NOTICE

*************************************************************************

 NOTICE

*************************************************************************

This document was originally prepared in Word Perfect.

If the original document contained--

 * Footnotes
 * Boldface & Italics

--this information is missing in this version

The document format (spacing, margins, tabs, etc.) is changed too.

If you need the complete document, download the Word Perfect version.

For information about downloading documents (FTP) see file pnmc5021.

File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous.

*************************************************************************
 Before the
 FEDERAL COMMUNICATIONS COMMISSION
 Washington, D. C. 20554

In the Matter of )
 )
Interconnection and Resale Obligations )
Pertaining to ) CC Docket No. 94-54
Commercial Mobile Radio Services )

 SECOND REPORT AND ORDER
 AND THIRD NOTICE OF PROPOSED RULEMAKING

 Adopted: June 27, 1996; Released: August 13, 1996

Comment Date: October 4, 1996
Reply Date: November 22, 1996

By the Commission: Commissioner Chong issuing a statement.

 TABLE OF CONTENTS

 Paragraph

I. INTRODUCTION AND EXECUTIVE SUMMARY. . . . . . . . . . . . . . . . . . .1

II.ROAMING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

 A.Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
 1.Regulatory Background . . . . . . . . . . . . . . . . . . . . . . . .3
 2.Technical Background . . . . . . . . . . . . . . . . . . . . . . . .5
 B.Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
 C. Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

III.FURTHER NOTICE OF PROPOSED RULEMAKING . . . . . . . . . . . . . . . 15

 A. Carrier-to-Carrier Roaming . . . . . . . . . . . . . . . . . . . . 15
 B. Sunset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
 C. Other Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

IV.CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

V. PROCEDURAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 37

 A.Filing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . 37
 B.Regulatory Flexibility Act . . . . . . . . . . . . . . . . . . . . 40
 C.Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
 D.Further Information . . . . . . . . . . . . . . . . . . . . . . . . 42

VI.ORDERING CLAUSES . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Appendix A:Parties Filing Comments and Reply Comments
Appendix B:Final Regulatory Flexibility Analysis
Appendix C:Initial Regulatory Flexibility Analysis
Appendix D:Final Rules

 I. INTRODUCTION AND EXECUTIVE SUMMARY

 1. This Order continues our examination of issues concerning the offering of roaming
services by commercial mobile radio service (CMRS) providers. We initiated this proceeding
in a Notice of Proposed Rulemaking and Notice of Inquiry that addressed a broad array of
CMRS regulatory issues, including roaming. Subsequently, we refined our proposals
concerning roaming in a second Notice of Proposed Rulemaking. Our actions in this Order
are taken to further the goals and requirements of the Communications Act of 1934, as
amended, including the charge recently given to us by Congress to promote competition and
reduce regulation in order to secure lower prices and higher quality services for American
telecommunications consumers and encourage the rapid deployment of new
telecommunications technologies.

 2. Our principal decisions, based on the record compiled in response to the Second
NPRM, are as follows. First, we conclude that the availability of roaming on broadband
wireless networks is important to the development of nationwide, ubiquitous, and competitive
wireless voice telecommunications, and that, during the period in which broadband personal
communications services (PCS) systems are being built, market forces alone may not be
sufficient to cause roaming to become widely available. Therefore, we expand the scope of
our existing "manual" roaming rule, which requires cellular carriers to serve individual
roamers, see 47 C.F.R.  22.901, to include other CMRS providers that offer comparable
competitive mobile telephony services. As a result of this action, cellular, broadband PCS,
and certain specialized mobile radio (hereinafter "covered SMR") carriers must, as a
condition of their licenses, provide service to any individual roamer whose handset is
technically capable of accessing their network. Second, we seek comment on whether we
should define cellular, broadband PCS and covered SMR providers' obligations to include the
provision of "automatic" roaming service to other carriers (i.e., carrier-to-carrier roaming
service). Since market forces should eliminate the need for any explicit roaming regulations
once broadband PCS licensees have built out their networks, our consideration of automatic
roaming issues is grounded in a belief that any action we might take would sunset five years
after the last group of initial licenses for currently allotted broadband PCS spectrum is
awarded. In addition, we seek comment on whether our manual roaming rule should be
subject to a similar sunset.

 II. ROAMING

A. Introduction

 1. Regulatory Background

 3. "Roaming" occurs when the subscriber of one CMRS provider utilizes the facilities
of another CMRS provider with which the subscriber has no direct pre-existing service or
financial relationship to place an outgoing call, to receive an incoming call, or to continue an
in-progress call. Typically, although not always, roaming occurs when the subscriber is
physically located outside the service area of the provider to which he or she subscribes.
Under Section 22.901 of our rules, cellular system licensees "must provide cellular mobile
radiotelephone service upon request to all cellular subscribers in good standing, including
roamers, while such subscribers are located within any portion of the authorized cellular
geographic service area . . . where facilities have been constructed and service to subscribers
has commenced."

 4. In the NOI, we requested comment regarding whether the obligation to permit
roaming should be extended to all CMRS, what regulatory standards are appropriate to
promote roaming, and what technical issues or requirements are implicated. In the Second
NPRM, we tentatively concluded that roaming service is important to the development of a
seamless CMRS "network of networks." We also tentatively concluded, based on the
available evidence, that uncertainties concerning the technological development of non-
cellular CMRS and the likelihood that market forces would adequately promote the
availability of roaming counseled regulatory caution. Therefore, we proposed, in lieu of a
rule, to monitor the development of roaming service and to intercede as appropriate. In
addition, we requested comment on several other issues related to roaming, including the
technical feasibility of cross-service roaming, the necessity of direct physical interconnection
to facilitate roaming, the necessity of access to subscriber databases and any privacy or
proprietary issues raised, and the technical and contractual arrangements that are currently
used to provide roaming in the cellular service.

 2. Technical Background

 5. Roaming service can be provided through a variety of technical and contractual
arrangements. The most rudimentary form of roaming is manual roaming. Manual roaming
is the only form of roaming that is available when there is no pre-existing contractual
relationship between a subscriber, or her home system, and the system on which she wants to
roam. In order to make or receive a call, a manual roamer must establish such a relationship.
Typically, the roamer accomplishes this in the course of attempting to originate a call by
giving a valid credit card number to the carrier providing service.

 6. Automatic roaming means that the roaming subscriber is able to originate or
terminate a call without taking any action other than turning on her telephone. This form of
roaming requires a contractual agreement between the home and roamed-on ("host") systems.
Before a subscriber can complete an originating call under an automatic roaming arrangement,
the host system first identifies the subscriber's home carrier by means of the subscriber's
telephone number, verifies that it has an agreement with that carrier, and queries the carrier to
verify that the subscriber's account is current (and in some instances to obtain other
information about the subscriber, such as her preferred service features). To provide
automatic terminating service, the host system typically sends a signal to the home carrier as
soon as the subscriber enters its service area with the phone turned on so that the home
system will know where to direct calls. Although many roaming agreements between
carriers allow for automatic originating and terminating access, others involve a form of
manual terminating service whereby the subscriber must make an affirmative act to register
with the host system, such as punching in a code, before she can receive calls.

 7. The basic technical requirement for either manual or automatic roaming is that the
subscriber have a handset technically capable of accessing the host system. Unless
subscribers are willing to carry two telephones, therefore, roaming between cellular and other
CMRS services will require subscribers to use handsets that are dual band, and perhaps dual
mode as well. Furthermore, in order for the switches of systems using different
technologies to communicate most efficiently when providing automatic roaming, new
protocol conversion standards may in some instances need to be devised. Neither
originating nor terminating roaming requires direct interconnection of carriers' switches.
Interconnection does appear to be necessary, however, if carriers desire to allow their
customers to continue calls in progress when they enter another carrier's service area. Such
interconnection may be technically and administratively complex.

