[Federal Register Volume 61, Number 92 (Friday, May 10, 1996)]
[Rules and Regulations]
[Pages 21380-21384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11643]



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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 22 and 90

[WT Docket No. 96-18; PP Docket No. 93-253; FCC 96-183]


Future Development of Paging Systems and Implementation of 
Section 309(j) of the Communications Act; Competitive Bidding

AGENCY: Federal Communications Commission.

ACTION: Interim measure; modification.

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SUMMARY: In this First Report and Order in WT Docket No. 96-18 and PP 
Docket No. 93-253, the Commission modifies the interim measures imposed 
in the Notice of Proposed Rulemaking (NPRM) in this docket. In the 
NPRM, the Commission addressed how paging applications should be 
treated during the pendency of this rulemaking, and imposed an across-
the-board freeze on new applications for paging licenses with an 
exception for Common Carrier Paging (CCP) and Private Carrier Paging 
(PCP) licensees with nationwide exclusivity. The Commission is 
modifying the interim freeze imposed in the NPRM by allowing all 
incumbent paging licensees subject to the interim freeze to apply for 
additional transmission sites on the same channel, on a primary basis, 
within 65 kilometers (40 miles) of an operating transmission site. An 
application must be accompanied by a certification that the applicant 
is an incumbent paging licensee, and the proposed site is within 65 
kilometers (40 miles) of an authorized transmission site that was 
licensed to the same applicant on the same channel on or before 
February 8, 1996 and which is operational as of the date the 
application for the additional transmitter site is filed. All 
applications filed by CCP incumbent licensees and 929 MHz PCP incumbent 
licensees on exclusive channels will be put on Public Notice to allow 
for competing applications to be filed.
    The Commission resumes processing all pending non-mutually 
exclusive applications that were filed by incumbents with the 
Commission on or before February 8, 1996. The February 8, 1996 freeze 
interrupted the 30 or 60 day filing window in some cases. Therefore, 
the Wireless Telecommunications Bureau will release a Public Notice 
with attached copies of the prior Public Notices containing the pending 
paging applications. All pending applications filed by incumbents on or 
before February 8, 1996 that were not on Public Notice for the required 
30 or 60 days, will be deemed to continue to be on Public Notice for 
the remaining amount of time until the required 30 or 60 day window for 
filing competing applications expires.
    The Commission's objective in modifying the interim freeze is to 
allow the incumbent paging licensees the flexibility needed to expand 
paging systems to continue to serve their customers and convert to 
flexible wide-area synchronous protocol technology during the interim 
period, while preventing an increase in telecommunications investment 
fraud.

EFFECTIVE DATE: May 10, 1996.

FOR FURTHER INFORMATION CONTACT: Mika Savir, Commercial Wireless 
Division, Wireless Telecommunications Bureau, at (202) 418-0620.

SUPPLEMENTARY INFORMATION: This First Report and Order in WT Docket No. 
96-18 and PP Docket No. 93-253, adopted April 22, 1996, and released 
April 23, 1996, is available for inspection and copying during normal 
business hours in the FCC Reference Center, Room 230, 1919 M Street 
N.W., Washington D.C. The complete text may be purchased from the 
Commission's copy contractor, International Transcription Service, 
Inc., 2100 M Street, N.W., Suite 140, Washington D.C. 20037, (202) 857-
3800)). Synopsis of First Report and Order:

I. Background

    1. In this docket, the Commission is examining the paging 
regulations in light of the statutory objective of regulatory symmetry 
for all Commercial Mobile Radio Services (CMRS) established in the 
Omnibus Budget Reconciliation Act of 1993, Pub. L. No.

