CC Docket No. 94-54
Interconnection and Resale Obligations Pertaining to Commercial Mobile Radio Services
Adopted: April 5, 1995; Released: April 20, 1995
Comment Date: June 14, 1995
Reply Date: July 14, 1995
By the Commission: Commissioner Quello issuing a separate statement.
I. INTRODUCTION II. BACKGROUND III. PLEADINGS; DISCUSSION A. Interconnection Obligation 1. Generally a. Background b. Positions of the Parties c. Discussion 2. Roaming a. Background b. Positions of the Parties c. Discussion B. Resale Obligations 1. Background 2. Positions of the Parties 3. Discussion III. CONCLUSION IV. PROCEDURAL MATTERS A. Ex Parte Rules B. Regulatory Flexibility Act C. Authority D. Further Information V. ORDERING CLAUSES APPENDIX A APPENDIX B
2. Based upon the record before us, we conclude that at
present it would be premature for the Commission to propose
or adopt rules of general applicability requiring direct
interconnection arrangements between CMRS providers. Although
cellular service has become a staple of modern telecommunications
service, many of its potential competitors are just beginning
to emerge. We have only recently concluded our auction
for the A and B blocks for broadband personal communications
service (PCS) licenses and have yet to begin the licensing
process. The specialized mobile radio (SMR) industry is
also undergoing a period of profound change and technological
development. Especially in view of the nascency of many
CMRS providers, and the rapidly developing technologies
they may be employing, we cannot at this time make general
conclusions about either the technical nature of CMRS-to-CMRS
interconnection, the costs involved, or the nature of any
rules that would best ensure its implementation. For present,
we leave such decisions to the informed business judgment
of the CMRS providers and to the competitive forces of
the CMRS marketplace. Nonetheless, because of the fundamental
importance of interconnectivity, and the needs of carriers
and the investment community to understand how CMRS will
be regulated, we believe that it is not too early to begin
to articulate some broad policy guidelines to help chart
the course of the CMRS industry through this all-important
early phase of its development. Accordingly, we seek comment
on several broad policy guidelines intended to pilot the
implementation of the basic common carrier obligations
of CMRS providers under Title II of the Communications
Act of 1934, as amended.(n2) In addition, we continue our
inquiry into the interconnection arrangements required
to support CMRS roaming service.
3. Further, we tentatively conclude that imposing a resale
obligation on most CMRS providers would be in the public
interest. We also tentatively conclude that a resaleobligation
will provide additional competition as well as act to jump
start the entry of personal communications services into
the CMRS marketplace while imposing only minimal costs
upon the subject carriers. We also seek comment on whether
there should be a time limitation on the obligation of
CMRS providers to provide resale capacity to their facilities-based
competitors similar to the five-year limit on the provision
of resale capacity by cellular providers to their facilities-based
competitors.
5. In the CMRS Second Report and Order,(n7) the Commission imposed an obligation on LECs to provide the type of interconnection reasonably requested by all CMRS providers. The Commis-sion also found that the record estab-lished in response to the CMRS Notice of Proposed Rule Making was inade-quate to decide whether to adopt generic rules requiring CMRS providers to furnish interstate interconnection to other mobile service provid-ers. The Commis-sion ex-pressed its intention to initiate an inquiry into that question.(n8)
6. On July 1, 1994, the Commission released a Notice of Proposed Rule Making (Equal Access NPRM) proposing equal access obligations for certain CMRS providers, seeking comment on tariffing requirements for LEC to CMRS interconnection, and instituting a Notice of Inquiry (Interconnection NOI) into whether the Commis-sion should find that it would be in the public interest to impose a general intercon-nection obligation on CMRS providers.(n9) The Interconnection NOI further sought comment on whether the Commission should impose roaming(n10) and resale obligations on some or all CMRS providers.(n11)
7. Seventy-four parties filed comments and 45 parties filed reply comments. These parties include LECs and their affiliated cellular companies, non-wireline cellular companies, interexchange carriers (IXCs), industry trade associations, SMR licensees, mobile satellite service (MSS) providers, and parties who intended to bid on PCS licenses.(n12)
III. PLEADINGS; DISCUSSION
A. Interconnection Obligation
1. Generally
a. Background
8. The Interconnection NOI identified as a principal objective the exploration of whether interstate interconnection requirements would foster the interconnectivity and growth of diverse and competitive mobile services.(n13) The Interconnection NOI sought comment on whether it was necessary for the Commission to promulgate a general rule requiring CMRS providers to provide interstate interconnection to other CMRS providers, or whether the Commission could anticipate that the CMRS marketplace will develop in such a way that makes establishing general interconnection obligations applicable to CMRS providers unnecessary.(n14)
9. Comment was also sought on two specific questions related to this general inquiry: (1) Whether there is a basis to conclude that there are policy considerations that would warrant imposition of interconnection obligations on CMRS providers even if CMRS providers lack market power and lack control of bottleneck facilities; and (2) Whether it would be a reasonable exercise of the Commission's discretion under Section 201 of the Act to conclude that any further examination of whether to impose interconnection obligations on CMRS providers may be premature at this stage in the development of the CMRS market. In addition, comment was sought on whether the failure to impose new interconnection obligations might unnecessarily restrict the capability of any CMRS providers to interconnect with the facilities of other CMRS providers. Finally, comment was sought on whether the Commission should address such matters by declaratory rulings resolving particular cases, or by issuing either specific rules or rules based on a general standard of reasonableness.(n15)
b. Positions of the Parties
10. Interconnection requirement is premature. Marketplace should achieve desirable results. Many commenters argue that an inquiry into whether the Commission should require CMRS providers to provide interstate interconnection to other CMRS providers is premature, and several recommend that the Commission defer any further consideration of this issue until the CMRS industry has developed sufficiently to create a sufficient record on which toproceed.(n16) Nextel characterizes the state of the CMRS marketplace as one of "infancy" and argues that it is premature to consider mandatory CMRS interconnection when the CMRS marketplace was defined by the Commission less than a year ago, some CMRS players are just beginning to emerge while others have yet to be licensed, and it is still not clear what players will actually be the participants in the CMRS marketplace. Nextel continues that imposition of an interconnection mandate on a nascent industry is unjustified and unnecessary, particularly since all CMRS end users can currently interconnect with users of any other network through the public switched telephone network (PSTN). Thus, Nextel maintains, because any user on any CMRS system can reach any other party with a telephone number -- on a wireless or wireline network -- through the PSTN, at this stage in CMRS development, there appears to be no compelling need for CMRS-to-CMRS interconnection regulation.(n17)
11. Southern argues that at this stage, the specific technical requirements to implement CMRS-to-CMRS interconnection obligations are unknown, but the likelihood that such interconnection would be technically complex is almost a certainty. For example, Southern asserts, wide-area digital SMR systems are still in their developmental stages. Until deployed, how they will operate and compete with other commercial mobile services remains uncertain. Southern argues that because of this uncertainty, the technical implications and potential burdens involved in CMRS-to-CMRS interconnection are difficult to predict.(n18) OneComm observes that the exact nature of PCS offerings also is not yet clear.(n19) CTIA argues that a compulsory interconnection scheme would be particularly inappropriate for CMRS given that many CMRS networks have yet to be designed. CTIA states that at present, CMRS providers cannot know their interconnection needs and further, because each type of CMRS has a unique network with potentially different technological requirements, the costs of direct interconnection may be prohibitive.(n20)
12. NABER asserts that few customers of traditional SMR systems have the need for interconnected service beyond the service area of a single operator. Rather, NABER states, such users typically require dispatch capabilities over a wide area.(n21) The New York DPS contends that the current network structure, whereby the connection is made through the LEC,has been efficient because of the low volume of traffic of this nature. Further, that this is true even though each CMRS provider is required to pay access charges to the LEC. The New York DPS argues that where most of the CMRS traffic is from the CMRS customer to the landline customer direct interconnection between CMRS providers is not a critical issue. However, the New York DPS argues that as the number of CMRS providers and services increase and usage charges decline, there may be a dramatic increase in the number of calls completed between CMRS carriers and thus a direct connection between them may become more desirable from both a cost and a service standpoint.(n22)
13. Most carriers argue that marketplace forces, rather than regulation, should determine the manner in which interconnection is furnished among CMRS providers, and urge that the Commission refrain from imposing interconnection obligations.(n23) For example, Bell Atlantic argues that although the Commission can declare that CMRS carriers have a basic obligation as common carriers to interconnect with other licensed carriers upon reasonable request from those carriers, it should first rely on the marketplace to determine the appropriate interconnection arrangements. Bell Atlantic contends that the CMRS industry is undergoing rapid change, rendering present data on speculative inquiries, such as those contained in the Interconnection NOI an unreliable basis upon which to adopt particular interconnection requirements. In addition, Bell Atlantic argues that there is no evidence that wireless carriers have been unwilling to interconnect with each other, or that they have an economic incentive to avoid interconnection. Bell Atlantic maintains that to the extent interconnection facilitates a carrier's ability to offer attractive services to its customers, the carrier will have sufficient market incentives for interconnection, without the need for the Commission to intervene.(n24) Moreover, Bell Atlantic asserts, experience shows that CMRS providers (for example, paging and cellular carriers) have reached voluntary interconnection agreements to serve the needs of their customers, indicating that there is no need to intervene to regulate interconnection arrangements among new or existing CMRS providers.(n25)
14. BellSouth urges that, given the competitive nature of CMRS, the Commission should refrain from adopting any specific interconnection requirements. BellSouth suggests instead that any CMRS-to-CMRS interconnection arrangements should be established throughgood faith negotiation among the carriers involved. BellSouth recognizes that, although each CMRS provider should have an obligation to satisfy reasonable requests for interconnection, the definition of "reasonable" will vary from case to case. BellSouth notes that the technical and service requirements of a CMRS provider requesting interconnection from another CMRS provider must be balanced against factors such as the ability to provide the needed connection and the existence of alternative sources and forms of interconnection.(n26) NYNEX also suggests that the Commission should permit interconnection arrangements to proceed by good faith negotiation, but should continue to monitor interconnection agreements to ensure that interconnection requests are not unreasonably denied.(n27)
15. PCIA urges that the Commission not establish formal, detailed broadband PCS-to-PCS interconnection obligations now. PCIA states that in light of the competitive nature of the marketplace and the nascency of many service providers, specifying up-front what forms of interconnection will be considered technically reasonable would be imprudent. PCIA further argues that in the absence of control over bottleneck facilities, marketplace forces should result in interconnection being made available where warranted. Additionally, the pace of technical change in the industry and the developmental nature of many CMRS offerings counsel against the adoption of an overly rigid interconnection framework.(n28)
16. Interconnection obligation is undesirable. Many CMRS providers, including most cellular carriers, some SMR providers, and several LECs with CMRS affiliates, oppose imposition of an interconnection obligation, arguing that the state of competition and the lack of bottleneck facilities would make such an obligation not only unnecessary but unwise because it would have a negative impact on competition.(n29) CTIA argues that, in determining whether to impose interconnection obligations on CMRS providers, the Commission should be guided by the principle that such requirements are only necessary in those markets where a firm possesses persistent, sustained market power.(n30) CTIA and other commenters assert that in a competitive market, such as CMRS, consumer demand and business necessity will dictate the extent and need for interconnection. They further argue that because commercial mobile radio services are operating in a competitive environment, there is no need to impose interconnection obligations on them.(n31) CTIA notes that only one case exists, concerning international record carriers, where the Commission has required carriers lacking market power to interconnect.(n32) Comcast argues that the Commission should encourage the development of competitive networks through progressive LEC interconnection policies rather than by imposing costly and premature direct connection requirements on CMRS providers.(n33)
