******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect or Word to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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 ) ) VIKING DISPATCH SERVICES, INC. ) ) Applications for Up to Twenty 900 MHz ) FCC File Nos. D001145-D001149, Private Land Mobile Radio Service Channels ) D001169-D001203, D001205 and at Various Locations ) D002908 MEMORANDUM OPINION AND ORDER Adopted: October 26, 1999 Released: November 2, 1999 By the Commission: I. INTRODUCTION AND EXECUTIVE SUMMARY 1. By this Memorandum Opinion and Order, we address the Application for Review filed by Viking Dispatch Services, Inc. (VDS) of a decision by the Wireless Telecommunications Bureau (Bureau) denying the above-captioned applications. VDS alleges that the Bureau's action is based on erroneous findings of fact, and is otherwise not in accordance with Commission regulations, thus requiring reversal. The Application for Review fails to meet the criteria established in Section 1.115(b)(2) of the Commission's Rules, and, therefore, we affirm the Bureau's action denying the subject applications requesting up to twenty 900 MHz Private Land Mobile Radio Service (PLMRS) channels in each of forty-two markets. II. BACKGROUND 2. On June 4, 1996, the Bureau denied a set of applications, filed by VDS, proposing the use of up to twenty 900 MHz channels at forty-two sites for PLMRS two-way mobile dispatch systems. VDS proposed to operate these facilities as a third party provider on a not-for-profit, cost-shared basis, and, for each proposed licensing area, requested up to twenty Business Radio Service channels in the 896-901/935- 940 MHz (900 MHz) band. As a third party provider, VDS may be licensed on the channels requested only if it operates on a non-profit, cost-shared basis. The Bureau, however, found that the proposed VDS system would not constitute a non-profit, cost-shared system. The Bureau also found that VDS had not demonstrated that there would be sufficient use of the channels in question to justify its request. As a result, the Bureau concluded that VDS was not eligible to be licensed for the PLMR frequencies. 3. The basis for the Bureau's decision was three-fold. First, the Bureau determined that the proposed systems would not serve any internal communications needs of VDS or its affiliates. The Commission has determined that where a system is only used for internal communications, and is not offered to other entities for compensation, it is neither subscriber-based nor for-profit. Such a system, thus, remains a PLMRS offering and does not violate the plain language of Section 90.179 of the Commission's Rules. The Bureau noted that the Viking proposal, however, has the attributes of a subscriber-based, for-profit system because none of its communications capacity would be used for Viking, and the universe of its customers is unknown and potentially broad. Second, the Bureau stated that VDS failed to provide a sufficient rationale as to why it would undertake to construct systems involving large amounts of capital and then make them available on a non-profit, cost-shared basis. Third, the Bureau found that VDS' failure to identify and disclose particular shared system participants was one more indication that its proposed systems are not bona fide not-for-profit, cost-shared systems. The Order also noted VDS' failure to justify sufficiently its general request for twenty channels at various locations throughout the country. No current need for these numerous channels was demonstrated and, therefore, even on this criterion alone the Bureau concluded that the subject applications could not be granted. On July 8, 1996, VDS filed its Application for Review of the Bureau's decision. III. DISCUSSION 4. An application for review regarding an action taken pursuant to delegated authority must concisely and plainly state the questions presented for review with reference, where appropriate, to the findings of fact or conclusions of law. The application for review must also specify with particularity, from among the following, the factors that warrant Commission consideration of the questions presented: (i) if the action is in conflict with a statute, regulation, case precedent or Commission policy; (ii) if the action raises a question of law or policy not previously resolved; (iii) if the action involves application of a precedent or policy which should be overturned or revised; (iv) if the action involves an erroneous finding as to a material question of fact; or (v) if there has been prejudicial procedural error. 5. In its Application for Review, VDS contends that two of the reasons for the Bureau's decision -- VDS' failure to provide sufficient assurance that the proposed systems will operate on a non-profit, cost- shared basis and its failure to justify the number of channels requested -- are inconsistent with the facts and effectively apply a new policy without adequate notice. VDS asserts that it has provided all the assurance required under the Commission's regulations to demonstrate that service will be offered on a non-profit, cost-shared basis. It further submits there is no published requirement mandating justification of the number of channels sought for use by a non-profit, cost-shared system. As discussed in further detail below, we conclude that VDS has failed to demonstrate that the Bureau's action involved an erroneous finding of fact, either material or immaterial. 6. We find VDS' arguments regarding the non-profit nature of its proposal to be unpersuasive. VDS' characterization in its By-laws and other corporate instruments of the proposed system as non- profit is not determinative of that status. Rather, it is the Commission's definition of non-profit that is the governing principle. For common and private carrier services, the Commission has previously interpreted the phrase "for profit" to include any mobile service that is provided with the intent of receiving compensation or monetary gain whether there is the actual realization of profit or not. Further, where a mobile system is operated exclusively for internal use, it has been considered by the Commission as not providing service for profit. However, that is not the situation here. This applicant seeks to operate a mobile system to serve the communications requirements of other entities. 