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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Amendment of Part 90 of the ) PR Docket No. 93-144 Commission's Rules to Facilitate ) RM-8117, RM-8030 Future Development of SMR Systems ) RM-8029 in the 800 MHz Frequency Band ) ) Implementation of Sections 3(n) and 322 ) GN Docket No. 93-252 of the Communications Act ) Regulatory Treatment of Mobile Services ) ) Implementation of Section 309(j) ) PP Docket No. 93-253 of the Communications Act -- ) Competitive Bidding ) ORDER Adopted: May 20, 1997 Released: May 20, 1997 By the Chief, Wireless Telecommunications Bureau: I. INTRODUCTION 1. In this Order, we review the submissions filed by thirty-seven Specialized Mobile Radio (SMR) licensees to rejustify extended implementation (EI) authority previously granted for construction of wide area 800 MHz SMR systems. For reasons discussed below, we grant twenty- nine licensees two years from the release of this Order (to May 20, 1999), or the remainder of their current authorization period, whichever is less, to construct their systems. We deny the requests of eight licensees and grant them six months from the release of this Order (to November 20, 1997) to construct their systems. II. BACKGROUND 2. When the SMR service was first created, the Commission intended it to be an open entry, competitive service that would stimulate the development of technology, provide flexibility for existing and new SMR users and enhance the development of new techniques and services. Since that time, the Commission has taken steps to encourage SMR licensees to develop new and more efficient wide area operations. SMR licensees have responded accordingly by proposing the use of digital technology to replace the more common analog mode of operation and by proposing wide- area SMR systems with multiple base station configurations rather than the more traditional single transmitter site arrangements. In order to further encourage such innovations, the Commission has allowed SMR licensees to obtain extended construction periods of up to five years to construct wide- area SMR systems. Beginning with the American Mobile Data Communications, Inc. (RAM) and Fleet Call decisions, the Commission initially used waivers to grant requests by SMR licensees for extended construction periods. In 1993, the Commission modified its rules to allow SMR licensees to request extended implementation authority under Section 90.629, which had previously been available only to non-SMR licensees. Through such actions, the Commission allowed SMR licensees to develop their own plans, as defined by their own service areas, and to commit to accomplishing a level of implementation within a timeframe they selected. 3. In December 1995, the Commission amended its 800 MHz SMR rules to provide for geographic area licensing of 800 MHz SMR systems. In conjunction with these rule changes, the Commission suspended acceptance of 800 MHz SMR operators' requests for EI authority by waiver or under Section 90.629. While the Commission found that extended implementation may have facilitated the development of wide-area SMR systems, there was record evidence that some extended implementation recipients had accomplished little or no construction. The Commission concluded that emerging SMR businesses, especially in the more rural areas, could be prevented from expanding their service for several years as a result of spectrum being held by other licensees under grants of EI authority. In addition, the Commission concluded that the new geographic area licensing rules for 800 MHz SMR would be a more effective means of accomplishing the objective of creating wide-area SMR systems. 4. The Commission, therefore, concluded that the termination date of all EI authorizations previously granted to SMR incumbents should be accelerated, and that such incumbents should be required to rejustify the need for extended time to construct their facilities. The Commission required SMR incumbents seeking to rejustify their EI grants to submit detailed information regarding their systems. Specifically, incumbents were required to: (a) specify the duration of the EI period, including the commencement and termination dates; (b) submit a copy of their implementation plan and any modifications; (c) demonstrate compliance with Section 90.629, if authority was granted pursuant to that provision; and (d) certify that all facilities covered by the EI grant that the licensee had proposed to construct as of the adoption date of the 800 MHz SMR Report and Order were fully constructed and that service to subscribers had commenced. 5. The Commission delegated authority to the Bureau to review and take appropriate action on EI rejustification showings. Pursuant to this delegation, if a licensee's EI rejustification showing was approved, the licensee would be afforded a construction period of two years or the remainder of its current EI period, whichever was shorter. Those licensees that submitted an insufficient showing would have six months from the denial of their requests to construct the remaining facilities covered under their implementation plan. Licensees that failed to submit a showing would have six months from the last day they could timely file such a showing to construct their remaining facilities. After the six month period, authorizations for facilities still unconstructed would cancel automatically. The Commission also stated that it would entertain requests for additional time to complete implementation of licensee proposals, provided that licensees justify the need for additional time. 6. On June 4, 1996, the Bureau released a Public Notice setting forth the information to be provided by 800 MHz SMR licensees seeking to retain extended implementation authority and ordered that such showings be filed by June 17, 1996. In response to a requests for extension of time filed by the Southern Company, Entergy Services, Inc., and the American Mobile Telecommunications Association, Inc., the Bureau subsequently extended the deadline for filing rejustification showings to July 15, 1996. Thirty-seven SMR licensees have filed rejustification showings under this procedure. 