17. CTIA further argues that, given the expense involved to establish compatibility by upgrading software, switches, and other network equipment, such requirements would be contrary to the public interest.(n34) McCaw concurs with CTIA, arguing that imposing interconnection obligations will lead to situations where the expense of interconnection would exceed the value.(n35) Horizon asserts that, for smaller carriers, the imposition of unwarranted and burdensome interconnection obligations would likely further decrease the limited capital that these providers would otherwise invest in their systems, ultimately degrading the quality of service that subscribers would otherwise obtain.(n36)
18. Additionally, opponents of interconnection requirements argue that an interconnection obligation comparable to the landline interconnection obligation would require unnecessary regulatory oversight and deter investment in, and growth of, competing facilities. They argue that until an identifiable problem develops, it would be premature to adopt regulations that could skew marketplace decisions.(n37) McCaw contends that regulation is too imperfect to discriminate accurately between situations where interconnection is efficient and other situations where it is inefficient. McCaw asserts that requiring inefficient interconnection would confer a disproportionate benefit on resellers and other CMRSproviders who could obtain interconnection at artificially low prices.(n38) CTIA also argues that interconnection may ultimately diminish consumer choice while substantially raising costs.(n39)
19. CTIA and others argue that an interconnection obligation between CMRS providers is unnecessary because CMRS providers may access the network via the LEC.(n40) CTIA contends that if all CMRS providers are interconnected with a LEC, then they and their customers will have access to all carrier networks. As a result, insists CTIA, direct connection of CMRS networks should be established only when such interconnection is more efficient than paying the LEC for transport and switching functions.(n41) Both CTIA and SBC argue that direct CMRS-to-CMRS interconnection will develop naturally as firms recognize a business need for such a link.(n42) However, McCaw asserts, indirect CMRS-to-CMRS interconnection through the LEC is likely to be the most efficient form of interconnection for the foreseeable future.(n43)
20. NABER argues that interconnection obligations for SMR providers are both unnecessary and, in some cases, economically infeasible. NABER asserts that since typical SMR customers utilize interconnected service as an adjunct to dispatch service (and have other choices if unsatisfied) mandatory interconnection is unnecessary to ensure access to the PSTN. NABER contends that few SMR end users need to communicate with users on other SMR systems. Thus, routing such calls through the LEC should not be too inefficient or expensive.(n44) E.F. Johnson asserts that it is illogical to assume that the subscriber of a local SMR system desires, or is willing to pay for, the ability to interconnect with PCS systems. Rather, contends E.F. Johnson, the customer expects to be able to communicate with other affiliated mobile units and, through interconnection with a LEC, other locations in the public switched network.(n45) NABER also claims that there are three commonly used SMR platformswhich are incompatible. Therefore, argues NABER, while interconnection between platforms is technically possible, it would require a massive replacement of equipment for hundreds of SMR operators across the country.(n46) Finally, NABER asserts that similar technical problems exist in the technologies announced for wide-area SMR systems and argues that the Commission therefore should not impose interconnection obligations on either traditional or wide-area SMR providers.(n47)
21. PageNet contends that the Commission should only impose interconnection obligations where an industry is dominated by one or two providers that control bottleneck facilities. Since the paging market is highly competitive, there is no need for interconnection requirements. Further, PageNet urges that the Commission exclude paging providers from an interconnection obligation, arguing that a decision to require a particular service to interconnect should be made in light of that service's particular characteristics. PageNet asserts that in the context of intraservice interconnection, such as the interconnection requirement in cellular, interconnection policy stems from the desire for seamless service. PageNet contends that in the paging context seamless service already exists, thereby eliminating the need to impose an interconnection obligation on paging providers.(n48)
22. Interconnection obligation is desirable. Pacific Bell supports a right to interconnection between CMRS providers and between CMRS providers and the LECs to enable the ubiquitous origination and termination of telecommunications. Pacific Bell observes that CMRS providers are designated as common carriers by the Omnibus Budget Reconciliation Act and thus are specifically subject to Section 201 of the Act. Continuing, Pacific Bell notes that Section 201 requires interconnection when the Commission determines that interconnection is in the public interest. Pacific Bell argues that interconnectivity of mobile communications promotes the public interest because it enhances greater flexibility in communications and makes services more attractive to consumers. Pacific Bell claims that one of the goals of the Commission in providing for the regulation of PCS is the universality of service and that interconnection will support this goal by enabling faster access to service over a wide area. However, Pacific Bell states, it only supports interconnection where technically feasible. Pacific Bell concludes that a requirement to enter into agreements negotiated in good faith should be sufficient to ensure that CMRS providers benefit from their right to interconnection. Pacific Bell observes that the Section 208 complaint process isavailable to any party experiencing difficulty obtaining an appropriate interconnection agreement.(n49)
23. Other commenters agree that the Commission should recognize the basic common carrier right to interconnection between CMRS providers. MCI and CSI\ComTech contend that there is nothing in Section 201 or Commission precedent that dictates that any and all interconnection obligations are premised on a connecting carrier having bottleneck facilities.(n50) In its comments, MCI argues that CMRS providers are presumptively common carriers and should be required to interconnect with any other common carrier upon reasonable request pursuant to Section 201(a) of the Act.(n51) In its reply comments, MCI argues further that the Commission has plenary authority under Section 201(a) of the Act to require that CMRS providers interconnect with one another. MCI asserts that in the interest of stimulating the most productive use of CMRS services, the Commission should exercise that authority, but refrain at this juncture from prescribing the terms of such interconnection. Continuing, MCI argues that interconnection among CMRS providers is presumptively in the public interest because it would ensure the most rapid growth and dissemination of mobile services. Accordingly, MCI reasons, it is appropriate for the Commission to require, as a matter of policy, such interconnection among CMRS providers and to stand ready to intercede in the event a CMRS provider refuses to interconnect, but it not necessary to prescribe the details of such interconnection arrangements unless the CMRS providers are unable to resolve any differences that may arise. MCI concludes that a broad Commission policy position favoring interconnection should provide a powerful incentive for even a recalcitrant CMRS carrier to agree to a reasonable interconnection request.(n52)
24. GSA argues that the establishment of specific CMRS-to-CMRS interconnection requirements will foster interconnectivity and the growth of diverse and competitive mobile services. GSA maintains that the public interest will best be served, and the government's own competitive procurement responsibilities enhanced, if the Commission acts now to adopt CMRS-to-CMRS interconnection requirements that encourage the development of a robust "network of networks," and not a situation where most traffic from one CMRS provider must pass through a LEC switch to reach another CMRS provider, if such routing would be inefficient or unduly costly.(n53)
25. NCRA argues that requiring cellular carriers to interconnect with other CMRS providers at just and reasonable rates will produce consumer benefits similar to those anticipated from the Commission's Expanded Interconnection proceeding. (n54) NCRA further argues that interconnection and access to unbundled service elements will dramatically improve the viability of cellular resellers as well as other facilities-based CMRS providers and thereby increase the overall number of CMRS carriers from which customers may choose to obtain service.(n55) NCRA argues that Section 332(c)(1)(B) requires interconnection upon reasonable request. NCRA submits that all interconnection arrangements that are technically and economically feasible should be considered reasonable; that the party requesting interconnection pay costs directly related to interconnection; that the interconnecting party should not be responsible for the costs of increasing network capacity; that parties alleging infeasibility should be required to demonstrate such conditions by a clear preponderance of the evidence; and that carriers should be required to charge interconnecting parties reasonable, unbundled, cost-based rates.(n56)
26. TRW argues that CMRS-to-CMRS interconnection should be mandated as soon as possible in order to encourage the development of a nationwide, seamless, wireless communications network that is independent of the LECs and can compete with the extant landline network. However, TRW also advocates deferral of the imposition of interconnection obligations on mobile satellite service (MSS) related CMRS providers. TRW contends that because MSS space segment providers are not yet operational and because of the unique attributes of MSS itself -- including its global coverage area and limited gateway access -- it is unclear how the capacity will be used on a local level by CMRS providers and end users. TRW asserts that the uncertainty regarding the way in which MSS systems will be used to provide CMRS and how the market will develop for those services, renders imposition of interconnection requirements for MSS providers premature. TRW argues that until the expected demand for MSS space segment in the CMRS marketplace has had an opportunity to develop, imposing a mandatory interconnection obligation on MSS CMRS providers could, infact, inhibit the genesis of a robust market by depriving operators and CMRS providers of desirable design and implementation flexibility.(n57)
27. Interconnection guidelines are desirable. Although PCIA recommends that the Commission let CMRS-to-CMRS interconnection proceed largely at the direction of the marketplace, it urges that the Commission nonetheless establish basic interconnection guidelines within which this development should occur. (n58) PCIA and APC each propose that the Commission establish broad guidelines for interconnection based on the requirements of Sections 201 and 202 of the Communications Act, in order to reinforce incentives for interconnection and promote goals of efficient access to public networks. Specifically, they recommend the following: (1) as required by Section 201(a) of the Act, CMRS providers should be required to provide interconnection service upon reasonable request. A CMRS provider should not be permitted to deny interconnection unless it can demonstrate that such a denial is reasonable;(n59) (2) as required by Section 202(a), CMRS providers cannot engage in unreasonable discrimination in offering interconnection to other CMRS providers. That is to say, if a CMRS provider offers an interconnection arrangement to one CMRS provider, the carrier may not deny that arrangement to a similarly situated CMRS provider without demonstrating that such denial is reasonable; (3) CMRS providers are co-carriers and as such should be required to negotiate in good faith. Carriers should respond to requests for interconnection in a reasonable and timely manner.(n60) PCIA suggests that these principles should apply to all broadband PCS providers, including resellers using their own switches, and further adds that the Commission should not extend interconnection rights to private carriers or individuals (other than grandfathered private carriers that will be reclassified as CMRS).(n61)
c. Discussion
28. As a general matter, we believe that the interconnectivity
of mobile communications networks promotes the public interest
because it enhances access to all networks, provides valuable
network redundancy, allows for greater flexibility in communications,
and makes communications services more attractive to consumers.
It is one further step toward a ubiquitous "network of
networks."(n62) Under appropriate circumstances, we believe
that CMRS-to-CMRS interconnection can promote the efficient
provision of service to consumers at reasonable prices
and will promote and achieve the broadest possible access
to telecommunications networks and services by all telecommunications
users. We seek to establish a framework under which the
benefits of interconnection are realized primarily through
private negotiations and arrangements. We are prompted
to seek such a framework in part because we are cognizant
that private discussions and transactions among carriers
may provide a more suitable mechanism for distributing
the costs and realizing the benefits associated with CMRS-to-CMRS
interconnection than the regulatory process. We believe
that the public interest considerations should play a role
in guiding these carrier transactions, and we are at the
same time confident that the technical and economic feasibility
of such interconnection will be explored and defined through
these private arrangements.