7. R&S asserts that there is no Commission rule requiring that an applicant claiming status as a non-profit corporation must use the proposed system for its own internal communications. Section 20.3 of the Commission's Rules indicates, however, that this is the case if the proposed system does not fit one of the enumerated exceptions. This rule defines "private mobile radio service" as including not-for-profit land mobile radio and paging services that serve the licensee's internal communications needs. This rule specifically states that shared-use, cost-sharing or cooperative arrangements, multiple licensed systems that use third party managers or users combining resources to meet compatible needs for specialized internal communications facilities are presumptively private land mobile radio services. PLMR licensees generally are entities that are not in the communications business and do not derive their compensation or monetary gain from providing communications services. Rather, they use wireless communications as a tool in furtherance of their respective business missions. Therefore, we agree with the Bureau that when internal communications are not envisioned, greater scrutiny as to the validity of non-profit status is often warranted. As the Commission has previously stated in classifying CMRS and PLMRS: "It was not Congress' intent nor is it ours, to allow licensees to enter into sham not for profit arrangements in an effort to disguise essentially for-profit activity." This statement was made in the context of a discussion concerning the PLMRS nature of non-profit shared-use and multiple licensing arrangements, and provides ample notice of the Commission's intention to use all means at its disposal to ensure that a particular PLMRS application is for a bona fide non-profit venture. 8. Contrary to VDS' contention, we believe that its position as a third party provider and its relationship with E.F. Johnson Company (EFJ), its affiliate, are relevant to a determination of whether VDS proposes a shared non-profit system as contemplated by the Commission's Rules. The corporate and actual relationship between VDS and EFJ raises questions regarding the non-profit nature of VDS' venture. EFJ is the manufacturer of the dual-mode private radio/cellular transceiver that VDS' system will use. Further, VDS will be the sole provider of this product to users prior to its general entry into the land mobile radio market. Moreover, VDS and EFJ are each third party providers that do not intend to use the proposed 900 MHz systems to meet any internal communications needs, but that do intend to fully construct and operate the systems, at significant capital expense, without any assistance from future, yet- to-be-identified users. In fact, we find merit in UTC's contention that an apparent motive by the system proponent is to facilitate equipment sales for its corporate affiliate. As a result, we believe that it was more than reasonable for the Bureau to question the nature of VDS' proposal, particularly in view of VDS' considerable expenditures. We also find that VDS is incorrect when it asserts that any profit accruing to its affiliate, EFJ, is not relevant to our determination. Rather, possible profit to EFJ should be considered in our evaluation of the nature of the proposed system. Furthermore, we believe that stating the method by which costs would be shared, when large capital expenses are not to be shared, is not enough data to resolve the many questions regarding the nature of VDS' proposed venture. Given the totality of the circumstances, we believe that the Bureau would have been remiss had it not requested that documentation be furnished to substantiate VDS' assertion that its system would be non-commercial in nature. 9. We conclude that VDS' proposal fails to meet the criteria for shared, non-profit use. We find that VDS' use of spectrum above 800 MHz, as proposed in the subject applications, is for operation on a for-profit basis. Pursuant to Section 90.179(f) of the Commission's Rules, however, such for-profit use is permitted only by Specialized Mobile Radio (SMR), Private Carrier Paging (PCP), and Location and Monitoring (LMS) licensees. Contrary to R&S' assertion, VDS also may not be licensed pursuant to Section 90.603(b) of the Commission's Rules. We believe that an arrangement whereby users of an entity's communications system are required to purchase system equipment from an affiliate of the entity is at odds with the provisions of Section 90.603(b) of the Commission's Rules. Section 90.603(b) permits the provision of communications services to Public Safety and Industrial/Business Pool eligibles only on a not- for-profit, cost-shared basis. We do not believe that this is the case under the facts presented here. Further, we find that the proposed arrangement is particularly troubling because the affiliate is the sole provider of the system equipment and such equipment is sold on a for-profit basis. Thus, to achieve its apparent objective of operating a mobile communications dispatch system under these circumstances, and without seeking a waiver of the Commission's rules, VDS would have to operate as a commercial mobile radio service (CMRS) entity. 10. Because VDS' proposal fails to substantiate the non-profit nature of its venture, we conclude that VDS is ineligible for grant of the subject license applications. Even had VDS provided justification for the requested number of channels, which it did not, the justification it advanced was inherently commercial in nature, and not the type of justification required to support channels sought for PLMR use. As noted by the Bureau, identifiable participants with existing communications needs are key components of a not-for-profit, cost-shared system. The lack of specified users further indicates that VDS' proposal is entrepreneurial in nature. Contrary to R&S' assertion, we believe it is possible to develop a list of sincere and committed prospective users before an application is filed. As PCIA notes, applicants for cooperative systems routinely furnish such information. VDS incorrectly asserts that its license applications should be granted because it demonstrated that demand for both the spectrum and the proposed system exists in the marketplace. We find that this demonstration of some general, loosely-defined need to be met by VDS as a third-party provider does not meet the PLMRS criteria for current, identifiable users to share costs and expenses. IV. CONCLUSION 11. We find no basis for reversing the Bureau's decision denying VDS' applications requesting up to twenty PLMRS channels in the 900 MHz band in forty-two markets. The Application for Review essentially restates arguments made in VDS' earlier pleadings which were thoroughly addressed in the Order. Contrary to VDS' allegations, the Bureau's action is consistent with the facts presented and Commission precedent. VDS failed to substantiate its assertions on review and, thus, we affirm the Bureau's decision denying VDS' applications. Since we are denying VDS' Application for Review, its Request for Extended Implementation filed pursuant to Section 90.629 of the Commission's Rules is moot and, therefore, dismissed. V. ORDERING CLAUSES 12. Accordingly, IT IS ORDERED that, pursuant to the authority of Sections 4(i) and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i) and 303(r), and Sections 1.43, 1.102, and 1.115 of the Commission's Rules, 47 C.F.R.  1.43, 1.102, 1.115, the Application for Review and the Request for Stay filed by Viking Dispatch Services Inc. ARE DENIED. 13. IT IS FURTHER ORDERED that, pursuant to the authority of Sections 4(i) and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i) and 303(r), and Section 90.629 of the Commission's Rules, 47 C.F.R.  90.629, the Request for Extended Implementation filed by Viking Dispatch Services, Inc. IS HEREBY DISMISSED AS MOOT. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary