-57-

[30-200 MHz], and that while development in this portion
of the spectrum might be considered as emerging from the
laboratory, it nevertheless requires further development
before it could be allocated to various services for
commercial operation on a permanent basis. Tal

The VHF spectrum was eventually allocated in October 1937. Available
records do not reveal the reason for the date of the allocation or what
additional information was acquired subsequent to the June 1936 Hearing.
Except for a brief mention in the Third Annual Report of the FCC for FY-37, no
further discussion of the frequencies above 30 MHz was found prior to the
allocation.

This account of the allocation of frequencies above 30 MHz is an example
of the delay in spectrum use that has occurred as the Commission was striving
to obtain the information necessary to decide the public interest. Even
ignoring the earliest experimental effort at VHF and accepting 1933 (when 32
police licensees were operating 87 experimental stations) as the initial year
of significant VHF occupancy, the allocation process required six years.

The discussion of preliminary results of the hearing in the Second Annual
Report mentioned above identified another problem associated with spectrum
Management by government administration. Following the conclusion that
further development was required before the spectrum could be allocated, the

Commission stated:

However, the evidence showed the necessity for making
tentative allocation in order to avoid the pitfalls of
premature entrenchment resulting from huge expenditures
for experimental apparatus, developing into future

72/ Second Annual Report of the Federal Communication Commission, p. 34.



~32-

service. The Commission decided, therefore, to reallocate 6.55 MHz of the
band to the Industrial Radio Services and also stated in the R&O that an
additional 1.9 MHz was designated for possible reallocation at a future date.

In recognition of the demand for wider eligibility for industrial and
business users the Report _and Order established the Business Radio Service,
the Manufacturers Radio Service, and the Telephone Maintenance Radio Service
as new Industrial Services. The Business Radio Service absorbed the Low Power
Industrial Radio Service and some elements of the Special Industrial and
Citizens Radio Service.

The Report and Order in Docket No. 11991 also reduced the channel spacing
from 100 KHz to 50 KHz in the 450-470 MHz band and provided for regular rather
than developmental assignment of all frequencies allocated to the Industrial
Radio Services. It also reduced the spacing of some frequency channels
allocated to the Industrial Radio Services at 173-174 MHz and 27.23-27.28 MHz
from 50 KHz to 25 KHz and 20 KHz to 10 KHz, respectively. Finally, it
assigned and reassigned frequencies to Industrial Radio subservices in the 25-
50 MHz, 152-162 MHz, 173-174 MHz and 450-470 MHz bands.

Docket Nos. 11992 and 11993 were both concerned with the Land

Transportation Services. In two Reports and Orders in Docket No. 11992, the
Commission assigned the new channels created in the 152-162 MHz band among the
Transportation subservices, and specified that the new channels were to be
immediately available. 63/ Licensees required to change frequencies were
permitted to operate on their current channels until November 1, 1963 to

pemit amortization of equipment.

63/ First Memorandum Opinion and Order Docket 11992 January 22, 1958; 16 RR
1595. Second Report and Order Docket 11992 July 31, 1958; 17 RR 1665.



-23-

PART III

ANALYSIS OF REGULATION KISTORY

Introduction
In a lecture entitled “The Law of the Air” delivered at the Harvard
Graduate School of Business Administration during the 1927-28 academic year,

Judge Stephen B. Davis made the following statement:

The history of radio law is largely the story of the
attempt to establish methods for the distribution of
radio channels among rival stations competing for their
use. 33/

It would be difficult to compose a more succinct definition of the
purpose of radio spectrum management. Judge Davis, who as Solicitor of the
Department of Commerce was intimately involved in the legislative effort that
produced the Radio Act of 1927, was referring to regulatory statutes when he
mentioned 'history of radio law'. Nevertheless, the statement would be
equally applicable to other methods of radio channel distribution. This

section analyzes the background of the Radio Acts of 1912 and 1927 to

33/ Stephen B. Davis, “The Law of the Air"; The Radio Industry: The Story of
Its Development.





-28-

non-Government use. This more than compensated for the loss of spectrum in
the 42-50 MHz band. The Commission was also engaged at this time, however, in
other rulemaking proceedings to assign the channels derived from the 152-162
MHz respacing as well as to administratively restructure the land mobile
services. In particular, the establishment of the Business Radio Service was
under consideration. The analyses associated with these proceedings made it
clear that all of the channels that could be made available, including the
42-50 MHz band, would be needed.

In December 1957, the Commission issued a Report and Order that reduced
channel spacing from 40 KHz to 20 KHz in the 42-46.51 MHz and 47.0-49.51 MHz
bands and designated channels at 30 KHz spacing in the 151.8-152 MHz band. 56/
In addition, the R&0 assigned the new channels among the land mobile
subservices with an effective date of April 1, 1958.

Docket No. 12295. In the R&O in which the Commission had made the use of

narrow band standards mandatory in the 25-50 MHz band (see fn. 47), the
Commission also established dates for compliance. Stations licensed on or
after November 1, 1958 were required to use narrowband equipment, and all
stations were to be so equipped by November 1, 1963. These dates were also
applicable to the 152-162 MHz band which represented a slight change from
those originally set. Considerable controversy arose over these dates much of
it expressed in comments in the Docket No. 12169 proceeding to split the 42-50
MHz channels.

The reason for the controversy was that the assignment of the new
channels created by respacing was, in the practical sense, tied to the

introduction of radio equipment which met the narrow band standards. Some of

56/ First Report and Order Docket No. 12169 December 18, 1957; 16 RR 1569.


-66-

the Citizens Radio Service expanded by 277 percent, the Special Industrial
Service growth was 1054 percent and that of the Citizens Radio Service 5682
percent.

By 1955, it was evident that the spectrum allocated for land mobile would
be inadequate. Thus began a 20 year saga of how to satisfy the spectrum
demand of the land mobile radio services. It began in 1955 with radio channel
vespacing (channel-splitting) and ended with reallocation of spectrum from UHF
television to land mobile radio in 1975. In between was a seven year review
of the spectrum allocation in the 25-890 MHz band, a three year study of land
mobile spectrum use by an Advisory Committee, and a seven year reallocation

process, all in series.

UBF Television

To place the events of this twenty year period in proper context, it is
necessary to summarize the Commission's concern for the development of UHF
television. In 1948, the Commission initiated a series of rulemakings in a
consolidated proceeding concerned with television broadcasting.

In its Sixth Report and Order in the consolidated proceeding the
Commission adopted a Table of Assignments for television based on 12 VHF
channels and 70 UHF channels derived from the UHF allocation of 470-890 MHz to
television. 84/ The Commission's decision that 82 television channels were
required to achieve the desired “nationwide competitive television broadcast
system” and its belief that the 82 channels would be occupied as implied by

the Sixth Report and Order was a subjective judgment based on the information

84/ Sixth Report and Order Docket No. 8736 et al April 11, 1952; 41 FCC
(1952) p. 148.


-77-

PART VI

CONCLUSIONS

The analysis and examples of governmental spectrum management decisions
described in the earlier parts of this report highlight several
characteristics of resource allocation under a system of administrative
regulation. The salient features may be summarized in the following tems:

(1) Delay: There has generally been long delay (several years) in
arriving at allocation decisions due to: (a) inadequate and often unavailable
information, and (b) Commission endeavor to avoid allocation mistakes. At
prices set equal to zero, the demand for access to the spectrum has virtually
always exceeded the technically usable supply. In any allocation proceeding,
therefore, the Commission has been required to choose among competing
applicants using subjective selection criteria in accord with the
Comminications Act. Application of these criteria, in turn, has required a
determination of “need” for a radio service and a prediction of its future
spectrum requirements, the latter necessarily entailing guesses about the
future technical capabilities of associated radio equipment. Information on
which to base such findings is difficult to come by in the best of
circumstances and may not be available at all prior to allocation when
learning requires doing.

(2) Inflexibility: Regulatory decisionmaking has frequently proven
inflexible. There has been reluctance to reallocate spectrum even when it has
become obvious that the spectrum was not being used as extensively as expected
or as efficiently as it might otherwise have been. One prominent example has.

been the allocation to UHF-TV broadcasting. This inflexibility represents


the only market for this transmitter, the Navy became concerned that such a
gale would lead to a British monopoly in international radio comparable to
that which it enjoyed in cable communication.

At the suggestion of the U.S. Navy, The Radio Corporation of America
(RCA) was formed by the General Electric Co. in October 1919. A primary
purpose was to establish a commercial presence in the international radio
field that would be capable of competing with the British Marconi Co. and
prevent a British monopoly. The Corporation was also intended to provide a
market for General Electric radio products. Included in the RCA corporate by~
laws was a provision for a Government representative to discuss and present
the Government's views and interests in matters coming before the RCA Board of
Directors. On November 20, 1919 the American Marconi Company was merged with
RCA. With this merger, RCA acquired the American Marconi communication
business and property as well as patents it held.

In addition to a lack of markets to absorb radio equipment production,
there were patent difficulties. Prior to the war, radio equipment patents
were owned by many different individuals and companies. To provide for
wartime production, the government pooled these patents and accepted
responsibility for patent infringement. After the war this government role
could no longer be justified. Since the patents were widely scattered among
the various interested parties, with some in litigation, it was virtually
impossible for any one entity to develop and operate a national or
international radio communication service. This situation gave rise, with
tacit Navy blessing, to several cross-license agreements.

The first cross-license agreement was executed in November 1919 between
General Electric and RCA. The agreement established reciprocal rights in

present or future patents or invent ions of either company. In July 1920, the


-37-

This Advisory Committee was established under the Chairmanship of
Commissioner Kenneth A. Cox. Its membership was to be drawn from licensees,
manufacturers, and radio service associations in addition to Commission staff
membe rs - Representatives of over 140 private organizations from virtually
every sector of the land mobile community actually participated in the work of
the Committee. The Committee's charter included a review of all aspects of
land mobile radio operation, including: channel usage, growth predictions,
existance of interference, measures to increase spectrum utilization
efficiency, use of frequencies above 890 MHz, and possible improvement in
Commission administrative and frequency assignment procedures.

The work of the Advisory Committee continued from March 1964 to September
1967. The Committee submitted the results of its study in a three volume
report of over 800 pages to the Commission on November 30, 1967+ The report
noted that during the study, an attempt had been made to investigate any
technical, operational, or administrative change or idea that might alleviate
the crowded land mobile frequency situation. This considerable effort
notwithstanding, the Committee was unable to find any long-term solution other
than allocation of additional spectrum to the land mobile services. It did
note that relief of a more immediate but limited form could be gained by
reducing the spacing of the 450-470 MHz channels to 25 KHz and permitting
interservice sharing of unused frequencies among the land mobile services- T/

During the years of the Advisory Committee study, frequency congestion in

the land mobile services grew increasingly more serious. In its FY 1966

Ee

7 The Commission had already reduced the channel spacing at 450-470 MHz to
25 KHz in November 1966 based on results of tests sponsored by the Advisory

Committee. See Report and Order Docket No. 13847 November 30, 1966; 8 RR 2nd
1629. ‘


The spectrum between the two bands designated for private land mobile
(902-928 MHz) was allocated to Industrial, Scientific and Medical Equipment
(ISM). In general terms, this equipment produces radio frequency enersy not
intended for communication. Prior to Docket No- 18262 the frequency pand 890-
940 Maz (915 + 25 MHz) had been allocated for operation of this equipment.

The Commission had noted in the NPRM and NOI that a 50 MHz band could no
longer be tolerated because of other demands on the spectrum. The First
Report and Order modified Part 18 of the rules to establish the new limits for
this ISM band at (915 + 13) MHz.

The Inquiry component of the First R&O and Second NOL raised the question
of the types of radio systems to pe developed for the new spectrum bands
allocated to the private and common carrier land mobile services. In
particular, the Commission wished to determine how the bands could most
effectively be used to satisfy land mobile requirements: There were also some
unresolved issues pertaining to ISM equipment.

The Commission adopted a Second Report and Order in Docket No. 18262 in
May 1974 that established the rules for land mobile operation in the 806-947
Miz band. 85/ The band was guballocated ina manner that departed radically
from past practice. Traditionally, the Commission had guballocated land
mobile spectrum by designating plocks of frequency for the various subservices
such as Police, Taxicab or Business Radio Service on 4 national basis- The
“block” allocation scheme had been criticized for its lack of flexibility and
failure to recognize variation in subservice requirements with geographic
area. In liev of * Second Repott_and order guballocated the

“block” method, the P

spectrum according to radio system technology:

__

85/ Second Report and Order Docket No- 18262 May 1974; 30 RR 2nd 75-

Second Report =


-72-

achieved, the Commission established an Advisory Committee for the Land Mobile
Service simultaneously with the release of the Report and Order.

Thus, 14 years after the allocation of spectrum to UHF television, the
Commissison was still deeply committed to the development of a service for
which demand was languishing. Meanwhile, at some unknown opportunity cost,
the land mobile services were without adequate spectrum. The Report and Order

did not explain why its date of issue was 7 years after that of the initiating

Notice of Inquiry except to note,

«sa determination with respect to the allocations future
of television and the feasibility of the expanded
television system which had been a central facet of
Commission policy since 1952 was required before this
proceeding could be concluded. 91/

Advisory Committee

The Advisory Committee for the Land Mobile Service under the Chairmanship
of Commissioner Kenneth A. Cox conducted an extensive study of land mobile
radio operation over a period of about 31h years. Representatives of over 140
private organizations from almost every sector of the land mobile community
participated. The results of the study were submitted in a three volume, 800
page report on November 30, 1967. Despite this effort the Committee was
unable to discover any solution to the land mobile spectrum congestion other
than allocation of additional spectrum.

On the surface, the Advisory Committee study would appear to have
contributed little more than delay to the resolution of the land mobile

spectrum shortage. It can be argued, of course, that the study was necessary

——

91/ Ibid, p- 1539.


Also, the very existence of the Radio Act of 1912 no doubt affected the
thinking of those concerned with the spectrum management problems induced by
the appearance of broadcasting. Administrative action under this statute had
quite successfully controlled radio interference up to that time. Thus, a
natural response to broadcasting would have been to consider a solution in the
form of modification of a system that appeared to be working for all other
radio services. In fact, legislation labeled "A BILL to amend an act to
regulate radio communication, approved August 13, 1912, and for other
purposes” was passed by the House of Representatives in January 1923. This
bill was not acted upon by the Senate. 43/

Quite aside from what appears to have been a general acceptance of
Federal regulation as the solution to the spectrum management problem posed by
broadcasting, Congressional concern with the non-technical matters mentioned
in Part II would very likely have prompted such vtegulation. Aa] Because of the
important role it played in subsequent spectrum management the congressional

concern with vested rights is discussed here.

Vested Rights in the Spectrum

The first reference to property rights in the spectrum was found in
Secretary Hoover's opening remarks to the First National Radio Conference in
February 1922. After discussing the need for extende! Federal authority to

control broadcasting interference he stated,

There is involved, however, in all of this regulation the
need to so establish public right over the ether roads

43/ House Report No. 464, 69th Congress lst Session, Minority Views.

44/ See fn. 27 and associated text.


-13-

prepared the way for the development of several new radio services as well as
providing for expansion of established services. 27/

In its Public Notice announcing procedures for the oral hearings to begin
in September 1944, the Commission had invited Proposals for new radio
services. In this Notice, it advised that in addition to testimony on
established radio services, it would ". . . receive testimony on the question
of whether any new radio services not heretofore recognized should be provided
for in any frequency allocation.” 28/ As a result of the testimony received,
the Conmission, in its May 1945 report, allocated frequencies for several new
services. The new radio services for which frequencies were allocated
included the Railroad Radio Service, the General Mobile Radio Service, and the
Citizens Radio Communication Service. The General Mobile Radio Service was
composed of the Bus Radio Service, Truck Radio Service, Taxicab Radio Service
and Common Carrier Mobile Radiotelephone Service.

What was perhaps the most innovative proposal for a new service, the
Citizens Radiocommmnication Service, was in fact made on the Commission's own
motion. 29/ The service was to be available to any U.S. citizen and entail
minimum regulation. It was intended for any private or business use except
broadcasting or common carrier communication. No charge was to be permitted

for any use of facilities licensed in the service. The frequency band of 460-470

frequencies above 25 MHz: Report of Proposed Allocations from 25,000
Kilocycles to 30,000 Kilocycles; Docket No. 6651 (Jamary 15, 1945) (available
in the FCC Library, 1919 M Street, N.W., Washington, D.C. 20554) This
Proposal contains a detailed discussion of the testimony received during the
oral hearings and explains the basis for many of the decisions cited in the
May 1945 report.

27/ In January 1945, the Commission issued a proposed allocation for

28/ 9 FR 10271 August 23, 1944.

29/ This service should not be confused with the Citizens Band Service (CB)

located at 27 MHz.


-37-

obviously we cannot provide them. In other words, the
wavelengths are gone. 54/

Judge Davis' purpose in making this statement was to emphasize the need for

legislation, because according to the Intercity Radio decision, the Secretary
of Commerce did not have authority under the 1912 Act to refuse to grant
licenses to the 250 applicants.

There was, however, a market alternative to administrative selection
among users. Judge Davis' statement that they were ‘getting by’ can be
interpreted to imply that the authorized locations, frequencies, and power of
the 536 stations must have been such as to provide a broadcast service with
acceptable interference. Further, Judge Davis had stated earlier in the
hearings that the broadcasting system as it existed did not represent a
conscious plan but rather the result of natural growth. ‘55/ Thus, the
stations were apparently located where the broadcasters anticipated a demand
for service.

A technically feasible procedure would have been to legally designate the
536 stations with their authorized operating characteristics (location,
frequency, and power) as an initial broadcast station assignment plan. 56/ If
Judge Davis' assumption was correct, that this configuration of stations
provided service with acceptable interference, such an assignment plan could
have been the basis for the future development of AM broadcasting without

further administrative selection of users.

54/ Ibid, p. 18.
55/ Ibid, p- 17.

56/ It does not appear that such a plan could have been authorized under the
Radio Act of 1912. New legislation would have been required.


-62-

May 25, 1945 Report in Docket No. 6651. The administrative structure
established for the land mobile radio services by the Report and Order looked
very much like that in Part 90 of the current rules. The most significant
difference was the lack of a Business Radio Service.

The 1949 Report and Order included provision for a Special Industrial
Radio Service. While the eligibility requirements for this service were
rather restrictive, they did authorize radio use solely to support an economic
activity with no reference to a safety of life or property justification. The
Report and Order also established a Low Power Radio Service (3 watts) which
was available to any person engaged in a commercial or industrial activity.

With the advantage of hindsight, it is now clear that the direction the
service was to take was established by the 1949 Report and Order. The
availability of the Special Industrial and Low Power Radio Services together with
the Citizens Radio Service permitted a demonstration of the latent demand for
spectrum access by private commercial entities that could not be ignored. 80/ As
a consequence, in 1958 the Commission authorized the Business Radio Service,
the Manufacturers Radio Service, the Telephone Maintenance RadioService, and
the Local Government Radio Service. 81/ The structure of the land mobile
services was then essentially fully developed. Future effort of the

Commission, as well as the industry would be devoted to the matter of locating

Spectrum space to satisfy the rapid growth of the service.

80/ The Citizens Radio Service was established as a regular service in March
1949 (effective June 1, 1949). See 14 FR 1596 (April 1949).

81/ First Report and Order Docket No. 11991 (June 18, 1958); 17 RR 1569.


-33-

waiver requirement was eventually included in the Radio Act of 1927 and still

exists today.

Use of Market Forces in 1927

It should be clear at this point that Congressional intent for use of the
spectrum, particularly for broadcasting, at the time of the Radio Act of 1927
would have permitted nothing less than complete administrative management.
The concern over vested rights made unthinkable any use of market forces for
spectrum allocation or assignment. 49/ Before reviewing the administrative
process in practice it is instructive to examine the status of radio
development of that era to determine the extent to which the use of market
forces might have been technically feasible.

A completely free spectrum market is one in which the only government
involvement would be provide a legal framework for the enforcement of property
rights and an official record of these rights. Spectrum allocation or
assignment decisions would be made by private transactions in the market. A
free market requires rights that are sufficiently well defined that the
commodity being exchanged is readily identifiable by buyer and seller.

Spectrum property rights can be completely defined for all legal purposes
in terms of field strength, geographical area, bandwidth and time.
Furthermore, such rights can be specified independent of any other
consideration. In order to comply with these rights and permit a free market
to function efficiently, however, it must be possible to relate them to

station operating parameters such as power, antenna height, etc. In 1927,

49/ In the field of spectrum management it has become common to refer to the
distribution of spectrum among uses (radio services) as ‘allocation' and the
selection of users (licenses) as “assignment”.


Commissioner Robert F. Jones actually dissented from the Report and Order
because he believed it was a mistake to permit the growth and development of
nonbroadcast radio services on a private and unintegrated basis. He argued
that such service should be provided either through a common carrier or
through an industry wide coordinating agency such as Aeronautical Radio, Inc.
which serves the commercial air transport industry. In his discusion of what
might be expected as a result of the rulemaking, fhe made what has been proven

to be a very accurate prediction when he stated,

The adoption of the report and the associated allocations
and rules catches us on the horns of a dilemma. In the
light of spectrum limitations as we see them today, we
must either make adequate provisions for future expansion
of these nonbroadcast services, and any new ones which
may hereafter be developed, by taking spectrum away from
FM or TV broadcasting, or both; or we must accommodate
any expansion of the nonbroadcast services by forcing on
the licensees a further sharing of spectrum space and
resultant degradation of service. 83/

After the 1949 Report and Order

In addition to establishing new services, the 1949 Report and Order
assigned frequencies for regular (as contrasted to developmental) use by the
various land mobile services from the bands that had been allocated during the
Docket No. 6651 proceeding. All mobile radio services grew rapidly following
the 1949 Report and Order. This was especially true of those services
associated with private commercial use of mobile radio. During the first half

of the 1950 decade, for example, while all land mobile services together with

83/ "Dissenting Opinions of Commissioner Jones”, Report and Order April 27,
1949; 13 FCC (1949) p. 1238.


-14-

MHz was allocated with no channels specified. No interference protection was
to be afforded. While the Citizens Radiocommunication Service never developed
as proposed, the Commission had clearly anticipated the Business and Personal
Radio Services in its description of the intended service. 30/

In addition to the frequency allocation to new radio services, the May
1945 report made special provision for utilities which had been operating
radio stations in the Special Emergency Service. Exclusive allocations were
made to power utilities and transit utilities. The Commission also noted in
its January 1945 proposal that it would consider authorizing broader use of
radio by both services. 3u/ As previously noted, the Commission had
recognized public utilities as eligible users of land mbile radio in 1938.
Frequencies were available, however, only on a shared basis with other
stations in the Special Emergency classification. Also, radio use was
restricted to actual emergencies. It could not be used, for example, to
dispatch maintenance crews in anticipation of an emergency-

The Docket No. 6651 proceeding was clearly a turning point in the
development of land mobile radio. Although no new radio services were
established per se, the seeds for such had been planted by the allocations
made. Safety of life and property as @ criteria for spectrum allocation was
still very much in evidence in the Commission's discussion of requirements.
At the same time, however, much greater weight was given to commercial service
to the public. In the case of taxicabs, in fact, a reduction in “dead” or
non-passenger-carrying miles could be discerned as the primary reason for the

allocation to the Taxicab Radio Service.

EE

30/ Report of Proposed Allocation from 25,000 Kilocycles to 30,000,000
Kilocycles; Docket No. 6651 (January 15, 1945), p- 184-186

B1/ Ibid, pp. 127 & 129.


~35-

13. The Growing Land Mobile Spectrum Pproblem-

The land mobile radio services had clearly demanded a large share of the
Commission's attention during the 1955-1958 period. Frequency channel spacing
had been reduced in the 25-50 MHz, 150.8-174 MHz and 450-470 MHz bands. New
narrow-band standards were adopted. Several new land mobile radio services
were established and the Citizens Radio Service rules were extensively
revised. 67/ Despite this effort, the Commission was not able to satisfy the
demand for spectrum by these still rapidly growing services.