29. We agree with the majority of commenters who argue
that it is premature, at this stage in the development
of the CMRS industry, for the Commission to impose a general
interstate interconnection obligation on all CMRS providers.
First, and most tellingly, the record in response to the
Interconnection NOI provides an insufficient basis for
proposing a general interstate interconnection obligation.
This is due, at least in part, to the fact that the CMRS
industry is undergoing rapid change in terms of technologies
and facilities employed, rendering many of the inquiries
contained in the Interconnection NOI speculative and any
data provided in response to such inquiries unreliable
as a basis for a rule making. How some of these new mobile
services will operate and compete with other services remains
uncertain. As Nextel observed, the CMRS marketplace is
in the early stages of its development, with some CMRS
companies just beginning to emerge while others have yet
to be licensed, leaving unclear the identity of the companies
that will actually be participants in the CMRS marketplace.(n63)
The Commission only recently concluded its initial auction
of spectrum for the A and B blocks of broadband PCS services.(n64)
Until those initial licenses are awarded, andPCS system
build-out begins, the nature of the needs of the parties
with the greatest potential interest in directly interconnecting
with other CMRS providers will not be clearly established.
Because we do not know what the CMRS networks will look
like, we cannot determine as a general matter what points
of interconnection would be the most efficient. In view
of the nascency of many service providers, and the rapidly
developing technologies they may be employing, we cannot
at this time make general conclusions about either the
technical nature of CMRS-to-CMRS interconnection, the costs
involved, the impact of general interconnection obligations
on infrastructure development and network efficiency, or
the nature of any rules that would best promote efficient
interconnectivity.
30. Second, as several commenters note, all CMRS end
users can currently interconnect with users of any other
network through the LEC landline network.(n65) The NY DPS,
we believe, correctly observes that the current network
structure whereby the connection is made through LEC facilities
has been efficient because of the low volume of CMRS traffic
(as compared to landline traffic) even though each CMRS
provider has been required to pay interconnection charges
to the LEC. (n66) In such an environment, where most of the
traffic is typically from the CMRS customer to the landline
customer, direct CMRS-to-CMRS interconnection has not been
perceived as a critical issue by CMRS carriers. However,
we caution that this is not to say that the balance will
not shift in the future. As the number of CMRS providers
(both facilities-based carriers and resellers) and the
number and variety of mobile services increase, and current
mobile services rates evolve toward lower usage charges,
there may be a dramatic increase in the number of calls
completed between CMRS systems, making more extensive direct
connections between CMRS providers beneficial from both
a cost and service standpoint.
31. Third, we do not think that present market conditions
indicate that it is necessary to impose a general interstate
interconnection obligation at this time. The fact that
interconnection is already available through LEC facilities
reduces the potential for CMRS providers to use denial
of interconnection as an anticompetitive tool against their
competitors. If interconnection between CMRS providers
could only be accomplished through direct links (without
access to LEC facilities), one CMRS carrier could prevent
a second from terminating calls on the first carrier's
network or from receiving calls from customers of the first
network, thus limiting the service the second carrier could
offer its customers. If the first carrier were much larger
than the second, lack of interconnection would be more
harmful to the second. With interconnection available
through the LEC, however, no CMRS carrier can limit the
service that another can offer.
32. If costs of indirect interconnection through the LEC were higher than direct CMRS-to-CMRS interconnection, however, some potential might exist for CMRS providers to raise their rivals' costs by denying direct interconnection, or increasing the price of directinterconnection to the price charged by the LEC for indirect interconnection. The ability to harm rivals would then depend on the relative costs of direct interconnection and interconnection through the LEC, and on the share of the rival's traffic that terminated with the CMRS provider. In most cases, to have an anticompetitive incentive and ability to deny interconnection to a rival, a CMRS provider would have to be much larger than the rival (or at least carry more of the rival's terminating traffic than the rival carries of its terminating traffic); otherwise the denying carrier's own costs would be raised as much as the rival's by lack of direct interconnection. Thus, unless considerable difference exists in market share among CMRS firms, the firms will probably gain more from jointly lowering their own costs through allowing direct interconnection than from raising rivals' costs by denying it. We invite interested parties to provide data and analysis arguing for or against the view that interconnection among CMRS providers is particularly important to the economic viability of CMRS providers, or to the advancement of Congressional and Commission public policy goals with respect to enhancing competition, promoting infrastructure investment, and facilitating access to the Nation's telecommunications networks.(n67)
33. This discussion makes clear that the CMRS provider's
market share, and the definition of the relevant market,
are important to the determination of the potential for
profitably raising rivals' costs. We tentatively conclude
that there are at least three possible relevant product
markets: (1) local exchange, both landline and wireless;
(2) all commercial mobile radio services; and (3) mobile
voice services. The first market definition could be supported
by the view that the only way to raise a rival's cost significantly
is to deny direct interconnection for a significant proportion
of all calls originating on the facilities of the competing
CMRS provider. The second definition could be supported
by the view that the customers of CMRS providers find it
particularly valuable to be able to reach at low cost the
subscribers of other CMRS providers. The third might be
based upon the consideration that a paging provider cannot
compete directly with a cellular carrier to complete telephone
calls. We seek comment on each of these definitions of
the relevant product market and solicit data and analysis
pertinent to our identification of the definition most
useful to a decision regarding CMRS interconnection.
34. We also seek comment regarding whether the relevant
geographic market should be considered to be a local market,
under the view that two providers in different cities,
for example, do not serve as substitutes for terminating
calls to a given subscriber. Under this approach, the
relevant geographic market may be either the service area
or license area, depending on the definition of the relevant
product market chosen. This analysis assumes that most
CMRS calls are terminated locally. We seek comment on
the distribution of call termination because this may affect
the ability of a firm with a high share of a single local
market, or set of local markets, to raise rivals' costs.
For example, if a significant portion ofcalls were terminated
in another area, then the power of a local CMRS provider
to increase rivals' costs through denial of interconnection
would be significantly diminished.
35. We seek comment on our tentative conclusions regarding
the relevant market definitions for purposes of analyzing
the need for an interstate interconnection obligation.
Interested parties are encourage to propose any alternative
product and geographic markets that they think are relevant.
Interested parties are encouraged to propose any alternative
product and geographic markets that they think are relevant.
36. In the past, the Commission has found it in the public
interest to impose interstate interconnection obligations
generally either to promote competition in the provision
of monopoly interstate services, or to prevent anticompetitive
conduct by carriers with market power who could use refusals
to interconnect for anticompetitive purposes.(n68) We have
more recently recognized that the presence or absence of
market power is an important factor in determining whether
the imposition of a general interconnection obligation
in the form of an equal access obligation on CMRS providers
may be in the public interest.(n69) As a result of our recent
spectrum auctions, as well as other developments in the
industry, we believe that all commercial mobile radio services
will be provided on a competitive basis by multiple facilities-based
competitors in each license area in the near future, thus
potentially lessening the need for regulatory intervention.
37. Through their comments, established industry representatives
(cellular carriers, LECs, trade associations) have represented
that when traffic volumes between CMRS systems justify
direct connections, the industry will implement interconnection
because it will make business sense to do so. The current
record presents the Commission with no reason to believe
that this will not be the case, and we fully expect all
CMRS providers to behave in an economically rational manner
and to implement direct and efficient network connections
at reasonable costs when the opportunity and need arise.
For now, we are confident that thedecision of interconnection
"where warranted" is best left to the business judgment
of the carriers themselves.
38. Nonetheless, we believe that it is important to reiterate the statutory rights and obligations of CMRS providers and to begin to articulate some policy guidelines to help chart the course of the CMRS industry through this all-important early phase of its development. This reiteration is intended to aid carriers in determining how the Commission will implement the basic common carrier rights and obligations of commercial mobile radio providers under the Communications Act. First, we remind all CMRS providers from whom interconnection is sought, that they are common carriers subject to the basic commands of Sections 201 and 202 of the Communications Act. Second, we remind any CMRS providers seeking interconnection that they may avail themselves of the Section 208 complaint process to seek redress for violations of the Communications Act or the Commission's rules.(n70)
39. The first clause of Section 201(a) of the Act requires
all CMRS providers and other common carriers to furnish
communications service upon reasonable request.(n71) The second
clause of Section 201(a) states that common carriers must
establish physical connections with other carriers "in
accordance with the orders of the Commission, in cases
where the Commission, after opportunity for hearing, finds
such action necessary or desirable in the public interest."(n72)
We read Section 332(c)(1)(B) of the Communications Act,
as added by the Budget Act,(n73) together with Section 201(a)
to mean that the Commission is required torespond to requests
for interconnection with proceedings to determine whether
it is necessary or desirable in the public interest to
order interconnection in particular cases. In addition,
CMRS providers are protected from unjust and unreasonable
charges, practices, classifications, and regulations in
connection with communications service under Section 201(b),
and from unjust and unreasonable discrimination in charges,
practices, classifications, regulations, facilities, or
services for or in connection with such service under Section
202(a) of the Act.
40. The steps the Commission may take to enforce the
statutory rights and obligations set forth in Section 201(a)
as they relate to the provision of CMRS may include: (1)
initiation of a notice and comment rule making proceeding
aimed at developing rules of general applicability to broad
classes of common carriers; (2) resolution of individual
complaints pursuant to Section 208, and (3) initiation
of other proceedings in response to requests of CMRS providers
for interconnection pursuant to Section 332(c)(1)(B) of
the Act . Thus, for example, CMRS providers may avail
themselves of the Section 208 complaint process to bring
to our attention any denials of interconnection they believe
to be unreasonable or otherwise unlawful and may also use
Section 208 to bring to our attention any terms and conditions
of interconnection they believe to be in violation of the
Section 201(b) or Section 202(a) prohibitions on unjust
or unreasonable charges or practices.
41. We tentatively conclude that regardless of the procedural
vehicle chosen, the central legal issue under Section 201(a)
is whether the public interest would be served by the imposition
of interconnection obligations on CMRS providers. We have
tentatively concluded that efficient interconnection will
serve the public interest by promoting the efficient provision
of service to consumers at reasonable prices and by fostering
competition. We tentatively conclude that a market power
analysis should be the basic analysis we conduct in determining
whether to impose specific interconnection obligations.
Past interconnection decisions have primarily been addressed
to local exchange carriers with significant market power.
However, we are heading into unchartered territory as
we consider issues of interconnection between CMRS carriers,
who are less likely to have market power in the future.
Therefore, our interconnection analysis should also consider
whether other public policies, such as insuring broad access
to the networks of the future, argue for imposing interconnection
obligations inthe absence of significant market power.
(n74) We solicit comment on this analysis by any interested
parties.
42. Thus, in addressing requests for interconnection
, we would anticipate the need to engage in an analysis
of market power and an assessment of other public policy
goals, together with an analysis of the facts in the particular
case. We believe that our analysis of market power is
important because carriers possessing market power might
deny interconnection and thus preclude other carriers from
gaining economically efficient access to telecommunications
networks and from competing to serve end users. We further
believe that it is important to consider public policy
goals in addition to market power because the statutory
standard for ordering interconnection under Section 201(a)
is "the public interest," an inquiry that is broader than
an inquiry into the presence or absence of market power.