7. We note that there may have been other SMR licensees that received extended implementation grants that did not file a required rejustification showing. In the 800 MHz SMR Report and Order, the Commission stated that licensees that fail to submit a required rejustification showing would have six months from the last day on which they could timely file such showings to complete the construction of the remaining facilities under their extended implementation plans. Extended implementation rejustification showings were due July 15, 1996, and the construction deadline for those facilities for which no rejustification showing was filed was January 15, 1997. Therefore, the license of any unbuilt facility for which a required extended implementation rejustification showing was not filed has cancelled automatically. III. DISCUSSION 8. As the Commission noted in the 800 MHz SMR Report and Order, the elimination of EI authority was designed to maximize spectrum use and to avoid an adverse impact upon the newly- adopted geographic area licensing rules. In this proceeding, we seek to determine whether incumbent SMR licensees have used EI authority appropriately and whether such licensees should be afforded additional time to complete construction of their systems under existing authorizations. A. Licensees With Existing Analog SMR Systems 9. Of the thirty-seven licensees that submitted rejustification showings, twenty-seven were licensees of existing analog SMR systems at the time they initially requested EI authority. These licensees sought EI authority for the purpose of converting their existing analog systems into digital systems. Based on our review of their rejustification submissions, we find that these licensees have taken reasonable and concrete steps to utilize their licensed channels and make the transition to digital technology. While some licensees are still in the early stages of the conversion process, most have undertaken significant construction of new digital systems and some have commenced digital operation. In addition, because these licensees were previously utilizing most or all of their licensed SMR channels in analog mode, granting them additional time to complete the construction of wide-area SMR systems will not significantly affect the availability of spectrum for geographic area licensing. In all of these cases, we find that the licensees have justified continuation of their EI authority as provided in the 800 MHz SMR Report and Order. 10. At the same time, we do not find that any of these licensees have justified a construction period longer than two years. In the 800 MHz SMR Report and Order, the Commission stated that where a firm had fully complied with the Commission's rules and "its system cannot reasonably be completed within the two-year period," we will entertain requests for more time, provided the licensee explains the reasons that two years is insufficient. We interpret this language as requiring a showing of extraordinary circumstances, and not simply a showing that more time would be better, or a re-arguing of the decision to adopt the two-year time period. No firm has met this test. Therefore, we grant each licensee a construction period of two years, from the release of this Order, or the remainder of its authorization period, whichever is less, to complete construction of facilities under its EI plan. Accordingly, licensees will have until May 20, 1999, to complete construction, except for those licensees whose current EI authorization expires prior to that date. Appendix A to this Order lists each licensee's construction deadline. B. Licensees Proposing New Digital SMR Systems 11. Ten licensees who have filed for continuation of EI authority applied initially to construct digital SMR systems rather than to convert existing analog facilities. Most of these licensees were granted EI authority between 1993 and early 1995. Of these ten licensees, only two -- Hawaiian Wireless, Inc., and New England Wireless Partners -- have indicated in their filings that they have begun construction of their systems. We conclude that by virtue of their construction efforts, Hawaii Wireless and New England Wireless have met the criteria for continuation of their EI authority until May 20, 1999. 