Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) SKYTEL COMMUNICATIONS, INC. ) ) For Modification of Authorization and ) Waiver of Section 24.129 ) of the Commission's Rules ) ORDER Adopted: May 28, 1999 Released: May 28, 1999 By the Chief, Commercial Wireless Division, Wireless Telecommunications Bureau: I. INTRODUCTION 1. In this Order, we address the Request for License Modification (request), filed on December 14, 1998, by SkyTel Communications, Inc. (SkyTel), seeking to modify its nationwide narrowband PCS license KNKV208. SkyTel's license KNKV208 contains the following paired spectrum: 901.7750-901.7875 MHz and 930.50-930.55 MHz, which is designated as channel eight in section 24.129(a) of the Commission's rules. In its request, SkyTel seeks to remove the 930.50-930.55 MHz (50 kHz) in channel eight and replace this spectrum with the 940.75-940.80 MHz band (also 50 kHz) that is allocated as channel nine in section 24.129(a) of the Commission's rules. As discussed below, we waive section 24.129(a) of the Commission's rules as it applies to SkyTel to allow for the exchange of the 930.50-930.55 MHz band for the 940.75-940.80 MHz band. II. BACKGROUND 2. In June 1993, SkyTel received a pioneer's preference for its development of two-way narrowband technology that increases spectrum efficiency. Consequently, on July 13, 1994, prior to the nationwide narrowband PCS auction, the Commission granted SkyTel an unpaired 50 kHz nationwide license at 940.75-940.80 MHz. Following certain Commission decisions and litigation relating to its pioneer's preference license, in December 1998, SkyTel returned the unpaired 50 kHz 940 MHz license it received pursuant to its pioneer's preference rather than make the $33.3 million payment that was required for this license. 3. At about the same time the Commission granted SkyTel's pioneer's preference license, SkyTel acquired two additional nationwide narrowband PCS licenses at auction for a total of $127.5 million. SkyTel paid $47.5 million for the license that is the subject of this Order: 50/12.5 kHz paired spectrum at 901.7750- 901.7875 MHz and 930.50-930.55 MHz (Station KNKV208). SkyTel also paid $80 million for the following license: 50/50 kHz paired spectrum at 901.20-901.25 MHz and 940.20-940.25 MHz (Station KNKV205). Presently, Skytel provides two-way messaging service on a nationwide basis operating on Station KNKV205. However, SkyTel at this time has not established service on the license that is the subject of its modification request. The five-year construction benchmark for these nationwide licenses is September 1999. 4. On December 14, 1998, SkyTel filed its modification request, seeking to remove the 930.50- 930.55 MHz band (50 kHz) of its nationwide narrowband PCS license KNKV208 and replace it with the 940.75-940.80 MHz band spectrum (also 50 kHz). The end result would be that license KNKV208 would remain as a paired 50/12.5 kHz license, but would be paired as 940/901 MHz instead of its original 930/901 MHz. SkyTel would then have two channels at 940/901 MHz. Further, the Commission would still have 50 kHz of unpaired spectrum that would be subject to a future auction, but it would be at 930.50-930.55 MHz instead of 940.75-940.80. 5. SkyTel contends that granting its request would serve the public interest because operating its nationwide system on two 901/940 MHz channels will result in lower consumer costs and greater service offerings to the public. SkyTel also contends that 930 MHz and 940 MHz spectrum are entirely fungible, and the change in authorizations will not harm any party. SkyTel further argues that grant of its request is appropriate in light of the complicated and long history associated with its efforts involving the pioneer's preference. Finally, SkyTel requests prompt action on its request since the additional frequency is necessary in the larger markets because of capacity constraints, and that considerable lead time is required by vendors in order to finalize development of equipment necessary to permit use of both frequencies efficiently. 7. On December 23, 1998, SkyTel's modification request was placed on public notice for comment. Three parties filed comments in response to SkyTel's modification request. Arch Communications, Inc. (Arch) supports SkyTel's request because it states that allowing the exchange would serve the public interest by creating greater spectrum efficiencies in the narrowband PCS service which ultimately benefit consumers. Arch also states that no other party will be harmed by the grant of SkyTel's request. Arch further contends that equipment for narrowband PCS service operates on 930 MHz through 940 MHz. Thus, Arch states the value of narrowband PCS spectrum is the same regardless of whether the spectrum is in the 930 MHz or 940 MHz band. Arch finally contends that grant of SkyTel's request supports the Commission's goal of increasing the flexibility of spectrum use by the