Finally, we would, of course, make this public interest
evaluation based upon the circumstances presented in the
particular record under consideration. We intend to monitor
the number and nature of interconnection-related requests
and complaints carefully. Should the Commission find itself
faced with an increasing number of complaints alleging
unreasonable denial of interconnection, we may revisit
the need for adopting interconnection rules of general
applicability through the rule making process. Similarly,
we intend to monitor closely the development of the CMRS
marketplace and any emergence of market power in that
marketplace.
43. We reiterate that the Commission stands ready to intercede in the event a CMRS provider refuses a reasonable request to interconnect. We will be particularly vigilant in policing, where they exist, any efforts by CMRS providers to deny interconnection in order to gain an unfair competitive advantage. For example, we would find LEC investment in, and affiliation with, the party denying interconnection an important factor in assessing whethersuch denial was motivated by an anticompetitive animus. Unlike independent CMRS carriers, LEC-affiliated CMRS carriers may have a unique incentive to deny interconnection so as to keep CMRS-to-CMRS traffic interconnected through the local exchange landline network, and to continue to collect CMRS interconnection charges from both sets of CMRS providers through their access charge structure. Such LEC ownership interests may play an important role in assessing whether a denial of interconnection is a reasonable business decision or a form of anticompetitive conduct intended to raise rivals' costs of doing business and hence hinder competition.(n75)
44. We seek comment on our assessment of the role of LEC investment in CMRS providers in determining the reasonableness of a denial of interconnection. We also seek comment regarding other anticompetitive incentives that may motivate CMRS providers to withhold interconnection or to attempt to make interconnection available on unreasonable or unreasonably discriminatory terms or conditions. Finally, in light of the foregoing discussion regarding the prematurity of imposing a general interstate interconnection obligation at this time, we seek additional comment on the issue raised in the Interconnection NOI with respect to preemption of state-imposed interconnection obligations.(n76)
2. Roaming
a. Background
45. "Roaming" describes the situation which occurs when the subscriber of one CMRS provider enters the service area of another CMRS provider with whom the subscriber has no pre-existing service or financial relationship, and attempts either to continue an in-progress call, to receive an in-coming call or to place an out-going call. The Interconnection NOI requested comment on whether the Commission should allow some or all CMRS providers to permit other CMRS providers' subscribers to use their system on a roaming basis and whether it should require a technical compatibility of equipment. The Interconnection NOI further sought comment on what interconnection obligations may be necessary to ensure that CMRS carriers provide to end users of various CMRS services and other carriers access to mobilelocation data bases and to routing information such as that contained in cellular carriers' Home Location Register (HLR) and Visited Location Register (VLR).(n77)
46. Part 22 of the Commission's Rules, 47 C.F.R. § 22,
et seq., governs the provision of "Public Mobile Services."
Section 22.99 defines a "roamer" as a "mobile station
receiving service from a station or system in the Public
Mobile Services other than one to which it is a subscriber."
That same section defines a "mobile station" as "one
or more transmitters that are capable of operation while
in motion." Pursuant to Section 22.901, cellular system
licensees "must provide cellular mobile radiotelephone
service upon request to all cellular subscribers in good
standing, including roamers, while such subscribers are
located within any portion for the authorized cellular
geographic service area (see § 22.911) where facilities
have been constructed and service to subscribers has commenced."
b. Positions of the Parties
47. APC argues that PCS systems will be directly competing with fully established cellular systems that offer their subscribers coast-to-coast roaming capabilities. APC asserts that as PCS providers begin building out their systems, they will be able to offer competitive service only if subscribers have access to nationwide roaming capabilities on cellular systems. APC argues that unless the Commission mandates that cellular providers must enter into fair and reasonable interconnection and roaming agreements with PCS providers, cellular carriers will be able to use their market power to inhibit the development of PCS. Accordingly, APC requests the Commission to require cellular providers to interconnect their Home Location Register and Visitor Location Register databases so that roaming is technically feasible and to provide such interconnection within one year of the PCS provider's request.(n78)
48. In an Ex Parte Letter dated January 27, 1995, APC maintains that the exact same processes that operate to enable cellular to cellular roaming could work for roaming between CMRS operators at 1900 MHz (PCS) and 800 MHz (cellular) when dual band phone hand-sets are available and utilized. According to APC, handset manufacturers estimate such handsets will be available in early 1996. However, APC argues, PCS to cellular roaming willonly work if (1) 800 MHz CMRS operators agree to allow roaming subscribers of a 1900 MHz CMRS provider to use their system; and (2) the 800 MHz CMRS providers program their HLR and VLR databases to communicate with 1900 MHz CMRS provider databases. APC maintains that the Signalling System #7 (SS7) network will transport any provider's messages across it, but if the databases at each end refuse to acknowledge each other's messages, no reciprocal data transfers, and hence no roaming service can occur. APC asserts that an 800 MHz CMRS provider could effectively block the new 1900 MHz entrant from taking advantage of the 800 MHz CMRS provider's nationwide network, thus reinforcing the cellular carrier's ten-year head-start.(n79)
49. Southern states that, although the technical implications and potential burdens involved in wholesale CMRS-to-CMRS interconnection are difficult to predict at this time, the Commission should consider such obligations on a service-by-service basis. Southern advocates that the Commission should now require digital, wide-area SMR licensees to enter into roaming agreements. Southern claims the Commission has designated standard control channels throughout the United States which allow subscribers to access the network of any cellular system in a given market, and that it should do the same for SMR systems. Southern claims that, without regulations mandating standard provisions in roaming agreements whereby SMR licensees will designate and disclose the control frequencies to access each other's networks, certain SMRs could unreasonably refuse to allow another SMR's customers access to their systems, thus foreclosing roaming capabilities for non-subscribers. Southern maintains that this could have the effect of stifling competition, contrary to the goals of the Commission.(n80) In contrast, NABER notes that marketplace forces have caused many SMR operators with similar operating platforms to enter into voluntary agreements for roaming, although such roaming is on a manual, not automatic, basis for the end user. NABER suggests that the Commission permit such marketplace forces to determine whether such arrangements should proliferate.(n81)
50. According to BellSouth, the roaming networks are increasingly using SS7 to provide for an exchange of customers' service profiles, thereby allowing customers to "carry" with them the advanced features to which they subscribe in their home systems. Thus, customers may activate or deactivate call forwarding or voice mail systems offered by their home systems while roaming in the same way they do at home. BellSouth avers that the end user does not need any special "interconnection" arrangements to use such features.(n82) BellSouth opposes any requirement that would obligate CMRS providers to permit unbundledaccess or interconnection to intelligent network services. BellSouth maintains that providing others with direct unbundled access to the HLR and VLR databases or other components of CMRS providers' intelligent network offerings would discourage CMRS licensees from making advanced services available to their customers. BellSouth argues that product differentiation is an important marketing tool that carriers should not be forced to sacrifice.(n83)
51. Southwestern Bell argues that Commission mandates are not required in this area because economic forces alone will spur the growth of CMRS roaming markets. It asserts that CMRS providers have an economic interest in selling service to roamers in their market and in selling the ability to roam to their customers. Southwestern points to cellular, and argues that CMRS providers should have the opportunity to negotiate with similar CMRS providers where it makes economic and technical sense for both parties. Southwestern maintains that the IS-41 network(n84) is an example of how the industry developed and implemented a common service standard to permit roaming. With IS-41, service providers can choose any vendor for construction of their networks with the assurance that the vendor's equipment will communicate with neighboring systems and distant systems utilizing the IS-41 standards. These standards were developed by the service providers, switch vendors, and access equipment manufacturers. Southwestern contends that new CMRS providers can build on the standards and structure that already exist.(n85) Similarly, Ameritech argues that the type of interconnection that supports access to cellular databases to facilitate roaming is technically feasible today. Ameritech argues further that the Commission should refrain from mandating such interconnection arrangements and leave the issue to the marketplace. Ameritech asserts that if CMRS providers wish to provide roaming service to their customers,it will be in their business interests to enter into the interconnection arrangements necessary to provide roaming service in the most "user-friendly" fashion.(n86)
52. In its comments, Pacific Bell argues that the Commission should mandate that PCS providers have fair and non-discriminatory access to cellular analog out-of-territory networks during the PCS 10-year build-out period. Pacific Bell contends that this policy will benefit all customers because they will be able to use wireless services wherever they are, even as PCS service begins. Pacific Bell asserts that the ability to roam is essential to public acceptance of PCS and to its competitiveness with cellular service. Without the ability to roam, Pacific argues that PCS providers will only be offering an ``island'' service which will compare unfavorably with cellular service and even with some of the developing SMR services.(n87) In an Ex Parte letter, Pacific Bell argues that the CMRS marketplace may not sufficiently protect the interest of PCS providers in having their customers roam onto cellular networks. Pacific Bell notes the plans of large cellular companies to combine PCS and cellular spectrum to create "national networks" and the plan of at least one potential PCS provider to implement a national network. Pacific Bell contends that customers of independent PCS carriers (e.g., regional and designated entities) may be unable to access these national networks for either technological or competitive reasons. Therefore, Pacific Bell urges the Commission to adopt a broad roaming policy that incorporates (1) the expectation that cooperative agreements among CMRS providers for roaming be entered into whenever technically feasible; and (2) the requirement that cellular carriers provide access to national analog roaming services on a fair and non-discriminatory basis.(n88)
53. CSI/ComTech seek interconnection of cellular reseller switches as a means of solving certain problems that existed with cellular roaming service prior to the implementation of IS-41-based seamless roaming service. In an attachment to their comments, CSI\ComTech describe the practical problems encountered by cellular end-users when roaming in the early 1990s. According to CSI\ComTech, depending on the cellular carrier, a roamer was handled usually in one of four ways: (a) provided service without intervention; (b) provided the first call, but subsequent calls may or may not be denied; (c) calls are blocked and service is denied until the carrier receives a valid form of payment; or (d) all access to the cellular system is denied. CSI\ComTech allege that some cellular carriers serving areas that have heavy roaming between themselves will interconnect their switches to provide roamers service without intervention, but the availability of this automatic roaming is limited because the switches serving the areas must be from the same manufacturer, and must be interconnected with dedicated voice and data circuits. The most common method of handing roamer traffic, according to CSI\ComTech is to allow the first call and then the switch will request averification of the roamer's status from its home carrier. This process can take up to an hour or longer to complete, during which time the carrier will usually deny further service. Moreover, allege CSI\ComTech, the carriers usually only provide this service to roamers of like carrier, that is, A block to A block and B block to B block. CSI\ComTech argue that direct connection of their switches where their customers have the greatest amount of roaming traffic would allow CSI\ComTech, where it is also a reseller, to have their subscribers' calls forwarded directly to the CSI\ComTech switch for processing, thus permitting customers to avoid onerous roaming charges.(n89)
c. Discussion
54. Roaming capability is an increasingly important feature
of mobile telephone communications. It is one of the attributes
that prominently sets mobile telephony apart from landline
service. The intelligent network features and connections
required to support roaming capability are critically important
to the development of the "network of networks." Therefore,
while we conclude that we should take any steps necessary
to support roaming, we also believe that the technical
issues should receive intense study and review by regulators
prior to the imposition of regulatory requirements, if
any are needed.