B. Comments

 8. Commenters generally agree with our tentative conclusion in the Second NPRM
that ubiquitous roaming on cellular and broadband PCS systems is important to the
development of a seamless, nationwide "network of networks." Commenters differ,
however, over whether regulation is necessary or appropriate to promote the availability of
roaming. Some commenters argue that regulation is unnecessary because CMRS providers
have a strong economic incentive to enter into reciprocal roaming agreements, both so that
they can offer roaming to their own subscribers and to realize revenues from roamers in their
service areas. Providers will have no anticompetitive incentive to deny roaming agreements,
they contend, because providers operating in different service areas do not directly compete
with each other. Furthermore, they state, cellular providers affiliated with PCS licensees will
not deny roaming opportunities to other PCS providers because such cellular providers will
want to preserve roaming capability for their own customers. Even if some cellular providers
do limit roaming, these commenters claim, PCS providers will have ample incentive to offer
agreements to each other. Several commenters also argue that roaming arrangements
occurred in the cellular service without substantial regulatory intervention. Thus, these
commenters conclude, competition in the CMRS market will ensure that automatic roaming
becomes available wherever there is sufficient consumer demand to justify its provision. In
addition, some commenters argue, roaming regulation could exact significant network-related
costs, especially for smaller CMRS providers, because: (1) roaming arrangements may be
technically infeasible or unreasonably costly under some circumstances, and (2) a roaming
requirement might obstruct or discourage buildout of networks and technical innovation.

 9. Other commenters argue that market forces alone will not ensure the widespread
availability of roaming arrangements, and that roaming regulation is necessary to ensure the
establishment of effective competition between incumbent cellular providers and new PCS
and covered SMR competitors. These commenters contend that new CMRS entrants will
need to offer automatic roaming in order to make their services attractive to consumers. For
example, Comcast states that cellular carriers often have not offered each other
nondiscriminatory roaming agreements, but rather have unreasonably favored their own
affiliates. Furthermore, they argue, there exists today a far stronger anticompetitive
incentive for established carriers to deny roaming capability to new entrants than existed
during the development of cellular service because the established carriers already have
widespread roaming capability, which they can claim as a distinguishing feature of their
service. In order to promote competition, commenters support the idea of prohibiting
CMRS providers from discriminating with respect to the availability or terms of roaming
agreements. Commenters further state that we should not mandate particular technology or
standards, and that the burden of developing and implementing any technology necessary to
permit roaming should lie with the party seeking a roaming agreement.

C. Decision

 10. At the outset, we note that Sections 201(b) and 202(a) of the Communications
Act apply to CMRS providers and govern the provision of common carrier communications
services. We reject BellSouth's argument that roaming is merely a billing arrangement and
not a common carrier service. We have held that certain billing and collection services
offered by local exchange carriers (LECs) to interexchange carriers (IXCs) are not common
carriage because such services do "not allow customers of the service . . . to communicate or
transmit intelligence of their own design and choosing," and because such services can be
offered by non-communications entities such as credit card companies. Roaming capability,
by contrast, gives end users access to a foreign network in order to communicate messages of
their own choosing. We therefore agree with those commenters that argue that roaming is a
common carrier service. We also note that we have authority to impose a roaming
requirement in the public interest pursuant to our license conditioning authority under
Sections 303(r) and 309 of the Act.

 11. The record submitted in response to the Second NPRM demonstrates that roaming
capability is widely available to cellular subscribers, is highly valued by those subscribers,
and is one of the industry's fastest growing sources of revenue. For example, roaming income
accounted for 13.6 percent of cellular industry revenues during the last six months of 1994
and was growing at 42 percent per year, despite the fact that many carriers charged premium
prices to roamers. Furthermore, when APC in the Washington/Baltimore area became the
first licensee in the nation to offer broadband PCS service, its largest cellular competitor
concentrated its advertising campaign on the unavailability of roaming to APC's customers.
Such activity indicates that roaming capability may be a key competitive consideration in the
wireless marketplace, and that newer entrants may be at a competitive disadvantage vis-a-vis
incumbent wireless carriers if their subscribers have no ability to roam on other networks.
Having said that, we recognize that roaming regulation may impose significant costs and
burdens on CMRS providers and that we should narrowly tailor our actions to avoid placing
an undue burden on such providers.

 12. Based on comments in the record and the experience of the first broadband PCS
licensee to begin service, we conclude that the public interest will be served by extending our
existing manual roaming rule, which is part of our cellular service rules, to obligate all
CMRS licensees competing in the mass market for real-time, two-way voice services and to
protect the subscribers of all carriers offering such services. That group consists of cellular,
broadband PCS and covered SMR providers. These "covered SMR providers" include two
classes of SMR licensees. The first consists of 800 MHz and 900 MHz SMR licensees that
hold geographic area licenses. The second covers incumbent wide area SMR licensees,
defined as licensees who have obtained extended implementation authorizations in the 800
MHz or 900 MHz SMR service, either by waiver or under Section 90.629 of our rules.
Within each of these classes, "covered SMR providers" includes only licensees that offer real-
time, two-way switched voice service that is interconnected with the public switched network,
either on a stand-alone basis or packaged with other telecommunications services. This is the
same group of SMR licensees to which we have applied our recently adopted rule governing
restrictions on resale.

 13. Under the rule that we adopt today, cellular, broadband PCS, and covered SMR
licensees are required to provide manual roaming to any subscriber of any of these services
who is using a handset that is technically capable of accessing the licensee's system. The rule
does not require licensees to modify their systems in order to provide service to any end user.
Some commenters argue that amending the existing rule in this manner is unnecessary
because cellular systems cannot distinguish between a cellular subscriber using a cellular-only
handset and a PCS subscriber using a dual-mode handset, and therefore the existing rule
effectively protects PCS as well as cellular roamers. As other commenters observe,
however, the current rule on its face extends only to cellular subscribers. To avoid any
uncertainty, our action today clarifies that any subscriber to any covered service with a
technically cellular-compatible handset has the same right as a cellular subscriber to manually
roam on cellular systems. Furthermore, our existing rule does not obligate broadband PCS
and covered SMR licensees. We are applying the manual roaming rule to these categories of
CMRS licensees in order to ensure regulatory parity and to promote competition in the
wireless market by enhancing all such carriers' abilities to compete. Since our action today
furthers the public interest by facilitating the widespread availability of roaming, we make
compliance with the rule we adopt today a condition of cellular, broadband PCS and covered
SMR licenses under Sections 303(r) and 309 of the Act.

 14. By contrast, the record does not establish that ubiquitous roaming capability is
important to the competitive success or utility of mobile services other than those offered by
cellular, broadband PCS and covered SMR providers. We therefore conclude that our action
today shall be limited to such licensees. In particular, because they do not compete
substantially with cellular and broadband PCS providers, local SMR licensees offering mainly
dispatch services to specialized customers in a non-cellular system configuration, as well as
licensees offering only data, one-way, or stored voice services on an interconnected basis, are
not covered by the roaming rule we adopt today. We believe that the costs of applying the
roaming rule to their operations would outweigh the benefits. Not the least of these costs is
that applying the policy might give them an incentive to eliminate their interconnection with
the public switched network, which would not be in the public interest. Of course, any
SMR provider that is not interconnected to the public switched network does not offer CMRS,
and therefore is not subject to the roaming rule. Allegations that particular practices by non-
covered CMRS providers are unjust, unreasonable or otherwise in violation of the
Communications Act would be grounds for complaint under Section 208 of that Act.

III. FURTHER NOTICE OF PROPOSED RULEMAKING

A. Carrier-to-Carrier Roaming

 15. Our previous notice of proposed rulemaking concerning roaming was released
more than one year ago. At that point, our initial broadband PCS auctions had just been
conducted and licenses were not yet issued. The business plans of companies entering the
market for broadband PCS services were in their formative stages. No dual band or dual
mode phones were yet available, and no broadband PCS provider had experience trying to
negotiate a roaming agreement. The comments we received largely reflected the nascent
nature of the market's development. Most commenters supported our tentative decision to
leave roaming to market forces while monitoring its progress. Relatively few commenters
(mostly new entrants) advocated the need for regulation that would promote automatic
roaming. Since the record predated the operation of nearly all broadband PCS systems, it
could not demonstrate the failure of the market to ensure the widespread availability of
automatic roaming arrangements. Overall, the record yielded by the initial comments was
inconclusive. In the interim, market activity has accelerated. Several broadband PCS systems
are now operational, and others are expected to become so in short order. Dual mode phones
will be available in a few months. The technical standards necessary to render cellular and
certain PCS network technologies interoperable for automatic roaming purposes appear to
have been developed. We understand that roaming negotiations between PCS and cellular
carriers have begun in some markets.