licensee. Paging Network, Inc. (PageNet) also supports SkyTel's request, contending that grant of the request serves the public interest because CMRS carriers need significant flexibility to bring innovation and quality services to the public. PageNet further states that grant of the request would promote the type of flexibility that is necessary for growth and effective competition in the CMRS marketplace. PageNet notes that WCS licensees have the freedom to innovate and implement new services when the public demands because licensees are permitted to use the spectrum for virtually any wireless service they may devise, and have a ten-year substantial service build-out requirement. PageNet contends that the Commission should allow CMRS licensees significant flexibility to quickly and easily meet the change in public demand due to innovative new services. Finally, PageNet believes that regulatory flexibility may take many forms, including a request to exchange spectrum. 8. AirTouch states that, because it believes licensees should be accorded maximum flexibility to utilize spectrum in ways that serve the public interest, it has no conceptual problem with SkyTel's request. However, AirTouch contends that SkyTel's request is a proposal to reconfigure the narrowband PCS channel plan since a grant of the SkyTel request will result in two new narrowband PCS channels that do not currently exist in section 24.129 of the Commission's rules. AirTouch explains that SkyTel's request will also eliminate two narrowband PCS channels in section 24.129. Thus, AirTouch argues that the relief requested by SkyTel requires a Commission rulemaking proceeding because spectrum allocation issues of this nature are routinely handled by a Commission rulemaking. AirTouch further contends that SkyTel's request will have an effect on the overall allocation issues in a pending rulemaking proceeding in which the configuration of narrowband spectrum is an issue because commenters were unaware that SkyTel was going to relinquish an unpaired 50 kHz nationwide PCS channel when comment was sought on the issue of whether the Commission should allocate additional nationwide and regional channels. Finally, AirTouch contends that the Commission must consider the implications of SkyTel's request on any treaties the United States has with Canada or Mexico on the 901-902, 930-931, and 940-941 MHz channels. 9. SkyTel, in response to AirTouch's contention that its request must be accomplished in the context of a rulemaking proceeding, states that the frequency it seeks to include in its license is allocated for mobile PCS use on a nationwide basis, and that it intends to use this frequency consistent with this allocation. Thus, SkyTel claims that, at most, it needs a waiver of section 24.129(a), and that such waivers to use frequencies for other than the assigned use can be granted where: (1) the existing frequency allocation is not suited to accommodate the applicant's requirements; (2) the frequency requested is underutilized; (3) the proposed frequency use will not be detrimental to assigned users; and (4) the grant of the waiver will serve the public interest. SkyTel contends that the Commission could waive section 24.129(a) because it has satisfied these four requirements. SkyTel states that the initiation of a notice and comment rulemaking on this matter would be of no utility from a due process perspective since the Commission provided notice and an opportunity to comment on its request. SkyTel further argues that, contrary to AirTouch's claim, the allocation of narrowband PCS nationwide frequencies is not at issue in Gen. Docket No. 90-314. Finally, SkyTel believes that its proposal will have no material impact on any existing international protocols, and has no objection to the Commission's consideration of the international protocols on its request. III. DISCUSSION 10. SkyTel styles its application as a request for a license modification. Because grant of the request would result in a designation of spectrum inconsistent with section 24.129 of the Commission's rules, we consider this a request for waiver of our rules. A waiver of our rules applicable to public mobile services is appropriate when a party demonstrates either (1) that the underlying purpose of the rule would not be served or would be frustrated by application to the instant case, and that grant of a waiver would be in the public interest, or (2) in view of unique or unusual factual circumstances to the instant case, application of the rule(s) would be inequitable, unduly burdensome or contrary to the public interest, or the applicant has no reasonable alternative. On the record presented in this proceeding, we find that the unusual facts and circumstances in this instance warrant a waiver of section 24.129 of the Commission's rules in order to avoid a result that is contrary to the public interest. 