[[Page 21381]]

103-66 (1993 Budget Act). The 1993 Budget Act amended the 
Communications Act to divide all mobile services into two categories, 
CMRS and private mobile radio service (PMRS), and mandated that 
substantially similar mobile services receive comparable regulatory 
treatment. In the CMRS Third Report and Order, Implementation of 
Sections 3(n) and 332 of the Communications Act, GN Docket No. 93-252, 
Third Report and Order, 59 FR 59945 (November 21, 1994) (CMRS Third 
Report and Order), the Commission concluded that CCP and PCP are 
substantially similar services and should be subject to comparable 
regulation. Under Section 6002(c)(2)(B) of the 1993 Budget Act, 
reclassified PCP licensees retain their PMRS status on a grandfathered 
basis until three years after the date of enactment of the legislation 
which occurred on August 10, 1993. PMRS paging services, as well as 
CMRS paging services, are subject to the interim and final measures in 
this proceeding.
    2. In the NPRM, Revision of Part 22 and Part 90 of the Commission's 
Rules to Facilitate Future Development of Paging Systems and 
Implementation of Section 309(j) of the Communications Act--Competitive 
Bidding, WT Docket No. 96-18, Notice of Proposed Rulemaking, 61 FR 
06199 (February 16, 1996) (NPRM), the Commission proposed a transition 
to geographic market area licensing for all paging services. In the 
NPRM, the Commission also proposed to adopt competitive bidding rules 
for mutually exclusive paging applications. Additionally, the 
Commission suspended acceptance of new applications for paging 
channels, as of February 8, 1996. The Commission allowed incumbents to 
make minor modifications to their existing systems, so long as the 
modifications did not increase their composite interference contour. 
The Commission also allowed all licensees with nationwide exclusivity 
to continue to add sites without restrictions.
    3. The Commission received comments and reply comments on the 
interim proposals. Based on the arguments raised by the commenters, the 
Commission concludes that partially lifting the interim freeze for 
incumbent licensees would be in the public interest.

II. First Report and Order

A. Interim Freeze

    4. In the NPRM, the Commission requested comment on an expedited 
basis on whether, during the pendency of this proceeding, incumbents 
should be allowed to file new applications to expand or modify their 
existing systems in a way that would expand their existing interference 
contours, with such modifications receiving only secondary site 
authorization. The Commission also requested comment from interested 
parties on other alternatives for allowing expansion or modification of 
existing sites during the interim period. Commenters offered numerous 
suggestions for partially lifting the freeze. The Commission concurs 
with the commenters that partially lifting the interim freeze is 
necessary to allow incumbents flexibility in serving their customers 
and upgrading their equipment, and that these additions or 
modifications should be given primary, not secondary, status.
    5. Commenters all generally oppose the interim freeze, particularly 
for incumbent licensees. Most of the commenters also oppose secondary 
site licensing, on the grounds that it would discourage investment, 
encourage speculation, and could result in future loss of service to 
the public. Several commenters propose that as an interim measure 
incumbent licensees be permitted to add sites to within 40 miles of an 
operating site. Commenters also offer other suggestions such as that 
incumbents be allowed to add sites if the service area of the new site 
overlaps with existing authorized sites by a minimum of 50 percent, or 
that they be allowed to expand their systems as long as the expansions 
do not interfere with other current adjacent licensees.
    6. Commenters also argue that the freeze gives undue advantage to 
nationwide carriers, while decreasing the ability of the remainder of 
the industry to compete. One commenter noted that the paging freeze 
gives a competitive edge to Personal Communications Services (PCS). 
Several commenters observed that the paging industry is converting to a 
flexible wide-area synchronous protocol which requires additional 
sites.
    7. A group of paging carriers and paging equipment manufacturers, 
the Coalition for a Competitive Paging Industry (Coalition), filed an 
Emergency Petition for immediate lifting of the freeze. The Commission 
incorporates the Petition into the record of this proceeding. The 
Coalition also filed reply comments on the interim licensing issue, 
which make many of the same arguments set forth in the Petition. To the 
extent that the Commission grants limited relief from the freeze for 
incumbent licensees, the Petition is granted. In all other respects, 
the Commission denies the Petition. The Coalition argues that the 
freeze is unlawful, arbitrary and capricious, and an abuse of 
discretion on the grounds that: (1) There is insufficient spectrum 
available on currently allocated paging channels to accommodate 
additional systems; (2) paging carriers who are upgrading their 
technology are prevented by the freeze from filing the modification 
applications required to implement their networks; and (3) the 
Commission has discriminated against carriers serving local and 
regional markets by exempting nationwide carriers from the freeze. The 
Coalition also filed an ex parte letter proposing that: (1) The 
Commission accept applications filed by incumbents to expand or modify 
existing systems; (2) applications would be subject to Public Notice 
and competing applications if required under the rules in effect as of 
February 7, 1996; (3) requests for exclusivity on 929 MHz channels 
would be granted in appropriate cases under the rules in effect on 
February 7, 1996; and (4) mutually exclusive applications would not be 
processed until the conclusion of the rulemaking unless the parties 
could agree to eliminate mutual exclusivity through agreement.
    8. The Federal Trade Commission (FTC) filed comments to, inter 
alia, explain the extent of the telecommunications investment fraud 
associated with paging licenses. According to the FTC, the investment 
fraud is of two basic types: (1) License ``application mills'' that 
sell application preparation services for acquisition of wireless 
licenses for a fee of several thousand dollars per license; and (2) 
``build-out'' schemes, in which investors are sold interests in limited 
liability companies or partnerships that claim they will acquire 
licenses and build and operate telecommunications systems. Both of 
these schemes are carried out by telemarketers calling unsophisticated 
consumers and deceiving them about the profitability of the licenses, 
and the consumers generally lose their entire investment. In January 
1996, the FTC filed six actions as part of ``Project Roadblock'' 
against the telemarketers who sold application preparation and 
acquisition services for paging licenses. The FTC observes that in the 
Commission's database of pending 931 MHz applications, over 72 percent 
of the applicants are individuals, rather than businesses. The FTC also 
notes that 92 percent of license holders on 929 MHz channels are 
individuals. According to the FTC, the high percentage of individual 
applicants strongly suggests that many of these individuals are victims 
of the

