Remarks of Michele C. Farquhar Chief of the FCC's Wireless Telecommunications Bureau before the Wireless Practice Committee of the Federal Communications Bar Association December 5, 1996 I. Introduction Thank you for inviting me here today to share with you some of the Wireless Bureau's upcoming priorities and recent accomplishments, particularly in the areas of facilities siting, general barriers to entry, and universal service. I also hope to hear from you about your priorities as practitioners in this exciting and rapidly evolving area of communications practice -- such an exciting field that Wired magazine recently wrote that while the Baby Bells are simply "tired," wireless is fully "wired." We at the Wireless Bureau think that's an apt description. Some of my staff, who would have liked to be here today, are occupied on the remaining PCS C-Block licenses. Although I am going to address several other topics today, we have no greater priority right now than completion of the PCS C-Block licensing process. Likewise, we will make a similar commitment when the D, E & F Block licenses are before us. We intend to assure that no one can use the petition to deny process anti-competitively, merely for delay. II. Priorities: Eliminating Barriers to Entry As many of you know, one of our greatest challenges -- and one of our greatest commitments -- is in the area of removing barriers to entry. Certainly this means assuring that a wide diversity of licensees are able to participate in the provision of wireless services. Yet it also means assuring that licensees who are in compliance with our rules are able to get their services to market quickly, fairly, and efficiently. With a level and open playing field, true competition can emerge. The Commission underscored the importance of an open playing field in its recent Interconnection Order, when it observed that "States may not impose on CMRS carriers rate and entry regulation as a pre-condition to participation in interconnection agreements." The Commission reiterated its commitment to review any entry barrier allegations on an ongoing basis, including "claims that States or local governments are regulating entry or imposing requirements on CMRS providers that constitute barriers to market entry." A. Wireless Facilities Siting One of our major initiatives in this area of "removing barriers to entry" is facilities siting. By enacting Section 704 of the Telecommunications Act of 1996, Congress acknowledged the critical import of facilities siting not only to industry, but also to the deployment and realization of personal communications systems nationwide. In the months since the Act's passage, we have learned that facilities siting is a multi-faceted, multi- jurisdictional problem -- one that demands equal measures of cooperation and creativity. What do I mean by "multi-faceted" and "multi-jurisdictional"? Section 704 preserves the authority of State and local governments over the placement, construction, and modification of personal wireless facilities -- land use issues that traditionally have been vested within the States' jurisdiction. While preserving that authority, the new law tempers its exercise in several important ways, and that is where a State and Federal partnership must emerge. First, State and local governments are barred from unreasonably discriminating among providers of functionally equivalent services. Nor may they prohibit -- nor their actions have the effect of prohibiting -- the provision of personal wireless services. Second, State and local authorities are precluded from premising their regulation of wireless facilities on the basis of the effects of radio frequency (RF) emissions, to the extent that facilities comply with the FCC's RF emission guidelines. And finally, there are some procedural due process protections: facilities siting requests must be acted upon within a "reasonable period of time," and any denial of such a request must be in writing, supported by substantial evidence contained in a written record. So there is a carefully parsed distribution of authority for tower siting issues -- one that may appear confoundingly complex to providers, who are confronting a task of activating tens of thousands of new sites nationwide over the next several years. In the Commission's estimation, nobody wins -- least of all the American public -- if PCS and other wireless services are delayed because these issues must be sorted out in the courts. In this regard, the Wireless Bureau has taken an active role in addressing the needs, questions, and concerns of local governments, concerned citizens, and wireless providers alike. We hope to increase our role going forward, and we solicit your suggestions as to how we can best help. First, we are spreading information and technical assistance far and wide: þ We have issued two lengthy "Fact Sheets" or memoranda, the first explaining the provisions of Section 704, and the second detailing the Commission's new RF guidelines and answering a set of frequently asked questions. We intend to issue a third Fact Sheet in January concerning access to Federal and State properties. þ In October, we issued a Public Notice seeking comment on what steps we the Commission can take, pursuant to Section 704(c), to offer technical assistance to the States to encourage them to make property, rights-of-way and easements under their jurisdiction available for the placement of telecommunications facilities. þ We intend to issue an NPRM in the near future, addressing procedures for providers to petition for relief from State or local action that is premised upon the effect of RF emissions. þ We also have responded to written inquiries from State and local officials seeking guidance in applying Section 704. Second, and equally important as written guidance, we have actively sought to work with State and local governments and wireless service providers to serve as a conduit for information, to build a foundation for open communication and understanding, and to devise mutually acceptable solutions: þ We have established an FCC-wide Facilities Siting Task Force, comprised of members from the Wireless Bureau, the Office of General Counsel, the Office of Legislative and Intergovernmental Affairs, the Compliance and Information Bureau, and the Office of Engineering and Technology. Shepherded by my Deputy and Section 704 expert, Roz Allen, this group is the FCC's equivalent of fire jumpers. They answer telephone, e-mail and written inquiries on a daily basis. They have met with the National League of Cities, the United States Conference of Mayors, the National Association of Counties, the American Planning Association, and the National Association of Telecommunications Officers and Advisors. And they give presentations to local governments, zoning boards and wireless provider organizations throughout the country, often at the rate of about one appearance per week. þ In addition, we talk with individual wireless providers and industry associations on almost a daily basis. Next week, we will be hosting a meeting with industry to discuss problems and possible solutions, and I plan to meet with officials from the New Jersey towns where Omnipoint has had difficulty. I am also pleased to announce today that the FCC will be holding a large public forum on siting issues in January. General Counsel Bill Kennard and I will both help lead this session. We hope that many providers and representatives of State and local governments will participate. Details will be forthcoming. Facilities siting issues are likely to be with us for a while, but we have learned some things throughout this process that I would like to share with you today. First, this is an issue that neither the municipalities, nor the providers, nor the Federal government can solve alone. We all need to work together constructively. This means hearing each party's concerns: the cities are concerned that they are being asked to decide critical planning issues, questions of first impression, in a short time-frame; citizens are concerned about perceived possible health effects and about the aesthetics of their communities; and providers are concerned about disproportionately high fees, uncertain processes, and lengthy hearings and moratoria, all of which can delay the roll-out of service. By listening to each other, we can find some creative solutions. For example, providers will find that it is in their best interest to work with the communities early on, to teach them about the economic and public safety value of wireless services to their communities, to assuage fears about possible health effects of RF emissions, and to be innovative about addressing aesthetic concerns. Likewise, local governments will see that clear procedures and timely action on applications will accrue to the benefit of their residents, not just to providers, and can help attract new business. Of course, creativity and cooperation will work only if actively exercised by both sides. To the extent that we cannot resolve these issues cooperatively, a more aggressive approach may be necessary. As established by Bell South's successful federal suit in the Northern District Georgia, many courts will not hesitate to enforce the provisions of Section 704. The important thing is that we all stand to gain by fast, fair and efficient deployment of wireless services. The Wireless Bureau stands ready to assure that. B. Petitions for Preemption of State and Local Regulation Facilities siting, as I noted, is just one subset of a larger group of legal issues that we are confronting in the area of eliminating barriers to entry. New Section 253 provides that no State or local regulation may prohibit, or have the effect of prohibiting, the ability of a carrier to provide any interstate or intrastate telecommunications service. While there is a savings clause preserving State authority over universal service, public safety and welfare, continued quality of service, and consumer rights, that authority must be exercised on a competitively neutral basis. And both State and local governments must manage their public rights-of-way in a manner that is both competitively neutral and non-discriminatory. Questions immediately arise as to how these provisions dovetail with Section 332(c)(3)(A)'s prohibition against State and local rate and entry regulation of CMRS and PMRS providers, and its savings clause concerning "other terms and conditions" of service. Or how Section 253's mandate concerning competitively neutral and non-discriminatory treatment relates to Section 601's State tax savings provision. These are exceedingly difficult questions, and they are more than academic. Presently, we have 10 petitions for preemption of State or local regulation raising these and other legal issues. You may be most aware of Western PCS Corporation's preemption request against an ad valorem tax levied by the State of Oregon that is based in part upon the price that Western paid for the Portland B-block PCS license at auction. In another petition, US West is challenging the City of Roseville's imposition of an annual CMRS franchise fee based on the carrier's gross revenues. These and the other petitions are a high priority for the Bureau in the coming months, and we expect that we will see additional filings as we continue to transition from the initial implementation of the new Act to its enforcement. In this light, we will be co-hosting an FCC public forum on December 16 concerning the use and management of public rights-of- way under Section 253. Part of the forum will focus on a TCI/Cablevision petition against the City of Troy, New York, as well as the City of Roseville petition that I just mentioned. The discussion concerning state regulation of public rights-of-way should be of great interest to all telecommunications providers. We hope that some of you will be able to attend. III. Priorities: Universal Service Reform The third Wireless Bureau priority that I would like to discuss with you today is universal service reform. The new Act added Section 254, for the first time explicitly recognizing universal service in the statute. Section 254 set forth six principles on which universal service policies should be based, including the principle that all telecommunications providers shall contribute on an equitable and nondiscriminatory basis to the preservation and advancement of universal service. As you are likely aware, the Federal-State Joint Board established by the Act recently released its Recommended Decision. Now, the Commission has until May to act on the Joint Board's recommendations. The Wireless Bureau has been actively involved in the universal service proceeding. The Bureau has a staff member, David Krech, serving on the Joint Board staff, and we have coordinated extensively with the Common Carrier Bureau. We have sought to assure that the Commission's new rules will not discriminate in favor of the wireline industry, that they will be responsive to the technological capabilities of wireless carriers, and that they will ensure that wireless carriers are eligible to receive support for providing universal service. Just yesterday, I heard several small and rural cellular providers tell financial analysts in New York City that they are well-positioned to become low-cost providers in high-cost areas, and they are following the progress of this proceeding very closely. Let me briefly highlight some of the portions of the Recommended Decision of note to the wireless industry. First, the Joint Board recommended that the principle of competitive neutrality, including technological neutrality, be added to the guiding principles set forth in the Act. This means that the universal service rules should not favor incumbent carriers or wireline technologies. The Joint Board endeavored to make sure that all competitors using any technology to provide the designated services are eligible both to provide universal service and to receive support for providing that service. The flip side, of course, is that all competitors must contribute to the universal service support mechanisms. The Joint Board designated seven services for support: voice grade access to the public switched network, with the ability to receive and place calls; dual-tone multi-frequency (DTMF) signalling, or its functional equivalent; single-party service; and access to emergency services, operator services, interexchange service, and directory assistance. We do not believe that any of these requirements pose a problem for broadband wireless carriers that wish to participate in the provision of universal service. In the area of low income support, the Joint Board focused on making the programs competitively and technology neutral. Specifically, the Joint Board recommended that the Lifeline program be de-linked from the subscriber line charge, and that it be based on a flat per month rate reduction. This means that the Lifeline program will no longer be limited to wireline telephone companies, which impose a subscriber line charge, but will be available to all eligible carriers, including wireless carriers. On funding, the Joint Board recommended that all telecommunications carriers providing interstate telecommunications services should contribute to the fund. Contributions would be assessed as a percentage of the carrier's gross revenues from telecommunications service, net of payments to other carriers for telecommunications services. Funding for schools and libraries will be based on interstate and intrastate revenues. The Joint Board, however, did not make a recommendation whether the support mechanism for the high cost support, which will be the largest part of the universal service support, should be based on only interstate revenues or interstate and intrastate revenues. Finally, in an action specifically affecting wireless carriers, the Joint Board found that Section 332(c) does not preclude states from requiring CMRS providers to contribute to any state universal service support mechanisms. While this last action may not seem positive, it fairly reflects legislative intent and helps to ensure a technology neutral approach across the board. As you can tell, wireless providers will all be affected by the Commission actions