12. The eight remaining licensees do not possess existing analog SMR systems and indicate in their filings that they have not undertaken any construction since receiving EI authority. We conclude that licensees who have no existing facilities and have failed to commence construction of new facilities do not meet the standard for continuation of their EI authority. These licensees designed their own business plans, chose their service areas and created their own implementation schedules. We find that allowing these licensees additional time to construct would be inconsistent with the Commission's decision in the 800 MHz SMR Report and Order. Moreover, adherence to this deadline will result in spectrum and geographic areas being automatically made available to EA licensees at six months where construction has not occurred. This means that spectrum will be quickly and effectively re-assigned to firms that have shown by winning licenses at auction that they whould utilize this resource efficiently to the benefit of the public. If these eight licensees desire a further opportunity to provide 800 SMR service, they will have opportunities to bid for spectrum under flexible construction requirements in the 800 MHz SMR auction. Therefore, we conclude that Atlantic, CTM, DRLP, Hansen, Roberts Licensees, SRI and Telecellular will be limited to six months from the release date of this Order, or until November 20, 1997, to complete construction of currently authorized facilities. After this period has expired, authorizations for unconstructed facilities will cancel automatically. Because each licensee raises particular facts and circumstances in support of its request for continued EI authority, we set forth our reasons for denying each request separately. 1. Atlantic Cellular Company, L.P. 13. On September 23, 1993, the Commission granted Atlantic a waiver of Section 90.631(e) and (f) of the Commission's rules to permit Atlantic to implement a wide-area enhanced SMR system covering the states of Michigan, Indiana, and Ohio. Thus, Atlantic's five-year EI period was set to expire on September 27, 1998. In the two and a half years from the grant of EI authority to filing of its rejustification showing, Atlantic did not begin construction of its proposed facilities. Atlantic claims that it has spent time forming coalitions with other SMR licensees to ensure that there would be sufficient spectrum to accommodate its expected demands, and considering different equipment designs to be used with its proposed system. However, Atlantic has not ordered equipment for use with its proposed system, nor has it taken any other steps towards construction of its proposed facilities. 14. We find that Atlantic has not adequately justified the delay in implementation of its wide-area SMR system. Atlantic claims that technical and regulatory uncertainties have prevented it from taking steps towards construction, and that it has not been fiscally or technically appropriate to proceed with full implementation of its wide-area SMR system. We note, however, that other SMR licensees have been able to construct wide-area facilities despite the presence of the same alleged technical and regulatory uncertainties cited by Atlantic. Atlantic has not cited any unique circumstance that prevented it from initiating construction. We therefore deny its rejustification request. 2. Centennial Telecommunications Midwest, Inc. 15. On February 27, 1995, the Commission granted CTM a five-year period to construct and operate a wide-area SMR system in the midwestern United States. As of July 18, 1996, when it filed its rejustification showing, CTM had not begun construction of its system or ordered equipment. CTM explains that it has been negotiating with other SMR licensees in an attempt to secure strategic relationships for switch sharing and other arrangements. In addition, CTM states that much of its time and effort has been spent consulting with various equipment manufacturers regarding commercially feasible opportunities for deployment of its SMR system. CTM also alleges that construction of its wide-area SMR system was delayed by technical and regulatory obstacles, which make it impossible for a "start-up" company like itself to attract investor financing 16. We find that CTM has failed to justify its request for additional time to construct its system. CTM's difficulties as a start-up company do not constitute a unique circumstance. At several points in its rejustification showing, CTM implies that it did not have the financing to go forth with the construction of its wide-area SMR system. Lack of adequate financing is a normal business risk, not a valid justification for failing to meet extended implementation commitments. 3. Digital Radio, L.P. 17. On February 27, 1995, DRLP received a five-year EI authorization to develop an SMR system in the mid-Atlantic region. In its original Request for Extended Implementation, filed August 5, 1994, DRLP stated that it would order equipment in June 1995. In its first annual status report filed in February 1996, however, DLRP claimed that its schedule called for commencement of construction in February 1997, but did not explain why it had failed to order equipment seven months earlier. At the time it filed its rejustification showing, on May 15, 1996, DRLP had still not ordered any equipment, over one year after it told the Commission it would do so. In fact, DRLP now claims that it cannot submit an equipment order until it has assurance from the Commission that its rejustification showing will be granted. DRLP also argues that the Commission's release of the 800 MHz SMR Report and Order has forced DRLP to "slow down" its implementation in order to assess the impact of the Commission's regulatory changes. DRLP claims that these regulatory changes have required DRLP to expend money and manpower that it would have been using for the acquisition of equipment. DRLP contends that it will need the full five years under its existing extended implementation plan to complete construction and operation of its SMR system. 