration Order* at 9997, ¶ 81.

[^34]: *Id*.

[^35]: *Id*.

[^36]: *Id*.

[^37]: *Fresno* at 969-70.

[^38]: *Id*. at 970.

[^39]: *Id*.

[^40]: *Id*.

[^41]: *Id*.

[^42]: *Id*.

[^43]: *See* Wireless Telecommunications Bureau Temporarily Suspends
    Construction Timetable for Wide Area 800 MHz SMR Licensees Due to
    Court Remand, *Public Notice*, 14 FCC Rcd. 6348 (1999) (*Tolling
    PN*).

[^44]: *See* Wireless Telecommunications Bureau Requests Comment on the
    Construction Requirements for Commercial Wide-Area 800 MHz Licensees
    Pursuant to *Fresno Mobile Radio, Inc. v. FCC*, *Public Notice*, 14
    FCC Rcd. 7799 (1999) (*Comment PN*). This Public Notice was
    subsequently published in the Federal Register, *see* "Comments
    Requested on the Construction Requirements for Commercial Wide-Area
    800 MHz Licensees," 64 FR 31532 (June 11, 1999). Thereafter, the
    Bureau extended the comment period. *See* New Deadlines for Filing
    Comments on the Construction Requirements for Commercial Wide-Area
    800 MHz Licensees, *Public Notice*, DA 99-1168 (rel. Jun. 5, 1999).

[^45]: *Comment PN* at 7799-7800.

[^46]: *Id*. at 7800.

[^47]: *See* Appendix A for list of comments and reply comments.
    Southern Company also submitted additional information. *See* Letter
    from Carole C. Harris, counsel for Southern Company, to Scott
    Mackoul, Wireless Telecommunications Bureau, dated September 22,
    1999 (*Southern Ex Parte*).

[^48]: *See* AMTA at 8; Chadmoore at 8-9; Nextel at 8; Southern at 10;
    Russ Miller at 5. In addition, the comments submitted by Mobile
    Relays advocate adopting EA-type construction requirements as an
    alternative to the original site-by-site, frequency-by-frequency
    construction requirements. Mobile Relays at 5.

[^49]: Southern at 5-8.

[^50]: Nextel at 7.

[^51]: *Id*.

[^52]: *See e.g*., AMTA at 8; Nextel at 10; Southern at 11. We note that
    Russ Miller requested that the start date should begin the later of
    the effective date of the new construction requirements or the date
    all pleadings with respect to outstanding wide-area applications are
    resolved. Russ Miller at 6.

[^53]: If a licensee has frequencies in both the upper 200 and lower 230
    channels and chooses to demonstrate substantial service for the
    lower 230 channels, it must still meet the specific coverage
    requirements for the upper 200 channels, using the population
    covered under those sites authorized with upper 200 frequencies*.*

[^54]: *See* 47 C.F.R. § 1.946(d).

[^55]: We believe that we have effectively met this directive by
    temporarily suspending the construction timetable for all commercial
    wide-area 800 MHz SMR licensees. *See* *Tolling PN*.

[^56]: Chadmoore at 9. Chadmoore's proposal would include 800 MHz
    licensees whose construction periods have already expired because
    they were denied extended implementation in the first instance (such
    as Chadmoore) or who failed to rejustify their extended
    implementation authority (such as the Roberts Group). *Id*.

[^57]: *Id*.

[^58]: *Id*. Chadmoore contends that retroactive reinstatement of
    cancelled wide-area licenses would not be unduly burdensome to EA
    licensees because they were on notice at the time of the auction
    that many issues, including construction deadlines, were still being
    adjudicated and could ultimately affect their use of certain
    channels. *Id*. at 10.

[^59]: Mobile Relays at 2-3. Mobile Relays's proposal would exclude any
    authorizations originally designated as Business and Industrial Land
    Transportation (B/ILT) frequencies, but converted to SMR use through
    inter-category sharing. Mobile Relays argues that B/ILT frequencies
    "held by an auction winner are not held as the result of any
    auction, and must be constructed consistent with the licensee's
    pre-existing waiver." *Id*. Mobile Relays also notes that any B/ILT
    frequencies held by a wide-area SMR licensee are held pursuant to 47
    C.F.R. § 90.621(f)(2) which specifies that the out-of-category
    licensee must operate by the rules applicable to the category to
    which the frequency is allocated. *Id*. at 2-3. The proposal would
    also exclude licensees who as yet have not constructed any
    authorizations but seek to construct a digital wide-area system
    "from scratch." *Id*. at 3-4. Mobile Relays argues that the former
    is far more costly and difficult because the licensee must maintain
    existing service and therefore, should have the more liberal EA-type
    construction requirements. *Id*.

[^60]: *Fresno* at 967-69.

[^61]: We note that Bureau has already granted Southern Company an
    extension of its extended implementation period for its Business and
    Industrial/Land Transportation channels until final rules regarding
    licensing of the I/LT frequencies in the context of the Commission's
    rulemaking proceeding to implement the Balanced Budget Act of 1997
    take effect. *See* Southern Company, *Memorandum Opinion and Order*,
    14 FCC Rcd. 1851 (WTB 1998).

[^62]: Nextel at 10.

[^63]: *Southern Ex Parte* at 1.

[^64]: *Id.* at 2.

[^65]: *See* 47 C.F.R. § 90.685(c). As noted above, 800 MHz EA licensees
    in the lower 230 channels do not have such requirement, but only
    need to construct and operate one frequency within their EAs.

[^66]: *See* *800 MHz Report and Order* at 1529, ¶ 121.

[^67]: AMTA at 8; Southern at 12; Russ Miller at 6; Nextel Reply at 4-5;
    and Chadmoore Reply at 5. For example, Southern states that it would
    be nearly impossible for an incumbent wide area licensee to
    construct fifty percent of its licensed channels at one site due to
    the fact that the sites were originally licensed on a site-by-site
    basis and site-by-site licensees do not have a uniform number of
    channels at each site and do not have the right to relocate other
    licensees within their service area. Southern at 12. Nextel agrees
    with Southern and adds that any attempt to enforce the 50 percent
    channel use requirement in a non-EA environment would be cumbersome
    at best. Nextel Reply at 4-5. Chadmoore also agrees with Southern's
    position and adds that a one channel minimum would give licensees
    the flexibility to construct their systems in accordance with market
    demand. Chadmoore Reply at 5.

[^68]: In light of the fact that we are dispensing with the interim
    three-year benchmark for incumbent EI licensees that elect to apply
    the EA coverage requirements, we will only require that the
    incumbent EI licensee certify its compliance with the channel use
    requirement for its upper 200 channel frequencies at its five-year
    construction benchmark.

[^69]: Mobile Relays at 5. Mobile Relays explains that two channels are
    necessary to construct a trunked radio system which is commonly used
    in a wide-area system. *Id*.

[^70]: Chadmoore Reply at 6; Southern Reply at 3.

[^71]: Nextel Reply at 7.

[^72]: *See* 5 U.S.C. § 601 *et. seq*.

[^73]: *Fresno Mobile Radio, Inc., et al. v. Federal Communications
    Commission*, 165 F. 3d 965 (D.C. Cir., Feb. 5, 1999).

[^74]: 5 U.S.C. § 603(b)(3).

[^75]: 5 U.S.C. § 601(6).

[^76]: 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).

[^77]: Small Business Act, 15 U.S.C. § 632 (1996).

[^78]: 5 U.S.C. § 601(4).

[^79]: *See* *Memorandum Opinion and Order on Remand* at Section II (¶
    13).

[^80]: *See* *Memorandum Opinion and Order on Remand* at Section II (¶
    19).