55. The current record in response to the NOI is limited
on the subject of roaming even though APC and CSI/ComTech
have discussed a number of technical issues related to
roaming. While our preference is that concerns such as
those expressed by APC be addressed at the outset by marketplace
forces rather than regulation, we will continue to monitor
the availability of roaming so that we can take any necessary
regulatory action in a timely fashion. It appears that
the types of technical problems described in the attachments
to CSI\ComTech's comments have been largely addressed by
the cellular industry itself in developing and implementing
the IS-41 standard and the backbone network architecture
needed to provide ubiquitous, seamless roaming service.
56. We are also aware of customer concerns regarding
the availability and pricing of roaming service and hope
that in the future, all CMRS providers will respond by
implementing nationwide seamless roaming networks and by
offering roaming service to interested subscribers at attractive,
cost-based rates. We tentatively conclude that no regulatory
action is required at this time, but that we should nonetheless
continue to monitor the development of roaming service.
We seek comment on this tentative conclusion.
57. Some in the cellular industry have informally expressed
the view that Section 22.901 of the Commission's Rules
governing cellular service requirements may also cover
PCS subscribers who roam in cellular service areas.(n90) This
is the case, we are told, because aPCS subscriber using
a hand-set capable of transmitting and receiving communications
on cellular frequencies (dual-band or dual-mode) will appear
to the visited cellular system like a cellular subscriber
once the dual-mode PCS phone switches into its cellular
mode. Because the cellular system would be unable to distinguish
the transmissions received from PCS phones from those received
from cellular phones, it would automatically serve the
PCS subscriber, assuming the requisite connections and
contractual arrangements between the carriers were in place.
We seek comment on these representations and on this interpretation
of Section 22.901.
58. Although the present record does not support proposed
rules, it does highlight the importance of roaming service
in a competitive CMRS marketplace. Therefore, we will
continue to monitor the development of roaming service
and to police actively any denials of reasonable requests
for roaming agreements. As with general interconnection,
we stand ready to intercede should the parties be unable
to reach reasonable private agreements and will closely
scrutinize any exercise of market power or engagement in
other forms of anti-competitive conduct designed to raise
rivals' costs and thwart competition, or to charge unjust
or unreasonable prices for roaming service.
59. As an aid in our monitoring effort, we seek further
comment on the following roaming issues. The present record
is particularly unclear on the issue of whether physical
or direct interconnection of CMRS networks is required
to providing roaming capability. We therefore seek comment
on the relationship between roaming and direct interconnection.
In addition, we seek comment on the manner in which cellular
nationwide, seamless roaming service is currently provided,
both technically and contractually, and on alternative
means of providing roaming. We seek comment on the same
issues with respect to the anticipated means of providing
PCS and SMR roaming service. In particular, we seek comment
on whether cross-service, e.g., PCS to cellular, roaming
can be accomplished from a technical stand-point. We also
seek comment on whether the different types of roaming
present different technical and regulatory issues. Commenters
should also discuss the costs and benefits of retaining
the cellular analog "AMPS" common air interface standard
to support cross-service roaming capabilities. Subscriber
database access appears to be a key feature of ubiquitous,
seamless cellular roaming. We seek comment on the type
of access and data which CMRS providers and other common
carriers need to support roaming service, as well as any
privacy or proprietary concerns raised by such access.
B. Resale Obligations
1. Background
60. Resale has been defined as an activity in which one entity subscribes to the communications services and facilities of another entity and then reoffers communicationsservices to the public (with or without ``adding value'') for profit.(n91) The Commission has consistently supported resale by prohibiting most common carriers from placing any restrictions on resale of their services. The Commission's resale policy was first established in the wireline telecommunications market, where carriers traditionally sought to restrict the resale of their tariffed and cross-elastic services to facilitate price discrimination. In the Resale and Shared Use Decision, the Commission held that provisions in carrier tariffs which had the effect of precluding the resale of private line service were unlawful.(n92) The Commission found that tariff provisions restricting resale were ``unjust and unreasonable'' in violation of Section 201(b)(n93) of the Communications Act.(n94) The Commission also concluded that such restrictions were ``unlawfully discriminatory'' under Section 202(a)(n95) of the Act because they would ``effectively foreclose a certain class of potential subscribers from obtaining carrier services and facilities.''(n96) In Resale of Switched Services,(n97) the Commission adopted a blanket prohibition on tariff provisions restricting the resale of common carrier domestic public switched network services, finding such restrictions to be unlawful under Sections 201(b) and 202(a) of the Act.(n98) For switched services, the Commission also found that an unrestricted resale policy would produce benefits similar to those set forth in the Resale and Shared Use Decision.(n99)
61. In 1981, the Commission amended its rules to authorize commercial cellular communications and extended its resale policy to cellular service.(n100) The Commission provided a frequency assignment plan that would allow for two competing facilities-based cellular systems in any particular metropolitan area or geographic market(n101) and reserved one block of spectrum for the exclusive use of the wireline carrier(s) certified to serve the area.(n102) Although uncertain as to the ability of a cellular resale market to develop, the Commission, for the reasons set forth in Resale and Shared Use Order and Resale of Switched Services, found that restrictions on cellular resale were contrary to the public interest. Consequently, the Commission decided to grant cellular licenses only on the condition that a licensee not restrict the resale of its services, with the intent of promoting a ``highly competitive secondary market for the distribution of cellular service.''(n103)
62. Subsequently, the Commission carved out an exception to its cellular resale policy. In 1992, the Commission found that a rule allowing a cellular carrier to deny resale capacity under certain circumstances to a fully operational facilities-based competitor would not violate the just and reasonable standard of Section 201(b).(n104) The Commission also determined that resale restrictions as applied to a fully operational facilities-based competitor do not violate Section 202(a) of the Act.(n105) The Commission reasoned that five years is sufficient time for a licensee to build its system, and that permit-ting licensees to deny each other resale after this period would promote competition by encourag-ing each licensee to build out its network.(n106) The Department of Justice and other commenters agreed that maintaining the resale requirement until both carriers are fully operational helps to mitigate anydisadvantage a second carrier may incur during the ``headstart'' period.(n107) The Commission emphasized that this is the only exception to the general rule that cellular licensees may not restrict the resale of their services.(n108)
63. The Interconnection NOI requested comment on whether the Commission should propose rules to place the resale obligations that apply to cellular licensees on all CMRS providers or any particular class of CMRS providers.(n109) Specifically, the Interconnection NOI sought comment on whether regulatory symmetry requires unrestricted resale obligations for all CMRS services. The Interconnection NOI further invited comment on how resale obligations would assist in the development of CMRS services, e.g., whether resale would allow new entrants in a market to offer service to the public more quickly because they could resell another service while building their own facilities.(n110)
64. Additionally, the Interconnection NOI sought comment on whether the current policy limiting a facilities-based competitor's mandatory right to resale to five years should be applied to those CMRS providers if the Commission imposes a resale obligation on some orall CMRS providers.(n111) The Interconnection NOI also asked whether, for the various CMRS geographic market areas to develop expeditiously and meet our policy objectives, cellular providers should be exempt from providing resale to facilities-based CMRS competitors in their service areas even during the first five years that these competitors hold their licenses. The Interconnection NOI requested that commenters address the standards the Commission might use to identify the services that compete with cellular. In considering a limit on the resale obligation, the Interconnection NOI noted that the Commission must eventually determine whether the restrictions are just and reasonable under Section 201(b) of the Act, and in doing so, must weigh any harm to the public posed by such restrictions against any potential benefits to the public. The Interconnection NOI also stated that the Commission must make a similar determination under Section 202(a) of the Act.(n112)
2. Positions of the Parties
65. Resale Generally. Commenters generally agree that the Commission should impose an obligation on CMRS carriers to permit unrestricted and nondiscriminatory resale.(n113) Bell Atlantic and SBC contend that the same rationale which supported the extension of resale obligations to cellular carriers in 1981 supports that application to all CMRS providers.(n114) McCaw argues that to the extent that resale is found to foster competition, the networks of all CMRS providers should be made available to competitors and new entrants in the mobile services marketplace.(n115) Allnet and MCI assert that because a strong market for resale fosters competition, the Commission should now issue a general statement indicating that resale prohibitions will not be allowed.(n116) LDDS contends that resale plays a crucial role inpreventing unreasonable price discrimination among customers, drives rates toward cost, and serves as a vehicle for competitive entry.(n117)
66. Several parties emphasize that whatever the Commission decides, all CMRS providers should be treated identically.(n118) Bell Atlantic contends that the Commission should impose an obligation on all CMRS providers to permit unrestricted and nondiscriminatory resale.(n119) CTIA argues that consistent with Congressional intent, the Commission, in its continued adherence to Section 332 of the Act, must ensure that similar services are treated alike.(n120) CTIA, Bell Atlantic, PCIA and SBC assert that the Commission must impose resale obligations on CMRS providers to the same extent as cellular carriers because such a policy is consistent with the goal of ``regulatory parity.''(n121) BellSouth agrees, arguing that the only exception to this obligation is resale to facilities-based competitors.(n122) AT&T contends that imposition of resale requirements solely on cellular licensees would thwart the intent of Congress to avoid differential regulation of CMRS providers and would impose a significant regulatory burden on one class of CMRS providers -- cellular providers -- to the benefit of competitors.(n123) AT&T asserts that if the Commission adopts resale requirements, it is critical that the Commission not artificially distinguish between CMRS providers.(n124)
67. Some commenters contend that there is no need to impose any resale obligation on any CMRS providers.(n125) ALLTEL and AMTA insist that the presence of multiple, facilities-based providers will ensure that consumers have sufficient choice and that price competition is vigorous.(n126) Moreover, contends ALLTEL, by avoiding imposition of resale obligations, the Commission will ensure that incentives to build out new services expeditiously are not diminished.(n127) Nextel argues that there is no reason to impose resale obligations in the competitive CMRS market, asserting that those supporting a resale requirement generally include those companies currently subject to the regulation.(n128) Nextel warns that mandated resale could likely have inequitable results as some CMRS providers would avoid significant investment in CMRS facilities and simply use the facilities of a competitor who has invested the requisite time, money and effort to build a system.(n129)
68. Other commenters, however, argue that there is no need to impose resale obligations on certain categories of CMRS.(n130) PageNet contends that the Commission has not previously imposed resale obligations on paging companies and should not do so now.(n131) PageNet argues that resale has been a tool of the Commission to assist carriers in entering the market and to eliminate discriminatory pricing. PageNet contends that there are no barriers to entry in the paging market, that permissible resale is already part of the distribution chain for paging services and therefore the Commission does not need to require resale for paging providers.(n132) E.F. Johnson and other commenters urge that resale obligations only be imposed on cellular-like services.(n133) NABER and OneComm contend that resale obligations areunnecessary and technically problematic for SMR providers.(n134) NABER asserts that the limited capacity of SMR systems mandates a high degree of user management by SMR operators, and that mandatory resale is unnecessary because: (1) SMRs do not have market power; (2) SMRs offer a limited interconnect service; (3) SMRs do not control a bottleneck; and (4) customers have many alternatives for service.(n135)
69. GTE argues that imposing a resale obligation on air-to-ground providers is technically and economically infeasible and therefore contrary to the public interest. Specifically, GTE contends that the Commission applied a limited resale obligation to air-to-ground only during its nascent period to minimize headstart concerns when GTE Airfone was operating but other carriers had not yet constructed their facilities. GTE asserts that no carrier requested resale capacity. GTE also argues that there are significant technological limitations that distinguish air-to-ground from cellular and other CMRS carriers, rendering the provision of resale an impossibility.(n136) For example, asserts GTE, capacity on a particular aircraft for air-to-ground communication is very limited, making it infeasible for the air-to-ground provider to permit resale in bulk the way landline and cellular carriers can.(n137) In addition, GTE contends that, in contrast to its decision to mandate equipment compatibility for cellular service, the Commission permitted air-to-ground licensees to develop their own unique systems without regard to equipment compatibility. GTE asserts that equipment compatibility is essential for resale. Thus, argues GTE, air-to-ground service's lack of uniformity among different systems creates conditions that inhibit, if not preclude, resale.(n138)