18. We find that DRLP has not rejustified its current extended implementation authority. After more than a year and a half, DRLP has not initiated construction of its system. DRLP has not even ordered equipment for its system, despite originally proposing to begin such orders in June 1995, and certifying to the Commission in February 1996 that its construction plan was "on schedule." DRLP now claims that it will not be able to order equipment until the Commission acts on its rejustification showing. We are not persuaded that circumstances outside of DRLP's control delayed the construction of its SMR system. It appears that DRLP made a private business decision to forego construction of its SMR system. We find that allowing DRLP a further extension of the construction period for its system is unwarranted. 4. Charles Hansen 19. Mr. Hansen holds several 800 MHz SMR licenses in Nevada. Hansen's rejustification request, filed on July 15, 1996, does not contain any information regarding the status of construction of his SMR system. Moreover, although the licenses listed in Hansen's Request expire between August 22nd and August 23rd, 2000, Hansen only seeks an extension of time to March 1, 1997 to complete construction of his system. We find Mr. Hansen's rejustification showing to be incomplete and not adequate to justify further extended implementation authority. Nonetheless, because we are affording other parties who failed to justify their extended implementation requests six months to construct, we will likewise grant Mr. Hansen an additional six months. 5. Licensees Represented by K. Steven Roberts 20. The Roberts Licensees jointly submitted an extended implementation rejustification showing on June 11, 1996. The Roberts Licensees hold SMR licenses across the United States, and they propose to construct an integrated nationwide SMR system providing coverage to 200 cities in 46 states, as well as Puerto Rico and the U.S. Virgin Islands. The Roberts Licensees were granted EI authority under Section 90.629 on March 3, 1995, requiring them to complete system construction by March 3, 2000. 21. Since the grant of EI authority in March 1995, the Roberts Licensees state that they have obtained approval from the Federal Aviation Administration for the tower sites specified in their licenses and have initiated negotiations with Motorola to provide vendor financing in conjunction with the sale of Motorola equipment. However, the Roberts Licensees concede that no equipment has been ordered and their system is unconstructed. As explanation for the delay, the Roberts licensees cite the suspension of SMR application processing from August 9, 1994, through October 31, 1995, and the interval between the release of the SMR Backlog Public Notice on October 31, 1995 and the issuance of individual licenses in April and May 1996. 22. We find that the Roberts Licensees have not justified continuation of their current extended implementation authority. Although many of the Roberts Licensees' licenses were granted in the October 1995 processing of the 800 MHz SMR application backlog, the Roberts Licensees held a significant portion of their licenses (749 of 5,554 channels) prior to the grant of EI authority on March 3, 1995. The Roberts Licensees have not commenced construction of these facilities, and fail to explain why these channels remain unconstructed. With respect to the remaining channels that were granted in the SMR Backlog Public Notice, the Licensees have not explained why it was necessary to await the mailing of individual licenses before initiating construction of these facilities. The SMR Backlog Public Notice provided notice of the authorizations that were granted, and the Roberts Licensees could have taken steps to order equipment and initiate construction at that time. Because they failed to do so, we deny their request for additional time. 6. Spectrum Resources, Inc. and Spectrum Resources of the Northeast, Inc. 23. On May 8, 1995, SRI filed requests for EI authority for certain licenses they either held or managed in order to integrate the licenses into two wide-area digital SMR systems. SRI's requests were granted on May 31, 1995, and its current EI authorizations expire May 31, 2000. SRI was subsequently granted additional licenses on October 31, 1995, pursuant to the SMR Backlog Public Notice, which SRI requested to be added to its EI authorizations. 24. In its original requests for EI authorization, SRI stated that it would issue a purchase order for equipment by March 1, 1996 and initiate construction of two base stations by September 1, 1996. However, SRI's rejustification showing reveals that notwithstanding this timetable, SRI has not ordered equipment or constructed any of the facilities covered by either of its EI plans. SRI claims that the delay has been caused by the lack of commercially available equipment. We note, however, that other SMR licensees have been able to obtain equipment during the same time period. SRI also claims that its systems will require extensive field trials and tests, but there is no indication that it has conducted any such tests. Finally, SRI contends that delivery of equipment must be staggered in order to ensure the availability of equipment from the manufacturer and to "permit prudent financing and payment of the equipment." We agree that one of the purposes of EI authority is to facilitate phased buildout of systems. In this case, however, SRI has failed to meet its own timetable for such development, without adequate justification for the delay. Based on these factors, we find that SRI has not adequately justified continuation of its EI authority. SRI will therefore have six months from the release date of this Order to complete construction of the facilities covered by its implementation plans. 