Anticipating the imbalance between spectrum demand and availability, the
Commission in April 1957 adopted an Order of Inquiry in Docket 11997 to
conduct an overall review of spectrum allocations and future requirements
between the frequencies of 25 MHz and 890 MHz. 68/ The Commission noted that
it had not conducted such a review since the allocation proceeding in Docket
No. 6651, initiated in 1944. The Inquiry was directed to all existing or
potential users of the 25 MHz-890 MHz band which, of course, included the land
mobile services. Among the objectives of the Inquiry was that of gathering
information in preparation for the World Administrative Radio Conference
scheduled for 1959- The Commission's findings were released in a Report and
Order adopted in March 1964. 69/

The major portion of the discussion in the Report and Order was concerned
with channel loading and prediction of future spectrum requirements for the

ee

67/ All of the subservices now listed in Part 90 of the rules for the Public
Safety, Industrial and Land Transportation Radio Services had been established
with the culmination of the several rulemakings involved during this period.

68/ Order _of Inquiry Docket No. 11997 April 5, 1957; 22 FR 2684 April 17,
957. An accompanying rulemaking fot frequencies above 890 MHz was initiated
by a preliminary Notice of Hearing Docket No. 11866 November 9, 19563 21 FR
8956 November 16, 1956.

69/ Report and Order Docket No- 11997 March 26, 1964; 2 RR 2d 1513.

Report an’


To be able to arrive at a precise definition of
such a phrase which will foresee all
eventualities is manifestly impossible. The
phrase will have to be defined by the United
States Supreme Court, and this will probably be

done by a gradual process of decisions on
particular combinations of fact. 61/

Then, in 1930, Louis G. Caldwell, the first General Counsel of the FRC, wrote

as part of a general legal discussion of the public interest clause,

The standard has no fixed meaning; it must be
construed in the light of the context and of
the purpose of the statute in which it is
found.... 62/

As a result of the lack of a unique definition, the Commission has been
required to subjectively interpret the “public interest, convenience, and
necessity” on a case-by-case basis. For each decision, the Commission oust
first define the public interest relative to a proposed action and then
ascertain that the form the action takes satisfies the definition. In many
instances, the information required to distinctly identify a proper course of
action is not available and the Commission must decide the issue on the basis
of its own best judgment. The public interest has become, therefore, whatever

the Commission decided it to be. In any particular instance it may be

impossible to distinguish between the use of the clause to justify a

61/ “Statement made by the Commission on August 23, 1928, relative to public
interest, convenience, or necessity." Reprinted as Appendix F(6) in the

Second Annual Report of the Federal Radio Commission for the Year Ended

June 30, 1928, p. 167.

62/ L.G. Caldwell, “The Public Interest, Convenience, or Necessity as Used in
the Radio Act of 1927", Air Law Review (July 1930) p. 295.


3+

General Principles Followed by Commission in Making Proposed Allocations

As appears from the preceding section, in most cases the request for
frequencies by the various non-governmental radio services far exceeded the
supply and in some of these cases the evidence showed little or no correlation
between the number of channels requested and the number and locations of the
units or stations proposed to be installed. Hence, the Commission could not
in all cases propose an allocation based strictly upon the number of channels
requested. Furthermore, the engineering standards or basis upon which channel
widths were estimated appeared somewhat conflicting, thereby necessitating a
detailed examination of all the engineering facts presented in order that a
proper adjustment of these conflicts could be made. As has been pointed out,
some of these requests were completely unsupported by adequate engineering
studies or satisfactory technical data, and therefore had to be rigidly
discounted. Even after this was done, the demand for frequencies still far
exceeded the supply. This was true throughout the entire spectrum. It was
therefore obvious that all of the requests based upon statements as to the
number of channels required could not be met, and in most instances, the
Commission has had to allocate fewer or narrower channels than were requested
or assign the service to a different portion of the spectrum from that sought,
or both.

There were six general principles that guided the Commission in making
this determination. In the first place, the Commission examined each request
to determine whether the service in question really required the use of radio
or whether wire lines were a practicable substitute. Obviously, with the
severe shortage of frequencies, it would not be in the public interest to

assign a portion of the spectrum to a service which could utilize wire lines


equipped to provide ship-to-ship and ship-to-shore communication. Commercial
ventures were formed in many countries to manufacture radiotelegraph equipment
and to provide ship-to-shore public correspondence. The most important and
most active of these companies were Marconi Wireless Telegraph Company, Ltd.
and the Marconi Wireless Telegraph Company of America formed in 1897 and 1899,
respectively.

According to the report of a Board on Wireless Telegraphy convened by
President Roosevelt, by 1904 there were twenty-four naval ships equipped with
radiotelegraph equipment and ten more being equipped. Twenty Navy coast
stations had been established and equipment for ten more had been ordered. In
all, two hundred stations on shore and afloat were planned. Six stations were
being operated by the Army and two by the Weather Bureau. Five private
companies were operating coastal stations. One of these companies was serving
the Pacific Coast. 4/

While the attention of governments was initially, and primarily,
attracted to radiotelegraphy because of its importance in naval operations and
maritime safety, the value of a commercial radiotelegraph service for public
correspondence did not escape notice. The Marconi Company was particularly
successful in establishing such a service. As a general practice, the Marconi
Company would not zermit coastal stations or ships for which it provided
radiotelegraph equipment to accept messages from ships or stations using
another company's equipment. Additionally, the rapid proliferation of Marconi

stations made it undesirable for ship owners to equip their vessels with

4/ “Report of the Interdepartmental Board Appointed by the President to
Consider the Entire Question of Wireless Telegraphy in the Service of the
National Government”; Government Printing Office (1904). Reprinted in
Documents in American Telecommunications Policy, Vol. I; Editor, John M.
Kittross (1977).



PART I

INTRODUCTION

Government regulation of the electromagnetic spectrum was originally
predicated on the need to prevent signal interference caused by users
operating on the same or adjacent radio frequencies. There is nothing
particularly novel or unique about government's assumption of this role as a
rule-maker and umpire in spectrum use. The definition of legally enforceable
resource rights is widely recognized as a necessary precondition for the
successful operation of markets or, more generally, productive economic
activity in a world in which resources are scarce. i Just as no one would
purchase a home or invest resources in home production if home ownership did
not convey the right to exclude others from use of the property, so too would
effective electronic communication be impossible without some elaboration and
enforcement of rights of spectrum resource usage. 2/

In his famous book on Capitalism and Freedom, Milton Friedman (1962,

p- 25) draws the following illustrative analogy:

It is important to distinguish the day-to-day activities
of people from the general customary and legal framework
within which these take place. The day-to-day activities
are like the actions of the participants in a game when
they are playing it; the framework, like the rules of the
game they play. And just as a good game requires
acceptance by the players both of the rules and of the
umpire to interpret and enforce them, so a good society
requires that its members agree on the general conditions

1/ See Richard Posner, Economic Analysis of Law (1977).

2/ Where rights of resource ownership are significantly attenuated, as in say
Soviet Russia, productive economic activity obviously suffers severely.


~40-

to be overcome and a learning process to be completed. In one instance case
law would have been developed, and in the other regulations. Even if it had
been concluded that existing courts did not have the expertise necessary to
deal with the matter of radio interference, Congress could have created a
single court to specialize in such cases. Tax and patent courts are examples
of such specialized courts.

In the only two cases found in the Mterature in which the courts were
asked to decide matters pertaining to radio “rights,” they did not appear to
be overwhelmed by the subject. One of these cases was that of Tribune Co. v.
Oak Leaves previously noted. 59/ In another case decided by a Federal Court
in Missouri in July 1926, one party Proposed to abrogate a voluntary two-party
agreement to time-share a frequency. 60/ The judge found the agreement, even
though voluntary, had become a condition of the license issued under the Act

of 1912 and could not be broken arbitrarily.

Summary of Part III

This part has reviewed the circumstances that led to spectrum management.
by regulation under the Radio Act of 1912 and even mre stringent regulation
with the Radio Act of 1927. It was noted that almost from its beginning,
Federal regulation of radio was promoted by many of the Executive Dep rtments,
although the Congress appeared initially reluctant to adopt the necessary
legislation. Even with the advent of broadcasting and the accompanying

political pressure to reduce radio interference, the Congress considered

59/ See fn. 47 supra.

60/ Charmichael v. Anderson, 14 Fed. Rep. 2d 166, (1926).
—_— amecnac’ V- Anderson,


-71-

Docket No. 11997

However well justified the Commission channel splitting effort may have
been, the increase in radio channels available to land mobile did not satisfy
the rapidly growing demand of these services. Partly in response to the land
mobile demand for spectrum, the Commission initiated a proceeding in April
1957 in which it proposed to conduct an overall review of current spectrum
allocations and future requirements for the frequencies between 25 MHz and 890
MHz. 89/ The results of the review were issued in a Report and Order in March
1964. 90/ This Report and Order was devoted primarily to spectrum
requirements of the land mobile radio services and acknowledged that land
mobile frequencies were extensively used and that vast expansion was
indicated. It further noted that if this spectrum demand was to be met by
making additional spectrum available, the spectrum would have to be
reallocated from UHF television broadcasting which the Commission was
unwilling to do. The Report and Order stated that the Commission remained
convinced that a 70 channel UHF allocation together with 12 VHF channels was
necessary to achieve a national competitive television system, and that the
feasibility of an 82 channel system had been ensured by the passage of the
all-channel tuner legislation in 1962.

The general conclusion of the Report and Order was that the spectrum
dexiand of land mobile radio could not be met by reallocation from other
services and that only more efficient use of land mobile spectrum could

resolve the matter. To determine how this increased efficiency might be best

89/ Order of Inquiry Docket No. 11997 April 5, 1957; 22 FR 2684 April 17,
1957.

90/ Report and Order Docket No. 11997 March 26, 1964; 2 RR 2d 1513.


~80-

spectrum~saving (or productivity-enhancing) technical advances under a system
in which the result would be loss of assigned transmission rights. Second,
the Commission has limited the scope of developmental tests primarily because
of concern that the capital investment involved may result in a de facto
allocation of the spectrum used. Assignment of experimental transmission
rights creates an interest group desirous of maintaining the allocation beyond
the initial period. Because the Commission is a political body, it has
difficulty in denying such demands. To avoid putting itself in the position
of having (and probably proving unable) to deny such demands, the Commission
is naturally reticent to undertake experiments to begin with. But this has
the undesirable effect of denying the Commission valuable information on which
to base allocation decisions. The Commission is thus, in effect, damned if it

does and damned if it doesn't.

The Market v. the Bureaucrat

There are no perfect methods of resource allocation. The question is
what is the least imperfect method. In economic terms performance is
frequently conceptualized in terms of how well a particular set of
institutions optimizes the use of scarce resources. But what is “optimal” in
no small measure depends on whose preferences are to count. The strength of
one set of institutions on one set of preferences may actually be a weakness
in terms of another. This is an important point because which preferences are
likely to count will itself depend on what kinds of allocation mechanisms are
adopted.

Markets and bureaucracies both respond to the wishes of citizen-

consumers. The question in any given setting is which will prove more




-18-

The decisions in the Report and Order of 1949 mark a milestone in the
development of the land mobile radio service. Implicit in the decisions was
the recognition that land mobile radio had more to offer in the public

interest than promotion of safety of life and property. Business productivity
was also important. Most of this result can be traced directly to the
policies adopted in the Docket No. 6651 allocation proceeding. There was,
however, one significant change in Commission policy that developed between
the May 1945 Report in Docket No. 6651 and the Report and Order in 1949 that
should be noted. By 1949, the Commission had become even more liberal in its
authorization for use of mobile radio for private commercial or industrial
purposes as noted by the inclusion of a Special Industrial Radio Service.

In the Docket No. 6651 allocation proceeding, the requests for spectrum
from the established and proposed users far exceeded the supply. The Commission,
therefore, found it necessary to adopt criteria by which it measured the relative
public benefit of each of the potential spectrum users. The criteria to which
the Commission gave greatest attention were the dependence of the service on
radio rather than wireline communication, protection of life and property, *the
number of people to be served, and the probability that a service would be
established if spectrum were allocated. 39/ The Commission emphasized that it
was particularly important that new services satisfy these requirements, and

stated that all new services to which it had allocated frequencies did so.

39/ Report of Proposed Allocation from 25,000 Kilocycle to 30,000,000
Kilocycles; Docket No. 6651 (January 15, 1945); p. 18.



-40-

the basis of these findings, the Commission opened two rulemaking proceedings
in July 1968. 78/ Together, these rulemakings were intended to relieve the
immediate frequency congestion and provide spectrum for long-term growth in
the land mobile services.

The NPRM in Docket No. 18261 proposed to reallocate the seven lowest
UHF-TV channels for shared use by land mobile and TV broadcasting in the 25
largest urbanized areas. Since these channels are located at 470-512 MHz, the
radio equipment then operating in the 450-460 MHz band could be readily
redesigned and made available for these adjacent frequencies in relatively
short time. The NPRM and NOI in Docket No. 18262, on the other hand, proposed
a reallocation of 115 MHz of spectrum between 806 MHz and 947 MHz to the land
mobile services, including common carrier service. 79/ The amount of spectrum
to be provided was much larger than in Docket No. 18261, but the development
of radio equipment for operation at these frequencies tas expected to take
several years.

Both proposals generated considerable controversy and the proceedings
went on for six years in the case of Docket No. 18261 and seven years for
Docket No. 18262. In addition, both proceedings led to further rulemaking in

subsequent years, especially Docket No. 18262.

78/ Notice of Proposed Rulemaking Docket No. 18261 July 17, 1968; FR 33 10945
August 1, 1968. Notice of Inquiry and Notice of Proposed Rulemaking Docket
No. 18262 July 17, 1968; 33 FR 10807 Augu-: ?. 1968. The NPRY in Docket No.
18261 contains considerable detail relativ. ++ the findings of the staff
committee,

79/ The sources of the 115 MHz were: 84 MHz (upper 14 channels) from UHF-TV,
5 MHz broadcast auxiliary, and 27 Miz Government.




Part 6

Part 10

Part ll

Part 16

Land Mobile Radio Services ~ June 30, 1949

Domestic Public Mobile Radiotelephone Service

-19-

TABLE I

Telephone Companies
Miscellaneous Carriers

Public Safety Radio Services

Police Radio Service

Fire Radio Service
Forestry-Conservation Radio Service
Highway Maintenance Radio Service
Special Emergency Radio Service

Industrial Radio Service

Power Radio Service

Petroleum Radio Service

Forest Products Radio Service
Motion Picture Radio Service
Relay Press Radio Service
Special Industrial Radio Service
Low Power Radio Service

Transportation Radio Services
Intercity Bus Radio Service
Highway Truck Radio Service
Railroad Radio Service

Taxicab Radio Service

Urban Transit Radio Service
Automobile Emergency Radio Service


-28-

were matters of longstanding concern such as maritime safety, national
defense, monopoly practices, and questionable business practices and stock
Promotion that many believed needed Congressional attention. Given this
context, some form of government regulation of radio communication was perhaps

inevitable.

Reasons for Regulation of Spectrum Management at the Time of

the Radio Act of 1927

Spectrum management by government regulation seems to have been a widely
accepted concept from the very beginning of the period during which the Radio
Act of 1927 evolved. Within the Executive Branch of government, the belief in
government regulation had, if anything, grown stronger since Passage of the
1912 Act.

Immediately following World War I, the Navy made a final bid to establish
a Government monopoly over ship-shore radio. 41/ During the war, the
Government (Navy) had assumed operational control of all U.S. radio
stations. As a part of this Process the Navy had purchased almost all coastal
stations. In December 1918, Navy Secretary Daniels was successful in reviving
hearings on a pre-War bill drafted by an Executive Department committee. The
bill was aimed at effectively eliminating commercial interests in ship-shore
radio. Post-War enactment of this bill would have perpetuated Government
ownership and operation of all coastal stations. The Congressional committee
that held hearings in the matter was unconvinced by the Navy's arguments and
the bill was tabled. The President approved the return of radio stations to
private owners effective March 1920.

eee

4i/ See, History of Communications-Electronics United States Navy,
Pp. 313-318.



-5-

of the spectrum. This evidence showed that operation on frequencies within
certain regions of the radio spectrum was more suitable for some types of
services than others. Certain frequencies could be more effectively used by
those services where long range communication was necessary. Other
frequencies were better suited for sh ort range communication. In the case of
some frequencies, the principle source of interference to a station on these
frequencies would be from stations located nearby, while in the case of other
frequencies the principal source of interference would be caused by distant
stations. All of these factors had to be evaluated so that the service could
be assigned to that portion of the spectrum where it could render its best
service.

The sixth principle also pertained to assignment of each service to the
proper place in the spectrum. In determining the competing requests of two or
more services for the same portion of the spectrum, when one of more of the
services was already operating in that portion of the spectrum, the Commission
gave careful consideration to the number of transmitters and receivers already
in use, the investment of the industry and the public in equipment, and the
cost and feasibility of converting the equipment for operation on different
frequencies, as well as to the time required for an orderly change to the new

frequencies.


-82-

to significantly influence spectrum management decisions, especially

allocation among uses and users, the inadequacies and inefficiency ascribed

herein to regulation will persist.


-10-

Radio Act of 1912

The Radio Act of 1912 was the first domestic legislation that dealt with
spectrum allocation. It should be noted that the ratification of the 1906
Convention was largely responsible for the timing of this legislation. One of
the articles of the Convention bound the parties to take necessary measures to
ensure execution of the Convention, and the associated regulations included a
specific requirement for government licensing of private stations on ships.
Interference between stations, however, had also become a problem.
Essentially three groups of radio users had developed during the early years
following the Marconi patent in 1896: government, commercial, and amateurs.
Each group was interfering with the other, sometimes maliciously. 13/ The
commonly recognized solution was Federal Tegulation that would separate the
groups by frequency, or wavelength in 1912 terminology.

The Radio Act of 1912 provided the necessary separation. The wavelengths
of 600 to 1600 meters (500 KHz to 187.5 KHz) were reserved for Government
operations. 14/ Commercial coastal stations were required to have equipment
capable of operating on either 300 meters (1000 KHz) or 600 meters (500
KHz). These allocations followed the international regulations associated
with the 1906 Convention. Amateurs were constrained to wavelengths of 200
meters or less (frequencies above 1500 KHz). At that time, frequencies above
1500 KHz, which is below the upper end of the present AM~Broadcast band, were

considered to be of little value for Government or commercial use.

13/ See for example, History of Commnications-Elctronics in the United

States Navy p. 73, 156 and History of Radio to 1926, p. 104.

14/ Conversions between wavelength ( ) and frequency (f) is straightforward:
f= 3x10°/ , where “f" is in cycles per second and " " js in meters.



-52-

predicting technological development except to extrapolate present experience
into the future. This may lead to entirely different conclusions from
prediction based on analyses and test results of new technological concepts.
A very recent illustrative example of predictions regarding future
equipment technology is that of the application of amplitude compandored
sideband (ACSB) modulation to land mobile radio. In this case, research to
investigate the use of this technology was initiated by the Commission in
1977. Comment by the larger established landmobile equipment manufacturers in
response to this effort was that the concept was not feasible. Meanwhile, two
smaller companies, one organized specifically for the purpose, began producing
and marketing ACSB equipment. Development tests by several hundred land
mobile licensees have shown that the concept is indeed quite feasible. The
Commission recently authorized use of ACSB for regular service in the 150-170

MHz band.

Summary - Part IV

The Commission in its function of spectrum allocation attempts to
replicate the functioning of a market and is handicapped by inadequate
objective information. To apply the “public interest” criterion, it must
first define the term and then verify that a contemplated action satisfies the
definition. To accomplish this verification, the Commission it requires
information by which to establish the level of need for a radio service and
also technical information to determine the best spectrum location for the
service and the amount of spectrum required. This information is not
available in complete and objective form. The end result of the process as
will be shown in the following section is not only imperfect and inefficient

allocation of the spectrum, but also long delay in its use.


-6-

allocated to this service. $/ The FCC (which by this time had replaced the ~
FRC) recognized that more channels were required to satisfy the growing
service and allocated a total of 34 channels for use by the States and
municipalities. These channels were still at frequencies just above the AM
broadcast band from 1610 KHz to 2490 KHz. 7/

Other types of radio stations that might be considered forerunners of the
land mobile radio service had also been licensed by the FRC. These were
mobile press, proadcast pick-up, motion picture, and special emergency
stations. These services, however, do not appear to have experienced the
growth nor did they engender as much discussion in the FRC annual reports as
did the Emergency Police Radio Service. In fact, the early operation of these
stations may have been more of a portable nature than mobile. A possible
exception to this observation is the broadcast pick-up service which by 1935
had grown to 102 stations. 8/

Frequencies had been allocated for the broadcast pickup stations because,
as the FRC noted, “Events of interest to broadcast listeners often occur at
locations at which wireline facilities are unavailable or unsuitable." 9/

The station was described as a low-power transmitter located on an airplane, a

train, an automobile, or carried by an announcer. 10/ In 1936, the station

_

6/ First Annual Report of the Federal Communications Commission (FY 1935)

p: 37-

7 FCC Telegraph Division Order No- 18, July 1, 1936; 2 FCC p- 33.

8/ First Annual Report of the FCC (FY 1935), P+ 27.

9/ Fifth Annual Report of the FRC (FY 1931), p- 53-

10/ Ibid, p- 53-


~73-

to establish beyond doubt that reallocation of spectrum was the only
alternative. From this, it follows that the study was inevitable given the
Commissions commitment to UHF television. It is another example of the delay
inherent in an administrative spectrum management system as it seeks

information on which to base decisions.

Reallocation of UHF-TV Spectrum

As a result of the finding of the Advisory Committee study and perhaps
also some political pressure, the Commission initiated proceedings to make
UHF-television spectrum available to land mobile radio. 92/ In April 1967,
the Commission announced that it was establishing a special staff committee to
investigate the possibility of meeting the frequency needs of the land mobile
radio services with spectrum currently allocated to UHF-television. This was

followed in July 1968 with two Notices of Proposed Rulemaking in Docket Nos.

18261 and 18282.

The NPRM in Docket No. 18261 proposed to permit sharing of the seven
lowest UHF-television channels by land mobile radio. The NPRM in Docket No.
18262 proposed to reallocate the 14 highest UHF-television channels plus an
additional 31 MHz for the exclusive use of land mobile. Both proceedings were
highly controversial and required several years to complete. The major
Commission actions in each of the proceedings are discussed in more detail in

Appendix B.

92/ The 1966 Annual Report of the FCC devoted a separate chapter to the land
jobile radio spectrum problem. At one point in this discussion, the
Commission stated: "Congressional interest in mobile radio is manifest in
testimony before various committees." See, FCC Annual Report for FY 1966,

pe 52.


-34-

knowledge of electromagnetic propagation characteristics was inadequate to
establish this relationship except on a very approximate basis. 50/ Although
the concept of ‘service area’ was in use, these areas could not be accurately
defined, and the term 'protected service area' was not found in the literature
of that time. In this regard, a comment by Secretary Hoover at the Fourth
Radio Conference is pertinent. In discussing the service areas available with

different radiated power levels, he remarked,

For some reason or other the area is not always a circle,
as you know, and it varies in different parts of the
country for the same power. 51/

He then explained that the Department of Commerce was conducting an
investigation of the phenomenon and expected that the information derived
would provide a basis for, “more efficient allocation of wavelengths.”

Thus, inability to satisfactorily correlate station operating parameters
with spectrum rights would likely have resulted in frequent and widespread
cases of interference and correspondingly high transaction and enforcement
costs. Even if the public and the Congress were not already opposed to a
property right approach, they may not have tolerated the delay involved while
the courts determined liability for the interference in each case.

Nevertheless, acceptance of the fact that some form of government
intervention was likely to manage the explosive demand for broadcast spectrum
does not imply that the Radio Act of 1927 was required. The necessary

regulation was already in place and effective under the Radio Act of 1912

50/ Stephen S. Attwood, “Radio-Wave Propagation Between World Wars I and I1;"
Proceedings of the IRE, Vol. 20, No- 5 (May 1962), p. 688.

51/ Fourth National Radio Conference, p- 4.



-46-

public need would be met and that there would be “public acceptability and use
of the service.”

These principles reflect the Commission's priorities for spectrum use as
established at the time, and as subjective criteria they are open to
question. For example, they contain no explicit recognition of the economic
contribution of a radio service as a criterion for spectrum allocation.
Certainly a radio service that increased the productivity of a business or
industrial enterprise can make a substantial contribution to the public
welfare even though it may appear to directly serve only the private interest
of an individual or an organization. Eventually, this fact was recognized and
the use of the spectrum for purely economic reasons has been authorized for
both mobile and fixed operations. As previously stated, the definition of the
public interest has been subject to change.

More important than any deficiencies that might be identified on the
particular list of allocation principles discussed here, is the fact that any
such list will likely be imperfect. The reason is lack of information.
Allocation policy at any point in time will reflect the subjective judgment of
the Commission sitting at that time, and that Commission's judgment will be
influenced by the information available to it. It will be seen in the
discussion that follows, and in the examples in Part V, that this information
jn objective form is never complete. Any particular list of allocation
criteria or priorities is a result of the regulatory process, not a cause of
its defective operation. Nevertheless, imperfections in such a list may

impose a high social cost.

Information Required for Allocation

The list of Significant Information Factors contains a series of

questions for which the Commission sought answers in the allocation proceeding


-26-

spaced at 100 KHz, thus providing 10 paired channels per service. 49/ At this
time only developmental operation was permitted.

The Commission recognized that although increased use of the 450-460 MHz
band would provide some relief from the growing spectrum congestion, many more
frequency channels would be required to produce any significant effect. The
most immediately available source of additional spectrum was a reduction in
channel spacing, or channel splitting. Development in radio equipment
performance had made such action feasible. Commission action to reduce the
channel spacing and assign the new channels involved eight rulemaking

proceedings over a period of about five years beginning in 1955.

10. "Channel Splitting” - VHF Bands.

Docket No. 11253. The channel splitting effort was initiated by a Notice
of Proposed Rulemaking (NPRM) in January 1955 that would reduce the channel
spacing in the 25-50 MHz and 152-162 MHz bands. 50/ In a Report and Order
(R&0) in this proceeding in September 1956 the Commission reduced the channel
spacing in the 152-162 MHz band but elected not to do so in the 25-50 MHz band
at that time. The reason given was the potential for adjacent channel
interference caused by long range fonospheric propagation at 25-50 MHz. Such
interference might be caused by foreign as well as domestic stations. 5u/ The
channel spacing at 152-162 MHz was reduced from 60KHz to 30 KHz for same area

assignment and 15 KHz for adjacent area. 52/ New standards were adopted for

49/ Report and Order Docket No. 10323 May 14, 1953; 18 FR 2941 May 22, 1953.
50/ NPRM Docket No. 11253 January 12, 1955; 20 FR 463 January 20, 1955.
51/ Report and Order Docket No. 11253 September 19, 1956; 8 R @ 1577.

52/ Adjacent area was defined generally as an area at a distance removed by
one-half the cochannel separation required.


=51-

Lack of propagation information was a particularly acute problem during
the earlier years of radio development. Perhaps even into the 1950 decade,
this inadequacy accounted for much of the delay in arriving at allocation
decisions. While knowledge of propagation cannot be considered complete, it
is adequate for most allocation matters today. Predictions of transmission
characteristics may be qualified by statements about limits of certainty, but
delays in allocation seldom occur due to lack of propagation knowledge.

Acquiring information relative to the future level of performance or
quality of radio equipment, however, has become no less difficult with the
growth of the radio industry. Except in the rare case where the Commission
has sponsored design research, the only sources of this information are the
radio equipment manufacturers. Any prediction of radio equipment performance
or operating techniques will be influenced by the marketing plans of the
various manufacturers. These marketing plans are in turn based on the
regulations or standards in place at the time of the inquiry. Therefore,
rather than information describing future equipment performance capability
based on purely technical development, which might provide a basis for changes
in standards or allocation, the Commission is more apt to receive projections
of what would be technically feasible given present standards and techniques.

This does not imply that manufacturers submit deliberately biased
information. They undoubtedly report what they believe ar. the facts based on
their knowledge of the technological state-of-the art and the market.
Depending upon the regulatory and operating history of the service in
question, however, there may have been no good business reason for a
manufacturer to have diverted research funds into an investigation seeking to
improve what appears at the time to be a technically satisfactory mode of

operation. In the absence of such research, manufacturers have no basis for


-47-

manufacturers to five systems nationwide. The MO&O further restricted
ownership to one system with the note that the restriction would be
reconsidered in the future 4f it resulted in adverse effect on trunked system
development + This restriction was removed by & subsequent rulemaking in July
1982. 89/

The proceeding was again terminated by the MO&0- Because Government
Accounting Office approval of the additional application information required

had not been received, applications still could not be accepted. 90/

17. Regional Spectrum Management Program

The decision to allocate more spectrum to the land mobile services did
not diminish the Commission's interest in methods to improve the technical
efficiency of spectrum use. In this regard, a common recommendation of the
many studies of spectrum management during the 1960 decade was the adoption of
more flexible allocation and assignment procedures. This included application
of more sophisticated spectrum engineering, and allocation based on local or
regional requirements rather than national in scope. To evaluate the
feasibility and effectiveness of such management techniques, the Commission

established a Spectrub Management Task Force (SMTF) in February 1970 to

_

89/ Second Report and Order Docket No. PR 79-191 July 22, 1982; 47 FK 41002
September 16, 1982.

90/ GAO approval was received and announced by the Commission in a Public
Wotice in June 13, 1975. The ef fective date for receipt of applications,
except applications for SMRS licenses, was July 1, 19753 40 FR 26061 June 20,
1975. The U.S- Appeals Court had stayed that part of the Order in Docket No-
18262 that authorized the SMRS pending its review of an appeal of the Order by
the national Association of Regulatory Utility Commissioners, et al. The
Court found in favor of the Commission January 5, 1976, and removed the stay
on June 3, 1976-


-47-

in Docket No. 6651 (discussed below). It is representative of the information
the Commission has attempted to acquire in all allocation proceedings. In
general, there is little on the list that could be declared unnecessary given
the environment in which the Commission must function. The difficulty has
been that it is virtually impossible to obtain this information in a complete
and reliable form and the resolution of conflicting opinion in attempts to do
so has introduced delays measured in years.

Answers to the questions under Public Need and Benefit are obviously
intended to permit the Commission to determine whether a proposed radio
service qualifies for spectrum access according to the criteria in the list of
principles. As a group, the questions are aimed at determining the need or
demand for a service, and in the interest of generalization they will be
discussed in those terms.

“Public Need" Versus Market Demand A comparison of the treatment of

“public need" by the Commission with the operation of a market may be helpful
in describing the Commission's difficulty with this subject. The market
measures the demand for a good or service by the objective action of the price
system. An important characteristic of market demand is that it represents an
aggregation of individual preferences that cannot be determined or expressed
by any other means. Market demand represents not a single number but rather a
schedule of how much spectrum (or any other good) users are willing to buy at
a given price. This market demand schedule provides information on the
aggregate preferences of users for spectrum given their alternatives. “Public
need" tends to treat possible uses of spectrum as absolute concepts, while a
market process recognizes that all needs are celative to the alternative uses

of the resource.


-76-

on the Land Mobile Radio Services was not foreseen by
those concerned. 94/

These statements by the Commission in 1966 suggest that the inability to

obtain information is inherent in the present allocation process. They

further emphasize the need for flexibility and 4 willingness on the part of

the Commission to accept change in past allocations.

oe

94) Ibid, p- 49-


-4-

instead. The Commission's determination was not limited to technical
considerations but also took into account economic and social factors and
considerations of national policy. For example, while fixed point-to-point
service between countries could be carried on by cable as well as by radio,
the great disparity in costs between the two types of service and
considerations of national policy clearly required the assignment at least at
this time of frequencies for such fixed point-to-point service.

As a second principle, the Commission determined that not all radio
services should e evaluated alike. Radio services which are necessary for
safety of life and property obviously deserved more consideration than those
services which are more in the nature of conveniences or luxuries.

Thirdly, the Commission was concerned with the total number of people who
would probably receive benefits from the particular service. Where other
factors were equal, the Commission attempted to meet the requests of those
services which proposed to render benefits to large groups of the population
vather than of those services which aid relatively small groups.

Fourth, and this applied particularly to proposed new services, the
Commission undetook to determine whether such newer services met a substantial
public need and what the likelihood was, if frequencies were granted, that the
service could be established on a practical working basis. With the shortage
of frequencies available, the Commission did not believe that it would be in
the public interest to assign frequencies to a new service unless it could be
shown that there would be public acceptability and use of the service.

The fifth principle related principally to consideration of the proper
place in the spectrum for the service in question. There was much evidence
introduced in the record - some of it available for the first time -

concerning the radio wave propagation characteristics of the various portions


~41-

several bills over about five years before passing the Radio Act of 1927. As
discussion of the need for broadcast regulation proceeded at four National
Radio Conferences as well as in the Congress during the five year period, the
Congress became increasingly concerned about broadcast matters other than
interference, particularly vested rights in the spectrum. By the time of the
Radio Act of 1927, it seems clear that Congressional determination to prevent
vested rights would have precluded any consideration of market forces as an
alternative to Federal control of spectrum management. Finally, market forces
in a limited sense were permitted by the Department of Commerce under the
Radio Act of 1912 and greater reliance on a market in broadcast spectrum than

was possible under the Radio Act of 1927 may have been feasible.


-38-
Annual Report, the Commission devoted a separate chapter to the subject. The
opening sentence of this chapter stated:

The major problem facing the Land Mobile Radio Services, as

well as one of the thorniest confronting the Commission, is the

congestion in the limited spectrum space available to these
intensely populated services. 72/

In this same chapter it was also noted that: “Congressional interest
in mobile radio is manifest in testimony before various of its
committees.” 73/

As one example of “Congressional interest," the report by a subcommittee
of the House Select Committee on Small Business in 1968 is worth mention. 74/
This subcommittee held hearings during 1968 in Washington, Los Angeles,
Detroit and Chicago to obtain the testimony of two-way radio users concerning
the urgent need for additional frequency spectrum for the land mobile radio
services. While the subcommittee report commended the Commission for its
actions in Dockets Nos. 18261 and 18262 (discussed below), it concluded that
relief for the land mobile services was long overdue. The report then
recommended, among other things, that if adequate relief was not forthcoming,
the next Congress should hold hearings and in those hearings consider the
recommendation of the President's Task Force that the spectrum management

function be shifted to another entity within the Federal Government. 75/

72/ FCC Annual Report for FY 1966, p. 48.

73/ Ibid, p. 52.

74/ The Allocation of Radio Frequency and Its Effect on Smali Business; A
Report of Subcommittee No. 5 to the Select Committee on Small Business, House
of Representatives 90th Congress, 2nd Session, House Report No. 1978 (December
23, 1968).

75/ This recommendation by the Task Force was intended to improve spectrum
jaanagement efficiency at the national level for both Government and
non-government uses. See, Final Report President's Task Force On
Communications Policy (December 7, 1968).


~22-

Prior to the allocation proceedings of 1944 (Docket No. 6651),
the Commission's policy seems to have been rather firmly
established as being one which gave virtually no recognition to
the use of radio by noncommon carrier licensees (other than
broadcast licensees), except for purposes directly and
primarily related to public safety.

In the Docket No. 6651 proceedings, the door was thrown open to
requests for the establishment of new radio services, private
in nature and having little direct and primary relationship to
the preservation of life and property. As a result of that
opening of the door, the Commission has today taken an action
which establishes 18 noncommon carrier services on a regular
basis. Though the new services claimed that they fostered the
protection of life and property, the primary purpose of some is
to foster the more efficient administration and greater
economic exploitation of the industries with which they are
associated. If there were enough frequencies to go around, I
would have no objection to such use of them. 43/

With the advantage of hindsight, it 1s clear that the form that the land
mobile service was to take was established by 1949. Future effort by both the
Commission and industry would be devoted to the matter of locating spectrum
space to satisfy the rapid growth of the service. In this regard,
Commissioner Jones included a highly prophetic statement in his dissenting

opinion when he stated,

The adoption of the report and the associated allocations and
tules catches us on the horns of a dilemma. In the light of
spectrum limitations as we see them today, we must either make
adequate provision for future expansion of these nonbroadcast
services, and any new ones which may hereafter be developed, by
taking spectrum space away from FM or TV broadcasting, or both;
or we must accommodate any expansion of the nonbroadcast
services by forcing upon the licensees a further sharing of
Spectrum space and resultant degradation of services. Aas

43/  Ibid,. pp. 1239-1240.

44/ Report _and Order April 27, 1949; 13 FCC (1949) p. 1240.


-31-

450-460 MHz frequencies and made them available to all Public Safety Services
on a shared basis. To provide greater flexibility for local governments to
satisfy their communication requirements, the B&O established the Local
Government Radio Service within the Public Safety Services.

Although a primary purpose of the NPRM in Docket No- 11990 had been to
assign the “gplit-channel” in the 152-162 MHz pand to Public Safety sub-
services, the Commission in its R&O noted that investigation of this matter
was simultaneously being conducted in Docket No- 12295 (see fn- 52) and
indicated that assignment of the 152-162 MHz channels would be made in that
proceeding: This action was completed by a combined Report and Order in
October 1958- 61/ This is an example of the interrelatedness of the various
rulemaking proceedings in which the Commission was involved during the channel
respacing exercise.

Docket No. 11991 was concerned with the Industrial Radio Services and was
perhaps the most complex of the proceedings referenced in footnote 59- The
Commission adopted a Report and Order in this proceeding in June 1958 that
allocated considerably more spectrum to the Industrial Services and created
three new Industrial subservices, as well as splitting and assigning channels
in the frequency bands allocated to the subservices- 62/

As noted previously, the 460-470 MHz band had been allocated to the
Citizens Radio Service in the May 1945 report in Docket No- 6651. While some
licensees were using the spectrum for short-range personal and business
communications a5 the Commission intended, the primary use was by large
industrial entities who were not eligible for a mobile license in any other

_

61/ Further Report and Order Docket Nos. 11990 and 12295 October 8, 1958; V7
RR 1562a-

st Report and Order Docket No. 11991 June 18, 19585 17 RR 1569.

62/ Fir P


-36-

land mobile services. It was mentioned that the majority of those filing
comments in the proceeding represented these services. The R&O stated that
the record of the proceeding showed a picture of the land mobile services not
only making extensive use of their available frequencies for various purposes
beneficial to the nation but, also looking forward to a continuation and vast
expansion of such uses. Further, it indicated that the extent of this demand
was such that if it was to be met by making additional spectrum available,
this spectrum would have to be withdrawn from television broadcasting. This
last statement was based on a review of all spectrum in the 25 MHz-890 MHz
band allocated to either non-Government services or to Government.

The Commission, however, was not yet prepared to reallocate any spectrum
away from television. According to the Report and Order, it remained
convinced that an 82 channel (12 VHF and 70 UHF) television allocation was
necessary to permit the development of a national competitive system.
Furthermore, it believed the feasibility of the 82 channel system had been
assured with the passage of the all-channel tuner legislation in 1962 which
would provide for UHF tuning capability in all subsequently manufactured TV
receivers.

The general conclusion of the Report and Order was that the land mobile
services required more frequency channels, but the channels needed could not
be obtained by a reallocation of non-Government (including television)
spectrum within the 25 MHz - 890 MHz band. Only more efficient use of land
mobile spectrum could resolve the matter. To that end, the Commission

established an Advisory Committee for the Land Mobile Service. 70/

70/ Public Notice FCC 64-266 March 26, 1964; 2 RR 2nd 1547.


SPECTRUM MANAGEMENT POLICY IN THE
UNITED STATES: AN HISTORICAL ACCOUNT

by

John 0. Robinson */

Office of Plans and Policy
March 1985

—_—_

*/ The opinions and conclusions expressed in this report are those of the
author. They do not necessarily reflect the policies or views of the Federal
Communications Commission or any other organization or individual. I wish to
thank the professional staff of the Office of Plans and Policy for their many
helpful suggestions. I am particularly indebted to John R- Haring who
actually composed some sections of the report.


-16-

During the years immediately following World War II, several developments
led to increased activity in land mobile radio. Materials and production
facilities that had been restricted to military support were released for
production of commercial radio equipment.. Technology that permitted use of
higher frequencies was applied to the design of commercial equipment resulting
in a considerable expansion of the useable spectrum. 34/ There was increased
demand for radio licenses in established services, and also a great demand for
experimental licenses, particularly by the new services to which the
Commission had assigned frequencies in the Docket No. 6651 proceeding. In the
midst of this activity, the Commission was studying the reports of the
experimental effort, reviewing the results of its frequency assignments in the
May 25, 1945 report in Docket No. 6651, and developing plans for the new land
mobile services.

The first of the new services to be established as a regular service was
the Railroad Radio Service in December, 1945. 35/ As a result of several
serious passenger train accidents in 1943 and a suggestion in February 1944 by
Senator Burton K. Wheeler, Chairman of the Senate Interstate Commerce
Committee, the Commission had initiated an investigation into the use of radio
in railroad operations and made provision for public hearings on the subject
in September 1944. The record of the hearings in this proceeding (Docket
No. 6593) was incorporated by reference into Docket No. 6651. 36/ Based on
the combined records, the Commission allocated 60 radio channels between

152-162 MHz for exclusive use by railroads in its May 25, 1945 report in

34/ See for example, Thirteenth Annual Report of the FCC (FY 1974), p. 45

35/ Twelfth Annual Report of the FCC (FY 1946), p. 45.

36/ Report of Proposed Allocation from 25,000 Kilocycles to 30,000,000
Kilocycles; Docket No. 6651 (January 15, 1945), p. 149.



-64-

Reaction of Commissioners

Statements issued by three members of the Commission expressed less than
complete satisfaction with the 1949 Report and Order and to some extent
indicated a recognition that it represented a precedent-setting decision. All
three Commissioners noted particularly that frequency allocated for common
carrier mobile radio telephone was inadequate.

Commissioner Paul A. Walker, who was the only Commissioner to have also
served at the time of the May 25, 1945 Report, stated that he was voting in
favor of the Report and Order only with the understanding that consideration
would be given to common carrier operation at UHF. As noted, the allocation
he sought in 1949 for common carrier mobile radiotelephone at UHF was not to
become available until 1975 with the Commission decision in cellular radio,
and the first system did not become operational until 1982.

While the statement of Commissioner Edward M. Webster acknowledged the
inadequacy of the common carrier allocation, he appeared to be more concerned
about the number of new services that had been authorized relative to spectrum
availability. He expressed the opinion that since 1945 the Commission had
“permitted growth to go beyond the capabilities of the art and radio

spectrum." He suggested that the reason it did so was,

The Commission, like many other groups, looked forward in
the postwar period to an expansion of all phases of
commmnications arts based on wartime innovations.
Unfortunately, our hopes for additional spectrum space
were not realized nearly in proportion to the number of
new communication devices and services developed. 82/

82/ “Additional Views of Commissioner E. M. Webster”, Report and Order
April 27, 1949; 13 FCC (1949) p. 1236.


market demand for spectrum. In an unrestricted market, the demand for any
particular use or by any particular user would ultimately depend upon the
relative consumer demand for various radio services.

The outputs of some radio services such as broadcasting and common
carrier offerings are used directly by consumers. In other cases such as land
mobile radio or private microwave, the radio service is a factor in the
production of some product other than communication, and thus the radio
service, including spectrum, is indirectly valued ‘by the consumer. In any
event, in a market the demand for spectrum and its value in use would be
established by the preferences of individual consumers.

The quantity of spectrum demanded in the present regulated system is, of
course, immediately distorted by the explicit price of zero. 67/ This fact
aside, it is clear from what has just been noted that the Commission could not
obtain the information necessary to replicate the market process and establish
the true market price or demand for spectrum. The market internalizes an
incredibly complex process that cannot be emulated successfully by a central
planning authority.

Technical Information The task of acquiring the information to answer
the questions in the Technical Category of the Significant Factors would at
first glance seem to be more straightforward because the term “technical” is
normally associated with objectivity. As in the case of "need" and “demand,”
however, difference of opinion can and does arise. Two general areas of
technical knowledge are involved in the allocation process. One area is that
concerned with propagation characteristics of electromagnetic energy. The

other deals with expected performance of radio equipment.

67/ It should be mentioned, however, that the use of spectrum is not without
cost due to application filing expenses including legal fees.


-11-

Special Emergency stations were authorized in the Emergency Radio
Services to provide radio commmication for random and relatively short time
emergencies. Most such facilities were operated by utilities, including
telephone utilities, to assist in restoration of disrupted service. Both
fixed and mobile stations were used.

In addition to the motion picture and relay press stations, the
Miscellaneous Radio Services included geological, provisional, and mobile
press stations. 23/ Mobile press stations provided telegraph press service to
Maritime mobile stations and made no use of land mobile. The geological and
provisional stations were intended for use for short periods of time where
telecommunication facilities other than radio service were not available.
Geological mobile stations were used largely in oil exploration and
provisional stations at large construction sites.

The Commission had maintained this relatively restrictive policy in its
authorization of land mobile radio because frequencies for more extended use
were considered to be unavailable. Land mobile communication was authorized
only for safety of life and property or, in a few instances, to support
Operations deemed essential and for which no other comminication facility was
available. Examples of the latter were relay press stations to transmit news

from remote locations and geological stations involved in oil exploration.

5. Impact of World War II Technical Development (Docket No. 6651).

In late 1944, the Commission initiated an allocation proceeding that
would have a major impact on the development of land mobile radio. Designated

Docket No. 6651, it was the most extensive allocation proceeding ever

23/ Rules for the Miscellaneous Radio Services had been adopted in December,
1938. 3 FR p. 3024 (December 17, 1938).


~24-

determine as nearly as possible the reasons for selection of government
regulation as the method of spectrum management. 34/

Theoretically, ore alternative to government regulation that could have
been considered to accomplish the functions of spectrum management would have
been to open the resource to the market. This would have required a
definition of property rights and an initial distribution of these rights to
the private sector. A less extreme option would have been government
regulation combined with selective use of market forces.

This Part explains the factors that led to an administrative approach to
spectrum management. Part II recited the important events that resulted in
the Radio Act of 1927, and noted that this Act was written especially for
broadcasting. This Part analyzes these events and relates their effects to
the ultimate Congressional decision to adopt the policy of spectrum management
by regulation. Parts IV and V will examine the regulatory process in practice
and cite examples of the difficulties that have been encountered with the

process.

Forces Favoring An Administrative Approach to Spectrum Management

From 1902 to 1927
There is no evidence that market forces in any form were even considered
in the legisla.ive process that led to the Radio Act of 1912. In fact, there

were two circumstances existing during this early period of radio development

34/ By “government regulation” is meant total control of spectrum use by
Federal agency decision and administration. Public comment may influence the
form that regulations take, but the ultimate decision remains with the
agency. A government license is required to gain access to the spectrum, but
the holder has no discretion in the use of the spectrum assigned.


introduced in the Senate and the House of Representatives in June 1922. 25/
This bill, which would have conferred greater authority on the Secretary of
Commerce to regulate radio, was apparently the first attempt by Congress to
address the problems associated with broadcasting. The bill was passed by the
House but not by the Senate. 26/ Several additional bills were introduced
before passage of the Act of 1927.

Both the timing and substance of the Radio Act of 1927 were a
Congressional response to broadcasting. Had broadcasting developed at a later
date there would have been no new radio law in 1927 because except for
broadcasting there was no need for one. As late as November 1925, at the last
of the four radio conferences convened by Secretary of Commerce Hoover, the
Committee on Maritime Problems reported that, “...there are no problems in the
marine radio field that require legislative action at this time.” 27/

Likewise the Committee on Amateur Problems indicated, “Amateur operation
during the past year under existing regulations has been generally

satisfactory...." 28/ There was no committee designated for the point-to-

25/ “Annual Report of the Commissioner of Navigation to the Secretary of
Commerce for FY 1922;" Government Printing Office (1922). Reprinted in
Documents in American Telecommunications Policy, Vol. 1.

26/ “Annual Report of the Commissioner of Navigation to the Secretary of
Commerce for FY 1923;" Government Printing Office (1922). Reprinted in
Documents in American Telecommunicat ions Policy, Vol. 1.

27/ | “Proceeding of the Fourth National Radio Conference, November 9-11,
T925;" Government Printing Office (1926), p. 26. Reprinted in Documents in
Telecommunicat ions Policy Vol. 1.

28/ Ibid, p. 27.


-15-

An explanation, or what might even be read as a justification, of the
more liberal policy adopted in the Docket No. 6651 proceeding is found in the
Commission's Annual Report for 1945. In a discussion of the advances in radio
technology during World War II, this report states,

These developments have resulted in extending the useful
Portion of the spectrum to such an extent that radio channels
can now be made available for the establishment of many new

radio services and the expansion of certain existing radio
services. 32/

As a final observation, of perhaps not great significance, it might be
noted that in the Docket No. 6651 proceeding land mobile radio sub-groups were
designated by “service” rather than “station”. For example, police and fire
radio users were identified and discussed as the Police Radio Service and Fire
Radio Service not as stations in the Emergency Radio Service. This appeared
to be the first use of this designation, and no explanation for the change was
found. It may have been an implicit recognition by the Commission of
impending change in land mobile radio.

6. Implementation of Docket No. 6651 Decisions.

Although the Commission had identified new radio services for which it
decided frequency allocations were justified, it was not yet ready to
establish rules for the services. In its 1945 Annual Report, the Commission
stated, “While the use of radio in these new services will unquestionably
prove feasible, there are many technical and policy problems which must be
solved before the services can be established on a regular basis." 33/ In the

meantime, the services were permitted to Operate on an experimental basis.

——

32/ Eleventh Annual Report of the FCC (FY 1945), p. 66.

33/ Ibid, p. 66.


-32-

granted temporary privilege to use the ether under the current law (Act of
1912) for a period not to exceed two years. Following this period, no license
was to be granted or renewed without acknowledgement by the applicant that all
claims to the use of the ether were in accord with the provisions of the

bill. A substitute bill containing similar language regarding ownership was
reported by a House committee, but not acted upon. Regarding the Senate bill,

Dill notes,

This bill is important because it shows that the purpose
of Congress from the beginning of consideration of
legislation concerning broadcasting was to prevent
private ownership of wave lengths or vested rights of any
kind in the use of radio transmitting apparatus. 48/

Following the Zenith decision in April 1926 which denied authority to the
Secretary of Commerce to effectively regulate use of the spectrum,
Congressional concern for vested rights increased. Although both the House
and the Senate had passed new radio regulation bills, there were differences
that could not be resolved before adjournment. As a stopgap measure,
therefore, the Congress passed a Joint Resolution on July 3, 1926 to deal with
the vested rights issue. This Joint Resolution declared that the term of all
broadcast Licenses was to be limited to 90 days and that of all other radio
licenses to two years. In addition, it required that following the date of
the Resolution, no license was to be granted unless the applicant waived any
right, or claim to any right, to use of the ether because of prior use. Due
to administrative difficulties the Resolution was not sent to the President

until after Congress reconvened and was signed December 8, 1926. A similar

48/ Radio Law, p. 81.


-24-

type-approved equipment for operation at 460-470 MHz. By 1952, equipment had
become commercially available and the service began to expand rapidly. 46/
Most of this expansion was in the form of business users, including large
corporations, who were not eligible for a license in any other service.

The Commission had not anticipated this development when it established
the Citizens Radio Service. Instead, it had expected the service to provide
for short-distance radio communication for personal convenience or
miscellaneous business purposes as well as radio signaling and remote control
of objects and devices by radio. 47/ As a result, the Commission was prompted
to reconsider its frequency allocation for the Citizens Service and the
eligibility structure of the Industrial Radio Services. It was because the
primary users of the Citizens Radio Service were entities that would become a
part of the land mbile service, that the Citizens Service was included in the
growth number cited above for the first half of the 1950 decade.

During the latter half of the 1950's the Commission was engaged in
several rulemaking proceedings directed toward the spectrum scarcity problem
that developed in the land mobile services. These proceedings involved
spectrum allocation, channel splitting, establishment of new services, and

revision of old services.

46/ In 1949, there were only 122 stations authorized in the Citizens Radio
Service. By 1952 there were over 1400 licensed stations and in 1954 there
were over 7000 stations.

47/ In the Statistical Summaries of the FCC Annual Reports from FY 1951
through FY 1959, the Citizens Radio Service was actually listed under Land
Transportation Services.


-45-

At the time of the Second Report and Order in Docket No- 18262 there was
still a deficiency of both technical and market information relative to the
cellular systems- Although, the R&O included the spectrum suballocation of 40
MHz for these systems only developmental operation was authorized. Further,
the Commission restricted developmental operation of these systems to wireline
common carriers because as noted in the REO, they were: “,.. The only
organizations which have demonstrated that they possess the resources and the
expertise necessary to establish cellular systems which would have nationwide
compatibility-” Additional reasons given for this restriction were that the
characteristic of a cellular system were such that competing systems in the
same area were not feasible and extensive interconnection with the telephone
system was required. To counter any tendency for cross-subsidization,
separate operating subsidiaries were required: Also restrictions were imposed
on the manufacture of cellular equipment, as well a6 maintenance of the mobile
equipment-

Although the Commission had adopted rules for regular operation of
private Jandmobile at g00 MHz in the Second Report and Order, it could not
accept applications - The new rules required submission of information that
was in addition to that required by the application form in use for lower
frequencies+ This change required approval of the General Accounting Office,
and such approval jad not been received: In «he meantime, the Commission
encountered other difficulties with the Second Report and Order.

When the Commission adopted the Second Report and Order, it apparently
assumed that its work in the Docket No- 18262 was complete pecause it
terminated the proceeding- The public response, however, included 9 petitions
for Reconsideration, 2 Petitions for Clarification and partial Reconsideration, 2

petitions for Stay, 18 sets of comments on the Petitions for reconsideration, 8


-56-

Every effort has, therefore, been made, not only during
the past year, but throughout the past 4 years, to obtain
the requisite technical and nontechnical data. Not only
must reliable information on the transmission
characteristics of the frequencies be obtained, but the
many services seeking frequency assignments must be
evaluated from the viewpoint of the public's interest. 70/

By 1935, there were 138 experimental licensees operating 393 stations in
the Emergency Police Service on frequencies above 30 MHz. A large number of
these experimental stations were providing operational police communications
on a regular basis. By June 30, 1936, the number of police experimental
stations operating above 30 MHz had increased to 963. There was also a
simultaneous decrease in the growth of the regular police service at the lower
frequencies during that year. It is clear from these facts that many police
departments were using experimental licenses of frequencies above 30 MHz to
obtain better radio service than that available with a regular license at the
lower frequencies (1610-2490 KHz). In addition to providing for two-way
communication, less interference was encountered on the VHF channels.

In June 1936, the FCC convened an informal engineerng hearing in
Washington, D.C. to, among other things, obtain information in the matter of
allocation of the spectrum above 30 MHz. n/ The Commission discussed
preliminary results of the hearing in its Second Annual Report (June 30,

1936). As a part of this “discussion it stated:

The evidence also indicated that insufficient knowledge
is available to date with respect to the practicality of
much of the spectrum between 39,000 and 200,000 KC

70/ First Annual Report of the Federal Communications Commission, p- 48.

71/ Notice of Informal Engineering Hearing, Docket No. 3929, April 22, 1936;
T FR 537 (May 26, 1936).



-21-

This experimental use of radio by industry was undoubtedly the forerunner
of the Special Industrial Radio Service established in the 1949 Report and
Order. Eligibility in the Special Industrial Service was somewhat
restricted. It was limited to activities devoted to production, construction,
fabrication or manufacturing as distinguished from activities of a service or
distribution nature. It: was expected to be used primarily in remote areas or
within the yard area of a single plant. Other commercial or industrial users
were expected to rely on common carrier facilities or the Citizens Radio
Service for mobile radio communication. 41/ Nevertheless, the Report and
Order in the 1949 proceeding did recognize a broad demand for mobile radio by
private commercial and industrial enterprises. In this respect, it went
beyond the new service authorizations of the Docket No. 6651 proceeding.

The Commission apparently recognized that its Report and Order in the
1949 proceeding was a precedent-setting decision. Two Commissioners (P-A.-
Walker and E.M. Webster) filed additional statements expressing concern that
the use of private mobile radio was being encouraged while the frequencies
allocated for common carrier were inadequate. Commisisoner R.F. Jones
actually dissented from the Report and Order out of concern that the
Commission's action did not make the most efficient use of the spectrum and
would lead to future problems. At the outset of his dissent, he stated:

It appeats to me that it is a mistake to permit the growth and
development of nonbroadcast radio services on a private and
unintegrated basis. 42/

At another point in his dissent, Commissioner Jones noted,

41/ The Citizens Radio Service was established as a regular service in March
1949 (effective June 1, 1949). See 14 FR 1596 (April 1949).

42/ Report and Order April 27, 1945 13 FCC (1949) p- 1238.


-74-

The features of either rulemaking most relevant here are: (1) they
represented the culmination of a 20 year effort to meet the spectrum demand of
land mobile radio; and (2) each is another example of the long period of time
required to complete an allocation proceeding. The primary purpose of the
sharing concept proposed in Docket No. 18261 was to provide immediate relief
for land mobile radio. Since the 7 lowest UHF-television channels (470-512
MHz) were just above the 450-470 MHz land mobile band, radio equipment to
operate in the television channels could be readily produced based on current
design. Equipment to operate on the upper channels (above 806 MHz), on the
other hand, would require some years to develop. Despite the objective to
provide immediate relief, three years elapsed between the NPRM and the order
authorizing assignment of shared radio channels.

The NPRM in Docket No. 18262 which proposed to reallocate spectrum to
land mobile was adopted in July 1968. It was not until July 1975 that the
Commission began accepting applications for private licenses to operate on the
reallocated frequencies. Some of this delay can be attributed to a
requirement for General Accounting Office approval of the application form to
be used and responding to petitions for reconsideration. Nevertheless, the
seven year period from proposal to licensing was all consumed by the
regulatory process. Common carrier operation of cellular radio systems was
even further delayed because the Commission decided that additional
development was required before this service could be licensed on a regular

basis. The first cellular system was not licensed until November 1982.

A Final Note
This discussion of the results of spectrum management by regulation has

noted several times, and even emphasized, the lengthy delay experienced by the


-26-

of the old common law with regard to rights in the air,
in the interest of modern progress and development. 36/

A second reason for not expecting consideration of market techniques in
the 1912 era was the conviction within several executive departments that
government ownership, or at least regulation, of radio was Necessary for its
survival. Advocacy for government control of radio telegraphy was active in
the U.S. Navy as early as 1902. 37/ At the recommendation of the Secretary of
the Navy, President Roosevelt in June 1904 appointed an Interdepartmental
Board on Wireless Telegraphy to consider “the entire position of wireless
telegraphy in the service of the National Government.” The Board consisted of
Tepresentatives of the Navy, Army, Department of Commerce and Labor and the
Department of Agriculture (Weather Bureau).

Among matters addressed by the Roosevelt Board were control of
interference between radiotelegraph stations in general, and nonduplication of
coastal stations by government departments. To achieve the latter, the Board
recommended that all government coastal radio facilities be placed under Navy
control. To prevent interference between private and government stations, as
well as for other reasons, the Board recommended that all private stations be
licensed by the Department of Commerce and Labor. As part of the
justification for this recommendation, the Board stated,

This method of placing private stations under full

Government supervision is desirable in order to regulate
them for their mutual and the public welfare, as well as
from considerations of national defense. Aside from the
necessity of providing rules for the practical operation

of such stations, it seems desirable that there should be
some wholesome supervision of them to prevent the

36/ History of Commnications-Electronics in the United States Navy, p. 156.

37/ Ibid, p. 69.


-4-

Sections 14, 15 and 16 deal with the Commission's decision to reallocate
spectrum from UHF-TV to land mobile including a review of the proceedings in
Docket No. 18261 and Docket No. 18262. Docket No. 18261 provided for sharing
of certain of the lowest seven UHF-TV channels by land mobile in the thirteen
largest metropolitan areas. Docket No. 18262 allocated the upper fourteen
UHF-TV channels to land mobile in addition to 26 MHz reallocated from
Government use and 5 MHz from the Broadcast Auxiliary Service, for a total of
115 MHz.

Section 17 briefly outlines the efforts of a Spectrum Management Task
Force established by the Commission to establish a facility in the Chicago
area capable of computerized automatic frequency assignment and license
preparation. The program involved the concept of inter-service sharing of

frequencies with assignment based on local radio service need.

1. Genesis of Land Mobile Radio:

According to one source, land mobile radio began in Detroit, Michigan on
April 7, 1928 with the first successful use of radio by the Detroit Police
Department for emergency dispatch of patrol cars. UV Actually, it would
probably be as difficult to determine with certainty the exact date and
location of the first use of land mobile radio as it ig to unequivocally
defend the selection of KDKA, Pittsburgh as the first broadcast station. The
efforts of the many individual experimenters who contributed to the early

development of radio are not that well recorded. For example, effort by the

es

l/ Daniel E- Noble, “The History of Land-Mobile Radio Communications”
Proceedings of the IRE Vol. 50, No. 5 (May 1962), pe 1406. See also the Fifth
‘Annual Report of the Federal Radio Commission, p-49-



radiotelegraph systems that would not be recognized by the Marconi stations.
Marconi's success together with its exclusive marketing tactics led to concern

that it would establish a world-wide monopoly in radiotelegraphy. 5/

International Radio Regulation

As a result of the developing control of radiotelegraphy by the Marconi
Company, the First International Radio Telegraphic Conference was assembled in
Berlin in 1903. The governments of Austria, France, Germany, Great Britain,
Hungary, Italy, Russia, Spain and the United States were represented.

Complete agreement was not reached, but the Conference drafted a protocol to
serve as the basis for future international agreement on the use of
radiotelegraphy. Among the articles of the protocol was the requirement that
all coastal stations were required to exchange messages with all ships without
distinction as to the system of radiotelegraphy used. All delegates agreed to
submit the protocol for examination by their respective governments. The
delegates of Great Britain and Italy, however, entered reservations to the
requirement for exchange of messages irrespective of radiotelegraph system.
Marconi had substantial interests in both countries.

A Second International Radio Telegraphic Conference was convened in
Berlin in 1906. Twenty-eight countries, including the nine involved in the
1903 Conference, were represented. The Conference adopted a Convention that
followed closely the Protocol of the First Conference. 6/ The main provisions
of the Convention were: (1) a requirement for acceptance of messages by all

coastal stations and ships regardless of system used; (2) priority for

Sf See, for example, History of Communications-Electronics in the United
States Navy, pp- 67-71.

6/ Ibid, p. 557.


-15-

allocation function of spectrum management and the contribution that
inadequate information has made to that delay. The inability to acquire the
information necessary for proper allocation decisions has proven to be the
most serious deficiency in FCC spectrum management. None of the material
reviewed for this paper stated this fact more clearly than the special chapter

devoted to land mobile radio in the 1966 Annual Report of the FCC. Excerpts

from this report are quoted below.

In discussing the types of information required for allocation decisions,

the Commission stated:

Apportionment of this valuable natural resource among the
many services is not, however, derived from formulas and
slide rule calculation, but rather is dependent on the
considered judgment of those entrusted with this task.
The basic apportionment of this part of the spectrum was
begun in 1944 in a lengthy allocations proceeding and
more or less fixed in its present form in a 1949 decision
of the Commission based on estimates of projected need
for the services in existence at that time. With the
possible exception of a few unavailing voices, no one
then envisioned the birth of so many more diverse
services and the astonishing growth pattern of the entire
group. 93/ (Emphasis in the original.)

The Commission went on to note that of the portion of the spectrum then
considered appropriate for land mobile radio (25-890 MHz), television and FM
broadcasting had received 60 percent and land mobile only 4.7 percent. It

then followed with this explanation:

The underlying reason, then, behind this apparent
imbalance in allocations is simply that the unusual
growth in the Nation's economy and its resulting impact

93/ 32nd Annual Report of the Federal Commmnications Commission for FY 1966,

p. 48.



-81-

effectively responsive.. Under which system will relevant information be more
effectively transmitted and acted upon? In a static world in which it was
clear what consumers desired and what means could be brought to bear to
satisfy these desires and in which means and ends never changed or changed
only slowly, it would probably make little difference whether allocation
decisions were rendered by an impersonal market or an impersonal

bureaucracy. Both would do a tolerably satisfactory job. In a dynamic world
in which knowledge of means and ends is scarce am the means and ends
themselves are constantly changing, the question of institutional choice
assumes much greater significance. And in that world, which is, of course,
the one in which we actually reside, there would seem to be little doubt about
the superiority of the market as an organizing principle. Certainly the
record of administrative regulation we have detailed does not suggest
otherwise.

In Part III of this report, it was postulated that a market in broadcast
spectrum would have been possible in the mid 1920's. Also it was inferred
that if such a course had been taken at that time, there would have been no
need for the system of spectrum management by regulation that followed from
the Radio Act of 1927. Reality, however, requires recognition that the Act of
1927 was enacted and as a consequence, there is a multibillion dollar
telecommmnication system operating under regulation. Thus, establishing the
elements of an unfettere? spectrum market would be a much more complex matter
today. It would simply not be feasible to abruptly replace regulation with
the market at this point. Instead, what must be considered is a process for
introducing market forces on a gradual but increasing basis. This caveat

notwithstanding, it must be emphasized that until market forces are permitted


may be irrelevant to the market and, similarly, economic factors that would
play a predominant role in determining outcomes in a market environment may
carry little weight in a political or regulatory context.

The Communications Act of 1934 states as one of the purposes of the Act,
“to make available, so far as possible, to all the people of the United States
a rapid, efficient, Nation-wide, and world-wide wire and radio communication
service with adequate facilities at reasonable charges.” On the surface, it
may appear that spectrum management as practiced in the United States since
1927 has satisfied this goal reasonably well. Certainly, nothing comparable
to the “chaos” that existed in the AM-broadcast service just prior to the
Radio Act of 1927 has recurred. Spectrum use has been expanded to much higher
frequencies, and many new radio services such as land mobile, fixed point-to-
point microwave, and satellite radio communication have been accommodated. In
general, considerable progress toward an adequate and efficient radio
communication service appears to have been made.

Closer inspection of events during this nearly six-decade period,
however, reveals that spectrum management has exhibited serious deficiencies
that have imposed incalculable, but conceivably large, social costs. These
defects result from constraints that inhere in the regulatory process and
cannot be eliminated without a fundamental change in national policy for
spectrum management.

This study focuses on the results of spectrum management through
administrative regulation by the federal government as they have manifested
themselves in the land mobile sector. While the analysis is largely
descriptive, it has important prescriptive implications. This is because the
revealed disabilities of spectrum allocation under the current method of

governance are likely to become increasingly severe in an operating


-20-

It will be recalled that all of these new services were involved in
transportation. In each case, direct service to large segments of the public
was obvious. Also, it could be, and was, argued that the use of radio
promoted highway safety. With one minor exception, the only allocation that
was authorized for general commercial or industrial use of land mobile radio
was the Citizens Radio Commmnication Service. The one exception was an
allocation for a new low-power station classification in the already
established Provisional Radio Service. These low-power stations were to be
permitted broader application than the regular Provisional Service.

It cannot be determined from the discussion in the January 1945 proposal
or the May 1945 report in Docket No. 6651 whether an allocation for general
commercial or industrial use of radio was proposed in the hearing testimony.
Nor can it be determined how such a proposed allocation might have fared at
that time when judged by the Commission's criteria. Whatever the explanation
for the lack of an authorization in the Docket No. 6651 proceeding for broader
use of radio commnication by private commercial or industrial interests, the
omission was only temporary.

In ite Annual Report issued in June 1946, the Commission included the
Industrial Radio Service as a new service the Experimental Radio Service. The
Commission stated that it appreciated ". . .the need for short-distance radio
communications in many businesses and industries such as construction,
manufacturing, mining, agriculture, and related activities.” 40/ The
Commission also noted that several experimental authorizations had been issued

to explore the merits of radio use by this Service and more were anticipated.

40/ Twelfth Annual Report of the FCC (FY 1946); p. 49.



-79-

(3) Bureaucratic Allocation Bias: With very few exceptions, Commission

policy has been to provide some spectrum for all proposed radio services
rather than attempt to optimize the value of scarce spectrum resources. This
is in part simply a natural consequence of bureaucratic organization.
Bureaucrats, no less public spirited than any other member of the public, will
nevertheless naturally seek to avoid taking decisions that threaten their
stature and power. They will seek to avoid resolving issues in ways that lead
to complaints by interested factions. This leads to a “something-for-
everybody” system of allocation, even though it is by no means clear that this
type of allocation actually maximizes the value of scarce spectrum rights to
society. The inability to define uniquely and precisely the “public interest”
and the absence of effective means for measuring opportunity costs reinforces
the political practicality of this approach.

An additional source of bureaucratic allocation bias arises in the case
of spectrum use by different branches of the government itself. Special
concessions have traditionally been made to public (State and local
government) users in the form of extended time for amortization of equipment
and for making use of allocated spectrum. This has been due in part to
concern for the funding cycle of these public users, but is a privilege they
do not receive in the case of other resources. It clearly leads to
inefficient use of the spectrum again because of a failure to consider
adequately the value to society of foregone alternative resource usage.

(4) Bias Against Innovation: Spectrum management under administrative
regulation has retarded technical innovation and the development of new
services. This has occurred for two reasons. First, because scarce spectrum
has been treated as a free good, little incentive has been provided to

economize on its use. There is little incentive to develop and implement


-17-

Docket No. 6651. With these channels available, the railroads moved rapidly
with plans to implement radio commmication within their operations.
Sufficient progress was made that the Commission could justify the
establistment of regular service status by the end of 1945.

The next use of mobile radio to be established as a regular service was
the Utility Radio Service in August 1946. This service authorized radio
communication for power, transit, and petroleum pipeline utilities. In
addition to messages related directly to safety of life and property, to which
the utilities had been restricted as part of the Special Emergency Service,
communication in connection with operations such as dispatching of maintenance

vehicles was authorized under the rules of the new service. 37/

7. Origin of Present Administrative Structure for Land Mobile Services.

In April 1949, the Commission issued a Report and Order in an omnibus
proceeding that completely revised and enlarged the structure of the land
mobile radio service. 38/ This Report and Order combined a proceeding
concerned with policy for the new general mobile radio services, four
allocation proceedings reviewing the results of the May 25, 1945 report, and
four proceedings to establish rules and regulations for the land mobile
services.

The resulting administrative structure for the land mobile radio services
is shown in Table I. It will be noted, that the structure looks very much
like that existing in Part 90 of the FCC Rules today. Perhaps the most

significant difference is the lack of a Business Radio Service.

37/ Thirtheenth Annual Report of the FCC (FY 1947), p. 42.

38/ Report and Order, April 27, 1949; 13 FCC (1949) p. 1190.


-2-

before its chronological occurrence. The discussion is divided by section
headings intended to identify in a general manner the topic under

discussion. These headings may refer to a point in time, a period of time, or
an action by the Federal Commmnications Commission (FCC), particularly
rulemaking proceedings.

The initial four sections describe the origin and development of land
mobile radio from 1928 to 1944, near the end of World War II. These sections
are concerned first with police radio (the first, and for some years, the only
land mobile radio service) and eventually with the Emergency Radio Service
which included the Police Service. A point of some significance is that
during these first sixteen years land mobile radio was permitted only for
emergency communications in the protection of life and property.

Section 5 describes the impact on the development of land mobile of a
major FCC spectrum allocation proceeding (Docket No. 6651). This was the most
extensive allocation proceeding ever undertaken by the Commission. It was
also a turning point for the land mobile radio service in that the Commission
invited and adopted proposals for new uses of land mobile radio.