70. AT&T replies that the Commission should reject proposals, including those of the air-to-ground service providers and SMR providers, to treat cellular carriers differently than other CMRS providers with respect to resale.(n139) Bell Atlantic asserts that commenters in the SMR and paging industries have offered no reason why SMR or paging in this context are different from cellular service and thus why differential treatment might be justified. Bell Atlantic argues that because these entities do not provide any evidence that resale obligations would burden SMR and paging services differently from cellular service, regulatory parity requires applying the Commission's policy in favor of resale to all CMRS providers. BellAtlantic further contends that unrestricted resale is even more important in the wide-area SMR service, because at this time only one company, Nextel, is offering this service and is rapidly acquiring potential SMR competitors.(n140) Allnet argues that opposition to resale is based on a contrived, nonsensical argument that CMRS competitors would avoid significant investment by simply using the systems built by other parties which would unfairly shift risk to existing firms. Allnet contends that if it is more profitable for a new entrant to resell rather than invest, this is not necessarily an uneconomic outcome or contrary to the public interest. Rather, insists Allnet, such an outcome simply states that the market cannot profitably support additional capacity.(n141)
71. CTIA also requests that the Commission clarify that its cellular resale rules merely require that carriers cannot discriminate in the rates they charge resellers and do not require carriers to offer bulk rates to resellers.(n142) Pacific Bell objects to this, arguing that while the cellular resale policy does not require the creation of a specific wholesale rate, the policy does require any bulk rate made available to some customers must be made available to resellers on the same terms and conditions. Pacific Bell contends that this is critical to the resale market and urges the Commission to make clear that resellers are eligible for bulk rates made available to other cellular customers. Pacific Bell asserts that resale of cellular service by PCS providers will help to mitigate the headstart cellular providers have. Pacific Bell contends that without the ability to purchase at a bulk rate the market for resale will disappear.(n143)
72. Resale to Facilities-Based Carriers. Most parties that commented on the resale issue distinguished the provision of resale capacity from facilities-based competitors. GSA and NCRA argue that the establishment of resale obligations will allow new entrants to offer services to the public more quickly because they will be able to resell services while building their own facilities.(n144) APC, however, cautions that the Commission should include appropriate restrictions so that CMRS providers do not abuse resale opportunities to avoid building out their systems.(n145) Several commenters argue that the Commission should place a limit on the obligation of facilities-based CMRS providers to resell services to non-facilities based providers. Some propose specific periods similar to those adopted for cellular service.Ameritech and Bell Atlantic encourage the Commission to permit any CMRS provider to restrict resale of its services by any facilities-based CMRS provider five years after the issuance of the license to the second provider.(n146) McCaw and AT&T support an eighteen-month window for resale to facilities-based competitors, arguing that continuing the five-year window -- particularly if the resale obligation is imposed only on cellular carriers -- would disserve the public interest in promoting competition. McCaw and AT&T contend that an eighteen-month window is an acceptable balance of new entrants' interest in reselling temporarily and the public interest in encouraging aggressive development of new networks.(n147) Pacific Bell supports linking the fill-in period to the build-out requirements for licensees which, in the case of PCS, would be 10 years.(n148)
73. Pacific Bell also asserts that PCS licensees reselling cellular services during their build-out period should be allowed to migrate cellular customers to PCS services when the PCS systems are operable. Pacific Bell argues that the migration should include being able to transfer the end users' number from cellular service to PCS. According to Pacific Bell, the ability to migrate customers from cellular service to PCS will put PCS licensees in a better position to compete with cellular providers and will somewhat mitigate the head start cellular providers have.(n149)
74. SBC and RCA argue that a cellular carrier should not be required to resell its services to facilities-based CMRS competitors who hold their own licenses.(n150) SBC contends that restricting competitor resale promotes efficient use of the spectrum and stimulates interbrand competition. SBC further asserts that, because the mobile service market is now established, there is no need to apply the five year rule, and that the public is better served by new CMRS entrants being encouraged to put the spectrum they have been assigned to use rather than relying on their competitors' facilities.(n151) SBC adds that the Commission should reject the notion that there should be a certain overlap between competing carriers services before resale obligations can be restricted. SBC asserts that if service areas are overlapping,then the carriers are competing in that service area and resale should not be required in the overlapping area.(n152)
75. Pacific Bell argues that PCS providers should have no obligation to resell to their facilities-based PCS competitors. Pacific Bell asserts that, since all PCS licenses are to be auctioned within a relatively short time of each other, no carrier will have significant lead time over any other. Thus, argues Pacific Bell, it is not in the public interest to require resale of PCS services among licensees serving the same area since the Commission presumably wants to encourage build-out of systems. However, Pacific Bell supports reselling by non-licensees as providing competition and furthering the Commission's goal of universality of PCS services.(n153) APC contends that cellular providers should not be exempt from providing resale opportunities to facilities-based CMRS competitors in their service areas, but, like Pacific, argues that PCS providers should be permitted to restrict the sale of PCS to cellular carriers in the same service areas. APC asserts that allowing cellular carriers to obtain additional PCS spectrum by purchasing it from a PCS competitor will only add to cellular's competitive advantage.(n154) PCIA requests clarification that CMRS providers cannot use resale opportunities to evade the intent of the construction requirements for broadband PCS.(n155)
76. BellSouth replies that APC's proposal violates the requirement of regulatory parity, and argues that neither cellular nor PCS providers should be required to permit resale of their service by facilities-based competitors. BellSouth argues that barring limits on resale would comport with regulatory parity because cellular and PCS licensees would be allowed the same resale restrictions and would be given an incentive to compete on the basis of their own facilities-based coverage.(n156) AT&T responds that any such distinction would avoid the intent of Congress and impose a significant regulatory burden on one class of CMRS providers -- cellular operators -- to the benefit of their competitors.(n157)
77. Few commenters attempted to define what constitutes a ``facilities-based competitor.'' In responding to the Commission's equal access proposal, WilTel states that its use of the term CMRS is limited to cellular services and service ``potentially competitive with cellular services, including PCS and enhanced (or wide-area) specialized mobile radio(ESMR) services.''(n158) NABER states that it disagrees with the Commission's statement in the CMRS Third Report and Order that all SMR systems are potentially competitive.(n159) NABER further argues that there is insufficient spectrum in any band to permit an SMR operator to be truly competitive in the CMRS marketplace, with the exception of the aggregation already accomplished by Nextel.(n160)
78. Reseller Switch Proposal. Along with their general
support for a resale obligation for CMRS providers, NCRA
and CSI/ComTech argue that the Commission should require
cellular providers to allow cellular resellers to install
their own switching equipment between the cellular network's
mobile telephone switching office (MTSO) and the facilities
of the LEC and the IXC.(n161) NCRA and CSI/ComTech contend that
requiring cellular providers to permit resellers to interconnect
their switches with those of the cellular provider is in
the public interest.(n162) CSI/ComTech claims that there is nothing
in Section 201 of the Act, its history, or precedent which
dictates that any and all interconnection obligations are
premised on a connecting carrier having bottleneck facilities.
CSI/ComTech argues that the Commission has already determined
that the standard of analysis for interconnection under
Section 201 is whether the requested interconnection is
privately beneficial without being publicly detrimental.(n163)
NCRA further contends that Section 332(c)(1)(B) requires
all common carriers to interconnect with CMRS providers
and, since CMRS providers are, by statute, classified as
common carriers, Section 332(c)(1)(B) clearly obligates
CMRS providers to interconnect toother CMRS providers.(n164)
Therefore, assert NCRA and CSI/ComTech, the Commission
should require cellular providers to permit cellular resellers
to interconnect their switches.
79. The California PUC supports the reseller switch proposal, arguing that the Commission should promote switch-based resellers in order to stimulate competition in the cellular industry. The California PUC contends that in order to become a competitive alternative, switch-based resellers must be able to isolate charges for monopoly bottleneck services they must acquire from facilities-based carriers from services which they can acquire elsewhere or produce themselves.(n165)
80. Most commenters, including most cellular providers, oppose the reseller switch proposal.(n166) AirTouch and others contend that the reseller switch is a vague, yet-to-be-designed facility. These commenters claim that the reseller switch does not add value and may harm the network.(n167) AirTouch, BellSouth, Comcast, and McCaw contend that resellers are in effect attempting to require cellular carriers and other CMRS providers to ``unbundle'' their networks. These commenters oppose any such action.(n168) GTE argues that the costs of cellular providers would likely increase due to such connection since the proposal would probably require the addition of ports to the cellular switch to accommodate inter-switch trunks. GTE contends that neither the purchase of their own NXX codes, nor their payment to LECs for traffic termination would counterbalance the cost to cellular carriers of providing such interconnection.(n169)
81. NCRA responds that the reseller switch is technically feasible and would resemble, in almost all cases, the interconnections between interexchange and local exchange carriers. NCRA insists that the reseller switch would not result in the degradation of the quality of service or an increase in processing time.(n170) CSI/Comtech argues that thecommenters have failed to cite any legal authority to justify a blanket refusal to allow cellular resellers' interconnection to facilities-based carriers. CSI/ComTech further contends that the cost/benefit arguments raised by the carriers do not justify a finding that resellers do not have a right to interconnection under Section 201.(n171)
82. Miscellaneous. BellSouth raised an issue which was not part of the Interconnection NOI. BellSouth requests that, in extending its cellular resale policies to CMRS, the Commission eliminate any ambiguity in the cellular rules regarding whether Bell Company local exchange carriers may resell cellular service, without having to use a separate subsidiary.(n172) Currently, Section 22.901 of the Commission's Rules requires structural separation between the Bell Companies' LEC and cellular units -- a Bell Company may ``provide'' cellular service only through its cellular subsidiary.(n173) BellSouth contends that, while cellular carriers are not permitted to restrict resale of their services (except in the case of operational facilities-based competitors), the structural separation rules for Bell Companies may inadvertently force the Bell subsidiaries to restrict resale to their affiliated telephone companies. BellSouth argues that this rule is ambiguous because it does not make clear whether resale by a Bell company's LEC constitutes the ``provision'' of cellular service. As a result, argues BellSouth, it is unclear whether a Bell cellular affiliate either must refuse to allow resale by its sister telephone company, as a consequence of the separation rule, or may not restrict resale by its LEC affiliate.(n174) BellSouth asserts that, to the extent that PCS licensees are permitted to resell cellular service, regulatory parity requires that this opportunity should be available to Bell Company LECs providing service as PCS licensees, on the same basis as others.(n175) Ameritech, Bell Atlantic, NYNEX, and SBC support this proposal.(n176)
3. Discussion
83. Resale Generally. We tentatively conclude that the existing obligation on cellular providers to permit resale should be extended to apply to CMRS provid-ers, unless there is ashowing that permitting resale would not be technically feasible or economically reasonable for a specific class of CMRS providers.(n177) As we have noted, the Commission has a long history of encouraging resale. The Commission has found on many occasions that the denial of resale is unjust and unreasonable and unlawfully discrimi-na-to-ry in violation of Section 201(b) and Section 202(a) of the Act.(n178) We also tentatively conclude that we should impose a resale obligation as a condition of license pursuant to our authority under Title III of the Communications Act, as we have for cellular providers. The Commission has authority, through rule making or by imposing license conditions, to apply such a restriction to existing licensees under Title III.(n179)
84. We further tentatively conclude that requiring
CMRS licensees to provide resale capacity will have the
overall effect of promoting competition. Prohibiting resale
restrictions provides a means of policing price discrimination,
mitigating head-start advantages among licensees, and providing
some degree of secondary market competition (i.e., retail
price competition). Further, promoting resale is advantageous
because resellers may be a source of marketplace innovation
(e.g., by adding value to the resold service). For example,
a reseller may provide a customized billing service, or
bundle resold service with other telecommunications services
such as interexchange or cable service. Resale could increase
overall demand for CMRS services and increase overall traffic
on telecommunications networks, thus permitting achievement
of economies of scope and scale.
85. It is our tentative view that requiring resale would
involve minimal expense and no technical problems for most
of the CMRS licensees subject to the requirement. CMRS
providers are permitted to charge resellers, thereby ensuring
that they are compensated for the provision of resale capacity.
This obligation would extend existing Commission policy
for cellular carriers to CMRS providers, i.e., CMRS providers
would be required to make airtime available to resellers.
Thus, under our proposal, any volume discount available
to a cellular or other CMRS carrier's large ``retail''
customers must also be available to resellers on the same
terms and conditions offered to retail customers.(n180) Of course,
any interstate bulk rate offerings would be subject to
the non-discrimination requirements of Section 202(a) of
theAct.(n181) In addition, if the Commission decides to make
a resale obligation a condition of license then the resale
obligation would apply to all services provided by a CMRS
licensee.
86. CMRS providers may have incentives to refuse to
enter into resale arrangements with competing carriers.
For example, even though carriers are permitted to charge
and realize a profit from selling service to resellers,
the return is higher when they provide the retail service
directly to end users. Thus, absent a Commission-imposed
resale obligation, it is our tentative view that carriers
might very well refuse to permit other providers to resell
their service. Therefore, we tentatively conclude that
a mandatory general resale requirement is necessary because
it will serve as an effective means of promoting competition
in the CMRS marketplace.
87. We also seek comment on whether resale is unrea-son-able,
unnecessary, or technically infeasible for specific classes
of CMRS providers. For example, GTE contends that resale
obligations do not make sense for air-to-ground services,
because of technical limitations and the nature of the
service. NABER alleges technical and capacity problems
for SMR systems. PageNet urges that a resale obligation
is unnecessary for paging companies. We tentatively conclude
that there may be considerations, such as technical problems,
that would support limiting the resale requirement. We
seek comment on whether the technical considerations raised
with regard to air-to-ground service and SMR service are
sufficient to permit restrictions on the resale of these
services and whether such restrictions would violate the
just and reasonable standard of Section 201(b), and the
non-discrimination provisions of Section 202(a). We seek
further comment on whether resale obligations are unnecessary
for paging operators and whether permitting restrictions
on the resale of paging services would violate the just
and reasonable standard of Section 201(b), and the non-discrimination
provisions of Section 202(a).
88. Resale to Facilities-Based Carriers. We further
tentatively conclude that the ability to resell other CMRS
services could be used by new facilities-based carriers
to enter the CMRS market in advance of the completion of
their systems and begin compet-ing with existing providers
much sooner. A resale requirement, for example, may ``jump-start''
competitive entry of PCS services into the CMRS marketplace.
The ability to enter the market quickly as cellular resellers
could assist them in building a customer base now, and
could counteract the head-start advantage that cellular
providers possess. Resale could also be a marketing tool
by which new entrants could build a customer base before
they have completed construction of their systems. We
seek comment on these observations and on APC's proposal
that PCS providers should have no obligation to resell
service to their facilities-based competitors.
89. We recognize, however, that at some point the facilities-based competitor will have had sufficient opportunity to build its system. There is a concern that by not placinglimits on the resale requirement, we increase the chances that CMRS licensees will opt not to complete construction of their systems. On the other hand, as we noted in the Cellular Resale Order, there are many factors that can delay construction of facilities, including state and local zoning approval delays,(n182) weather conditions, and site availability for additional transmittal locations. We recognized in that Order the importance of adopting a rule that takes all of these factors into account. We also found that eliminating the resale requirement prior to the end of a new licensee's five-year fill-in period would interfere with the flexibility of cellular carriers to construct their systems. Therefore, we determined that the public interest was best served by eliminating the resale requirement to facilities-based competitors after the five-year build-out period.(n183)
90. In the interest of striking an acceptable balance
of new CMRS entrants' interest in reselling in order to
enter the market as quickly as possible and the public
interest in encouraging the aggressive development of new
networks, we tentatively conclude that, as in the case
of cellular carriers, a time limitation on the obligation
of one facilities-based CMRS provider to permit another
facilities-based CMRS provider to resell its services is
appropriate. Several commenters have cited resale as an
important aspect of creating a customer base during the
build-out phase. We tentatively conclude that, as in the
case of cellular service, once the newer entrant in a market
is fully operational one rationale for prohibiting resale
restrictions between facilities-based carriers, i.e.,
to offset any competitive advantage gained as a result
of a service provider's ``headstart'', ceases to exist.
We further tentatively conclude that a rule allowing a
carrier to deny resale capacity to a fully operational
facilities-based competitor would not violate the just
and reasonable standard of Section 201(b), or the non-discrimination
provisions of Section 202(a). We seek comment on these
tentative conclusions.
91. Additionally, we seek comment on Allnet's assertion
that if it is more profitable for a new entrant to resell
rather than invest, this is not necessarily an uneconomic
outcome or contrary to the public interest. Allnet argues
that such activity may indicate that the market cannot
profitably support additional capacity.(n184) Commenters should
address whether Allnet's assertions should cause the Commission
to rethink the advisability of allowing limitations of
resale to facilities-based competitors. In particular,
we seek comment on whether the assignment of licenses through
competitive bidding should affect our analysis of this
issue.
92. The commenters propose several different ``windows''
after which the resale obligation would cease, including:
no ``window''; a twelve-month ``window''; an eighteen-month
``window''; a five-year ``window''; and a ten-year ``window''
(for PCS).(n185) We seek comment on these proposals. We also
seek comment on whether, as in the case of cellular, the
resale requirement should remain in effect until the termination
of the fill-in period of the particular service, which
we have previously established in our Rules.(n186) In the alternative,
we seek comment on whether the resale requirement should
terminate in advance of the termination of the build-out
period to encourage licensees to complete construction
of their systems as rapidly as possible.
93. If we ultimately decide to allow carriers to deny
resale capacity to facilities-based competitors, we need
to establish what constitutes a facilities-based competitor.
Under current rules, a cellular licensee ``may apply resale
restrictions to licensees of cellular systems on the other
channel block in its market'' at the expiration of the
five-year build-out period.(n187) Here, we are proposing a broader
rule that would include most, if not all, CMRS providers.
The rule that currently applies to cellular carriers does
not readily translate to the CMRS marketplace where different
services have different service areas. In the CMRS Third
Report and Order, the Commission concluded that all CMRS
providers are providing compet-ing services or have the
reasonable potential to provide compet-ing services in
the CMRS marketplace.(n188) We also noted, however, that a different
set of policy goals, or the application of the same policy
goals to differing circumstances, may require a different
analysis and may result in different conclusions regarding
the extent of competition between services.(n189) Some commenters
suggest that the Commission should only include ``broadband''
services in our determination of what constitutes a competitor.
We seek comment on what factors the Commission should consider
in defining a carrier's facilities-based competitor. We
also seek comment on the factors we should consider for
determining the geographic market in whichto apply a resale
obligation. For example, should there be a certain percentage
of overlap between competing carriers before resale obligations
can be restricted?
94. We seek comment on whether it is necessary to revise our rules to encourage resale in the wireless marketplace. It has been argued, for example, that number transferability would aid the resale market, e.g., if numbers were ``transferable'' resellers could use their ability to move their customers and their numbers to other facilities-based providers as leverage to obtain better service at lower prices.(n190) Number transferability, in this context, means the capability of a CMRS reseller either to migrate its customers' numbers to its system when completed, or to move its block of numbers to other facilities-based providers in the event that the reseller is able to negotiate a better wholesale rate from another provider. The Commission has previously determined that, with regard to cellular resale, ``a transferable NXX scheme . . . would serve the public interest.''(n191) We seek comment on whether we should make number transferability requirements a part of our CMRS resale policy.(n192)
95. Reseller Switch Proposal. We tentatively conclude
that the reseller switch proposal espoused by NCRA and
Comtech/CSI in this proceeding should not be generally
imposed upon CMRS providers at this time.(n193) We tentatively
conclude that in each local geographic market, the relevant
product market for purposes of analyzing this proposal
comprises those wireless carriers that offer switched mobile
voice services over networks that are fully interconnected
to the public switched telephone network. We reach this
conclusion because the product that resellers appear to
want to provide is mobile voice telecommunicationservices.(n194)
We believe the relevant geographic market may be either
the service area or license area. We seek comment on the
scope of both the relevant product and geographic market.
96. Under our tentative conclusions about the relevant
product and geographic markets, this market would include
cellular providers and the up to six broadband PCS providers
who are purchasing licenses at auction. It may also include
wide-area SMR providers. Given the number of competitors
we expect to be present in this market in the near future,
competitive forces should provide a significant check on
inefficient or anticompetitive behavior. This fact suggests
that a regulatory mandate to allow switch-based resale
may be unnecessary. Moreover, a mandatory switch-based
resale policy may impose costs on the Commission, the industry,
and consumers. For example, CMRS providers might have
to incur costs to satisfy a requirement to unbundle their
services and offer interconnection on the terms needed
for switch-based resellers.(n195) We acknowledge, however, that
the record reflects differing views with regard to this
issue of costs,(n196) and we thus seek further comment on this
issue. Further, we are concerned about the administrative
complexity and costs of imposing such regulations. In addition,
we seek comment on whether it would be anomalous to establish
an interconnection obligation for the benefit of switch-based
resellers alone and not for other CMRS providers. In light
of these considerations, we are unable to conclude at this
time that the benefits of general unbundling and interconnection
requirements for switch-based resale outweigh the costs.