 16. The inconclusiveness of the original record does not present a basis for us to
adopt automatic roaming rules. The record does persuade us, however, of the need to seek
up-to-date information on events of the past year concerning automatic roaming issues.
Evidence indicates that the views of interested parties on automatic roaming issues have
evolved significantly since our last action on such issues. Entities that have obtained
broadband PCS licenses or recently submitted winning bids in broadband PCS auctions have
urged us to examine automatic roaming issues more thoroughly. Another, more established,
entity in the wireless marketplace recently made a detailed presentation of its view that
Commission action on automatic roaming would be premature and could harm the
development of wireless services. There also appears to have been a significant shifting of
positions by some commenters. In general, the record raises the question whether, during
the broadband PCS buildout period, market conditions may create economic incentives for
certain CMRS carriers to discriminate unreasonably in the provision of roaming, or to
otherwise engage in unjust or unreasonable practices with regard to roaming.

 17. Some commenters contend that the need to jump start competition by emerging
wireless providers, especially PCS providers, is too great to rely on clarification of statutory
obligations in after-the-fact adjudicatory proceedings, such as complaint proceedings under
Section 208 of the Act. Such commenters are arguing, essentially, that a proactive
Commission posture toward roaming at this time, including defining in advance the
obligations of licensees to provide automatic roaming, will promote competition and thereby
eliminate the need for regulation in the long run. On the other hand, the record contains
thoughtful arguments that the regulation of automatic roaming is unnecessary and may distort
the development of wireless services. Given the importance that we attach to ensuring the
widespread availability of roaming, and the inconclusiveness of the current record, we
conclude that we should request additional comment on whether it would serve the public
interest to adopt rules governing the provision of automatic roaming service by CMRS
providers to other CMRS providers.

 18. Our consideration of automatic roaming issues is framed by three general
questions. First, is there a need for Commission action? Second, if we are persuaded that
regulation would serve the public interest, what specific action should be taken? Third, what
are the disadvantages of such action, especially as to network costs and additional burdens on
providers, particularly smaller providers?

 19. Some commenters indicate that new entrants may need access to originating and
terminating roaming agreements in order to begin competing immediately and effectively with
their relatively more established counterparts, and that market forces alone may not ensure
that such arrangements will be widely available in the near term. They claim that incumbent
CMRS providers have the market power and the economic incentive to deny roaming
agreements to new entrants. On the other hand, AT&T argues that this incentive exists only
when both A and B Block cellular licensees in a market also hold cellular licenses in a PCS
provider's home market, and that such dual overlap occurs only rarely. Carriers also argue
that they have strong incentives to enter into roaming agreements to get revenues. We note
as well that the geographic scope of broadband PCS licenses may reduce the importance of
roaming to ensuring the ability of PCS providers to compete. Most roaming appears to occur
in adjacent markets. The relatively limited geographic scope of cellular service areas
prompted cellular carriers to compete for customers based on the extent of their roaming
networks and their roaming rates and features. In contrast, broadband PCS license areas are
significantly larger than cellular. Accordingly, broadband PCS customers can go much
further distances without roaming. This raises the question of whether broadband PCS
providers need to be able to offer automatic roaming arrangements in order to be able to
compete. We seek comment on this issue.

 20. We also seek comment on whether incumbent wireless providers have an
incentive to, and will, deny roaming agreements to other providers. We note that there is no
specific evidence in the record of unreasonable discrimination against PCS licensees
concerning the provision of roaming. To the contrary, there is evidence that some PCS
providers believe they will be able to negotiate roaming agreements successfully without an
automatic roaming rule. However, it is still early in the process. Many PCS licensees are
just starting to construct their systems. Dual-mode handsets are just becoming available. We
seek evidence of the denial of agreements, or unreasonable discrimination in the provision of
agreements, to the extent it exists. We also seek comment on the likelihood of discrimination
among wireless carriers belonging to partnerships, joint ventures, and other alliances among
cellular carriers. We seek comment on whether the geographic extent of a carrier's license
holdings (in particular, carriers whose cellular and/or PCS holdings give them essentially
nationwide, facilities-based operating "footprints") affects its incentive to enter into roaming
agreements with smaller competitors in a way that merits a roaming requirement. We seek
comment, too, on whether requiring carriers to enter into roaming agreements will affect the
value of these carriers' nationwide footprints.

 21. We seek comment on whether new entrants currently have viable options to
obtain automatic roaming if incumbent cellular providers unreasonably deny such agreements.
We note that although the deployment of multiple CMRS networks will, in the long run,
increase the number of parties with which roaming agreements can be obtained in any area,
such networks will not be widely available during the construction period of broadband PCS.
We seek comment on the timing of such construction period. AT&T argues that, to the
extent this is a problem at all, a PCS carrier can obtain roaming service during the buildout
period in any market by entering into a contractual agreement with a cellular carrier that
already possesses a roaming agreement in that market. Pacific responds that this approach
may be administratively cumbersome, financially costly, and potentially inconsistent with the
way roaming agreements are written. We seek comment on whether AT&T's proposal for
new entrants to "piggyback" on existing roaming arrangements is a reasonable means for
carriers to obtain roaming capability.

 22. To the extent that a basis for Commission action on automatic roaming is
established, we seek comment on what the nature of that action should be. For example,
should we, as a condition of license, require cellular, broadband PCS and covered SMR
providers which enter into roaming agreements with other such providers to make like
agreements available to similarly situated providers, where technically compatible handsets
are being used, under nondiscriminatory rates, terms and conditions? Such a rule could
prevent established carriers from entering into favorable roaming agreements only with
selected providers and unreasonably denying such agreements to other similarly situated
carriers. We clarify that such a rule would need to recognize that not all carriers are similarly
situated. Thus, such a rule need not require carriers to offer roaming agreements to all other
carriers on the same terms and conditions, or even to offer roaming service to any carrier at
all. We seek comment on the question of whether a covered CMRS provider that enters into
a roaming agreement with another CMRS provider, however, should be required to offer like
roaming agreements to other similarly situated providers upon reasonable request, without
unreasonably discriminating on rates, terms, and conditions. We seek information and
comment on the cost and burden of such a requirement.

 23. Sprint Venture argues that providers should be permitted to offer roaming
agreements to affiliates on different terms and conditions than to non-affiliates, reasoning that
a roaming arrangement with an affiliate may be part of a greater agreement that affords other
benefits to the provider. Comcast, however, contends that major carriers' practice of
offering discriminatorily favorable roaming rates to their affiliates has had a serious
detrimental effect on the competitive position of carriers without extensive affiliations. We
seek comment on whether a carrier should be able to offer a more favorable rate to its
affiliates. Similarly, we seek comment on whether a carrier should be able to offer a lower
rate to a geographically proximate carrier. We seek comment on whether, as a general
matter, it would serve the public interest to require carriers to make roaming service available
to other carriers pursuant to one-way agreements under the same terms and conditions as
under reciprocal agreements. We seek comment on whether carriers should be permitted to
refuse to enter into automatic roaming agreements with other facilities-based carriers in their
markets. We seek comment on the advantages and disadvantages of a rule that would
facilitate such "in-region" roaming. We seek comment on how in-region roaming may affect
carriers' incentives to build out their networks. We also seek comment on how an exception
that permits carriers to deny roaming agreements to in-region competitors could be
administered, given the different geographic scope of cellular, broadband PCS and covered
SMR licenses and operations.

 24. Cellnet of Ohio claims that licensed, facilities-based carriers often discriminate
against resellers with regard to the provision of roaming services, and typically will not enter
into roaming agreements with resellers at all. Cellnet of Ohio argues that special rules are
necessary to protect the right of resellers to enter into roaming agreements. We do not
propose to regulate the prices that carriers may charge resellers (or anyone else) for roaming,
other than perhaps to prohibit discrimination in the prices charged to similarly situated
carriers. We seek comment, however, on the additional costs and burdens that may be
imposed on facilities-based carriers if they are required to separately enter into agreements
with multiple resellers. We also seek comment on what, if any, benefits might be generated
by enabling resellers to obtain roaming agreements.