in this proceeding, if only by the fact that they will have to contribute to the support mechanisms. I encourage all of you to read the Recommended Decision, which has been put out for public comment (comments due December 16). Please let us know if there are recommendations which adversely affect the wireless industry, or which recommendations are on target and should be adopted without change. If you do not have a copy of the Recommended Decision, it can be found on the Commission homepage. In the related area of access reform, Bureau attorneys Dan Grosh and Steve Weingarten are working to assure inclusion of a wireless perspective. And in the area of interconnection, the FCC is pleased that the Eighth Circuit lifted its stay on the portion of the rules concerning reciprocal compensation, use of MTAs to define the size of wireless markets, and the right to a "fresh look." We are quite concerned by rumors that some LECs have been slow to come to terms with non-discriminatory treatment provisions, that they are stalling negotiations, or that they are imposing onerous billing or reporting requirements as a condition to reciprocal compensation. We are eager to offer our assistance to assure compliance. IV. Recent Accomplishments: Process Reform Certainly Section 704, Section 253, and the Universal Service proceeding are providing the Wireless Bureau with a lot of challenging and complex issues to chew on. At the same time, however, there is a lot of bread and butter work to be done, work that we recognize is just as important, if not more so, for your clients. In this regard, I am quite pleased to report to you that over the past 11 months, we have reduced our licensing backlog by a full 75%. And we're pleased to note that this dramatic backlog reduction has occurred at a time when the Bureau has increased its number of rulemakings by 78% from last year! One particular subset of the backlog cases involve CMRS -- I hope all of you saw the Public Notice on its CMRS case backlog reduction efforts, released yesterday. At the beginning of the year, I established a task force to work on resolving these cases. All of the cases have been assigned to individual attorneys within the divisions, and we have given priority to resolving cases where the service at issue is not being provided to a particular area because of the pendency of the litigation. Thus far, the task force has resolved 36% of the CMRS case backlog, defined as cases pending from before 1996 (indeed, some were pending from before the Bureau's creation). For those cases remaining, do not be surprised if you receive a telephone call to determine whether the parties still wish to pursue their claims. We intend to require settlement conferences for cases ripe for such discussions. And we will continue to encourage parties to settle their cases privately wherever possible. Going forward, to help assure that the licensing backlog, once eliminated, stays that way, we have implemented electronic filing procedures for 75% of our services. This benefits you and your clients because electronic filing results in fewer errors, it minimizes staff time performing data entry and, better yet, it reduces processing time by at least 25%. In many instances, applications that once took 30 days are now being processed overnight. So I heartily encourage you to make use of our electronic filing capabilities. Moreover, by visiting our homepage on the Internet, you can now check on the status of cases, review recent actions in rulemakings, browse through our service-by-service spectrum inventory, and read Bureau reports and speeches. If you haven't visited the website, give it a try -- we have been receiving roughly 2,000 visitors a week. Finally, I'd like to highlight one area of process reform in which some of you, as FCBA members, have been playing a vital role. Earlier in the year, we issued an NOI and a Public Notice addressing a number of proposals for streamlining Part 22. With the help of the FCBA Task Force, we hope to issue an NPRM on these initiatives sometime early next year. I'd particularly like to thank David Gross, Kathy Zachem, and Michael Sullivan for the hard work that they have put into this process. Conclusion In summary, the Bureau's current workload seems counter to conventional wisdom: the largely deregulated status of wireless carriers seems to have only increased the number and complexity of issues before us! In truth, as wireless carriers compete in new markets and enter the consumer mass market, new challenges will continue to confront us, and our role will often be to facilitate wireless competition and entry in new forums. The Bureau appreciates the need to broaden its outreach efforts with industry, the financial community, and State and local governments during this dynamic period in order to anticipate and solve problems that arise as we set a broad, competitive framework for wireless services. Having met with a number of financial analysts on Wall Street just yesterday, I can report that even the experts acknowledge that the only real "certainty" in this business right now is growing enthusiasm for wireless as penetration continues to exceed all expectation. My staff and I thank you for this opportunity to be here today. We look forward to hearing from you and, hopefully, working with you, as we tackle these issues in the upcoming months. I am happy to answer any questions that you might have.