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Federal Communications Commission
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Internet: http://www.fcc.gov

This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).

September 11, 1997


Wireless Telecommunications Bureau Chief Daniel Phythyon hailed the success of market-based spectrum policies in remarks yesterday to the Personal Communications Industry Association (PCIA) '97 Convention in Dallas, Texas. Phythyon said that since its inception in December 1994, the Wireless Telecommunications Bureau "has successfully moved wireless services towards a flexible, competitively neutral regulatory scheme that has resulted in an unprecedented growth in the number of new service offerings and providers."

In his breakfast session remarks, Phythyon called spectrum auctions "the most free-market, successful program ever designed to promote competition in communications," adding that the FCC's philosophy relies on markets to allocate goods efficiently and to produce innovation, consumer choice, lower prices and better services more quickly and at a lower cost than ever before." Phythyon noted that over the last three years, "we've run 14 auctions, issued 4,377 licenses for spectrum-based services involving nine different wireless technologies." Phythyon said the "result has been tremendous growth in innovation and competition in the wireless marketplace--creating billions of dollars in growth and thousands of jobs, and collected over $11.8 billion for the U.S. Treasury." He added that "a number of these services represent new uses of spectrum, employ new technology, and are or will be broadly available to the public."

Phythyon noted that the licensing of PCS represented the fastest roll-out of a wireless service in FCC history, changing the competitive landscape in wireless services almost overnight. Reiterating Chairman Reed Hundt's prediction to the cellular industry last year that wireless will "be our 21st century telephone company," Phythyon cited as typical of what's possible a Wall Street Journal report about a Dallas interior decorator who got rid of her landline phone and uses wireless exclusively.

Phythyon said the FCC's spectrum auction program has succeeded "because it is a dynamic and flexible process that can be continuously improved and changed." He noted, for example, that the Bureau is currently evaluating the use of "combinatorial bidding" and other bidding methodologies," as directed by the Budget Act of 1997. He also said the Bureau has designed "a unique and innovative automated auction system that has revolutionized the assignment of licenses for wireless telecommunications services." Phythyon noted that not only has the system been recognized by Harvard University and by the Guinness Book of World Records, but also that a number of other nations have followed the Republic of Mexico's lead and considered licensing the FCC's auction software to conduct their own spectrum auctions.

Phythyon also hailed congressionally-mandated opportunities for designated entities to compete in the growing wireless marketplace. He added that the FCC will continue to encourage participation by small business and other designated entities as a way to promote opportunity for all to participate in the communications revolution. Phythyon noted that to date 80% of license winners in FCC spectrum auctions are small businesses, 22% of which are minority-owned and 18% woman-owned. "The FCC is currently fine-tuning the program and we will continue to be guided by our commitment to competition and increasing service to all Americans as we decide these tough issues," Phythyon told PCIA attendees.

When asked about the difference between the old FCC and the current FCC, Phythyon said that, "The FCC's market-based spectrum policies have unleashed unprecedented competition and innovation in the wireless communications market -- everything the 1996 Telecommunications Act is predicated upon. When it comes to competition the wireless marketplace is leading the way."

Phythyon, who was joined by other Wireless Telecommunications Bureau staff at this morning's "Meet the Wireless Bureau" panel, also highlighted the following Bureau accomplishments of particular interest to PCIA members:

- Promoting spectrum flexibility: Permitting CMRS providers to offer fixed wireless services on a co-primary basis with mobile services has afforded them flexibility to meet consumer demand for fixed services, mobile services, and combinations of the two. A number of PCS licensees and other CMRS providers are developing fixed as well as mobile service offerings. These offerings are particularly focused on providing "wireless local loop" service, a wireless form of local telephone service that could potentially provide direct competition to traditional landline service.

- Geographic licensing: Rules for spectrum services that were traditionally licensed on a site-by-site basis now allow for geographic area licensing. This and other service rule changes have led to flexible and efficient regulation of auctionable spectrum.

- General competitive bidding rules: The Bureau has streamlined auction procedures by adopting a single menu of auction rules that can be tailored to different services and applied to all future spectrum auctions.

- Developing a New Framework for Public Safety Communications Policy: The Bureau has taken a leading role in assessing the operational, technical and spectrum requirements of all public safety organizations -- Federal, state and local -- through the year 2010. The Bureau will continue to promote efficient use of public safety spectrum while recognizing particular regional public safety needs.

- Partitioning and Disaggregation: Permitting licensees to geographically partition their licensing areas and to disaggregate portions of their spectrum holdings provides licensees with flexibility to retain only the spectrum they need to provide service and affords opportunities for new entrants to meet other market demands, particularly for niche market services and service to small markets and rural areas.

- Microwave relocation: Creating incentives for PCS licensees and microwave incumbents to expedite the relocation process through voluntary agreements has furthered the rapid clearing of spectrum and the buildout of PCS networks.

- Wireless 911: The FCC promulgated rules to govern the availability of basic 911 services and the implementation of Enhanced 911 for wireless services.

- LEC-CMRS Interconnection: In light of the Eighth Circuit's decision in the local competition proceeding, the FCC will need to evaluate whether there is a need for, and, if so, the extent of, further action regarding CMRS-LEC interconnection.

- Universal Licensing System: The Bureau has embarked on the task of creating a Universal Licensing System which will not only combine all of the existing 10 licensing systems, but will serve as a continuously updated, easily manipulated database of information on spectrum occupancy, use and ownership. Additionally, the system will improve public access to licensing information, implement electronic filing for all services, permit auto-grant of certain licenses, reduce fifty forms currently used for license application to approximately five and integrate with all fee and collection data systems.

- LEC/CMRS Safeguards: The FCC proposed new rules for in-region safeguards to replace the existing restrictions on BOC provision of cellular service.

- Resale: To facilitate the growth of wireless telecommunications services and stimulate competition among providers of cellular, broadband PCS, and certain SMR services, the FCC adopted interim rules governing resale obligations of such providers.

- Future auctions: Rulemakings for future auctions of licenses have been issued in the Local Multipoint Distribution Service, 220 MHz Service, 800 MHz SMR and paging. Two auctions have been scheduled: 1) 800 MHz Specialized Mobile Radio Service, which can operate in an interconnected mode, as a mobile telephone, or in a dispatch mode, as two-way voice communications between mobile units or between mobile and fixed units, is scheduled to begin October 28, 1997. In light of recently adopted Budget Act of 1997, the Bureau issued a Public Notice last Friday seeing comment on a proposal that a reserve price or minimum opening bid be established; 2) Local Multipoint Distribution Service (LMDS), which permits two-way, speed data transmission and/or one-way video distribution in the high frequency microwave or millimeter wave band. An auction of LMDS licenses is scheduled to begin December 10, 1997.


News Media contact: Audrey Spivack at (202) 418-0654.