7. Telecellular 25. Telecellular was initially granted EI authority on February 27 1995, to provide island- wide SMR service in Puerto Rico. On May 19, 1995, Telecellular filed an amendment seeking to add additional sites to its original EI authorization. Telecellular's amendment was granted on July 31, 1995. 26. In its initial request for EI authority, filed May 25, 1994, Telecellular stated that it would begin construction of its SMR system by February 1, 1995 and would initiate service by February 1, 1996. In its May 19, 1995, amendment, Telecellular stated that it would build "0-9" sites in the first year of its construction period and "0-15" sites by the end of its second year. In its annual certification filed February 27, 1996, Telecellular stated that it had made "substantial progress in executing its implementation plan." 27. We find that granting Telecellular further extended implementation authority would be inconsistent with the Commission's holding in its 800 MHz SMR Report and Order. In that decision, the Commission stated that extended implementation authority must not be allowed to hamper the future construction plans of EA licensees. Telecellular acknowledges that it has not begun construction of its facilities. While Telecellular's extended implementation plan does not require construction of a minimum number of sites in the first two years, we find that permitting Telecellular to further postpone construction of its facilities for such an indefinite period of time may hamper future EA licensees from complying with the construction requirements associated with their authorizations. Accordingly, Telecellular will have six months from the release date of this Orderto complete construction of the facilities covered by its current authorizations. IV. CONCLUSION 28. Our review of the rejustification submissions indicates that most SMR licensees requesting continuation of EI authority have taken reasonable and concrete steps to build wide-area SMR system, and therefore have met the criteria for continuation of their EI authorizations for an additional two years. In the case of those licensees who have not taken steps to begin construction of their systems, we conclude that allowing an extended time to construct under their existing authorizations could encourage spectrum warehousing and adversely affect geographic area SMR licensing. Moreover, these licensees will have opportunities to bid for spectrum under flexible construction requirements in the upcoming 800 MHz SMR auction. V. ORDERING CLAUSES 29. Accordingly, IT IS ORDERED that the Specialized Mobile Radio licensees listed in Appendix A attached hereto are granted additional time, up to and including the relevant construction deadline listed in Appendix A, to complete construction of the remaining facilities covered under their existing extended implementation plans. Authorizations for facilities still unconstructed after the construction deadline will cancel automatically. 30. This action is taken pursuant to delegated authority as set forth in Section 0.331 of the Commission's rules, 47 C.F.R.  0.331. FEDERAL COMMUNICATIONS COMMISSION Daniel B. Phythyon Acting Chief, Wireless Telecommunications Bureau APPENDIX A Licensee Construction Deadline Advanced MobileComm of Texas, L.P. May 20, 1999. Atlantic Cellular Company, L.P. November 20, 1997. Bayou Communications, Inc. May 20, 1999. Bis-Man Mobile Phone, Inc. May 20, 1999. CellCall, Inc. October 31, 1997. Centennial Telecommunications of the Midwest, Inc. November 20, 1997. Charles Hansen November 20, 1997. D&L Communications, Inc. May 20, 1999. Davis Electronics Company, Inc. July 15, 1998. DCL Associates, Inc. May 20, 1999. Digital Radio, L.P. November 20, 1997. Entergy Services, Inc. March 31, 1998. Hawaiian Wireless, Inc. May 20, 1999. Industrial Communications & Electronics, Inc. April 23, 1998. Licensees represented by K. Steven Roberts November 20, 1997. Mobex Idaho Inc. May 20, 1999. Mobex North Carolina Inc. May 20, 1999. Mobile Relays, Inc. April 22, 1999. Motorola and Castle Tower Corp. May 20, 1999. New England Wireless Partners July 11, 1998. Nextel Communications, Inc. Current expiration date for each individual authorization or May 20, 1999, whichever is sooner. Norcal Wireless May 20, 1999. Palmer Communications dba Illowa Communications May 20, 1999. Parkinson Electronics Co. May 20, 1999. Pittencrieff Communications, Inc. May 20, 1999. Potomac Corporation May 20, 1999. Racom Corp. October 1, 1998. Radiophones, JV May 20, 1999. RAM Technologies, Inc. May 20, 1999. Spectrum Resources of the Northeast, Inc. November 20, 1997. Spectrum Resources, Inc. November 20, 1997. Speed Net May 20, 1999. Southwest Wireless, Inc March 22, 1999. Telecellular November 20, 1997. The Southern Company May 20, 1999. Western Wireless May 20, 1999. William Miller dba Russ Miller Rentals May 20, 1999.