 25. One of the principal reasons for our tentative conclusion in the Second NPRM to
monitor the development of roaming, rather than to propose rules at that time, was our
concern that technical factors might render compliance with rules unduly costly for providers,
or that our rules might inadvertently impede technological progress. Based on the comments
that we received, we are not persuaded that a roaming rule would have such an effect unless
it required direct interconnection of networks for the continuation of calls in progress. While
handoff of calls in progress is available at this time in some cellular markets, it is much less
widespread than originating and terminating access. More importantly, the record does not
indicate that broadband PCS or cellular providers need to be able to obtain "continuation of
calls in progress" roaming capability in order to compete. For these reasons, we do not
propose to require continuation of calls in progress. We seek additional technical
information on this subject, and request comment on our analysis.

 26. We seek comment on whether and how rules governing automatic roaming could
be at odds with our general policy of allowing market forces, rather than regulation, to shape
the development of wireless technologies. Our goal would be to make any rule we adopt
consistent with such a policy. For example, under such a rule, if systems used different
technologies or operated on different frequencies, we believe the carrier seeking to enable its
subscribers to roam on another system would have the burden of developing and
implementing any technology necessary to achieve that result. Furthermore, on the basis of
the existing record, we believe any automatic roaming rule should be sufficiently flexible to
permit a carrier to change its technology for legitimate business reasons (e.g., increasing
capacity, spectrum efficiency, fraud control or the deployment of enhanced features) without
any obligation to make its system accessible to roamers using different technologies, to the
extent such a technology change is otherwise permitted by our rules. A carrier could not,
however, introduce features into its system in order to obstruct service to roamers from
systems using otherwise compatible technologies. We seek comment on this analysis.

 27. Requiring non-discrimination in roaming agreements would, theoretically, generate
certain benefits. However, there also are potential downsides to imposing an automatic
roaming requirement. First, imposing such a requirement is inconsistent with our general
policy of allowing market forces, rather than regulation, to shape the development of wireless
services. Similarly, it could be viewed as at odds with Congress' goal in adopting the
Telecommunications Act of 1996 of creating a "pro-competitive, de-regulatory national policy
framework" for the United States telecommunications industry. Does the importance of
roaming and the potential for discrimination warrant a departure from our general
competitive, deregulatory approach to wireless?

 28. Second, as discussed above, cellular carriers compete vigorously on the basis of
their roaming services. If we adopt an automatic roaming non-discrimination requirement,
will carriers still be able to differentiate their roaming services? If they cannot, will this
lessen competition in the wireless market? Also, what impact will a roaming requirement
have on the development of new and improved roaming features?

 29. Third, the imposition of an automatic roaming requirement could be costly and
burdensome. There are currently approximately 1,400 cellular systems; we anticipate that
broadband PCS and covered SMR providers, once licensed, will expand that number
appreciably. What network and administrative costs are associated with entering into and
maintaining roaming agreements among all such carriers? Will carriers, particularly smaller
carriers, be able to absorb these costs or to recover them from their customers or other
carriers? In this regard, we emphasize that we are not considering requiring carriers to
upgrade their networks or implement any technology solely to enable roamers on different
frequencies or with different air interface devices to complete calls on their systems.
Similarly, we are not considering requiring carriers to interconnect their networks to ensure
that calls in progress can continue.

 30. Finally, some commenters argue that a roaming requirement would unduly expose
CMRS providers to losses due to fraud, or that fraud cannot be controlled without direct
interconnection of switches. We seek further comment on these arguments. We note that
cellular carriers have exercised various options to protect themselves under the existing
manual roaming rule, such as requiring manual roamers to supply a valid credit card
number. We seek comment on whether similar protective measures would be available and
equally effective if an automatic roaming rule is adopted. We also seek comment on whether
carriers could include in their agreements with other carriers provisions to suspend roaming
service in case of fraud, or other appropriate anti-fraud provisions, so long as they do so on a
nondiscriminatory basis, and whether a particular carrier that poses an unusually high risk of
fraud (for example, a carrier that is located in an area where fraud is especially prevalent or
that is known to have poor mechanisms for fraud control) could for that reason be differently
treated with respect to the terms of a roaming agreement.

B. Sunset

 31. Pacific's expert argues that roaming regulations should apply only for a
transitional period. At the end of the transitional period, he states, the rules will become
unnecessary because competition will have developed to the point that market forces will
cause roaming to become available where it is economically efficient.

 32. We agree with this analysis. We believe that once broadband PCS providers'
buildout periods are completed, sufficient wireless capacity will be available in the market
and, as a result, any roaming regulations, whether manual or automatic, likely will become
superfluous. We believe that, given the availability of sufficient capacity, a carrier would not
have either the incentive or the ability to unreasonably deny manual roaming to an individual
subscriber, or to unreasonably refuse to enter into an automatic roaming agreement with
another CMRS provider, because some other carrier in its service area would be willing to do
so. We anticipate, due to our broadband PCS build-out requirement, that the market for
cellular, broadband PCS and covered SMR services will be substantially competitive within
five years after we complete the initial round of licensing broadband PCS providers. We
therefore believe that any action taken concerning automatic roaming should sunset five years
after we award the last group of initial licenses for currently allocated broadband PCS
spectrum. We seek comment on this issue. We also seek comment on whether, for the same
reasons, the manual roaming rule we adopt today also should sunset at the expiration of this
five-year period. We note that this is the same sunset period that we recently adopted for our
resale rule, and that the commencement of the five-year period will be announced by Public
Notice.

C. Other Issues

 33. In order to provide automatic roaming and adequately protect itself against fraud,
a carrier would have to make arrangements with a subscriber's home system to verify the
validity of the subscriber's account. In the Second NPRM, we noted that such arrangements,
as well as other arrangements that may be necessary for subscribers to use special features
while roaming, may implicate concerns relating to subscriber privacy and carrier control over
proprietary information, and we requested comment on these issues. Since that time,
however, Congress has amended the Communications Act by adding a new Section 222,
which generally prohibits a carrier that obtains proprietary information from another carrier
for purposes of providing a telecommunications service from using that information for any
other purpose. We tentatively conclude that the treatment of roaming-related access to
proprietary information is governed by Section 222. We seek comment on this analysis.

 34. Bell Atlantic and Bell Atlantic NYNEX ask us to preempt state regulation of
roaming. Neither these parties nor any other commenters, however, supply any evidence
that states have attempted to regulate roaming. We therefore see no basis for addressing the
issue of preemption at this time. We note, however, that any automatic roaming rules would
apply to both interstate and intrastate roaming if they were made a condition of license
pursuant to Sections 303(r) and 309 of the Act. We further note that the states are preempted
by statute from any regulation of intrastate roaming that would constitute the regulation of
CMRS entry or rates. We seek comment on this analysis.

 35. Finally, Comcast proposes that we facilitate interoperability among CMRS
systems by implementing government-industry joint studies through the Office of Engineering
and Technology. Comcast's proposal is beyond the scope of this proceeding, and we do not
address it herein. We plan to address issues of interconnectivity and interoperability generally
in a rulemaking proceeding that we will commence in the near future to implement Section
256 of the Communications Act.

 IV. CONCLUSION

 36. We conclude that, under current market conditions, the widespread availability of
roaming capability on cellular, broadband PCS and covered SMR networks promotes the
public interest in nationwide, ubiquitous, and competitive telecommunications service, and
that, under current market conditions, market forces alone may not always produce such a
result. We therefore require cellular, broadband PCS and covered SMR licensees to provide
manual roaming service upon reasonable request to any subscriber to any of these services
whose handset is capable of accessing their systems. We also seek comment on whether we
should adopt rules governing cellular, broadband PCS and covered SMR providers' obligations
to provide automatic roaming service.

 V. PROCEDURAL MATTERS

A. Filing Procedures

 37. Pursuant to applicable procedures set forth in Sections 1.415
and 1.419 of the Commission's Rules, interested parties may file
comments on or before October 4, 1996, and reply comments on or
before November 22, 1996. To file formally in this proceeding, you
must file an original and four copies of all comments, reply comments,
and supporting comments. If you want each Commissioner to receive a
personal copy of your comments, you must file an original plus eight
copies. You should send comments and reply comments to the Office of
the Secretary, Federal Communications Commission, Washington D.C.
20554. A copy of each filing also should be sent to International
Transcription Service (ITS), 2100 M Street, N.W., Suite 140,
Washington, D.C. 20037, (202) 857-3800, and to Rita McDonald,
Federal Communications Commission, Wireless Telecommunications
Bureau (WTB), Policy Division, 2025 M Street, N.W., Room 5202,
Washington, D.C. 20554. Comments and reply comments will be
available for public inspection during regular business hours in the
Reference Center of the Federal Communications Commission, 1919 M
Street, N.W., Room 239, Washington, D.C. 20054.