Sections 6 and 7 discuss events of the post-World War II period (1945-
1949), during which the decisions of the Docket No. 6651 spectrum allocation
proceeding was influencing activity both in the land mobile commmity and
within the FCC. The result was a Commission rulemaking in 1949 that
established the administrative structure of the land mobile services very much
like that of the present FCC rules. Except for the addition of a few radio
services (Business Radio being most important), the remainder of the history
is a discussion of the Commission's efforts to provide sufficient spectrum to

support the radio services authorized in 1949.


-58-

obstacles of a practical nature when the time becomes
opportune for pemmanent allocation. 73/

In other words, the FCC required the results of physical radio
experiments at frequencies above 30 MHz to establish a basis for allocation of
that spectrum. On the other hand, the very authorization of the experimental
licenses could present the Commission with the political difficulty of a
de facto allocation. This particular problem has never been satisfactorily

resolved and exists yet today.

Docket No. 6651 Proceeding

In late 1944, the Commission initiated an allocation proceeding
designated Docket No. 6651. Several Commission proposals, reports, orders and
modifications were issued in this proceeding over the next roughly seven (7)
years. 74/ The proceeding was terminated in March 1952. It was in connection
with this docket that the Commission first published its allocation principles
previously mentioned and contained in Appendix A.

In its Public Notice announcing procedures for the oral hearings in
Docket No. 6651, the Commission invited proposals for new radio services for
which frequency allocations should be provided. 75/ Several new radio
services were proposed and the Commission decided that frequency allocations
for many of them were justified according to its allocation principles. These

new services were the Railroad Radio Service, a General Mobile Radio Service,

73/ Second Annual Report of the Federal Commmnications Commission, p. 35.

74/ See 39 FCC pp. 33-333.

75/ 9 FR 10271 August 13, 1944.


-54-

insatiable demand for spectrum. Even as bands have been allocated at higher
frequencies where new and (at least initially) more costly equipment was
required, the radio channels have been loaded as fast as the Commission could
make them available.

The establishment of the Emergency Police Radio Service and allocation of
spectrum for its use was accomplished by the Federal Radio Commission. The
number of frequency channels available was increased by the FCC in 1936 and
were included in a band between 1610 KHz abd 2490 KHz. The most significant
aspect of these early allocation decisions was the recognition by the FRC and
the FCC that emergency police communication with mobile units was a use of the
Spectrum that was in the public interest. It is hard to imagine other uses of
land mobile radio that would have been authorized at that time. In fact, the
FRC stated it could not justify frequencies for municipal fire departments.

If the initial proposal had been for commercial or industrial use, for
instance, it would no doubt have been denied. Spectrum use that was in the
public interest was very narrowly defined at that time.

The development of the land mobile services has been marked by
intermittent allocation proceedings and major changes in the Commission's
interpretation of the “public interest". The more significant of these
Commission actions are described in the following sections. The first such
action is the allocation of frequencies above 30 MHz which represented a
milestone in the development of two-way land mobile radio. Next is a major
allocation proceeding (Docket No. 6651), followed by a 1949 proceeding, which
together established the land mobile radio service essentially as it is
today. Beginning in the 1950's, Commission activity in land mobile has been
directed primarily to satisfying spectrum requirements for these rapidly

growing services. This included “channel-splitting,” the UHF-TV allocation,


-16-

Plans for the station went forward with completion scheduled in time to
broadcast the results of the presidential election on the eve of November 2,
1920. A few available receivers were distributed to clubs, friends, and
Westinghouse executives. The broadcast from station KDKA was a success and
the radio industry was forever changed. By June 30, 1922, there were 382

licensed broadcast stations. 19/

Completion of the Radio Trust

The introduction of broadcasting altered the balance among the industrial
contenders for the radio market. Westinghouse had acquired patents that were
of sufficient importance to the new field of broadcasting that it had become a
force that could no longer be ignored. Consequently on June 30, 1921, the
RCA-GE-AT&T alliance was extended to include Westinghouse. Cross-licensing
agreements of one form or another now existed between RCA, General Electric,
AT&T, Western Electric, Westinghouse, and the United Fruit Co. 20/ In
addition, 65% of the RCA stock was owned by GE, Westinghouse, AT&T, and United
Fruit.

These cross-license agreements clearly had the appearance of an attempt

to monopolize the radio equipment market. On the other hand, without some

19/ Annual Report of the Commissioner of Navigation to the Secretary of
Commerce for FY 1922. Reprinted in Documents in American Telecommunications
Policy, Vol. I. This was the first year in which broadcast stations were
separately reported.

20/ The United Fruit Co. was engaged in growing and transporting fruit from
Central and South America to the United States. It was an early user of radio
telegraphy and acquired a subsidiary, the Wireless Specialty Apparatus Co., to
develop and manufacture radio equipment for its communication system. It also
owned and operated radio stations open to public correspondence. United Fruit
and Wireless Specialty owned many important radio patents, and both executed
cross-license agreements with General Electric and RCA on March 7, 1921 to
whith AT&T and Western Electric assented.


As early as 1935, the Commission issued a list of significant factors
about which it said it would require information to arrive at an allocation
decision in the public interest. $4/ The list was divided into two categories
identified as “public need and benefit" and “technical.”

It was not until later that the Commission first issued its definition of
the “public interest" for allocation purposes. In an allocation proceeding in
1945, the Commission published a list of principles by which it said it was
guided in making allocation decisions. 65/ These were in essence a set of
criteria defining public interest priorities, and have been restated in later
rulemaking proceedings with only minor change. The list as published in 1945
is included in Appendix A. In the same Report of Proposed Allocations the
Commission reissued, with slight alteration, its 1935 list of information

factors. This revised list of factors is also included in Appendix A.

Allocation Principles

A review of the allocation principles indicates that the Commission
favored radio services for which non-radio communication was impossible or
impractical, services that promoted safety of life and property, and services
that served large groups of people. Investment by a previously authorized
service was given careful consideration in the case of reallocation of

spectrum. For new services, it was necessary to show that a substantial

, 64/ Memorandum No. 14019 To the Licensees of Radio Stations Operating on
Frequencies Above 30,000 Kilocycles (August 22, 1935) Copy in the FCC
Library. The list of factors was also included in the Notice of Informal
Hearing and in the Report in Docket No. 3929. (See f.n. 81 and 82 infra).

65/ Report of Proposed Allocations from 25,000 Kilocycles to 30,000 Kilocycles;
Docket No. 6651 (January 15, 1945) (available in the FCC Library, 1919 M
Street, N.W., Washington, D.C. 20554).



~49-

real need or want of that public. This would explain why there have been
instances of allocated spectrum remaining unused, and other instances of radio
services being oversubscribed.

“Public need” is not a satisfactory surrogate for market demand. The
latter can be objectively and precisely determined and depends only on
individual preferences expressed as a willingness to pay. “Public need,” on
the other hand, is an illusive concept and cannot be measured because of lack
of information. It must be subjectively determined. It would be entirely
fortuitous, therefore, for a Commission decision to result in the same
allocation of spectrum that would occur by individuals voting with their
dollars in the market. Thus, the spectrum is not likely to be used under
regulation as it would if allocated by consumers' choices in the market place.

It might appear at first glance that the Commission can determine the
demand for a radio service after an allocation for the service by observing
its operation. While the Commission can certainly observe the number of
consumers who use the service, this outcome will be different from that
produced by a market allocation. The reason is that the Commission distorts
prices faced by consumers by the very act of regulating. There is an inverse
relationship between the amount of spectrum available in terms of bandwidth
and the cost of the radio equipment that must be used to obtain the same
quality of serv.ce. Thus, unless the Commission happens to allocate exactly
the same amount of spectrum as would result from a market, the price of the
service will be higher or lower than in a market with the obvious effect on
the qunatity demanded.

The discussion to this point has concentrated on the Commission's
inability to determine the true demand for a radio service by applying a

“public need" standard. The Commission is even less able to measure the


-78-

more than an intellectual or emotional attachment by certain Commissioners to
past decisions, although unwillingness to admit error is certainly not an
uncommon human trait.

In the case of UHF-TV, for example, between the time of the initial
allocation in 1952 and the Notice proposing to reallocate in 1968, more than
twenty Commissioners had participated in the several decisions to retain the
82-channel television allocation. One reason for regulatory inflexibility is
that the decisionmaking process does not provide a simple mechanism for
altering past decisions. The UHF-TV allocation was based on a decision that
the “public interest,” a compelling 4f entirely amorphous concept, required 82
channels to provide a satisfactory national television system. The fact that
valuable land mobile services would be necessarily foregone did not really
figure in that decision. Nor did the increasingly widespread availability of
UHF substitutes over time.

Eventually the growing demand for spectrum by land mobile and effective
political organization by the land mobile community lead the problem to be
reframed, at least roughy, in terms of allocating a scarce resource among
competing uses. Broadcasting and land mobile produce different communication
products both of which are valued by the public (1.e-, poth are “needed”)-
The information that was not available initially (and was never actually
produced under the regulatory management system) was that regarding the
marginal va.uation that members of the public placed on these services in
terms of a derived demand for spectrum. As a consequence, the matter was
resolved only after the land moble community was able to muster enough
political pressure to force a reallocation. Even now, there is little basis
for a claim that the current service mix represents an optimal allocation of

scarce transmission rights.


-5l-

continued. License processing continued in Chicago until March 1977 after
which the licensing process and Chicago computer were moved to Washington.

In April 1977, the Commission announced its plans for future land mobile
spectrum management + 98/ This involved abandoning the regional assignment
concept and automatic frequency selection and returning to assignment on @
national basis with private frequency coordination. The Notice of Inquiry
also stated the Commission's immediate objectives which included development
of a computerized nationwide data base, establishing rules and standards for

private frequency coordinators, and monitoring in congested urban areas+

—_—

98/ Notice of Inquiry Docket No. 21229 April 27, 19775 42 FR 26030-


~b4q

The Commission identified three types of radio systems: conventional,
trunked, and cellular. It then divided the 115 MHz band into 30 Miz
conventional/trunked systems, 40 MHz for cellular systems, and 45 MHz was
labeled “land mobile reserve.” 86/ The suballocated bands were positioned to
provide a 45 MHz separation between base station and associated mobile
frequencies. Channel spacing was established at 25 kHz.

The conventional/trunked bands were further divided between the two
systems. The Commission was eager to encourage the development of trunked
systems because they were expected to be more efficient. These systems were
also, however, much more expensive which raised question about the extent and
rate of their application. The Commission decided therefore to authorize only
300 of the 600 paired channels that could be derived from the 30 MHz
allocation. The remainder were held in reserve for later release when the
relative growth of conventional and trunked systems had been established. To
stimulate the development of trunked systems, the Commission designated 200
channels for these systems and 100 channels for conventional.

The Second Report and Order also established a new license classification
in the private land mobile services called “common user systems.” 87/ These
licensees were to be commerical entities engaged in providing communication
service for all users eligible in the private radio services as well as to the
public. This new license classification became the most controversial element

of the Docket 18262 proceeding.

86/ This was a considerable change from what had been adopted in the First
R&0. The specific suballocated bands were: 806-821 MHz and 851-866 MHz
‘convent ional/trunked; 825-845 MHz and 870-899 MHz cellular; the remainder as
"reserve." This allocation exists today, except for a small portion of the
“resetve" has been allocated for other then land mobile use. Rulemakings are
in progress to allocate the remainder of the “reserve”.

87/ This classification later became Special Mobile Radio Systems (SMRS).


-1l-

The Radio Act of 1912, unlike later radio legislation, was not a flexible
document in the administrative sense. Licensing of stations and enforcement
of regulations were delegated to the Secretary of Commerce and Labor. The
regulations were written into the Act, however, and little was left to the
discretion of the Secretary. According to the Teport which accompanied the
Senate Bill, this narrow construction of the legislation was deliberate. The
report noted that anything less would be a “surrender by Congress of its
powers and the bestowal of legislation power to all intents and purposes upon

administrative officers.” 15/

Effective “Life” of the Radio Act of 1912

The provisions of the Radio Act of 1912 proved adequate for purposes of
spectrum allocation and interference control until the advent of broadcasting
in the early 1920's. During this period, commercial radio was still used
primarily for maritime and military (naval) purposes, although transoceanic
and some domestic point-to-point service had been established. With amateur
stations relegated to frequencies above 1500 KHz, the number and types of
stations in operation were such that radio commmnication with tolerable
interference was possible under the regulations of the Act of 1912. Also, for
almost three years of this period, following United States entry into World
War I in April 1917, all private stations were either closed or operated under
Navy conrol. During those three years then, there were no private stations
Per se to regulate. Spectrum management under the Radio Act of 1912 became
increasingly ineffective when radio broadcasting emerged, and it was

ultimately superseded by the Radio Act of 1927.

15/ Senate Report No. 698, 62nd Congress 2d Session (May 2, 1912).


~46-

sets of comments on the Petitions for Stay, and 5 Requests for Associated
Relief. The Commission addressed these petitions in a Memorandum Opinion and
Order adopted in March 1975. 88/

The MO&0, with some exception affirmed the decisions of the Second R&0
and denied most elements of the Petitions. One change was to permit other
than wireline carriers to operate cellular systems. Any organization that met
the technical and financial qualifications could apply. The MO&O also adopted
the term Specialized Mobile Radio System (SMRS) for those systems to be
operated on a commmercial basis to provide service to users eligible in the
land mobile. The authorization for service to the general public by SMRS
licensees was determined to be unncessary to meet the objectives of the Docket
18262 proceeding and was deleted. It was also decided that operators of the
mobile equipment (eligible users) would be separately licensed.

Another matter addressed in the MO&O and that resulted in a change from
the Second R&0 was the operation of trunked systems by radio equipment
manufacturers. Throughout the Docket 18262 proceeding the Commission was
concerned with encouraging the development and use of trunked radio systems by
private land mobile to improve the technical efficiency of spectrum use. The
Commission recognized that these systems would be expensive to construct and,
in fact, used as one justification of the SMRS the ability to garner the
resources necessary to construct trunked systems. The radio equipment
manufacturers were obvious candidates to promote trunked systems. There was
concern, however, that the integration of equipment manufacture and system
operation could lead to a monoply of trunked system operation. Consequently,

the Second Report and Order limited ownership of trunked systems by equipment
ee epor ane Vrder

eee
88/ Memorandum Opinion and Order Docket No. 18262 March 19, 1975; 33 RR 2nd 457.



-53-

PART V

EXAMPLES OF SPECTRUM MANAGEMENT BY FEDERAL REGULATION

Introduction

This Part examines some results of spectrum management under the Radio
Act of 1927 and the Communications Act of 1934. These results are drawn
primarily from decisions associated with the development of the Land Mobile
Radio Services, although some significant decisions affecting other services
are cited where appropriate. 68/

Land mobile radio was selected as the primary case to be studied for
several reasons. First, because it was nonexistent at the time of the Radio
Act of 1927. Therefore, its entire development has been subject to the
“public interest" standard as a justification for spectrum allocation.
Second, the spectrum location considered most desirable for mobile radio has
required that service to compete for spectrum with other radio services
considered to be especially important to the public interest, particularly
television broadcast and aeronautical radio. Third, the service has
experienced rapid growth and includes several million transmitters for which
spectrum must be made available. Finally, because of continuing growth, the
spectrum demands of the Land Mobile Radio Services are even today presenting
the Commission with some of its most challenging spectrum management

problems. More than any other radio service, land mobile has demonstrated an

68/ For purposes of this examination, a “History of the Development of the
Land Mobile Radio Services" has been compiled and is included as Appendix B.
This history is written in terms of Commission actions. It does not,
therefore, include some important contributions from the private sector such
as the evolution of Frequency Coordinating Committees and mobile radio
equipment design, production and marketing. Much of the documentation
contained in this history is not repeated in this Part. :


that will govern relations among them, on some means of
arbitrating different interpretations of these
conditions, and on some device for enforcing compliance
with the generally accepted rules....In both games and
society also, no set of rules can prevail unless most
participants most of the time conform to them without
external sanctions; unless that is, there is a broad
underlying social consensus. But we cannot rely on
custom or on this consensus alone to interpret and to
enforce the rules; we need an umpire. These then are
basic roles of government in a free society.

There is thus little controversy associated with the idea that a
governmental role in defining and enforcing rights of resource use is
appropriate. Such a role is not only consistent with a market economy, it is
a necessary condition for its existence. You cannot have trade without
something to trade. What is traded in a market economy are resource rights
ultimately defined and enforced by the government.

It is important to recognize, however, that government regulation of
electronic communication involves much more than simply defining and enforcing
Spectrum resource rights. The government not only performs these necessary
functions, but also determines the specific uses to which spectrum resources
may be put and by whom. In a market economy, these allocative functions are
normally determined by market forces of supply and demand, that is, through
voluntary exchanges transacted by individuals with their own resources. In
electronic communication, market allocation processes have largely been
supplanted by bureaucratic and political allocation processes.

Different methods of resource allocation imply different results in terms
of what activities are permitted and the efficiency with which they are
carried out. This is because the factors which govern allocation decisions
(i.e., the structure of incentives) differ as among these different

processes. Factors that may be very important to a politician or bureaucrat


-70-

Maintenance, and Local Government Radio Services that were previously
mentioned.

Arguments can be conceived that would appear to support the Commission's
decision to split the mobile radio channels. The channels were becoming
congested; technology that permitted closer channel spacing had become
available; and there was no incentive for voluntary adoption of narrow-band
equipment. That congestion was present and the technology to produce narrow
band equipment was available were observable facts and therefore reasonable
arguments. The lack of incentive for conversion to narrow-band equipment,
however, was a defect of the regulatory system. It contained no provision for
the user of a wide-band channel to gain any benefit from the channel created
by an investment in narrow-band equipment. If the licensee of a wide-band
channel had been permitted to use or lease the new channel, the wide-band
channel would have been split as soon as either the licensee's own
requirements, or the revenue from a lease, justified the cost of narrow-band
equipment. This assumes, of course, that no other uncongested channel was
available merely by applying to the Commission.

Voluntary conversion would have reduced the cost of channel splitting.
The Commission found it in the public interest to require the use of new
narrow-band equipment on a national scale at a common future date. This
effectively established a fixed amortization schedule for all wide-band
equipment. There undoubtedly were licensees in areas where congestion was not
a problem who under voluntary conversion would have continued to use their
wideband equipment indefinitely and certainly beyond the date mandated by the
Commission. On the other hand, some users perhaps should have converted
sooner. In either case, voluntary conversion would likely have been more

efficient.


that suggest that serious contemplation of market forces in spectrum
management would have been highly unlikely.

First, the phenomenon of wireless or radio transmission was not well
understood even by experts at the time. There were hypotheses and even an
empirically derived formula, but no satisfactory explanation had been
developed to account for the electromagnetic propagation characteristics
observed. In a paper presented to the Royal Institution of Great Britain in
June, 1911, Mr. G. Marconi stated, “...so far we understand but incompletely
the true fundamental principles concerning the manner of propagation of the
waves on which wireless telegraph is based.” 35/ Thus, even if such an
alternative had been considered, the inability to characterize the mechanism
by which radio signals were propagated would have rendered the use of market
forces impracticable because of inadequate information by which to define
rights.

It should be noted that there was at least one reference to property
rights in the “air”, but not in terms of their use for spectrum management
purposes. In February 1910, the House Committee on Naval Affairs held
hearings on a resolution by Congressman Roberts to establish a civilian-
government board to prepare a plan to govern the operation of all radio
stations under the cognizance of the United States. During the hearings
Congressman Roberts commented that it had always been understood that a person
who owned land also owned the air above it and then stated,

We have been brought up with the idea that the air was
absolutely free to everyone; but the march of
civilization has brought about conditions, particularly

in this matter of wireless coumunication, that render it
imperative, in my estimation, that there be some change

35/ G. Marconi, “Radiotelegraphy”, June 1911; Reprinted in The Development of
Wireless to 1920, Edited by George Shiers, Arno Press, New York 1977.


-68-

protect UHF television. In a rulemaking concerned with CATV in March 1966,
the Commission addressed the issue of the economic impact of CATV on UHF
television. 85/ This Second Report and Order noted that CATV was beginning to
-tove into the larger markets and could thus offer competition to UHF
television just as the all-channel equipped receivers were arriving on the
market. The Commission stated that while it could not conclude from the
evidence available that UHF television would suffer economic harm in the
general case, there was “a substantial problem of great significance to the
public interest which must be thoroughly explored.” 86/ The Commission then
included in the CATV rules the requirement that no CATV system operating in
the top 100 markets could import a distant signal without a showing in an
evidentiary hearing that such importation would be consistent with the
establishment and healthy maintenance of television broadcast service in the
area. In other words, the Commission was willing to restrain the introduction
of CATV into the larger markets if this was necessary to protect the
development of UHF television. 87/

An interesting aspect of the CATV decision from the standpoint of
spectrum management is the contradiction between this decision and one of the
Commission's allocation principles. The Commission listed as its first
principle in determining whether spectrum should be allocated to a service,

the question of whether wireline might be a practical substitute for

85/ Second Report and Order Docket No. 14895 et al March 4, 1966; 2 FCC 2nd
(1966) p. 725.

86/ Ibid, p. 776.

87/ For an excellent history of the regulation of CATV, see: S. M. Besen and

R. W. Crandall, "The Deregulation of Cable Television"; Law and Contemporary
Problems, Vol. 44, No. 1 (Winter 1981), pp- 74-124.


-61-

Implementation of the Docket No. 6651 Decisions

Despite the designation of frequencies for new services very early in the
Docket No. 6651 proceeding, the process of implementing these decisions proved
to be no exception to the general finding here that spectrum allocation can
result in long delay when the only basis for authorizing a radio service is
the public interest. Frequencies allocated to established services which had
already qualified under the public interest standard were made available

immediately. For the new services, however, the Commission stated,

While the use of radio in these new services will
unquestionably prove feasible, there are many technical
and policy problems which must be solved before the
services can be established on a regular basis. 78/

Once again, the Commission was faced with inadequate information and had to
resort to experimental authorizations. The Railroad Radio Service was
established on a regular basis in December 1945 and the Utility Radio Service
in August 1946. In both cases, there were strong safety arguments as well as
some history of operation. For the rest of the new services, operation on a
regular basis would not occur until 1949, four years after the May 1945
report.

In April 1949 the Commission issued a Report and Order in an omnibus
proceeding that completely revised and enlarged the land mobile radio
service. 79/ This Report and Order combined nine (9) rulemaking proceedings
dealing with spectrum allocation and the establishment of rules and

regulations for land mobile radio. In many respects, it was a 'sequel' to the

78/ Ibid, p. 66.

79/ Report and Order, April 27, 1949; 13 FCC (1949) p. 1190.


-18-

mandamus proceeding in the District of Columbia Supreme Court. The court
decided that the Secretary must issue the license, and the case was appealed
to the District Court of Appeals. The Court of Appeals affirmed the decision
of the lower court and stated inter alia,

In the present case the duty of naming a wavelength is

mandatory upon the Secretary. The only discretionary act

is in selecting a wave length, within the limitations of

the statute, which in his judgment will result in the
least possible interference. 22/

While that part of the Intercity decision that stated that the Secretary of
Commerce could not refuse to issue a radio license under the Act of 1912 was
important for spectrum management purposes, the opinion that he could use his
judgment in the selection of a wavelength (frequency) had even greater near-
term effect on broadcasting.

When broadcasting first appeared, the Department of Commerce selected two
frequencies to which all stations in that service were assigned. This was
essentially in accord with the policy of the Act of 1912 of assigning
frequency by service grouping. With only two frequencies available, the
growth in broadcasting soon resulted in considerable interference between
stations. Following the Intercity decision and a recommendation by the Second
Radio Conference in March 1923, the Secretary began to specify a unique
frequency in the license of each station from within a band allocated for this
purpose. This procedure continued until 1926, and according to one commenter,

“The broadcasting system of the United States was erected under it.” 23/

22/ Hoover v. Intercity Radio, 286 Fed. 1003 (1923).

23/ Stephen Davis, The Law of Radio Communicat ion; Mc-Graw-Hill Book Co.
(1927), p. 42.



until the time of the Zenith decision. Prior to that time, the Department of
Commerce had provided for orderly growth of the radio broadcast service and
had produced what could have been used as an initial broadcast station
assignment plan from which a spectrum market could have been launched. In at
least two important ways, market forces were allowed to operate within the
administrative system. They suggest that even greater reliance might have
been possible.

First, a virtual market in radio licenses existed at the time in question
due to Department of Commerce policy with regard to license transfer with the
sale of a station. In hearings before a Senate Committee in January 1926 on
the bill that resulted in the Radio Act of 1927, the Solicitor of the
Department of Commerce, Judge Stephen B. Davis, responded to a question about

the Department's policy for permitting license transfers by stating,

We have felt this way about it, Senator, that the license
ran to the station rather than to the individual...a man
can transfer his apparatus, and if there is no good
reason to the contrary we will recognize that sale and
license the new owner of the apparatus. 52/

The Radio Act of 1912 did not explicitly address license transfer, but it did
require that the license specify the owner of the station. This would have
preciuded transfer without government awareness.

Second although not identified as such, another example of market
operation was cited by Judge Davis at the same hearings. He noted that on

occasion, the Department would assign the same frequency to two stations in

52/ Hearings before the Committee on Interstate Commerce, United States
Senate, 69th Congress, lst Session on $1 and $1754 (January 1926), p. 39.
$1754 after compromise with House bill H.R. 9971 became the Radio Act of 1927.


~55-

and finally two important reallocation proceedings, Docket Nos. 18261 and
18262.

All of these actions exemplify the difficulties associated with spectrum
management by regulation and the deficiencies that can result. In particular,
they demonstrate the lengthy delay that has occurred in arriving at allocation
decisions. A consequence of the delay, of course, is foregone radio
communication service of some unknown value. Part VI specifies the
conclusions to be drawn from this allocation experience and from the analyses

in other parts of the report.

Allocation of Frequencies Above 30 MHz

Apparently, land mobile radio operation at frequencies above 30 MHz (VHF)
became technically feasible during the first half of the 1930 decade.
According to the Sixth Annual Report of the FRC, experiments at these
frequencies were underway by 1931. In March 1933, the Bayonne, N.J. Police
Department established a two-way communication system between headquarters and
mobile units at 33.1 MHz under an experimental license. 69/ Regular two-way
comminication capability had been requested earlier by police but had been
denied due to lack of available frequencies in the lower band.

Regular service at frequencies above 30 MHz had not been authorized
because neither the FRC nor the FCC was confident that sufficient information
was available to support an allocation "in the public interest”. In its First
Annual Report the FCC in discussing the need for a VHF allocation and its

concern that the allocation not be made prematurely stated:

69/ Daniel E. Noble “The History of Land Mobile Communications," Proceedings
of the IRE Vol. 50, No. 5 (May 1962), p. 1407.


-21-

point service, but Secretary Hoover in his opening remarks indicated that in the
international telegraphic field there were no pressing problems. 29/

While the original impetus for legislation to revise the Radio Act of
1912 was the growing demand for radio broadcast channels, by 1927 the Congress
had become concerned with much more than just technical management of the
broadcast spectrum. Three general topics that had emerged as major concerns
were: (1) vested rights in the spectrum, (2) the basis or criteria for
granting a license, and (3) monopoly of radio equipment. In addition, several
matters uniquely associated with broadcasting had gained attention. 30/ Thus,
out of an initial effort to develop a framework for management of broadcast
spectrum, there evolved a legislative environment that created a regulatory
mechanism with far-reaching powers that would control all radio services.

This point was emphasized by Commissioner Henry A. Bellows in an address
before the League of Women Voters in Washington in April 1927 when he stated,
Congress has grasped the significance of radio as a vital
force in American life and has recently enacted a law
which in many ways is absolutely unique. I know of no
other activity, conducted entirely through private
enterprise which has seemed to Congress so important and
so complex in its problems as to require the creation of
a new and separate branch of Government exclusively for
its regulation. Nor do IL know of any other law which,
like the Radio Act of 1927, sets up as the sole guide for

the body charged with its administration the interest,
convenience, or necessity of the public. 31/

29/ Ibid, p. 2.

30/ These included such matters as programming (e.g., cultural versus
entertainment), applicants' qualifications, equitable distribution of
broadcast stations among states and localities, the use of advertising, chain
broadcasting, and monopoly of broadcasting.

31/ Quoted in the Annual Report of the Federal Radio Commission for Fiscal

Year Ended June 1927, p. 6. Commissioner Bellows was a member of the first
Federal Radio Commission.







-42-

PART IV

GENERAL LIMITATIONS OF REGULATED SPECTRUM MANAGEMENT

Parts Il and III reviewed the history of the Federal statutes under which
spectrum management has been conducted and the Congressional reasoning that
led to regulation. This Part first describes the allocation process including
the principles by which the Commission defined the “public interest” and the
factors about which it sought information. It then discusses the difficulties
the Commission has encountered in using these principles and factors and
compares the regulatory process and its results with the operation of a
market. It is shown that the present regulatory process is inherently limited

in its ability to produce an efficient allocation of the spectrum.

The Public Interest Criterion

The Communications Act of 1934 requires that any spectrum management
decision, whether pertaining to allocation, assignment, or interference
control, must satisfy the public interest criterion. A major drawback in the
application of this criterion has been that the term “public interest” has no
unique definit..on. This inability to uniquely define the public interest was
recognized soon after the passage of the Radio Act of 1927. In 1928, the
Federal Radio Commission released a statement regarding its interpretation of
the clause, and in response to criticism that the Commission had not issued a

precise definition it noted,


APPENDIX A

SIGNIFICANT FACTORS AND GENERAL PRINCIPLES FOR ALLOCATION

This Appendix contains the significant factors about which the Commission
stated it required information to arrive at allocation decisions and the
general principles it followed as allocation criteria in the Docket No. 6651
proceeding. l/ With the exception of minor revisions in section titles
everything that follows is quoted directly from the Commission's Report of

Proposed Allocations cited below.

Significant Factors

1. Public Need and Benefit:

(a) The dependence of the service on radio rather than wire lines.

(b) The probable number of people who will receive benefits from the
service.

(c) The relative social and economic importance of the service,
including safety of life and protection of property factors.

(d) The probability of practical establishment of the service and the

degree of public support which it is likely to receive.

1/ Report of Proposed Allocations from 25,000 Kilocycles to 30,000
Kilocycles; Docket No. 6651 (January 15, 1945) (available in the FCC Library,
1919 M Street, N.W., Washington, D.C. 20554).



could be discerned as a primary justification for the allocation. Thus, even
though Commission allocation policy at the time of the Docket No. 6651
proceeding was far too restrictive to have permitted land mobile radio
operation as it is known today, later events indicate that the seeds for a
more liberal policy were planted during this proceeding.

A statement that might be taken as an explanation, or even a
justification, for the somewhat relaxed policy in the Docket No. 6651

proceeding is found in the Commission's Annual Report for FY 1945. Ina

discussion of the advances in radio technology during World War II, this

report states:

These developments have resulted in extending the useful
portion of the spectrum to such an extent that radio
channels can now be made available for the establishment
of many new radio services and the expansion of certain
existing radio services. 77/

This rather optimistic appraisal of spectrum availability conflicts to some
extent with a statement made elsewhere in the same report where it was
indicated that even with the extension of the usable spectrum the demand for
channels exceeded the supply. Apparently, it was not yet obvious to the
Commission in 1945 that at a zero price the demand for technically useable
spectrum would always exceed supply. That is, spectrum allocation would
require denying frequencies to some attractive uses given that other uses were

more beneficial.

77/ Eleventh Annual Report of the FCC (FY-45), p. 66.


(e)

(£)

(a)

(>)

(ec)

(4)

(e)
(£)

(g)

(h)

-2-

The degree to which the service should be made available to the
public, that is, whether on a limited scale or on an extended
competitive scale-

When it is proposed to shift a service from its present location in
the spectrum, data should be presented showing the feasibility and
cost of the shift, particularly with respect to the technical,
economic and other considerations involved, and the length of time

and manner for completing the shift.

Technical:

The frequency bands required for @ given service and the exact
position thereof in the radio frequency spectrum; also the width of
communication bands or channels within each portion required for
station frequency assignments.

Suitability and necessity for particular portions of the spectrum
for the service involved. This includes propagation characteristics
and reliable range data.

Field intensity required for reliable service.

The number of stations required to enable efficient service to be
rendered.

The distance over which communication must be maintained.

The relative amount of radio and other electical interference likely
to be encountered.

The relative amount of noise which may be tolerated in the rendering
of service.

Apparatus Limitations, both transmitter and receiver.


established in Docket No. 11253. Finally, the frequency deviation of all
transmitters was to be reduced to the narrow band standard of + 5 KHz within
six months from the effective date for all except the Public Safety Service

which was allowed a period of two years.

11. Summary of "Channel Splitting” — VHF Bands.

At this point (1959), the Commission had split the land mobile channels
in the 150.8 MHz-162 MHz band, split and assigned some of the channels in the
25-50 MHz, established standards for narrow-band equipment in both bands, and
established dates by which the new standards were to be effective and new
channels were to be available. There remained the tasks of assigning the new
channels created in the 150.8-162 MHz band and disposition of the 450-460 MHz
and 460-470 MHz bands. In addition, demand for radio service required the
Commission to review the administrative structure of the land mobile
services. On April 3, 1957, the Commission released Notices of Proposed
Rulemaking in five separate dockets that had the common objective of dealing

with these matters. 59/

12. Suballocation of VHF and UHF Channels.

Docket No. 11990 dealt with the Public Safety Radio Services. In June
1958, the Commission adopted a Report and Order in this docket that affected
several parts of the Public Safety rules. 60/ It reduced the channel spacing
in the portion of the 450-460 MHz band allocated to the Public Safety Services

from 100 KHz to 50 KHz. It also removed the developmental restriction on the

59/ NPRM Docket Nos. 11990, 11991, 11992, 11993 and 11994 April 3, 1957; 22
FR 2584 April 16, 1957.

60/ Report and Order Docket No. 11990 October 8, 1958; 17 RR 1553.


-33-

The Commission adopted a Report and Order in Docket No- 11993 in February
1958 which reduced the spacing between channels in the portion of the 450-460
MHz band allocated to the Land Transportation Services and made the channels
available for regular assignment. It also made channel assignments in the
450-460 MHz and 27 .23-27.28 MHz bands to the Land Transportation subservices- 64)

The Docket_No- 11994 proceedings resulted in a general revision of the
Citizens Radio Service Rules- of primary interest here is the reallocation of
part of the 460-470 MHz band to the Industrial Radio Services which has
already been discussed under the Docket No. 11991 proceeding: Other aspects
of the Docket 11994 proceeding are included at this point, however, to provide
a more complete record of the history of the Citizens Radio Service which in
its own way played an important role in the development of business and
industrial use of land mobile radio- In particular, it was the availability
of the 460-470 MHz spectrum together with very permissive eligibility
requirements in the Citizens Service that permitted a convincing demonstration
of the demand for mobile radio by a large number of users who were not then
eligible for a license in the Industrial Radio Services-

A First Report and Order in the Docket No- 11994 proceeding was adopted
in April 1958. 65/ This Report and Order included rule changes to promote
more efficient administration of the service. A Second Report and Order in
August 1958 reallocated the spectrum pand 26-96-27 «23 Miz from the Amateur

Service to the Citizens Service, established a new Class D Citizens radio

station, and specified the frequencies on which all classes of citizens

Ee

64/ Memorandum Opinion and Order Docket No- 11993 February 26, 1958; 16 RR
16l4a-

65/ irst Report and Order Docket No. 11994 April 16, 1958; 17 BR 1538-

65/ Fi Pp.


-29-

There does not appear to have been any further effort to establish
Government ownership of radio commmication. A major reason could have been,
and probably was, that interest in radio communication took a major turn with
the introduction of broadcasting in November 1920.

It 1s apparent that the Department of Commerce also assumed government
regulation of radio. Several times during the four National Radio Conferences
convened between 1922 and 1925, Secretary Hoover called on the radio industry
to voluntarily establish and comply with rules to prevent interference.

Still, it is clear that he did not envisage a spectrum management system
devoid of a central administrative authority. In his opening remarks to the
first Conference in February 1922 he stated that one purpose of the Conference

was,

++eto advise the Department of Commerce as to the
application of its present powers of regulation and to
develop the situation generally with a view to some
recommendation to Congress, if it be necessary, to extend
the present powers of regulation. This is one of the few
instances that I know of in this country where the

public - all of the people interested - are unanimously
for an extension of regulatory powers on the part of the

Government. 42/

42/ Minutes of Open Meeting of (lst) Department of Commerce Conference on

Radio Telephone (February 27 and 28, 1922), p. 4. Copy in the Federal
Communications Library, 1919 M Street, N.W., Washington, D.C. 20554.



PART IL

HISTORY OF INTERNATIONAL AND DOMEST.C RADIO REGULATION

Introduction

This part discusses significant events in the history of radio regulation
which led to the Radio Act of 1927 which in turn became Title III of the
Commmunications Act of 1934. The initiation of international regulation with
the Berlin Convention of 1906 and domestic regulation with the Radio Act of
1912 are described. The formation of the Radio Cooperation of America and
cross-licensing agreements among major equipment manufacturers and their
subsequent effect in the development of broadcasting and radio regulation are
noted. Finally, the emergence of broadcasting and its role as the reason for

the Radio Act of 1927 are discussed.

Early Radio Background

Interest in radiocommunication by other than experimenters began with the
award of a British patent to Marconi for a radiotelegraph system in 1896,
followed by successful demonstrations of the system. 3/ The implications for
maritime safety and naval operations were immediately apparent. National
governments began installing radiotelegraph equipment on naval vessels and at

coastal locations. Merchant ships, particularly ocean liners, were also

3/ Prior events and dates that are relevant to the development and regulation
of radio communication are: (1) the establishment of wire telegraphy in 1844;
(2) the inauguration of telephone service in 1877; (3) publication of the
theory of electromagnetic radiation by Maxwell in 1865; and (4) confirmation
-of Maxwell's theory by Hertz in 1887. A complete history of radio
communication would encompass the entire development of man's knowledge of
electricity and magnetism.


7
©

develop the items of hardware and software together with rules necessary to
operate a regional spectrum management facility. o1/

Primary objectives in the design of the spectrum management facility were
frequency assignment and license preparation by automatic data processing.
This required a data base that was compatible with computer processing and
that contained the necessary engineering and channel occupancy data and the
operational characteristics of the radio equipment in use and proposed. To
satisfy these data base requirements, mobile channel monitoring units were
designed and procured, and a new application form containing the mobile radio
operational information was developed. In addition, engineering models for
radio propagation analyses and channel loading optimization were defined and
adapted for computer processing.

In February 1971, the Commission initiated a rulemaking proceeding to
establish a prototype regional spectrum management center in Chicago. 92/
The center was to be equipped and staffed to assign frequencies and issue
licenses to land mobile applicants in the Chicago area. It was to be
sufficiently flexible, however, to permit extension of the concept to other
radio services. Also, it was anticipated that if the management technique
proved feasible, it would be expanded to a national system involving some
10-12 regional centers. Spectrum use optimization was an ultimate and a

primary goal of the Center.

91/ For a brief history of the efforts of the Spectrum Management Task Force,
‘see: Diane King, Chronology of the National Spectrum Management Program;
Federal Communications Commission, Office of Chief Engincer Report No. FCC/OCE
SMIF 76-01 (August 1976). ~ 4

92/ Notice of Proposed Rulemaking Do. ct ho. 19150 February 3, 1971; 36 FR
2793 February 10, 1971.



-44-

Commission action already decided upon and its use as a criterion by which to
select a course of action, which was its original purpose. The Commission's
interpretation of the public interest has changed over time. These changes
have occurred in some instances because circumstances have been altered, while
in other cases results did not materialize as expected.

While the public interest criterion is applicable to decisions affecting
any function of spectrum Management, the most significant issues in which it
has posed problems have been those involving allocation and reallocation of
the spectrum. Since these occasions also most vividly demonstrate the ef fect
of inadequate information and resulting inefficiency of regulated spectrum
management, the remainder of the discussion in this Part will be focused on

allocation matters. 63/

The Allocation Process

The result of spectrum allocation is the designation of uses of the
various parts of the spectrum. The allocation process, however, must consider
not only the relative merits of the uses of the spectrum, but also many
technical factors associated with both the propagation characteristics and the
technology of the radio equipment involved. In this process, the Commission
has been quite explicit in distinguishing between a definition of the public
interest for purposes of comparing different uses of the .pectrum and the
information it requires about a proposed use to decide whether that use

satisfies the definition.

63/ Examples of other issues which involve cost-benefit compromises, and thus
the public interest, are the rigidity with which equipment standards to

control interference are specified and the use of pre-engineered allotment
tables rather than market demand for station assignment.


=4-

environment characterized by ever more rapid advances in technical
capabilities and expanding consumer expectations with attendant economic
penalties. At the same time, improvements in our understanding of radio
transmission and our ability to measure spectrum outputs make reliance upon
market allocation mechanisms more feasible. Thus, the analysis suggests that
a high priority be placed on finding ways to substitute market forces for
regulatory methods of spectrum resource allocation.

The study is organized in the following manner. Parts II and III trace
the historical development of spectrum management through federal
administrative regulation. These Parts attempt simply to explain what
happened and why. Part IV examines the allocation principles and process as
they evolved over time. Part V describes how the tools of administrative
spectrum management were applied in the land mobile sector and to what
effect. Finally, Part VI analyzes the results or characteristics of federal
spectrum management as exemplified by the historical experience in land mobile
radio. A history of land mobile radio providing relevant technical and

institutional background is given in Appendix B.


-38-

The operating characteristics of each of the stations could have been
vested as a set property rights protected against additional interference. An
initial distribution of the rights could have been accomplished by vesting
them in the then current licensees, or by auction or lottery if that were
deemed more equitable. These rights could then have been bought and sold just
as the Department of Commerce had already authorized for stations, except that
no government approval would have been required. The only government
administrative involvement that would have been necessary would have been
maintenance of an official record of the ownership right.

The broadcast station assignment plan described thus far would have been
technically no different than that which was operating under license by the
Department of Commerce. The rights conveyed by the license would have simply
become a vested private property right. This plan, however, would only have
provided a baseline from which AM broadcasting would have been expected to
expand. 57/ To accommodate this expansion a legal procedure to permit entry
of a new station or modification of one in the original plan would have been
necessary. An obvious procedure would have been to require that a new or
modified station protect the owners of established rights from any additional
interference. Having satisfied this requirement, the owner of the new or
modified station could have been permitted to establish a new property right
in the spectrum by registe.ing the change with the agency maintaining the

official record of ownership.

57/ According to an October 12, 1984 FCC news release there were 4754
licensed AM-broadcast stations on September 30, 1984. Most of the increase
over what was fesible 60 years ago is due to the introduction of the ‘daytime
only’ station and the directional antenna. Improved knowledge of propagation
characteristics, however, has also had considerable effect. Also, a few more
broadcast channels have been added.


-29-

the older wider bandwidth receivers were subject to interference from stations
operating on the split channels even though narrow band transmitting equipment
would be used. Even more important, the larger deviation (+ 15 KHz) permitted
under the old rules could result in interference to receivers (old or new) on
adjacent eplit channels. Furthermore, if the deviation were reduced to comply
with the new standards (+ 5 KHz) the performance of the older radio systems
would be somewhat deteriorated:

Extremes in the controversy were represented py those (particularly the
police service) who requested full protection of their older systems until the
November 1, 1963 date and potential users (such a6 the Industrial Service
users) who preferred immediate assignment of the split channels- Because of
this wide divergence of views, the Commission opened yet another proceeding
specifically aimed at establishing 4 date for assignment of the split channels
and conversion to the new narrow band standards in the 25-50 MHz and 152-162
Maz bands. 57/

In June 1958, the Commission released a Report and Order in the Docket
No. 12295 proceeding which reaffirmed the November 1, 1963 date for conversion
of all radio stations and made the split channels in the 25-50 MHz and 152-162
Maz bands available for assignment as of the effective date of the R&0. (August 1,
1958). 58/ The R&O also required all radio systems authorized after the
effective date to use equipment which met the narrow band standards

__

57/ NPRM Docket No. 12295 January 22, 1958; 23 FR 598 Jamary 29, 1958.
Because there were no land mobile licensees operating in the reallocated
150.8-152 MHz pand this band was not included. The assignment date remained
April 1, 1958 and only equipment meeting narrow pand standards was authorized.

58/ Report and order Docket No- 12295 June 26, 1958; 17 RR 1582. In the case
of the Public Safety Radio Service, split channels were to pe assigned prior
to November 1, 1963 only where @ satisfactory showing could be made that no
harmful interference would be caused to stations operating on adjacent
channels-


-17-

consolidation of the conflicting interests in patents and inventions there

seemed little hope of developing a U.S. national radio system or of competing
in the international arena. In any event, the alliance was not to be a happy
one. The next few years saw several disagreements among the participants and

a Federal Trade Commission investigation at the request of Congress. 21/
Concern over a possible monopoly undoubtedly affected the form of regulation

that was imposed on the radio industry.

Radio Act of 1927

Regardless of what motivated the cross license agreements, with the
development of broadcasting there came a fundamental change in the demand for
Spectrum. The Radio Act of 1912 proved totally inadequate to cope with the
spectrum demands of the rapidly growing radio broadcasting service. The Act
required a Federal license to operate a radio station but permitted
essentially no discretionary action by the licensing authority for spectrum
Management purposes. Its most fundamental flaw was that it provided no
authority for the licensing authority to grant some applications and reject
others. The authority of the Secretary of Commerce under the Radio Act of
1912 was the subject of two court decisions in the 1920's, both of which
affected spectrum management.

tn 1921, the Secretary of Commerce refused to grant a renewal of license
to the Intercity Radio Company for a radio telegraph station on Long Island
because no frequency could be found that would not result in interference to

government and other private radio stations. Intercity Radio entered a

2u/ For a detailed account of the history of this alliance, see History of
Radio to 1926 and Gleason L. Archer, Big Business and Radio; The American
Historical Company, Inc. (1939).


-12~

The Developments Leading to the Introduction of Commercial Broadcasting

Important technical and economic events that occurred during the 1912-
1920 period warrant brief mention because of their effect on broadcasting and
the legislative effort that led to the Act of 1927. First, a significant
technical achievement of this period was the development of the vacuum tube
radio transmitter. None of the transmitting devices used in the early days of
radio telegraphy were well adapted to radio telephone, although there was
considerable experimental effort. 16/ The availability of the vacuum tube
transmitter stimulated development of radiotelephony and eventually made
broadcasting feasible since broadcasting was an application of radiotelephony.

Second, the formation of the Radio Corporation of America and the
establishment of cross-licensing agreements among major manufacturers of radio
equipment created economic pressures that provided the impetus for the
development of broadcasting. 17/ During World War I, radio equipment
manufacturers devoted their facilities to research and production of radio
equipment for military use. When government procurement was curtailed at the
end of the war, many companies were left with greatly expanded capacity and no
immediate domestic market for their products. As the largest mamfacturers,
the General Electric Co. and the Westinghouse Electric and Manufacturing Co.
were particularly affected. General Electric was then manufacturing what was
considered to be the world's best high~power transmitter. When General

Electric entered negotiations with the British Marconi Co., who represented

16/ History records the first transmission of the human voice by radio as
occurring on Christmas Eve 1906. See History of Radio to 1926. p. 86.

17/ > The basis for this discussion 1s found in History of Radio to 1926 and
History of Communication-Electronics in the United States Navy. In the
interest of brevity, specific documentation and most detail have been omitted.



INDEX

PART I
Page
INTRODUCTION... ccecseccccecssceceeceveel
PART IL
HISTORY OF RADIO REGULATION

Introduction... ...eceeeeues
Early Radio Background.......

International Radio Regulation
First U.S. Radio Regulation...
Radio Act of 1912.........++-
Effective “Life” of the Radio Act of 1912..
Developments Leading to the Introduction of Broadcasting. - -
Beginning of Broadcasting........++
Completion of the Radio Trust.
Radio Act of 1927......eeeeeeeee

PART III
ANALYSIS OF REGULATION HISTORY

Introduction. secssevceececscesccees beet eee e cee e cece eeeeeeeeee ween 23
Forces Favoring an Administrative Approach to

Spectrum Management From 1902 to 1927....seeeeeveecceeecees eee 2h
Reasons for Regulation of Spectrum Management

at the Time of the Radio Act of 1927.... 2428
Vested Rights in the Spectrum....
Use of Market Forces in 1927
Summary of Part III..