11. We find that a number of factors are present that justify a waiver permitting this frequency exchange. First, the spectrum being returned and the spectrum being sought in this frequency exchange are allocated for the identical service, nationwide narrowband PCS. Second, the spectrum being returned and the spectrum being sought are of the same bandwidth (50 kHz). Third, we find that spectrum on the 930 MHz band and spectrum on the 940 MHz band are virtually identical in terms of (1) regulatory flexibility; (2) propagation characteristics of the spectrum; and (3) potential encumbrances of the spectrum. Specifically, the rules governing both bands are identical; thus, any type of narrowband service or coverage can be achieved on either band. Further, the propagation characteristics of the spectrum are the same, i.e., for a given amount of power, you will receive approximately the same coverage. Because the physical properties of the spectrum are substantially the same and these bands are adjacent to one another, there is no apparent advantage of one band over the other. Moreover, there are no encumbrances on either band and the potential sources of co-channel or adjacent interference are nearly identical. Indeed, based on the similarity between the 930 MHz and 940 MHz bands, we find that it is immaterial whether we auction channel nine of section 24.129(a) of the Commission's rules as a 930 MHz or 940 MHz license. Finally, we note that the auction for this spectrum is not imminent, so this exchange will not cause any disruption in planning for the auction by either Commission staff or potential bidders. 12. Finally, we believe that allowing SkyTel to operate its nationwide narrowband PCS service on two 940/901 MHz channels rather than on one 940/901 MHz channel and one 930/901 MHz channel would serve the public interest. Skytel acquired two nationwide narrowband PCS channels at auction in 1994. Although several other licensees who acquired nationwide narrowband spectrum at the same time as SkyTel have yet to launch their nationwide narrowband PCS systems, SkyTel has established a nationwide system, providing a specialized two-way and guaranteed text messaging service to its customers throughout the U.S. According to SkyTel, it currently provides coverage to approximately 72 percent of the U.S. population. In short, SkyTel has taken certain of its spectrum and utilized it productively to the benefit of consumers. Its nationwide system currently operates on a license that consists of paired 50/50 kHz spectrum at 940/901 MHz. However, because of capacity constraints on this channel, SkyTel states that it needs to expand its nationwide system, specifically in the larger urban areas. While we recognize that SkyTel can meet these capacity constraints by utilizing its paired 930/901 MHz channel that is the subject of this request, we are persuaded that SkyTel will be able to operate its system on two 940/901 MHz channels more efficiently than on one 940/901 MHz channel and one 930/901 MHz channel, especially in high demand areas. We find that it is reasonable to assume that these efficiencies will result in cost economies that will translate into lower prices and greater service offerings to the public. We also find that operating on two 940/901 MHz channels likely will result in higher quality service for customers because the end user devices need only interoperate with one frequency. Therefore, the unusual facts and circumstances warrant a waiver of section 24.129 of the Commission's rules in order to avoid a result that is contrary to the public interest. IV. CONCLUSION 13. We conclude that a waiver of section 24.129 of the Commission's rules to allow the frequency exchange requested by SkyTel is warranted because of the public interest benefits that will result from allowing this frequency exchange, and also because SkyTel's request involves an exchange of spectrum in which the spectrum being returned and the spectrum being requested are allocated for the same service and are of the same bandwidth, the spectrum on the 930 MHz and 940 MHz bands is substantially similar, and the other reasons discussed in this Order. V. ORDERING CLAUSE 14. Accordingly, IT IS ORDERED, on our own motion, pursuant to sections 4(i) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), and Sections 1.3 and 1.925 of the Commission's rules, 47 C.F.R.  1.3, 1.925, that a waiver of Section 24.129 of the Commission's rules IS GRANTED. 15. IT IS FURTHER ORDERED that the request to modify nationwide narrowband PCS license KNKV208 filed by SkyTel Communications, Inc. to change the frequency authorization from 901.775- 901.7875 MHz and 930.5-930.55 MHz to 901.775-901.7875 MHz and 940.75-940.80 MHz IS GRANTED. 18. This action is taken under delegated authority pursuant to Section 0.331 of the Commission's Rules, 47 C.F.R.  0.331. FEDERAL COMMUNICATIONS COMMISSION Steven E. Weingarten Chief, Commercial Wireless Division Wireless Telecommunications Bureau