 38. Parties are encouraged to submit comments and reply
comments on diskette. Such diskette submissions would be in addition
to and not a substitute for the formal filing requirements presented
above. Parties submitting diskettes should submit them to Rita
McDonald of the WTB Policy Division. Such a submission should be
on a 3.5 inch diskette formatted in an IBM compatible form using
WordPerfect 5.1 for Windows software. The diskette should be
submitted in "read only" mode, and should be clearly labelled with the
party's name, the proceeding (CC Docket No. 94-54), the type of
pleading (comment or reply comment) and the date of submission.

 39. This is a non-restricted notice and comment rulemaking
proceeding. Ex parte presentations are permitted, except during the
Sunshine Agenda period, provided they are disclosed as provided in
Commission Rules.

B. Regulatory Flexibility Act

 40. As required by Sections 603 and 604 of the Regulatory
Flexibility Act, the Commission has prepared a Final Regulatory
Flexibility Analysis (FRFA) and an Initial Regulatory Flexibility Analysis
(IRFA) of the expected impact on small entities of the rules adopted and
proposed in this document. The FRFA and IRFA are set forth in
Appendices B and C of this document, respectively. Written public
comments are requested on the IRFA. These comments must be filed in
accordance with the same filing deadlines as comments on the rest of
the Notice, but they must have a separate and distinct heading
designating them as responses to the Initial Regulatory Flexibility
Analysis. The Secretary shall send a copy of this Notice of Proposed
Rulemaking, including the Initial Regulatory Flexibility Analysis, to the
Chief Counsel for Advocacy of the Small Business Administration in
accordance with paragraph 603(a) of the Regulatory Flexibility Act.

C. Authority

 41. This action is taken pursuant to Sections 1, 4(i), 4(j), 201,
202, 303(r), 309, 332, and 403 of the Communications Act, 47 U.S.C. 
151, 154(i), 154(j), 201, 202, 303(r), 309, 332, 403.

D. Further Information

 42. For further information regarding this Order, contact Jeffrey
Steinberg of the Wireless Telecommunications Bureau Policy Division,
at 202-418-1310.

 VI. ORDERING CLAUSES

 43. Accordingly, IT IS ORDERED that the rule amendments
appearing at Appendix D and discussed herein ARE ADOPTED and
SHALL BE EFFECTIVE sixty days following publication in the Federal
Register.

 FEDERAL COMMUNICATIONS
COMMISSION

 William F. Caton
 Acting Secretary
  APPENDIX A

 Parties Filing Comments

1. AirTouch Communications, Inc. (AirTouch)
2. All Cellular, Inc.
3. Alltel Mobile Communications, Inc. (Alltel)
4. American Mobile Telecommunications Association, Inc. (AMTA)
5. American Personal Communications (APC)
6. American Tel Group
7. Ameritech
8. AT&T Corporation (AT&T)
9. Bell Atlantic Mobile Systems, Inc. (Bell Atlantic)
10. BellSouth Corporation, BellSouth Telecommunications, Inc.,
BellSouth Cellular Corp. (BellSouth)
11. Cellnet Communications, Inc.
12. Cellnet of Ohio, Inc. (Cellnet of Ohio)
13. Cellular Service, Inc. and ComTech Mobile Telephone Company
(CSI/ComTech)
14. Cellular Telecommunications Industry Association (CTIA)
15. Comcast Cellular Communications, Inc. (Comcast)
16. Connecticut Telephone and Communication Systems, Inc.
(Connecticut Telephone)
17. E.F. Johnson Company (E.F Johnson)
18. Frontier Cellular Holding Inc. (Frontier)
19. General Communication, Inc. (GCI)
20. General Services Administration (GSA)
21. Geotek Communications, Inc. (Geotek)
22. GTE Service Corporation (GTE)
23. Horizon Cellular Telephone Company (Horizon)
24. In-Flight Phone Corporation (In-Flight)
25. Information Technology Association of America (ITAA)
26. WorldCom, Inc. d/b/a LDDS WorldCom (LDDS)
27. MCI Telecommunications Corporation (MCI)
28. MobileMedia Communications, Inc. (MobileMedia)
29. MobileOne
30. Molasky, Andrew M.
31. National Telephone Cooperative Association (NTCA)
32. National Wireless Resellers Association (NWRA)
33. New Par
34. New York Telephone Company, New England Telephone &
Telegraph Company, and NYNEX Mobile Communications
Company (NYNEX)
35. Nextel Communications, Inc. (Nextel)
36. Pacific Telesis Mobile Services and Pacific Bell Mobile Services
(Pacific)
37. Paging Network, Inc. (PageNet)
38. PCS Primeco, L.P. (PCS Primeco)
39. Personal Communications Industry Association (PCIA)
40. Rural Cellular Association (RCA)
41. Rural Cellular Coalition (RCC)
42. San Diego Cellular Communications, Inc.
43. SNET Cellular, Inc. (SNET)
44. The Southern Company (Southern)
45. Southwestern Bell Mobile Systems, Inc. (SBMS)
46. Sprint Telecommunications Venture (Sprint Venture)
47. Telecommunications Resellers Association (TRA)
48. Time Warner Telecommunications (Time Warner)
49. Vanguard Cellular Systems, Inc. (Vanguard)
50. Western Wireless Corporation (Western)
51. WJG Maritel Corporation (WJG Maritel)

 Parties Filing Reply Comments

1. AirTouch
2. Allnet Communication Services, Inc. (Allnet)
3. AMTA
4. Ameritech
5. AT&T
6. Bell Atlantic NYNEX Mobile, Inc. (Bell Atlantic NYNEX)
7. BellSouth
8. Cable & Wireless, Inc. (Cable & Wireless)
9. People of the State of California and the Public Utilities Commission
of California (California)
10. CSI/ComTech
11. CTIA
12. Connecticut Telephone
13. E.F. Johnson
14. GSA
15. Geotek
16. GTE
17. In-Flight
18. MCI
19. National Association of Regulatory Utility Commissioners (NARUC)
20. NWRA
21. New Par
22. Nextel
23. Pacific Bell Mobile Services (Pacific)
24. PageNet
25. PCS Primeco
26. PCIA
27. SNET
28. Southern
29. SBMS
30. Sprint Venture
31. TRA
32. U.S. AirWaves Inc. (U.S. AirWaves)
33. Vanguard
34. Waterway Communication System, Inc. (Watercom)
 APPENDIX B

 Final Regulatory Flexibility Analysis

 As required by Section 603 of the Regulatory Flexibility Act, 5
U.S.C.  603 (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was
incorporated in the Second Notice of Proposed Rulemaking in this
proceeding (Second NPRM). The Commission sought written public
comments on the proposals in the Second NPRM, including on the
IRFA. The Commission's Final Regulatory Flexibility Analysis (FRFA)
in this Second Report and Order conforms to the RFA, as amended by
the Contract With America Advancement Act of 1996, Pub. L. No. 104-
121, 110 Stat. 847 (1996) (CWAAA).

I. Need for and Purpose of this Action:

 In this decision, the Commission extends its existing rule under
which cellular licensees are required to provide manual roaming service
upon request to subscribers in good standing of any cellular carrier.
Under the rule adopted in this decision, cellular, broadband personal
communications services (PCS), and certain specialized mobile radio
(SMR) licensees must provide manual roaming service upon request to
subscribers in good standing of all such carriers, provided the
subscriber is using a handset that is technically capable of accessing the
licensee's system. This action will ensure that customers of all
providers competing in the mass market for two-way, real-time,
interconnected switched voice service have an equal opportunity to
obtain manual roaming service, if they are using technically compatible
equipment. In this way, the rule will promote the development of
competition by ensuring that newer entrants to the market, as well as
competitors without extensive affiliations, are not competitively
disadvantaged by the inability of their subscribers to roam.