[[Page 21382]]

application mills. The FTC observes that telemarketing fraud has caused 
the Commission to process thousands of license applications for 
consumers who will never provide telecommunications services to the 
public, and contributes substantially to the backlog of pending 
applications and the quantity of mutually exclusive applications. 
According to the FTC, the freeze against accepting new applications has 
a strong deterrent effect on application mill fraud.
    9. The Commission explains that it rejects the arguments of the 
Coalition and other commenters that the freeze is unlawful because it 
was not based on prior notice and comment. The Commission notes that 
the suspension of acceptance of applications is a procedural action 
that does not require notice and comment under the Administrative 
Procedure Act (APA). Additionally, the Commission notes that it has 
imposed similar freezes without prior notice and comment in other 
rulemaking proceedings when there was a proposal to make the transition 
to geographic area licensing and auction rules.
    10. The Commission also rejects the arguments of commenters that 
imposing a freeze was arbitrary or an abuse of the Commission's 
discretion. The freeze remains essential to ensure that the goals of 
the rulemaking are not compromised. The primary argument raised by 
commenters against the freeze is that there is limited ``white space'' 
to be auctioned; however this contention is undermined by the 
commenters' argument that the freeze is causing severe economic harm. 
If there were in fact little or no white space left to be licensed, 
maintaining the freeze would have minimal impact. The Commission notes 
that while paging channels are heavily encumbered, there is some 
available spectrum that is of considerable value to applicants.
    11. The Commission also states that the freeze is necessary to 
combat telemarketing schemes involving paging application fraud. The 
FTC estimates that fraudulent investment schemes centered on acquiring 
FCC licenses for wireless technologies have been the most prevalent 
telemarketing investment scams of the 1990s, costing consumers hundreds 
of millions of dollars. If the freeze were to be lifted, it could 
inadvertently encourage a resumption of fraudulent activity by 
application mills seeking to induce unsophisticated investors into 
filing applications. The Commission also stated a concern that the 
proposal to use auctions in this service may stimulate speculative 
activity by parties seeking to warehouse free spectrum.
    12. The Commission notes that the commenters have raised valid 
reasons to support partially lifting the freeze for the remainder of 
the interim period: the paging industry needs flexibility to make 
modifications and additions to systems to continue to serve their 
customers; licensees are in the process of converting to flexible wide-
area synchronous protocol technology to increase data delivery speeds 
and therefore require additional base stations to maintain the existing 
service area; and the nationwide carriers may have a competitive 
advantage over the non-nationwide incumbent licensees in the local and 
regional markets. The Commission concludes that the interim freeze 
should be partially lifted for incumbent paging licensees.
    13. As of May 10, 1996, the Commission is modifying the interim 
freeze imposed in the NPRM, by allowing all incumbent paging licensees 
subject to the interim freeze to apply for additional transmission 
sites on the same channel, on a primary basis, within 65 kilometers (40 
miles) of an operating transmission site. An application will be 
accepted only if it is accompanied by a certification that (1) the 
applicant is an incumbent paging licensee, and (2) the proposed site is 
within 65 kilometers (40 miles) of an authorized transmission site that 
was licensed to the same applicant on the same channel on or before 
February 8, 1996 and which is operational as of the date the 
application for the additional transmitter site is filed. The 
applications from incumbent paging licensees on a non-nationwide CCP 
channel and incumbent paging licensees on an exclusive PCP channel will 
be placed on public notice and subject to competing applications within 
the applicable filing window.
    14. The Commission states that while it will accept initial 
applications as described above only from incumbents, but it will not 
limit eligibility to file competing applications once the incumbent's 
initial application is filed. If no competing application is filed, the 
incumbent's initial application can be granted. If a competing 
application is filed, both applications will be treated as mutually 
exclusive and will be held in abeyance until the conclusion of this 
proceeding.