PART IV
GENERAL LIMITATIONS OF REGULATED SPECTRUM MANAGEMENT

The Public Interest Criterion..
The Allocation Process..... .
Allocation Principles.....-+++seeee-
Information Required for Allocation........+

"Public Need" Versus Market Demand.

Technical Information
Summary — Part IV.-..-.++ eee



-41-

15. Docket No- 18261 Proceeding-

In its First Report and Order in Docket No. 18261, the Commission adopted
a more conservative approach than originally proposed and reallocated UHF-TV
channels for shared use by land mobile in only the 10 largest metropolitan
arease 80/ Further, the Commission restricted the sharing to one or possibly
two of the lowest seven channels. It had proposed to permit as many a8 four
channels to be shared in some areas- The Commission noted that its decision
was influenced by the necessity to provide maximum protection to television
stations while allowing adequate power and antenna height to provide
meaningful relief for the land mobile services in the areas where the need was
most urgent. The results of the sharing experiment, including effects on
television, were to be reviewed in five years:

A Second Report and Order in June 1971 guballocated the 470-512 MHz among
the various land mobile services and modified the rules of the Public Safety,
Industrial, and Land Transportation Radio Services accordingly- 81/ This
Order made the channels available for assignment effective August l, 1971. It
is interesting to note that three years elapsed between the initiation of the
Docket No. 18261 proceeding and the availability of the shared channels for
use by the land mobile services. This occured despite the fact that the
primary purpose of the reallocation proceeding was to provide “immediate”
relief for land mobile.

Shared use of the 470-512 MHz band was extended to three additional

metropolitan areas by a Fifth Report and Order in Docket No. 18261 in July

Ee

80/ First Report _and Order Docket No. 18261 May 20, 1970; 19 RR 2nd 1585

81/ Second Report _and Order Docket No- 18261 June 16, 1971; 22 RR 2nd 1691.




-67-

available at the time. It subsequently became, however, and for several years
remained, an inviolate commitment that was not easily changed.

For the first decade after the Sixth Report and Order there was little
progress in the development of UHF television broadcasting. Of the few
stations that attempted operation, many failed for economic reasons. The
Commission was confronted with a highly anomalous allocation matter.

Normally, allocation problems developed because the demand for spectrum by a
radio service exceeded the available supply. In the case of UHF television,
the opposite situation prevailed, but the Commission remained convinced that
the demand would appear if the right set of circumstances could be
established. The Commission took action in many ways to create an environment
conducive to UHF television development of which two examples will be
discussed.

Because there were few UHF television stations on the air, receiver
manufacturers found little incentive to equip television receivers with UHF
tuners. Converters that permitted a UHF signal to be received on a VHF-only
receiver were available but were not widely used. The Commission, therefore,
requested Congressional legislation giving it authority to require al1-channel
tuning on all television receivers sold in interstate commerce. This
legislation was approved in July 1962, and the Commission adopted rules
requiring all-channel tuning capability in receivers manufactured after
April 30, 196". This example has been cited because, as will be seen later
the very presence of the all-channel requirement had the effect delaying
allocation of spectrum to the land mobile services.

A second example of Commission dedication to the promotion of UHF
television is both more interesting and significant. This is the matter of

the constraints placed on Community Antenna Television Systems (CATV) to


-22-

Eventually, even without broadcasting, there undoubtedly would have been
legislation to revise the Act of 1912. As the spectrum became more crowded,
some means to select among users would have been required. It is, of course,
impossible to know what form such revised regulation would have taken. It is
very reasonable to assume, however, that something quite different from the
Radio Act of 1927 would have resulted. It bears repeating that this Act was
written for broadcasting and then all radio services were regulated
accordingly. For example, in his book "Radio Law,” Mr. Dill discusses the
origin of “public interest” as a criteria for a license grant and notes,

Congress legislated primarily concerning broadcasting
when it established this test. 32/

It is possible if the focus of legislation has not been broadcasting, the
eriterion might have been different.

The development of the regulatory stance adopted with the Radio Act of
1927 is analyzed in Part III of this paper. Also the origin of some of the
Congressional concerns that influenced the legislation are discussed to the

extent such information was available.

32/ Clarence C. Dill, Radio Law, Practice and Prodecures; National Law Book
Company (1938), p. 88. Mr. Dill was a member of the U.S. Senate from 1923-
1935 and was very active in the construction of the Radio Act of 1927.





distress calls from ships; (3) establishment of an International Bureau to

gather and distribute information about the radiotelegraph systems in use and
the coastal station installations in each country; and (4) tariffs to be
charged for international radio communications. The Conference also adopted
regulations that prescribed specific wavelengths from which commercial
comminications were excluded. 7/

The Berlin Convention of 1906 was the beginning of international
regulation of radio communication and spectrum allocation. The United States
reacted cautiously to the new Convention. Hearings on ratification of the
Convention were first held in January 1908. The commercial wireless interests
led by the Marconi Wireless Telegraph Company of America were against
ratification primarily because of the compulsory intercommunicat ion
requirement and tariff regulation. The strongest proponents of ratification
were the executive departments of government including the Army, Navy and
Department of Commerce and Labor. 8/ Despite a recommendation by President
Roosevelt that the Convention be ratified, the opposition of the commercial

interests was sufficient to prevent action at that time.

First U.S. Radio Regulation

Although ratification of the 1906 Berlin Convention was dezerred by the
Senate in 1908, the provision requiring compulsory communications was included

in the first U.S. domestic law dealing with radio communication on June 24,

7/| The legislative history of the Radio Act of 1912 implies that the excluded
‘band was reserved for use by governments, but the Convention does not so
state.

8/ See History of Commnications-Electronics in the United States Navy

(p- 124) for a discussiou of the Hearings.



the management of the Chicago center under the authority of the regional
Manager at that location.

Licensing of Chicago systems using SMTF procedures began in Washington in
May 1972. The Chicago Regional Office began Processing land mobile licenses
in January of 1973. In February 1974 automatic frequency assignment was
Anitiated for the purpose of comparing frequencies selected with the choices
of the private frequency coordinators. Finally, in October 1974, the requirement
for prior frequency coordination of applications was eliminated. 96/
Essentially, the Chicago regional center had achieved operational status with
frequencies for new applicants selected automatically by computer and licenses
issued by the center under delegated authority.

Although the Spectrum Management Task Force had achieved the objective
for which it had been established, there remained the question of whether the
highly automated Chicago licensing system was sufficiently cost-beneficial to
warrant extension of the concept to other metropolitan areas. After a series
of studies beginning in 1973, the Commission decided that budgetary
constraints would not petmit even the continuation of the Chicago effort. In
a Public Notice in June 1976, the Commission stated that the SMIF was to be
disbanded and the responsibility for frequency selection returned to private
coordinators. 97/ It also stated that the Commission's primary effort in land

mobile would be the creation of a nationwide data base similar to that

‘ -
developed in Chicago and that a reduced monitoring program would be
ee
96/ See, “Chronology offtthe National Spect.um Management Program” *

pp- 15 and 18.

97/ Public Notice "Action on Regional Spectrum Management Program"; released
June 29, 1976, FCC 76-605.


-27-

exploitation of speculative schemes based on a public
misconception of the art. 38/

The “speculative schemes” mentioned by the Board were, no doubt, a
reference to questionable promotions of radiotelegraph company stock by some
individuals. 39/ On July 29, 1904, the President approved the recommendations
of the Board to the extent they applied to government stations and directed
all Departments concerned to put the recommendations into effect. It is
obvious from what has already been said that the Congress took no action at
that time on the recommendation for licensing of private stations. The
situation whereby government departments were striving for regulation of
vradiotelegraphy and private interests were opposing it, while Congress took no
action, persisted until the enactment of the Radio Act of 1912. It will also
be seen to have occurred again just prior to 1920. 40/

By 1912, the Congress had been, so to speak, overtaken by events. There
were the international requirements of the recently ratified Berlin Convention

to be met. Interference between stations had become serious. Finally, there

38/ “Report of the Inter-Departmental Board Appointed by the President to
Consider the Entire Question of Wireless Telegraphy in the Service of the
National Government;" Government Printing Office (1904). Reprinted in
Documents on Awerican Telecommunications Policy, Vol. I; Editor John M.
Kittross (1977).

39/ See, History of Communications-Electronics in the United States Navy,
Pp. 67-69.

40/ History records an interesting parallel between the effort to establish
“government control of radio during its early years and that of the Post Office
Department to wrest control of the telegraph and telephone from the private
sector. One of the more intriguing arguments used, recalling similar
statements about the "airwaves," was that of the Postmaster General who stated
in 1891 that, “The electric current belongs to the people by right...." See,
"Selections from Government Ownership of Electrical Means of Communication";
Government Printing Office (1914). Reprinted in Documents in American
Telecommunications Policy, Vol. I.



prompted the Commission to consider extension of the allocation table to
higher frequencies. A public hearing on the matter was held in June 1936. As
a result, the Commission established an allocation of the spectrum to 300
MHz. 15/ Twenty-nine (29) channels between 30.58 MHz and 39.90 MHz were
reserved for police mobile communications. Channels were also allocated for
several land mobile stations not yet recognized as part of the land mobile
service. Channel spacing was 40 kHz.

The allocation of VHF frequencies had a major impact on police
communication. Perhaps the most immediate effect was increased growth in both
the number of licensed stations and two-way communication systems. It also
undoubtedly led to experimentation with frequency modulation (FM) in the
mobile service. Frequency modulation required the wider channel width that
could be made available at VHF.

Second was an expansion in the types of mobile stations recognized by the
Commission. In 1937, Congress amended the Communications Act of 1934 which
among other things, added the words, “for the purpose of Promoting safety of
life and property through the use of wire and radio communications" to Sec.’ 1
of the Act. 16/ While the amendment was passed largely because of concern for
maritime safety, the Commission interpreted the change in purpose of the Act to
include all aspects of public safety, and took that mandate very seriously. 17/

In June 1938, the Commission adopted new rules for the Emergency Radio
Services. 18/ These new rules included municipal and State police, marine,
ee
15/ FCC Order No. 19 (October 13, 1937) Docket No. 3929; 4 FCC (1937) p- 30.

16/ Public Law No. 97, 75th Congress, lst Session (May 20, 1937).

l7/ Fourth Annual Report of the FCC (FY 1938) p. 75 and Fifth Annual Report.
of the FCC (FY 1939) Pp. 59.

18/ 3 FR p. 1734 (July 15, 1938).


-49-

For the Chicago experiment, the Commission proposed to replace its
procedure of allocating plocks of spectrum on a nationwide basis to the more
than 20 land mobile services with a system of inter-service shared usage based
on local needs. The radio services were to be divided into two categories+
One category would include only the Police and Fire Mobile Radio Services.

All other mobile services, including the remainder of the Public Safety
Services, were to compose the second category. The frequencies then assigned
to the Police and Fire Services were to be pooled and shared by both

services. Likewise, the frequencies assigned to all other services were to be
pooled and shared according to need-

In October 1971 the Commission adopted a First Report and Order in Docket
No. 19150 in which it introduced a new application form for land mobile and
established rules for its use. 93/ The primary purpose of the R&O was to
initiate procedures for gathering the information necessary to establish an
adequate data base for computer supported frequency assignment and license
processing.

By a Second Report and Order in December 1972, the Commission adopted the
inter-service sharing concept with the two categories of users as proposed in
ite NPRM. 94/ On the same date the Commission adopted an administrative
Order, delegating authority to the Chief Engineer to conduct the operation of

the regional spectrum management center(s)- 95/ This Order effectively placed

OE

93/ First Report and Order Docket No. 19150 October 28, 1971; 32 FCC 2d 347.
94/ Second Report and Order Docket No- 19150 December 13, 1972, 38 FCC 2d
625. While the Commission adopted the inter-services sharing concept, it
instructed the SMIF that it was not to be implemented until results of the
Chicago Region occupancy monitoring and computerized frequency assignment
program had been evaluated.

95/ order December 13, 1972; 38 FCC 2d 622.


APPENDIX B

DEVELOPMENT OF THE LAND MOBILE RADIO SERVICES

Introduction

This account of the development of the land mobile radio services is in
essence a chronical of Commission actions with regard to these services. It
is not a complete history in that it does not include the contribution to land
mobile development by the private sector. The primary purpose in compiling
this historical record was to trace the evolution of the authorized service
(sub-service) structure of land mobile radio and to identify those spectrum
allocation proceedings, and other regulatory actions, which had a significant
effect on the growth of land mobile.

The present structure of the land mobile services has existed with very
little change since the latter part of the 1950 decade and the last ma jor
allocation to land mobile was made in 1975 in Docket 18262. This history,
therefore, covers the period from the origin of land mobile in 1928 to the
middle 1970's. While there have been several land mobile rule making
proceedings in the last eight years or 80, some deregulatory in nature, none
of these proceedings had a significant effect on land mobile allocation policy
or altered the list of eligible services included in the land mobile
administrative structure.

This development of land mobile radio is documented primarily in
chronological sequence. The procedure could not be followed exclusively,
however, because in some instances influential events were more appropriately
described in connection with a period of land mobile development that was

later in time while in other cases clarity required mention of an incident


1910. 9/ This 1910 Act was directed specifically at maritime safety and
required any U.S. or foreign ocean-going ship carrying more than 50 persons
(including passengers and crew) to be equipped with “efficient apparatus for
radio-communication” in the charge of a skilled operator. It further
specified that such apparatus would not be deemed efficient unless the company
installing it contracted in writing to exchange, and in fact did exchange,
messages with shore or ship stations using other systems of radio-
communication. The Department of Commerce and Labor was designated by the Act
to provide for its execution. Thus, the U.S. had its first regulation of
radio, but spectrum management was yet to come. 10/

The 1906 Berlin Convention was eventually ratified by the Senate in
1912. The reason for a ratification at that time is interesting. A Third
International Radio Telegraphic Conference was scheduled to be held in London
in June 1912. By 1911, thirty-three countries had ratified the 1906
Convention, while the U.S. had not. ly/ The adhering nations, therefore,
elected to withdraw the U.S. invitation to the London Conference. This action
prompted the Senate Foreign Relations Committee to reconsider the matter and
the treaty was ratified on April 3, 1912 and the U.S. invitation was

reextended. 12/

9/ Public Law No. 262-6lst Congress.

10/ The 1910 Act was modified in July 1912 to include ships navigating the
Great Lakes, and to require two or more operators and an auxiliary electric
power supply independent of the ship's main plant.

11/ See Report of the Commissioner of Navigation, Department of Commerce and
Labor (1911) (p. 670). Reprinted in Documents in American Telecommunications
Policy, Vol. I.

12/ History of Communications~Electronics in the United States Navy, p- 159.



~

designation was changed to relay broadcast station and included as a part of
the broadcast service. ly

During the early years of the 1930 decade, several municipal police
stations began operating on an experimental basis at frequencies above 30
MHz. %In 1935, there were 138 experimental licensees operating 393 stations in
the Police Radio Service. 12/ Two-way communication was included in this
experimental work, and in March 1933 the Bayonne, N.J. Police Department,
established the first two-way communication between police mobile units and
headquarters on 33.1 MHz. 13/ Four police cars were equipped with
transmitters as well as receivers and operated under a temporary experimental

license.

3. Expansion of Land Mobile Radio (1935-41).

Several events in the second half of the 1930 decade influenced the
development of land mobile radio. Until 1935, nearly all of the equipment
used in police radio systems was of a do-it-yourself variety. Only a few
commercial receivers were available. In 1936, however, RCA and GE entered the
mobile radio mamfacturing field, followed by Motorola in 1937. 14/ In
addition, there were important actions by the Commission.

First, the rapid development of radio equipment for operation above 30

MHz together with increasing demand for access to the lower frequencies

11/ Second Annual Report of the FCC (FY 1936), p-. 62.

12/ First Annual Report of the Federal Communicaitons Commission (FY 1935),
p- 38.

13/ Daniel E. Noble, “The History of Land Mobile Commmications”, Proceedings
of the IRE Vol. 50, No. 5 (May 1962), p. 1407.

14/° Ibid, p. 1408.


-12-

conducted by the Commission. A primary reason for the proceeding was an
anticipated expansion of non-Government radio use as a result of the technical
advances in radio equipment that had occurred during World War II. In
particular, equipment capable of operating at much higher frequencies was
expected to be commercially available. The proceeding dealt with the
frequency range from 10 KHz to 30 GHz. Prior to this, the spectrum had been
allocated only to 300 MHz.

The Commission began the Docket No. 6651 proceeding by holding oral
hearings for 25 days between September 28 and November 2, 1944 at which 231
witnesses were heard and 4559 pages of testimony were recorded. Several
Commission proposals, reports, orders and modifications, were issued and
additional hearings were held over the next roughly seven (7) years. 24/ The
proceeding was terminated in March 1952. While the proceeding was concerned
with all radio services, only the decisions affecting land mobile radio
development are discussed here.

Although the Docket No. 6651 proceeding was lengthly and entailed the
release of many Commission documents, the decisions which led to major changes
in land mobile radio were all contained in the Commission's first report in
May 1945. 25/ This report was concerned with frequency allocation above 25
MHz. 26/ The allocation decisions contained in the May 1945 report reflected

a much more liberal policy for the authorization of land mobile radio and

24/ 39 FCC pp. 33-333.

25/ Report of Allocations from 25,000 Kilocycles to 30,000,000 Kilocycles;
May 25, 1945; 39 FCC (1945), p. 68.

26/ Commission action in Docket No. 6651 at frequencies below 25 MHz can be
found in 39 FCC 33 and 303. Allocation decisions at these frequencies had no
significant effect on land mobile radio and will not be discussed further in
this history.


-27-

the narrow band operation and dates for the conversion to these standards were
established. New authorizations were to comply with the narrow band standards
by September 19, 1958 (two years) and all stations were to pe converted by
September 19, 1963. This allowed a seven year equipment amortization

period. No channel assignments were included. This was deferred to a later
rulemaking -

Although the Commission did not split the 25-50 MHz channels in the sense
that no new channels were assigned, it did establish narrow band technical
standards for this band in the Report and Order in Docket No. 11253. The use
of these standards was not mandatory, but voluntary application was encouraged
to reduce interference. A year later, however, because the Commission
continued to receive reports of harmful skywave interference, it decided that
the narrowband standards should be mandatory. 53/

Docket No. 12169- Simultaneous with the order making the narrowband
standards at 25-50 MHz mandatory, the Commission released a NPRM in @ new
docket proceeding to once again consider reduced channel spacing in the 25-50
MHz band. S4/ A primary reason for this reconsideration was & reallocation of
a portion of the 42-50 MHz band to the Government for implementation of a
commnication technique known as forward propagation by jonospheric scatter
(FPIS)- 55/ This reallocation displaced some land mobile licensees and new
channel locations had to be found.

Actually, the reallocation of the 42-50 MHz spectrum to the Government
had been accompanied by @ transfer of the 150.8-152 MHz from Government to
OE
53/ Second Report and Order Docket No. 11253, September 19, 1957; 8 BR 1588.
54/ NPRM Docket No. 12169, September 19, 19575 22 FR 7660 September 26, 1959.

55/ The reallocation included the frequency bands 46.51-47 MHz and 49-51-50
YHz which were made available for poth Government and non-Government FPIS.


63+

Private versus Common Carrier Mobile Radio

One matter left undecided in the 1949 Report and Order was the relative
merit of the provision of mobile radio communication by common carrier versus
private license. This issue was raised in the Docket No. 6651 proceeding in
connection with the land transportation services (bus, truck, and taxicab)
which were the only new private services under consideration at the time. In
general, the Commission favored common carrier operation on the basis that it
made service available to the greatest number of people. In its May 25, 1945
Report the Commission allocated frequencies for experimental operation to both
common carrier and private services to obtain information by which to resolve
the issue.

The Commission did not decide the matter in its 1949 Report and Order,
but instead allocated frequencies for regular use by both private and common
carrier licensees. The Report and Order acknowledged, however, that the
common carrier allocation was inadequate to satisfy predicted public demand
for this service. It stated that further consideration of a “broad band”
allocation for common carriers was to be undertaken in the proceeding to
allocate spectrum for UHF television above 470 MHz.

The significance of the failure to provide more spectrum for common
carrier operations is that it delayed a determination of whether mobile radio
is more efficiently provided by common carrier or private licensee. It is
conceivable that there have been private users of mobile radio who would have
found it economically advantageous to subscribe to a common carrier service
rather than install and maintain their own radio equipment. Since the
Commission did not make spectrum available for common carrier service in the
UHF television proceeding the question has remained unanswerable until the

recent inauguration of cellular service.


-69-

radio. 88/ Both radio and television broadcasting qualified, of course,
because wireline was not economically practical. CATV, on the other hand, was
a wireline service that the Commission believed might be sufficiently viable
to supplant some or all of the functions of over-the-air television. Thus,
the Commission found it necessary “in the public interest” to constrain the
development of a viable wireline service to protect a service that required
access to the spectrum.

With that very brief background of the Commission's concern with UHF
television, the major events dealing with land mobile spectrum management
between 1955 and 1975 can be reviewed. These events are described in much
greater detail in the appended history of land mobile radio. This is

especially true for rulemaking documentation.

Channel Splitting

As previously noted, the growth of the land mobile services following the
1949 Report and Order was of euch a magnitude that an impending shortage of
spectrum was soon apparent. The most immediately available source of
additional spectrum was a reduction in channel spacing, or channel-splitting
as it was called. Between 1955 and 1958 the Commission issued several
rulemaking documents in eight (8) different dockets to accomplish the
channel-splitting, adopt new narrow-band standards, and assign the new
frequencies derived. The frequency bands involved includ*<d 25-50 MHz,
150.8-162 MHz, 173-174 MHz, and 450-470 MHz. It was during these proceedings

that the Commission established the Business, Mam facturers, Telephone

88/ See Appendix A.


-14-

RCA-General Electric agreement was extended to include the American Telephone
and Telegraph Co. and the Western Electric Co., who also owned radio patents.

Meanwhile, Westinghouse was searching for a market for its radio
products. In June 1920, it entered into a rather complex agreement with the
International Telegraph Co. which included rights to patents and the
organization of a new company that was to compete in the international radio
communication field. The new company was incorporated with only a slight
change in name as The International Telegraph Co.

The RCA-GE-AT&T-Western Electric combination, however, controlled enough
of the radio patents that Westinghouse found it difficult to compete in’ the
domestic radio communication market. Furthermore, at the time of the RCA-
Marconi merger, RCA had managed to establish exclusive agreements for
international radio communication with most of the commercially important
foreign nations. Thus, the Westinghouse-International Telegraph affiliation
found the world market foreclosed and was restricted to the western
hemispheric and domestic markets.

All of the cross-license agreements, including that of Westinghouse and
The International Telegraph Co., had been arranged for the purpose of
participating in the fields of maritime or point-to-point radio
communication. Although considerable progress in the development of
radiotelephony had been made during the war, the idea of commercial
broadcasting had not yet dawned. It was in its striving to find an outlet for
its radio production that Westinghouse discovered the market for
broadcasting. The cross-license agreements were, therefore, indirectly
responsible for the timing, if not the actual introduction, of radio

broadcasting.


~9-

fire, forestry and special emergency stations within the Emergency Radio
Services. The rules were intended to comply with the new Congressional
mandate to promote safety of life and property. They were designed to take
advantage of the availability of VHF channels and for the firet time
identified forestry as a separate radio service. Public utilities were also
specifically included under the Special Emergency stations to which 10 VHF
channels were assigned. Land mobile operation was authorized in all services
except marine~fire which was intended only for communication with fire

boats. It should be noted that only emergency communication was permitted.
General dispatch was not yet authorized in the land mobile service. It is not
clear, however, how 'emergency' was distinguished from 'dispatch’ in the
police radio service.