II. Summary of Issues Raised by the Public Comments in Response to
 the Initial Regulatory Flexibility Analysis:

 No comments were filed in direct response to the IRFA. In general
comments on the Second NPRM, however, several commenters raised
issues that might affect small entities. Some of these commenters
argued that the Commission should adopt a roaming rule in order to
protect the ability of carriers without a nationwide footprint or
extensive affiliations to compete. Other commenters, however,
expressed concern that compliance with a requirement to offer roaming
could be technically infeasible or unduly costly under some
circumstances. In particular, several commenters urged the
Commission not to require carriers to adopt particular technologies or
modify their networks in order to facilitate roaming. Some commenters
also argued that a roaming requirement could expose carriers to
financial losses due to fraud. Two alliances of rural cellular carriers
argued that, in drafting any roaming rule, the Commission should
consider the technical obstacles faced by providers that do not have SS7
capability, as well as rural cellular licensees' alleged lack of market
power.

III. Description and Estimate of the Small Entities Subject to the Rules:

 The rule adopted in this Second Report and Order will apply to
cellular, broadband PCS, and geographic area 800 MHz and 900 MHz
SMR licensees, including licensees who have obtained extended
implementation authorizations in the 800 MHz or 900 MHz SMR
services, either by waiver or under Section 90.629 of the Commission's
Rules. However, the rule will apply to SMR licensees only if they offer
real-time, two-way voice service that is interconnected with the public
switched network.

 A. Estimates for Cellular Licensees

 The Commission has not developed a definition of small entities
applicable to cellular licensees. Therefore, the applicable definition of
small entity is the definition under the Small Business Administration
(SBA) rules applicable to radiotelephone companies. This definition provides that a small
entity is a radiotelephone company employing fewer than 1,500 persons. Since the
Regulatory Flexibility Act amendments were not in effect until the record in this proceeding
was closed, the Commission was unable to request information regarding the number of small
cellular businesses and is unable at this time to determine the precise number of cellular firms
which are small businesses.

 The size data provided by the SBA does not enable us to make a meaningful esimate
of the number of cellular providers which are small entities because it combines all
radiotelephone companies with 500 or more employees. We therefore used the 1992 Census
of Transportation, Communications, and Utilities, conducted by the Bureau of the Census,
which is the most recent information available. This document shows that only 12
radiotelephone firms out of a total of 1,178 such firms which operated during 1992 had 1,000
or more employees. Therefore, even if all 12 of these firms were cellular telephone
companies, nearly all cellular carriers were small businesses under the SBA's definition. We
assume, for purposes of our evaluations and conclusions in this FRFA, that all of the current
cellular licensees are small entities, as that term is defined by the SBA. Although there are
1,758 cellular licenses, we do not know the number of cellular licensees, since a cellular
licensee may own several licenses.

 Two alliances of rural cellular licensees filed comments in which they argued that a
roaming rule may have an especially large impact on rural licensees. In its comments, the
Rural Cellular Coalition states that it has 12 members which serve licensed cellular areas
encompassing approximately 3 million people; the Rural Cellular Association states that its
members serve areas with a cumulative population of more than 6 million. We do not have
information, however, sufficient to support a meaningful estimate regarding the total number
of rural licensees, nor do we have specific information regarding how many rural cellular
licensees are small entities. For purposes of this FRFA, we assume that all rural cellular
licensees are small entities, as that term is defined by the SBA.

 B. Estimates for Broadband PCS Licensees

 The broadband PCS spectrum is divided into six frequency blocks designated A
through F. Pursuant to 47 C.F.R.  24.720(b), the Commission has defined "small entity" in
the auctions for Blocks C and F as a firm that had average gross revenues of not more than
$40 million in the three previous calendar years. This regulation defining "small entity" in
the context of broadband PCS auctions has been approved by the SBA.

 The Commission has auctioned broadband PCS licenses in Blocks A, B, and C. We
do not have sufficient data to determine how many small businesses bid successfully for
licenses in Blocks A and B. As of now, there are 90 non-defaulting winning bidders that
qualify as small entities in the Block C auctions. Based on this information, we conclude that
the number of broadband PCS licensees affected by the rule adopted in this Second Report
and Order includes the 90 winning bidders that qualify as small entities in the Block C
broadband PCS auctions.

 At present, no licenses have been awarded for Blocks D, E, and F of broadband PCS
spectrum. Therefore, there are no small businesses currently providing these services.
However, a total of 1,479 licenses will be awarded in the D, E, and F Block broadband PCS
auctions, which are scheduled to begin on August 26, 1996. Eligibility for the 493 F Block
licenses is limited to entrepreneurs with average gross revenues of not more than $125
million. However, we cannot estimate how many of these licenses will be won by small
entities, nor how many small entities will win D and E Block licenses. Given the facts that
nearly all radiotelephone companies have fewer than 1,000 employees and that no reliable
estimate of the number of prospective D, E, and F Block licensees can be made, we assume,
for purposes of our evaluations and conclusions in this FRFA, that all of the licenses will be
awarded to small entities, as that term is defined by the SBA.

 C. Estimates for SMR Licensees

 Pursuant to 47 C.F.R.  90.814(b)(1), the Commission has defined "small entity" in
auctions for geographic area 800 MHz and 900 MHz SMR licenses as a firm that had average
gross revenues of not more than $15 million in the three previous calendar years. This
regulation defining "small entity" in the context of 800 MHz and 900 MHz SMR has been
approved by the SBA.

 The rule adopted in this Second Report and Order applies to SMR providers in the
800 MHz and 900 MHz bands that either hold geographic area licenses or have obtained
extended implementation authorizations. We do not know how many firms provide 800 MHz
or 900 MHz geographic area SMR service pursuant to extended implementation
authorizations, nor how many of these providers have annual revenues of less than $15
million. Since the Regulatory Flexibility Act amendments were not in effect until the record
in this proceeding was closed, the Commission was unable to request information regarding
the number of small businesses in this category. We do know that one of these firms has
over $15 million in revenues. We assume, for purposes of our evaluations and conclusions in
this FRFA, that all of the remaining existing extended implementation authorizations are held
by small entities, as that term is defined by the SBA.

 The Commission recently held auctions for geographic area licenses in the 900 MHz
SMR band. There were 60 winning bidders who qualified as small entities in the 900 MHz
auction. Based on this information, we conclude that the number of geographic area SMR
licensees affected by the rule adopted in this Second Report and Order includes these 60
small entities.

 No auctions have been held for 800 MHz geographic area SMR licenses. Therefore,
no small entities currently hold these licenses. A total of 525 licenses will be awarded for the
upper 200 channels in the 800 MHz geographic area SMR auction. However, the
Commission has not yet determined how many licenses will be awarded for the lower 230
channels in the 800 MHz geographic area SMR auction. There is no basis to estimate,
moreover, how many small entities within the SBA's definition will win these licenses. Given
the facts that nearly all radiotelephone companies have fewer than 1,000 employees and that
no reliable estimate of the number of prospective 800 MHz licensees can be made, we
assume, for purposes of our evaluations and conclusions in this FRFA, that all of the licenses
will be awarded to small entities, as that term is defined by the SBA.

IV. Summary of Projected Reporting, Recordkeeping and Other Compliance
 Requirements:

 The rule adopted in this Second Report and Order imposes no reporting or
recordkeeping requirements. The only compliance requirement is that licensees subject to the
rule (i.e., cellular licensees, broadband PCS licensees, and geographic area 800 MHz and 900
MHz SMR licensees that offer real-time, two-way, interconnected switched voice service)
must provide manual roaming service upon request to subscribers in good standing of covered
services who are using technically compatible equipment.