B. Interference Contour

    15. In the NPRM, the Commission stated that incumbent licensees on 
all bands except the nationwide channels could add sites to existing 
systems, or modify existing sites during the pendency of this 
rulemaking proceeding, if the addition or modification does not expand 
the interference contour of the incumbent's existing system. The 
Commission stated in a footnote that for such purposes, the 
interference contour would be based on a median field strength of 21 
dB<greek-m>V/m, and referenced the proposed mathematical formulas for 
calculating the service and interfering contours for paging systems.
    16. The Commission's reference to the proposed formula to calculate 
the interference contour during the interim period caused some 
confusion among the commenters. The commenters object to the proposed 
formula to calculate the interference contour during the interim period 
because it would shrink their current interference contour. The 
commenters also contend that this proposal was unlawful because it was 
retroactive and was not subject to the required notice and comment 
procedures.
    17. The Commission clarifies that it is not applying the proposed 
interference contour formula on a retroactive basis to any current 
sites. For purposes of interim licensing, incumbents may use the 
interference contour defined under the current rules to determine 
whether internal sites may be added or modified. The Commission notes 
that this will allow 939 MHz licensees to make internal system changes 
so long as they do not expand the composite circular interference 
contour of their existing stations as defined in Section 22.537(f) of 
the rules. The Commission also clarifies that the tables in Section 
22.537(f) may be used on an interim basis by licensees on 929 MHz 
exclusive channels to determine where stations may be added.

C. Exempt Services

    18. Commenters have asked the Commission to clarify that the freeze 
does not apply to Basic Exchange Telecommunications Radio Systems 
(BETRS), Special Emergency Radio Service (SERS), and two-way mobile 
telephone service on the two-way channels listed in Section 22.561 and 
these rural telephone channels should be exempt from the freeze. The 
Commission observes that this proceeding was initiated to examine the 
paging regulations in light of the statutory objective of regulatory 
symmetry for all CMRS established in the 1993 Budget Act. BETRS are 
licensed under the Rural Radiotelephone Service, which is a fixed 
service, not a mobile service, and by definition is not CMRS. 
Implementation of Sections 3(n) and

[[Page 21383]]

332 of the Communications Act, GN Docket No. 93-252, Second Report and 
Order, 59 FR 18493 (April 19, 1994) (CMRS Second Report and Order). 
Therefore, BETRS are not subject to the interim paging freeze. 
Similarly, conventional Rural Radiotelephone Service provided on the 
channels listed in Sections 22.561 and 22.563 is not a mobile service, 
and is not subject to the interim freeze in this proceeding. The 
Commission is also exempting SERS from the interim freeze.

D. Processing of Pending Applications

    19. In this First Report and Order, the Commission establishes 
consistent procedures for processing applications filed on or before 
February 8, 1996. Pursuant to Sections 22.120(d) and 22.127, 
applications for 150 MHz and 450 MHz channels are placed on Public 
Notice for 30 days, and applications for 931 MHz channels are on Public 
Notice for 60 days to allow other applicants to file competing 
applications. All applications that were filed with the Commission on 
or before February 8, 1996 have been on Public Notice; however, the 
February 8, 1996 interim freeze interrupted the 30 or 60 day filing 
window in some cases. After the release of this First Report and Order, 
the Wireless Telecommunications Bureau will release a Public Notice 
with attached copies of the prior Public Notices containing the pending 
paging applications. Once the Public Notice is released, all pending 
applications filed by incumbents that were not on Public Notice for the 
required 30 or 60 days will be deemed to be on Public Notice for the 
remaining amount of time until the required 30 or 60 day period for 
filing competing applications expires. The Commission will not issue an 
additional Public Notice for these pending CCP applications. Upon 
expiration of the remaining filing period for these pending CCP 
applications filed by incumbents, the applications that are not 
mutually exclusive will be processed.
    20. All 929 MHz PCP exclusive applications filed by incumbents 
which were processed through the frequency coordinator, and filed with 
the Commission on or before February 8, 1996, and are not mutually 
exclusive, will be processed. Applications for PCP channels submitted 
by incumbents to the frequency coordinator but not filed with the 
Commission prior to February 8, 1996, may be resubmitted to the 
frequency coordinator, and then may be filed with the Commission, 
provided that the applicant certifies that the applicant is an 
incumbent licensee with an operating system.

E. Canadian and Mexican Coordination During the Interim Period

    The Commission states that in cases where coordination must be 
obtained in Canadian or Mexican border areas, licensees must continue 
to file applications with the Commission to allow for such coordination 
under the interim licensing procedures.

III. Conclusion

    22. The Commission concludes that the revisions to the interim 
measures adopted in this First Report and Order will enable paging 
licensees to continue expansion of their systems and enhance the 
quality of service to the public while this proceeding is pending. At 
the same time, the limitations on new applications during the interim 
period will prevent spectrum warehousing and deter application fraud. 
The Commission emphasizes that the measures set forth in this First 
Report and Order are interim measures only, and that the long-term 
proposals for geographic licensing of paging channels will be 
determined in the future.

IV. Procedural Matters and Ordering Clauses

A. Regulatory Flexibility Analysis

    As required by Section 604 of the Regulatory Flexibility Act, the 
Commission has prepared a Final Regulatory Flexibility Analysis for the 
Interim Measures in the First Report and Order of the expected impact 
on small entities of the modification of the interim measures.
    Statement of the Need for and Objectives of Measures: In the First 
Report and Order, the Commission is modifying the interim measures, 
specifically, the interim freeze on new paging applications imposed in 
the Notice of Proposed Rulemaking, to permit incumbent paging licensees 
to apply for additional licenses to add transmission sites to existing 
paging systems on the same channel as the existing systems, provided 
that the additional transmission site is within 65 kilometers (40 
miles) from an operating transmission site in the applicant's system. 
This modification of the interim measure will allow paging companies 
additional flexibility to expand their systems during the interim 
period.
    Summary of Significant Issues Raised by Comments to the Initial 
Regulatory Flexibility Analysis (IRFA): There were no comments to the 
IRFA regarding the interim measures.
    All significant alternatives are discussed in the First Report and 
Order.