Another event of importance to land mobile that occurred as the 1930
decade ended was the introduction of frequency modulation (FM). The
Commission had become aware of the advantages of FM over amplitude modulation
from the results of FM broadcast experiments. These experiments had
demonstrated the noise suppression characteristic of FM and the tendency of an
FM receiver to select the strongest signal present ("capture” effect).
Recognizing that FM was now a highly developed technique the Commission
adopted rules for a regular FM broadcast service in June 1940. 19/

The Commission was not satisfied, however, that it had enough information
to authorize FM in other services. Instead, in January 1940 it began accepting
applications for experimental authorization for the use of FM for other than

broadcast. 20/ At the end of FY 1941 (June 30), 179 authorizations for FM

19/ Sixth Annual Report of the FCC (FY 1940), pp. 65 & 66.

20/ Ibid, p. 94.


-19-

In April 1926, the Department of Commerce brought suit in a District
Court in Illinois against the Zenith Corporation under the punitive provisions
of the Radio Act of 1912 for operating on a frequency and at a time other than
assigned. The Court decided that the penalty clauses of the Act could not be
enforced in this case because the Congress had provided no standard or
criteria by which the discretion of the Secretary was to be guided in the
selection of a frequency. 24/ In effect this decision denied the Secretary
the authority to require stations to operate on assigned frequencies or at a
specified time.

Because the Zenith decision was contrary to the opinion expressed in the

Intercity case, the Secretary of Commerce asked the Attorney General for a
definition of his powers and duties with respect to the Radio Act of 1912.
The opinion rendered by the Attorney General was in effect the same as the
decision of the Court in the Zenith case. New legislation was required to
regulate broadcasting, and the Radio Act of 1927 followed very shortly in
February 1927.

The Radio Act of 1927 was actually in the making for five years. It
would be very difficult, perhaps impossible, to reconstruct in a chronological
manner the evolution of the concepts and policy that finally formed the basis
for this Act. Certainly, the recommendations of four radio conferences called
by the Secretary of Commerce between 1922-1925 had u major influence. A bill

carrying out the recommendations of the first conference held in February 1922 was

24/ United States v. Zenith Radio Corporation 12 Fed. 2nd 614 (1926).



-48-

Indirectly, there may be a relation between these aggregate preferences
and “public need" in that consumers would not be expected to buy a good or
service unless they perceived a need for it. The market, however, responds
only to willingness to pay and is not concerned with the subjective concept of
need. The market process thus imposes a discipline on the proponents of any
given use of a scarce resource that the regulatory process may not. The
market process counts only expressions of desire by those who are willing to
sacrifice alternative desires by paying an explicit price.

The Commission, on the other hand, has endeavored to determine “need” for
a radio service in its allocation proceedings because it cannot ascertain a
demand schedule prior to establishment of the service. 66/ In effect, the
Commission attempts to imitate the market's allocation function by
substituting “public need" for "demand." In the process, information in the
form of public comment, proposals and studies is solicited in an effort to
establish “public need." This information is submitted primarily by parties
with an immediate interest either in establishing a new radio service or
protecting the allocation or market position of an established service.
Objectivity is not necessarily a goal of these submissions, and it is not
uncommon for some to claim to show that there is a need for a service while
others argue the contrary.

In the end, frequently after long delay, tis question of ‘public need' is
most often resolved by the subjective judgment of the Commission. Actually,
it would appear that the “need” as used in the allocation process is more an

interpretation by the Commission of what is best for the public than it is a

66/ It will be noted below that even after establishment of a new radio
service, the Commission cannot obtain a correct measure of demand either for
the service or the spectrum required for the service.


Detroit Police Department began in 1921. 2/ In any case, it is apparent that
by 1928 at least one police department was using land mobile radio.

In October 1929, the Federal Radio Commission (FRC) assigned three
frequencies for police emergency radio. 3/ Then in April 1930 it established
the Emergency Police Radio Service and assigned eight frequencies between 1712
KHz and 2470 KHz for its use. 4/ The service was defined as “. .. the
broadcasting of emergency communications from central police headquarters to
squad cars or other mobile units.” Two-way communication as well as general
(non-emergency) dispatch were yet to come.

The Commission also noted that it did not consider that provisions for
similar communications for fire departments could be justified given the few
frequencies available because such service could be rendered by coordination
with police departments using radio or wire. Scarcity of useable spectrum was
already influencing spectrum allocation for land mobile in 1930. At this
time, the spectrum had been allocated internationally to 60 MHz. Sf Above 23
MHz, however, it was allocated only to amateurs and for experimentation.

Domestic allocation was in accord with this international agreement.

2. Early Development of Land Mobile Radio (1930-35).

From 34 municipal stations and 9 State police stations in 1930 the
Emergency Police Radio Service had grown to 194 municipal stations and 58

State police stations by 1935. At this time, 11 channels or frequencies were

2/ Ibid, p. 1405.
3/ FRC General Order No. 74.

4/ Annual Report of the Federal Radio Commission for FY 1930; General Order
No. 85, April 8, 1930.

5/ International Radiotelegraph Conference, October 5 to November 25, 1927.


-31-

that there may be no national Tegret that we have parted
with a great asset into uncontrolled hands. 45/

An excellent discussion on the matter of property rights and the Radio
Act of 1927 is found in Dill. 46/ He notes that Congress had no intention of
permitting property rights in the spectrum and feared that "...this one and
only remaining public domain in the form of free radio communication might
soon be lost unless Congress protected it by legislation.” Dill states that
Congress was particularly concerned by what he termed “property by right of
user." This is the established principle of law that conveys title to a
property on the basis of long use without opposition. According to Dill
there were several instances of claims to rights vested by use, and also a
related court case. In November 1926, the Circuit Court of Cook County,
Chicago, Illinois decided a case in which a station that had been broadcasting
on a frequency of 990 KHz for some years complained of interference from a
newcomer on a nearby frequency. The Court ruled that 'priority of time
creates superiority in right’ and found in favor of the longtime user under
the Radio Act of 1912. 47/

The matter of vested rights had been addressed by the Senate as early as
April 1924 when it passed a bill declaring the ether to be the inalienable

possession of the people of the United States and their government. The bill

45/ Minutes of Open Meeting of (lst) Department of Commerce Conference on
Radio Telephone (February 27 and 28, 1922), p. 4. Copy in the Federal
Communications Commission Library, 1919 M Street, N.W., Washington, D.C.
20554.

46/ Radio Law, p. 77-85.

47/ The Tribune Co. v. Oak Leaves Broadcast Station, Inc., et. al.

(November 17, 1926); Ct. Crt. Cook County, Illinois. This case was apparently
not printed but was reproduced in the Congressional Record on December 10,
1926. See Cong. Rec. Vol. 68, Part I (pp. 216-219).



-42-

1974. 82/ This Order also terminated the proceeding. The Third and Fourth
Reports and Orders dealt with a modification of the suballocation of channels
in New York and Washington, D.C. and technical matters concerned with antenna
height. 83/ They are mentioned here only for completeness.

The sharing of the UHF-TV channels by land mobile has been quite
successful in that no serious interference between the services has
occurred. In October 1984, the Land Mobile Communications Council filed a
petition with the Commission to extend the sharing concept to the entire

UHF-TV band (470-806 MHz) in the twenty-one largest metropolitan areas.

16. Docket No. 18262 Proceeding.

As noted, the NPRM and NOI in Docket No. 18262 proposed to reallocate 115
MHz of the spectrum between 806 MHz and 947 MHz to the land mobile services.
Also proposed was a division of 75 MHz for common carrier mobile use and 40
MHz for private land mobile. In May 1970, the Commission adopted a First.

Report and Order and Second Notice of Inquiry that reallocated and divided the

band of spectrum as proposed and modified Part 2 of the rules accordingly. 84/
It also tentatively designated the band 806~881 MHz for common carrier mobile
service and the bands 881-902 MHz and 928-947 MHz for private land mobile

use. The Commission envisioned a high capacity cellular common carrier system
that might satisfy some oi the private land mobile demand for dispatch service

as well as provide a public mobile radiotelephone service.

82/ Fifth Report and Order Docket No. 18261 July 17, 1974; 31 RR 2nd 115.

83/ Third Report and Order Docket No. 18261 July 26, 1972; 25 RR 2nd 1584
Fourth Report and Order Docket No. 18261 November 14, 1973; 28 RR 2nd 1393.

84/ First Report and Order and Second Notice of Inquiry Docket No. 18262 May
20, 1970; 19 RR end 1663.



-15-

Beginning of Broadcasting

During the war, Westinghouse had been involved in government directed
programs to further the development of radiotelegraph and telphone
equipment. Dr. Frank Conrad, a Westinghouse engineer responsible for research
in radiotelephony happened also to be a radio amateur. He used his amateur
station to extend his professional work and when testing transmission
equipment would frequently use phonograph records when he grew tired of
talking to his “public”. His following grew to the extent that in 1920 a
local Pittsburgh department store advertised that it sold radio sets that
could receive Dr. Conrad's programs. A Westinghouse vice-president, Mr. H. P.
Davis, noting this advertisement, was struck with the idea of erecting a
station for regular broadcasting to attract listeners to whom Westinghouse
could then sell receivers.

In a lecture delivered at the Harvard Graduate School of Business
Administration during the 1927-28 academic year, Mr. Davis recounts the
history of this Westinghouse development of broadcasting. In discussing his
reaction to the newspaper advertistment he states that it,

++-caused the thought to come to me that the efforts that
were then being made to develop radio telephone as a
confidential means of communication were wrong, and that
instead its field was really one of wide publicity, in
fact, the only means of instantaneous collective
communication ever devised. Right in our grasp

therefore, we had that service which we had been thinking
about and endeavoring to formulate. 18/

18/ H. P. Davis, “The Early History of Broadcasting in the United States";
The Radio Industry: the Story of Its Development, a series of lectures at the
Graduate School of Business Administration, Harvard University, p. 194; A. W.
Shaw Co. (1928).



-59-

and a Citizens Radio Communication Service. 76/ The General Mobile Radio
Service was composed of the Bus Radio Service, Truck Radio Service, Taxicab
Radio Service, and Common Carrier Mobile Radiotelephone Service.

The Citizens Radio Communication Servie was proposed on the Commission's
own motion. This service was to be available to any U.S. citizen and entail
minimum regulation. It was intended for any private or business use except
broadcasting or common carrier operation.

In addition to the allocation of frequencies to the new services just
mentioned, the Commission in its May 1945 report upgraded the status of power
and urban transit utilities as mobile radio users. Prior to this time, these
utilities had been authorized to operate in what was defined as the special
emergency service on shared frequencies with radio to be used only in cases of
actual emergency. Exclusive frequencies were allocated for power utilities
and for transit utilities.

In retrospect, the Docket 6651 proceeding was clearly a turning point in
the Commission's spectrum allocation policy for land mobile radio. It is true
that no new radio services had been created, per se. Frequencies had been
allocated, but no rules recognizing the new services were adopted.
Furthermore, safety of life and property as a criterion for allocation was
very much in evidence in the Commission's discussion of its decisions in the
proceeding. Nevertheless, much greater weight was given to the use of radio
to support commercial service to the public. In the case of the taxicab

service, for example, a reduction in “dead” or nom-passenger-carrying miles

76/ Report of Allocations from 25,000 Kilocycles to 30,000,000 Kilocycles,
May 25, 1945; 39 FCC (1945) pp- 137-146. While this report reflects the final
allocation action of the Commission in this mater, it should be read in
conjunction with the 'Report of Proposed Allocations' cited in Appendix B at
fn. 27. The proposal contains detailed discussion of the testimony received
and the basis for many of the decisions in the report of May 25, 1945.



-39-

14. Commission Decision to Reallocate Spectrum.

Even before the official submission of the Advisory Committee report, the
Commission had anticipated the conclusion that additional spectrum would be
required to relieve the congestion in the land mobile services. Ina Public
Notice on April 14, 1967, the Commission announced that it was investigating
the possibility of meeting the frequency needs of these services with spectrum
allocated to the upper and lower ends of the UHF-TV band. 76/ The Commission
appointed 4 special staff committee under the Chairmanship of the Chief
Engineer to conduct the investigation. Three alternative spectrum allocations
were to be studied:

(1) reallocation of four to seven lowest UHF-TV channels.
(2) shared use of seven lowest UHF-TV channels.
(3) reallocation of the upper 14 UHF-TV channels.

The staff committee report was released in March 1968. The committee
found that if the lower UHF-TV channels (470-512 MHz) were reallocated to land
mobile, they could be replaced by higher channels for TV proadcasting. It
also determined, however, that such a reallocation would, be both disruptive
and expensive. Conversely, the upper 14 UHF-TV channels could be reallocated
at litle cost, but would provide no immediate relief because of unavailability
of land mobile radio equipment at these frequencies (806-890 MHz). Finally,
the committee found that shared use of the lower seven channels was feasible

and would provide near-term relief from the land mobile congestion. 77/ On

ee

76/ FCC Annual Report for FY 1967; pp- 89 and 141.

71/ By “shared use” in this case is meant that UHF-TV channels not assignable
for television in a particular geographical location because of “taboo”
restrictions could be allocated for land mobile use-


-23-

8. Growth as Result of 1949 Rulemaking.

The effects of the 1949 rulemaking on the growth of the land mobile radio
services soon became apparent. While all of the mobile services increased at
a relatively rapid rate, the growth was by far the greatest in those radio
services devoted to industry and commerce. For example, the total number
(including the Citizens Radio Service) of authorized land mobile stations
increased by 277 percent in the first half of the 1950 decade. 45/ During the
same period, however, the Special Industrial Service increased by 1054 percent
and the Citizens Radio Service by 5682 percent. The reason for including the
Citizens Radio Service as a part of the land mobile services will be explained
shortly.

The growth in the Special Industrial Services would have been even
greater if the Commission had not imposed very restricted eligibility
requirements. Because of the limited number of frequency channels available,
the rules adopted for this service in 1949 restrictive eligibility to those
engaged in production or construction activities confined to remotely or
sparsely settled regions, the yard area of a single manufacturing plant or a
construction project of a public character. No provision was made for such
operations as mobile dispatching by retail stores or by service or
distribution businesses. The only radio service available for this type of
operation was the Citizens Radio Service.

As noted, the Citizens Service was established as a regular service in

June 1949. At that time, the use of the service was limited by the lack of

45/ Including the Citizens Radio Service, there were 13602 licensed land
mobile stations on June 30, 1949 and 51240 stations on June 30, 1954. See,
Fifteenth Annual Report of the FCC (FY 1949), p. 88 and Twentieth Annual
Report (FY 1954), p. 86. The number of licensed stations does not indicate
total number of authorized transmitters. Each licensed station might have
been operating several mobile units.


9. Summary of Land Mobile Spectrum Allocation.

As background for discussion of the 1950 rulemaking proceedings, it will
be advisable to briefly review the spectrum allocation that had been made to
the land mobile services uP to this time. An initial allocation of eight
frequency channels between 1700 KHz and 2500 KHz had been adopted for the
Emergency Police Radio Service in 1930. This was increased to 34 channels in
the same part of the spectrum in 1936. In 1937, 29 channels were added for
the Police Service in the 30-40 Mz band. Several channels in this band had
also been allocated to stations not yet recognized as part of the land mobile
service such as forestry, special emergency and motion picture. During the
Docket No. 6651 proceeding, the 42-50 MHz, 152-162 MHz, and 450-460 MHz bands
had been added to the land mobile service allocation while the 460-470 MHz
band had been designated for the Citizens Radio Service. By the middle of the
1950 decade all of the land mobile bands except 450-460 MHz, were intensively
used.

In the May 1945 report in Docket No. 6651, the Commission had allocated
the 450-460 MHz band temporarily to the Aeronautical Radionavigation Service
and permanently to the fixed and mobile services. At that time it was being
used for special air navigation aids- During the omnibus proceeding (see fn.
35) in 1949, the band was allocated to the land mobile services and
suballocated equally among the Land Transportation, Public Safety, Industrial,
Domestic Public, and Remote Pickup Radio Services 48/ The band was
resuballocated in 1953 to provide frequency pairs for repeater operation.

Each of the services retained a 2 MHz share of the band. The channels were

ee

48/ Domestic Public and Remote Pickup were by this time included as part of
the Common Carrier and Broadcasting services respectively.


-2-

PART V
EXAMPLES OF SPECTRUM MANAGEMENT BY FEDERAL REGULATION

Introduction. ..sseeeecseeceeereeesceer
Allocation of Frequencies Above 30 MHz
Docket No. 6651 Proceeding....-+++++- steer eee
Implementation of the Docket No. 6651 Decisions
Private Versus Common Carrier Mobile Radio..

Reaction of Commissioners.....+++
After the 1949 Report and Order.
UHF Television...sssccseseee
Channel Splitring
Docket No. 11997.
Advisory Committee...eeseeeeee
Reallocation of UHF-TV Spectrum
A Final Note..

PART VI

CONCLUSIONS ...cccceccecceccereveeeee ed]

APPENDIX A - SIGNIFICANT FACTORS AND GENERAL
PRINCIPLES FOR ALLOCATION

APPENDIX B - HISTORY OF THE LAND MOBILE RADIO SERVICE


Sections 8 deals with the growth of the land mobile services following
the 1949 decision and the demand for radio service by business and industry.
The Commission's attention was being focused on the matter of increased
eligibility as well as radio channel availability for these potential users.
Section 9 is a brief review of the status of the spectrum allocated to land
mobile in this early 1950's period.

Section 10 describes the process of “splitting” the VHF channels
allocated to the land mobile services in an effort to satisfy the growing
demand for spectrum. Three Tulemaking proceedings are involved and the
discussion by necessity becomes somewhat detailed. In an effort to make the
text easier to follow, docket numbers are used as subsection headings.
Section ll is a summary of these FCC actions.

Section 12 discusses five rulemaking proceedings in which the Commi ssion
among other things "split" the UHF (450-470 MHz) channels and authorized their
use for regular service. In addition, both the VHF and UHF “split” channels
were suballocated among the land mobile services. New land mbile radio
services were established and the Citizens Radio Service rules were
extensively revised. Each docket is treated separately in Section 12, and
again, the docket numbers are used as subheadings.

Section 13 recounts the growing landmobile spectrum shortage that
persisted throughout the 1960 decade. This shortage accurred in spite of the
additional channels made available by “channel splitting.” To address the
problem, the Commission initiated a proceeding that lasted seven years to
review the allocation of the entire Spectrum band between 25 MHz and 890
MHz. This was followed by the establishment of an Advisory Committee for the
Land Mobile Service which studied the matter for four years. Even the

Congress held hearings on the subject.


-36-

the same geographical area, but that the division of time for use of the
frequency was left to the stations to decide. When asked what the Department
would do in the case of a disagreement between stations, he replied that while
the Department had the authority to specify operating times, the necessity to
do so had not arisen because the stations “have been able to get together and
agree among themselves.” 53/ These private agreements for frequency use are
clearly an example of market forces working within an administered assignment
scheme. The details of the negotiations between stations are not known, but
it must be assumed they included whatever exchanges (including monetary) that
were necessary to result in mutual benefit to the parties involved.

Finally, these marketplace features suggest that a market in broadcast
spectrum could have been an alternative to the Radio Act of 1927. Om the
recommendation of the Third National Radio Conference (October 1924), the
Department of Commerce allocated the frequency band of 550-1500 KHz to
broadcasting. This allocation, which provided 89 radio channels was in effect
at the time of the 1927 legislation. Thus, the spectrum to be used by
broadcast stations had been administratively decided. The next matter was to
select among users. It was the problem of selecting among users that, more
than anything else, generated calls for new legislation.

In the January 1926 hearings on $1754, Judge Davis noted that there were

536 licensed broadcast stations on the 89 channels allocated and then stated,

Under the pregent situation we are getting by, but we
have today applications from 250 more people who want to
build broadcasting stations and operate them. Now

ee
53/ Ibid, p. 16.


-34-

stations were to operate. 66/ Only the Second R&O is pertinent to the present
discussion.

The Citizens Radio Service prior to Docket No. 11994 included three
classes of stations. Class A stations were authorized for radio telephony
with relatively high power (60 watts). Class B stations were authorized for
radio telephony and remote control of objects or devices with low power (10
watts). Class C stations were intended only for remote control purposes and
were authorized to operate only at 27 MHz. The 460-470 MHz band had been
occupied primarily by Class A stations operated by commercial enterprises not
otherwise eligible for a mobile radio license. It was to satisfy this demand
that the Commission established the Business and Manufacturers Radio Services
to supplement the Special Industrial Services.

With the reallocation of a large portion of the 460-470 MHz band (6.55
MHz), the Commission recognized the need for additional spectrum for personal
radio use, particularly for those individuals then holding Class A station
licenses but who, despite the new services, would not be eligible in either
the Industrial or Land Transportation Services. Consequently, the Commission
reallocated the 26.96-27.23 MHz band to the Citizens Radio Service. The Class
D Station was established because the technical standards applicable to Class
A stations in the 460-470 MHz band differed from those at 27 MHz; e-g.,
maximum authorized power of the Class D stations was 5 watts. The Class D
stations (CB) along with the Business Radio Service were destined to

experience enormous growth.

66/ Second Report and Order Docket No. 11994 July 31, 1958; 17 RR 1607.


-10-

experimental operation had been granted in the Emergency Radio Service. 21/
Finally, in October 1941, FM was authorized for regular use in the police,

forestry, and other stations in the Emergency Service. 22/

4. Land Mobile Radio at the End of World War Il-

During the years of World War II, the land mobile service continued to
grow, but (with one exception) there was no change in the structure of
service. The one exception was 4 change in the Emergency Radio Service rules
in May 1944 that deleted “marine-fire” stations and substituted “municipal
fire” stations. Because of frequency limitations, only fire departments
serving a population of 150,000 or more persons were eligible for a station
license. As noted above, prior to this time radio communication with fire
department mobile units was provided through the municipal police radio
systems. Municipalities of less than 150,000 people were expected to continue
this cooperative procedure.

Even with the inclusion of the municipal fire tations, the Commission
had by 1944 adopted rules for only five of the land mobile services existing
today. These included the police, fire and forestry stations in the Emergency
Radio Services and motion picture and relay press stations in the
Miscellaneous Radio Services. The Commission had not yet adopted subservice
designations. Instead, it established rules and assigned frequencies in terms
of station classifications. For each of the five classes of stations just
mentioned, there were separate rules and frequency assignments. Other land
mobile operations of a less permanent nature were conducted as special
emergency stations or in the Miscellaneous and Experimental Services.

ee

21/ Seventh Annual Report of the FCC (FY 1941), p» 49-

22/ Eighth Annual Report of the FCC (FY 1942), P+ 47.



-39-

Certainly claims of additional interference would have been generated by
the addition or modification of stations, either because real interference
occurred or as a ruse to prevent increased broadcasting competition. Those
claims that could not be resolved by negotiation would have required referral
to the courts. Admittedly, the courts may have experienced difficulty in the
adjudication of these interference claims when they were first encountered.
Unlike today where interference protection is specified in rather precise
ratios of desired to undesired signal level, only a qualitative measure of
interference based on the clarity of receiver output appears to have been
available at the time in question. Signal strength ratios could not be used
because field strength could not be predicted with sufficient accuracy.

The feasibility of the hypothetical market approach just described would
have depended on whether the negotiated agreements could have been enforced.
As noted, the courts may have experienced difficulty initially. Recognition
that the courts would have experienced difficulty when initially confronted
with the problem of radio interference does not, however, justify a conclusion
that they could not have dealt with the matter. The lack of refined
protection criteria due to the technical limitations of the times would have
presented no greater problem to the courts than it did to the Federal Radio
Commission. The courts would have relied on the testimony of witnesses,
experts if necessary, just as the Radio Commission did. 58/ In other words,
whether interference between broadcast stations was to be arbitrated by the

courts or a regulatory agency, there was a deficiency of technical information

58/ The Commission's General Order 15 issued June 7, 1927 was entitled
“Interference Hearings". This Order described the procedure for scheduling
‘such hearings and indicated that interference complaints would be resolved on

the basis of the testimony given by the parties of interest. Annual Report of
the Federal Radio Commission for FY 1927, p. 16.