V. Steps Taken to Minimize the Economic Impact on Small Entities:

 The rule adopted in this Second Report and Order only requires certain CMRS
licensees to provide manual roaming service to eligible subscribers upon request. The
Commission determines on the present record not to promulgate any rule governing roaming
agreements between carriers, but instead to request further comment regarding the need for
any such rule and the costs that it would impose. Thus, the Commission in this Second
Report and Order avoids potential burdens that a rule governing intercarrier roaming
agreements might impose on small entities, including questions regarding the feasibility and
cost of offering automatic roaming under certain circumstances, the administrative costs of
entering into roaming agreements, and possible exposure to fraud. Furthermore, the rule
requires covered licensees to provide service only to subscribers who are using equipment that
is technically capable of accessing their systems. The rule therefore does not require carriers
to adopt particular technologies or to modify their networks to accommodate roamers using
different technologies. Because the rule neither requires carriers to enter into roaming
agreements nor impacts their technological choices, it does not implicate the concerns raised
by rural carriers.

 The Commission also determines not to apply its roaming rule to CMRS providers
other than cellular, broadband PCS and certain SMR licensees. Many of the providers that
are thereby excluded from the rule are small entities, including paging, narrowband PCS, air-
ground, public coast service, and non-covered SMR providers. In addition, the Commission
requests comment on whether it should sunset the rule adopted herein five years after it
awards the last group of initial licenses for currently allotted broadband PCS spectrum.

 Finally, the Commission believes that the rule adopted in this Second Report and
Order will benefit certain small entities by ensuring that subscribers of providers that do not
have a nationwide presence or affiliations will have the same right to obtain roaming service
as subscribers to competing larger carriers, provided they are using technically compatible
equipment.

VI. Significant Alternatives Considered and Rejected:

 The Commission considered and rejected the alternative of not extending its existing
manual roaming rule beyond cellular licensees and cellular subscribers. Instead, the
Commission concluded that the rule should extend to broadband PCS and covered SMR
services in order to protect smaller and newer providers of these services from likely
competitive disadvantage. At the same time, the Commission rejected the alternative of
extending the rule to other CMRS services because the record did not establish that
ubiquitous roaming capability is important to the competitive success or utility of these
services. The Commission also rejected the alternative of promulgating a rule governing
intercarrier roaming agreements in this Second Report and Order because the record did not
sufficiently illuminate the costs and benefits of any such rule. Finally, the Commission
rejected any alternative that would require carriers to adopt particular technologies or modify
their physical networks.

VII. Report to Congress:

 The Commission shall send a copy of this Final Regulatory Flexibility Analysis, along
with this Report and Order, in a report to Congress pursuant to SBREFA, 5 U.S.C. 
801(a)(1)(A). A copy of this FRFA will also be published in the Federal Register. APPENDIX C

 Initial Regulatory Flexibility Analysis
.
I. Reason for Action:

 This Third Notice of Proposed Rulemaking (Third NPRM) requests comment on
whether the Commission should promulgate transitional regulations governing certain
commercial mobile radio service (CMRS) providers' obligations to enter into "automatic"
roaming agreements with other carriers. The Commission determines that a further NPRM is
necessary because the existing record does not sufficiently illuminate the costs and benefits of
an automatic roaming rule. In particular, at the time comments were filed no broadband PCS
providers were in operation, and most providers were only beginning to formulate their
business plans. Therefore, the record does not reflect the actual experience of broadband PCS
providers in attempting to negotiate roaming agreements. Although some comments in the
record suggest that an automatic roaming rule may be necessary to ensure new entrants an
equal opportunity to compete, other commenters argue that established providers do not have
an incentive to deny automatic roaming agreements or unreasonably discriminate against new
entrants.

 The Commission also requests comment on whether the manual roaming rule adopted
in the Second Report and Order should sunset five years after the last group of initial licenses
for currently allotted broadband PCS spectrum is awarded. Although the Commission expects
that market forces will render a manual roaming rule unnecessary once broadband PCS
licensees have substantially built out their networks, the existing record is insufficiently
developed to support a decision regarding the advantages, disadvantages, and implications of
sunsetting the manual roaming rule.

II. Objectives of Proposed Rules:

 The Commission's principal objective in this Third NPRM is to obtain information on
the costs and benefits of an automatic roaming rule. In particular, the Commission seeks
comment on whether it should adopt a rule requiring providers that enter into roaming
agreements with any other provider to make like agreements available to similarly situated
providers under nondiscriminatory rates, terms, and conditions. The Commission also seeks
comment on the potential costs of an automatic roaming rule, including whether such a rule
would inadvertently impede technological progress, whether it would interfere with free and
open competition, whether it would expose providers to the risk of losses due to fraud, and
what administrative costs would be involved. The Commission seeks comment on how any
rule should be drafted to minimize such costs. An additional objective is to obtain
information on the advantages, disadvantages, and implications of sunsetting the manual
roaming rule.

III. Legal Basis for Proposed Rules:

 If adopted, any changes to the Commission's roaming rules would be authorized under
Sections 1, 4(i), 4(j), 201, 202, 303(r), 309, 332, and 403 of the Communications Act of
1934, as amended, 47 U.S.C.  151, 154(i), 154(j), 201, 202, 303(r), 309, 332, 403.

IV. Description and Estimate of Small Entities Subject to the Rules:

 Pursuant to the Contract with America Advancement Act of 1996, the Commission is
required to estimate in its Final Regulatory Flexibility Analysis the number of small entities
to which a rule will apply, provide a description of such entities, and assess the impact of the
rule on such entities. To assist the Commission in this analysis, commenters are requested to
provide information regarding how many total CMRS entities would be affected by the
regulations on which the Commission seeks comment in this Third NPRM. In particular, we
seek estimates of how many affected entities will be considered small businesses.

 The regulations on which the Commission seeks comment, if adopted, would apply to
providers of cellular, broadband PCS, and geographic area 800 MHz and 900 MHz
specialized mobile radio services, including licensees who have extended implementation
authorizations in the 800 MHz or 900 MHz SMR services, either by waiver or under Section
90.629 of the Commission's Rules. However, the rules would apply to SMR licensees only if
they offer real-time, two-way voice service that is interconnected with the public switched
network.

 As explained in the Final Regulatory Flexibility Analysis for the Second Report and
Order (Appendix B), there are different definitions of "small business" for the various
services affected by this proceeding. Since the Commission has not defined small business
with respect to cellular service, we are utilizing the Small Business Administration's definition
applicable to radiotelephone companies -- i.e., an entity employing fewer than 1,500 persons.
With respect to broadband PCS, the Commission has refined the definition of a small
business to mean firms that have had average gross revenues of not more than $40 million in
the preceding three calendar years. With respect to 800 MHz and 900 MHz SMR services,
the Commission has defined small businesses as firms that have had average gross revenues
of not more than $15 million in the preceding three calendar years.

 We seek comment as to whether our use of these definitions is appropriate in this
context. Additionally, we request commenters to identify whether they are small businesses
under these definitions. For commenters that are a subsidiary of another entity, we seek this
information for both the subsidiary and the parent corporation or entity.

V. Reporting, Recordkeeping, and Other Compliance Requirements:

 The proposals under consideration in this Third NPRM would not involve any
reporting or recordkeeping requirements. The only likely compliance requirement would be
to refrain from prohibited discrimination in offering roaming agreements to other carriers. If
a sunset of the manual roaming rule is adopted, the effect would be to relieve affected
providers from compliance requirements after the sunset takes effect.

VI. Significant Alternatives Considered and Rejected:

 The Commission considered and rejected the alternative of adopting an automatic
roaming rule in the Second Report and Order. The Commission concluded that the record
did not establish that an automatic roaming rule is necessary, nor did it sufficiently develop
the costs of any such rule. At the same time, the Commision rejected the alternative of
declining to adopt an automatic roaming rule without further inquiry. Some commenters
made cogent arguments that established providers might have the ability and incentive to
disadvantage their competitors by denying them nondiscriminatory roaming agreements, and
the Commission believed these arguments should be further explored in light of ongoing
developments.

 The Commission did determine, however, that certain forms of regulation should not
be proposed in the Third NPRM. In particular, the Commission rejected any proposal that
would require carriers to adopt particular technology or modify their networks so as to offer
roaming arrangements to any provider. Similarly, the Commission determined not to propose
regulation of agreements between carriers to hand off calls in progress because the record
indicated that such arrangements may be technically and administratively complex and
because there was no evidence that access to such arrangements is important to providers'
ability to compete. The Commission also rejected any alternative that would require carriers
to do more than refrain from discrimination among similarly situated providers. Thus, the
Commission does not propose to require carriers to offer roaming agreements under any
particular terms and conditions, or even to offer roaming service to any carrier at all.