B. Paperwork Reduction Act

    This First Report and Order contains a new information collection. 
The Commission, as part of its continuing effort to reduce paperwork 
burdens, has submitted this to Office of Management and Budget (OMB) 
for emergency approval under the Paperwork Reduction Act of 1995, 
Public Law 104-13. The Commission has requested OMB approval by April 
29, 1996.
    Further Information: For additional information concerning the 
information collections contained in this First Report and Order, 
contact Dorothy Conway at (202) 418-0217 or via the Internet at 
<a href="/cdn-cgi/l/email-protection#3a5e5955544d5b437a5c5959145d554c"><span class="__cf_email__" data-cfemail="f89c9b97968f9981b89e9b9bd69f978e">[email protected]</span></a>.
    Supplementary Information:
    Title: Revision of Part 22 and Part 90 of the Commission's Rules to 
Facilitate Future Development of Paging Systems and Implementation of 
Section 309(j) of the Communications Act--Competitive Bidding.
    Type of Review: New Collection.
    Respondents: Common Carrier Paging licensees and Private Carrier 
Paging licensees filing applications for additional transmission sites.
    Number of Respondents: Approximately 2000.
    Estimated Time Per Response: Approximately 0.08 hours for each 
respondent to read and sign the certification.
    Total Annual Burden: A burden of approximately 160 hours.
    Needs and Uses: On February 8, 1996, the Commission adopted a 
Notice of Proposed Rule Making (NPRM) that examines ways to establish a 
comprehensive and consistent regulatory scheme that will simplify and 
streamline licensing procedures and provide a flexible operating 
environment for both common carrier and private paging services. The 
NPRM imposed an interim across-the-board freeze on new paging 
applications.
    On April 22, 1996, the Commission adopted the First Report and 
Order that modified the interim freeze imposed in the NPRM to allow the 
incumbents in the paging industry the flexibility needed to serve the 
public, and upgrade to more spectrally efficient equipment. The First 
Report and Order allows incumbent common carrier paging and private 
carrier paging licensees to expand their current paging systems by 
applying for additional transmission sites on the same channel within 
65 kilometers (40 miles) from their existing operating transmission 
sites. This modification of the interim measures is limited to 
incumbent licensees. Paging applicants must certify in writing that: 
(1) The applicant is an incumbent

[[Page 21384]]

paging licensee, and (2) the proposed site is within 65 kilometers (40 
miles) of an authorized transmission site that was licensed to the same 
applicant on the same channel on or before February 8, 1996 and which 
is operational as of the date the application for the additional 
transmitter site is filed. This modification of the interim measures is 
effective May 10, 1996.

C. Ex Parte Rules--Non-Restricted Proceeding

    Ex parte presentations are permitted except during the Sunshine 
Agenda period, provided they are disclosed as provided in the 
Commission's rules, 47 CFR 1.1202, 1.1203, 1.1206(a).

D. Authority

    The above action is authorized under the Communications Act, 
Secs. 4(i), 303(r), 309(c), 309(j), and 332, 47 U.S.C. 154(i), 303(r), 
309(c), 309(j), and 332, as amended.

E. Ordering Clauses

    It is Ordered that, pursuant to the authority of sections 4(i), 
303(r), 309(c), 309(j), and 332 of the Communications Act of 1934, as 
amended, 47 U.S.C. 154(i), 303(r), 309(c), 309(j), and 332, this First 
Report and Order is adopted and the interim freeze set forth in the 
Notice of Proposed Rulemaking in this docket is modified, effective May 
10, 1996 as set forth herein.
    It is further ordered that the Emergency Petition for Immediate 
Withdrawal of Freeze filed by the Coalition for a Competitive Paging 
Industry on February 28, 1996, is granted to the extent discussed 
herein, and denied in all other respects.

List of Subjects

47 CFR Part 22

    Communication common carriers, Reporting and recordkeeping 
requirements.

47 CFR Part 90

    Common carriers, Reporting and recordkeeping requirements.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-11643 Filed 5-9-96; 8:45 am]
BILLING CODE 6712-01-P

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