 In addition, the Commission rejected the alternative of proposing to apply any
automatic roaming rule to CMRS providers other than cellular, broadband PCS, and covered
SMR carriers because the record did not establish that ubiquitous roaming capability is
important to the competitive success or utility of these services. The Commission also
rejected the alternative of proposing to continue any automatic roaming rule indefinitely
because it believes that any necessity that may now exist for such a rule would be obviated
once broadband PCS networks are substantially built out. With respect to manual roaming,
the Commission requests comment on a sunset for similar reasons, but it rejected the
alternative of imposing a sunset in the Second Report and Order because the existing record
does not sufficiently develop the implications of such a sunset.

VII. Federal Rules That Overlap, Duplicate, or Conflict with These Proposed Rules:

 None.

VIII. IRFA Comments:

 We request written public comment on the foregoing Initial Regulatory Flexibility
Analysis (IRFA). Comments must have a separate and distinct heading designating them as
responses to the IRFA and must be filed by the deadlines specified in paragraph 37 of the
Second Report and Order and Third Notice of Proposed Rulemaking. APPENDIX D

 Final Rules

Parts 20 and 22 of Chapter I of Title 47 of the Code of Federal Regulations are amended as
follows:

Part 20 - COMMERCIAL MOBILE RADIO SERVICES

1. The authority citation for Part 20 continues to read as follows:

 Authority: Sections 4, 303, and 332, 48 Stat. 1066, 1092, as amended; 47 U.S.C. 
154, 303, and 332, unless otherwise noted.

2. Section 20.12 is amended by revising the heading and adding new paragraph (c) to read as
follows:

Section 20.12 Resale and roaming.

*****

 (c) Roaming. Each licensee subject to this Section must provide mobile radio service
upon request to all subscribers in good standing to the services of any carrier subject to this
Section, including roamers, while such subscribers are located within any portion of the
licensee's licensed service area where facilities have been constructed and service to
subscribers has commenced, if such subscribers are using mobile equipment that is technically
compatible with the licensee's base stations.

Part 22 - PUBLIC MOBILE SERVICES

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

 Authority: Sections 4, 303, and 332, 48 Stat. 1066, 1082, as amended; 47 U.S.C. 
154, 303, and 332, unless otherwise noted.

2. Section 22.901 is amended by revising the introductory paragraph to read as follows:

Section 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  20.12 of this
chapter. A cellular system licensee may refuse or terminate service, however, subject to any
applicable requirements for timely notification, to anyone who operates a cellular telephone in
an airborne aircraft in violation of  22.925 or otherwise fails to cooperate with the licensee
in exercising operational control over mobile stations pursuant to  22.927.

***** June 27, 1996

SEPARATE STATEMENT OF

 COMMISSIONER RACHELLE B. CHO NG

 Re: Interconnection and Resale Obligations Pertaining to Commercial Mobile Radio
 Services, Second Report and Order and Further Notice of Proposed Rulemaking, CC
 Docket 94-54

 In the early days of cellular telephones, the ability of customers to use their cellular
phones when they were "roaming" outside of their home service area was limited. Not all
cellular carriers offered roaming, and those who did, offered roaming only in select cities.
When roaming was available, it was often a cumbersome process. For example, customers
would have to give a valid credit card number to roam, and customers could not
automatically receive calls when they were travelling. A caller trying to reach a roaming
customer had to know what city the roamer was in and the roamer access number of that city.
In those early days, roaming was also expensive. It was common for systems to charge a
daily access fee of several dollars in addition to a high per minute rate.

 Today, the cellular industry has matured, and customer demand has resulted in
roaming being widely available to cellular subscribers. Most cellular carriers have roaming
agreements with cellular carriers in other markets that permit their customers to automatically
roam in most parts of the nation. Cellular carriers have realized that many subscribers desire
the ability to use their mobile phone when travelling, and these carriers welcome the
additional roaming revenue realized.

 The process of roaming is also significantly easier now. With the advent of such
programs such as "follow me roaming," subscribers can now automatically receive calls
almost anywhere they are roaming. In addition, many features (e.g. call waiting and call
forwarding) now "follow" customers when they roam. Roaming rates have also decreased
significantly. Many carriers have found that customers are more inclined to roam when they
are guaranteed consistent nationwide or region-wide rates.

 I note that all of these advancements in roaming occurred without a Commission rule
or regulation requiring cellular carriers to enter into automatic roaming agreements with each
other. For this reason and because competition in the Commercial Mobile Radio Service
(CMRS) market is dramatically increasing with the introduction of multiple new PCS
providers, I supported the original tentative conclusion in our Second Notice of Proposed
Rulemaking (Second Notice) in this proceeding that we should monitor the development of
roaming in the CMRS marketplace and not intervene unless and until a problem develops.
In my view, nothing in the record we received in response to the Second Notice has
convinced me that the imposition of a mandatory automatic roaming requirement is necessary
at this juncture.

 I write separately to explain why I supported our original tentative conclusion and to
set forth some concerns about the imposition of an automatic roaming requirement as
described in the Third Further Notice of Proposed Rulemaking (Third Notice) portion of the
item. I invite the parties to address these concerns in their comments on the Third Notice.

 In general, I believe that market forces and competition should shape the development
of wireless communications services. In my view, we should avoid unnecessary regulation
unless an identifiable problem has developed. In the case of new players (PCS and the
covered SMR providers) entering the current wireless market, I am not yet convinced that
government needs intervene with regulations to ensure the widespread availability of
automatic roaming agreements on reasonable terms and conditions.

 Although some of the new entrants, the PCS providers, expressed concern in their
comments a year ago that the incumbent cellular providers may refuse to enter into automatic
roaming agreements with them for anticompetitive reasons, they have not yet provided us
with evidence that any such denials are actually occurring. Thus, it appears that, at least at
this time, their concern is of a speculative nature as opposed to grounded in actual experience.
I recognize that the process of negotiating roaming agreements between the new entrants and
the incumbents is just beginning. Should the situation change, however, and evidence be
proffered to the Commission that incumbents are denying reasonable automatic roaming
arrangements to new entrants in a discriminatory manner for anticompetitive reasons, I would
support taking swift corrective action.

 I further believe that regulation should be imposed only when it is necessary to serve
the public interest. It has been argued that automatic roaming is critical during the
"headstart" period when the new providers are entering the competitive wireless market so
that they can effectively compete with the cellular incumbents. I am not convinced that a
new entrant must have access to automatic roaming agreements with every CMRS provider in
the nation in order to compete successfully in the wireless market. Traditionally, the majority
of roaming takes place in markets near the home market. Unlike the smaller cellular
geographic service areas, PCS service areas (MTAs and BTAs) are much larger in size.
Thus, PCS customers can travel much further distances without having to roam. In addition,
not all wireless customers require roaming capabilities as a condition of subscription. In this
regard, it appears that the first broadband PCS system in the nation is very successfully
attracting a large number of customers even though it is unable to offer any roaming
capability at this time.

 On the contrary, I have some concerns that the imposition of automatic roaming
requirements might inadvertently hinder competition in the CMRS market in practice. In
addition to cellular rates and service plans, cellular carriers compete vigorously in their
marketing efforts on the basis of their roaming footprint and roaming rates. If we mandate an
automatic roaming requirement, CMRS providers may not be able to differentiate their
roaming products as they do today. This may actually serve to lessen overall competition in
the CMRS market.

 Finally, I believe that we need to carefully consider the burdens and costs associated
with the imposition of an automatic roaming regulation. There are currently approximately
1,400 cellular systems. We anticipate that broadband PCS and covered SMR providers, once
licensed, will more than double that number. If a CMRS carrier enters into one automatic
roaming agreement (and nearly all do in adjacent areas as a practical matter), our rules may
require that carrier to enter into a like agreement with every similarly situated provider in the
nation where technically compatible handsets are being used. Such a requirement could result
in the imposition of significant network and administrative costs. These costs would only be
increased if the roaming requirement were extended to resellers. I invite commenters to
expand on what the scope of these network and administrative costs may be. I am
particularly interested in hearing from small carriers as to whether they think they can absorb
these costs or recover them from their customers or other carriers, should an automatic
roaming requirement be imposed.