We seek comment on these tentative conclusions.
97. We note that two cellular resellers have filed complaints
against two different cellular licensees, claiming that
the cellular licensees' refusal to permit interconnection
with the respective cellular resellers' switches violates
Sections 332(c)(1)(B) and 201(a) of the Communications
Act.(n197) We will address these specific requests in the context
of these complaint proceedings. We note that our tentative
conclusions regarding a general resellerswitch interconnection
requirement should not be viewed as prejudging any specific
complaints filed with respect to this issue.(n198)
98. Miscellaneous. Finally, we find that this rule
making is not the appropriate proceeding in which to address
BellSouth's proposal that the Commission determine that
the structural separation requirement contained in Section
22.903 does not apply to the resale of cellular service
by a Bell Operating Company. Therefore, we do not decide
that question here. Rather, we intend to address this question
in a separate proceeding.
100. This is a non-restricted notice and comment rule making proceeding. Ex parte presentations are permitted, except during the Sunshine Agenda period, provided they are disclosed as provided in the Commission's Rules.(n199)
B. Regulatory Flexibility Act
101. As required by Section 603 of the Regulatory Flexibility
Act, 5 U.S.C. § 601 et.seq. (1981), the Commission has
prepared an Initial Regulatory Flexibility Analysis (IRFA)
of the expected impact of the policies and rules proposed
in this Notice on small entities. The IRFA is contained
in Appendix B to this Notice. The Secretary shall cause
a copy of this Notice, including the IRFA, to be sent to
the Chief Counsel for Advocacy of the Small Business Administration
in accordance with Section 603(a) of the Regulatory Flexibility
Act.
C. Authority
102. This action is taken pursuant to Sections 1, 4(i),
4(j), 201, 202, 208, 332, and 403 Communications Act as
amended; 47 U.S.C. §§ 154(i), 201, 202, 208, 332, and 403.
D. Further Information
103. For further information regarding this Notice, contact
Judy Argentieri or Barbara Esbin (Wireless Telecommunications
Bureau, Policy Division) at (202) 418-1310.
105. IT IS FURTHER ORDERED that the motion to accept
a late filed pleading filed by UTC, The Telecommunications
Association, IS GRANTED.
106. IT IS FURTHER ORDERED that the proposed action is
authorized under Sections 1, 4(i), 4(j), 201, 202, 208,
332, and 403 Communications Act as amended; 47 U.S.C. §§
154(i), 201, 202, 208, 332, and 403.
107. IT IS FURTHER ORDERED that pursuant to applicable
procedures set forth in Sections 1.415 and 1.419 of the
Commission's Rules, 47 C.F.R. §§ 1.415 and 1.419, comments
SHALL BE FILED with William F. Caton, Acting Secretary,
Federal Communications Commission, Washington, D.C. 20554
on or before June 14, 1995 and reply comments SHALL BE
FILED with the Secretary on or before July 14, 1995. To
file formally in this proceeding, parties must file an
original and five copies of all comments, reply comments,
and supporting comments. Parties wishing each Commissioner
to receive a personal copy of their comments must file
an original plus nine copies. Parties should also file
one copy of any documents filed in this docket with the
Commission's copy contractor, the International Transcription
Services, Inc., Suite 140, 2100 M Street, N.W. Washington,
D.C. 20037. Comments and reply comments will be available
for public inspection during regular business hours in
the Reference Center of the Federal Communications Commission,
1919 M Street, N.W., Washington, D.C. 20554.
FEDERAL COMMUNICATIONS COMMISSION
William F. Caton
Acting Secretary
Initial Regulatory Flexibility Act Analysis
Reason for Action
Objectives
The Commission's rules already establish some requirements
relating to roaming and resale for cellular providers.
This rule making will clarify whether similar rules regarding
roaming and resale will apply to other commercial mobile
radio services, and explore whether an interconnection
obligation for commercial mobile radio service providers
would be in the public interest. In turn, this will promote
regulatory certainty and allow for the enhanced provision
of service to the public.
Legal Basis
The proposed action is authorized under the Omnibus Budget
Reconciliation Act of 1993, Pub. L. No. 103-66, Title VI,
§ 6002(b), and Sections 3(n), 4(i), 303(r), 332(c), and
332(d) of the Communications Act of 1934, 47 U.S.C. §§
153(n), 154(i) and 303(r), 332(c), and 332(d), as amended.
Reporting, Recordkeeping and Other Compliance Requirements
Federal Rules Which Overlap, Duplicate or Conflict with
These Rules
Description, Potential Impact, and Number of Small Entities
Involved
Alternatives Minimizing the Impact on Small Entities Consistent
with the Stated Objectives
IRFA Comments
We request written public comment on the foregoing Initial
Regulatory Flexibility Analysis. Comments must have a
separate and distinct heading designating them as responses
to the IRFA and must be filed by the deadlines provided
in paragraph 107 of this Notice.
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
III. PLEADINGS; DISCUSSION
A. Interconnection Obligation
1. Generally
a. Background . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
b. Positions of the Parties . . . . . . . . . . . . . . . . . . . 10
c. Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2. Roaming
a. Background . . . . . . . . . . . . . . . . . . . . . . . . . . 45
b. Positions of the Parties . . . . . . . . . . . . . . . . . . . 47
c. Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . 54
B. Resale Obligations
1. Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
2. Positions of the Parties . . . . . . . . . . . . . . . . . . . . . 65
3. Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
III. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
IV. PROCEDURAL MATTERS
A. Ex Parte Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
B. Regulatory Flexibility Act . . . . . . . . . . . . . . . . . . . . . 101
C. Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
D. Further Information. . . . . . . . . . . . . . . . . . . . . . . . . 103
V. ORDERING CLAUSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
APPENDIX A
APPENDIX B
Footnote 1 Equal Access and Interconnection Obligations Pertaining to Commercial Mobile Radio Service, CC Docket No. 94-54, Notice of Proposed Rule Making and Notice of Inquiry, 9 FCC Rcd 5408 (1994) (Equal Access NPRM; Interconnection NOI).
Footnote 2 47 U.S.C. §§ 201-208.
Footnote 3 Omnibus Budget Reconciliation Act of 1993, Pub.L.No. 103-66, 107 Stat. 312 (1993) (Budget Act).
Footnote 4
Specifically, the Budget Act amended the Communications
Act of 1934 (Act) to provide:
Upon reasonable request of any person providing commercial
mobile service, the Commission shall order a common carrier
to establish physical connec-tions with such service pursuant
to the provisions of section 201 of this Act. Except to
the extent that the Commission is required to respond to
such a request, this subpara-graph shall not be construed
as a limitation or expansion of the Commission's authority
to order intercon-nection pursuant to this Act.
47 U.S.C. § 332(c)(1)(B). Section 201(a) of the Act reads
in pertinent part as follows:
It shall be the duty of every com-mon carrier engaged in
inter-state or foreign communication . . . in accordance
with the orders of the Commis-sion, in cases where, after
opportu-nity for hear-ing, finds such action necessary
or desirable in the public interest, to establish physi-cal
connec-tions with other carriers, to establish through
routes and charg-es applicable thereto and the divi-sions
of such charges, and to estab-lish and pro-vide facilities
and regu-lations for operating such through routes.
47 U.S.C. § 201(a).
Footnote 5 47 U.S.C. § 332(c)(1).
Footnote 6 Implementation of Sections 3(n) and 332 of the Communications Act, Regulatory Treatment of Mobile Services, GN Docket No. 93-252, Notice of Proposed Rule Making, 8 FCC Rcd 7988, 8001-002 (1993) (CMRS Notice of Proposed Rule Making).
Footnote 7 Implementation of Sections 3(n) and 332 of the Communications Act, Regulatory Treatment of Mobile Services, GN Docket No. 93-252, Second Report and Order, 9 FCC Rcd 1411 (1994) (CMRS Second Report and Order), reconsideration pending.
Footnote 8 Id. at 1499-1500.
Footnote 9 Equal Access NPRM; Interconnection NOI, 9 FCC Rcd 5408 (1994).
Footnote 10 Roaming occurs when the subscriber of one CMRS provider enters the service area of another CMRS provider with whom the subscriber has no pre-existing service or financial relationship, and attempts to either continue an in-progress call, receive an incoming call, or place an out-going call.
Footnote 11 Interconnection NOI, 9 FCC Rcd at 5459, 5466-69.
Footnote 12 A list of the parties filing comments and reply comments is contained in Appendix A. UTC, The Telecommunications Association, filed its reply comments one day late. UTC's motion to accept a late filed pleading is hereby granted.
Footnote 13 Interconnection NOI, 9 FCC Rcd at 5458.
Footnote 14 Id.
Footnote 15 Id. See, e.g., AMTA Comments at 14 and Reply Comments at 6-7; Bell Atlantic Comments at 15-17; Century Cellnet Reply Comments at 18 (mandated interconnection at best is premature, at worst is inimical to flexibility and responsiveness needed to meet evolving consumer needs); NABER Comments at 9-10; Nextel Comments at 18; Southern Comments at 4-5.
Footnote 17 Nextel Comments at 18-19. Accord NABER Comments at 9-10; OneComm Comments at 21.
Footnote 18 Southern Comments at 4.
Footnote 19 OneComm Comments at 21.
Footnote 20 CTIA Reply Comments at 13-14.
Footnote 21 NABER Comments at 10.
Footnote 22 New York DPS Comments at 6.
Footnote 23 See, e.g., AirTouch Comments at 22-23; Ameritech Comments at 4; Alltel Comments at 8; Bell Atlantic Comments at 15-17 and Reply comments at 13; Century Cellnet Reply Comments at 18; CTIA Comments at 26-28; GTE Comments at 46 and Reply Comments at 39; New Par Comments at 22; OneComm Comments at 21 and Reply Comments at 11; OPASTCO Comments at 5; Rochester Comments at 10 and Reply Comments at 10-11; SNET Mobility Comments at 13-14; Vanguard Comments at 22.
Footnote 24 Bell Atlantic Comments at 15-17; accord Ameritech Reply Comments at 5.
Footnote 25 Bell Atlantic Reply Comments at 13; accord Alltel Comments at 9.
Footnote 26 BellSouth Comments at 13; accord NYNEX Comments at 13-14.
Footnote 27 NYNEX Comments at 14 and Reply Comments at 8.
Footnote 28 PCIA Comments at 14-16.
Footnote 29 See, e.g., AirTouch Comments at 22-23; AT&T Reply Comments at 5; BellSouth Comments at 13-14; Comcast Comments at 17; CTIA Comments at 25-26 and Reply Comments at 12-14; NYNEX Comments at 13-14; SBC Comments at 66; Vanguard Comments at 22.
Footnote 30 See CTIA Comments at 25-26. See also RAM Comments at 6-7 (arguing that the Commission should impose interconnection obligation only on those carriers possessing market power).
Footnote 31 See, e.g., CTIA Comments at 25-26; GTE Comments at 46; McCaw Comments at 6.
Footnote 32 See CTIA Comments at 30-32.
Footnote 33 Comcast Comments at 17.
Footnote 34 See CTIA Comments at 26-27. See also Vanguard Comments at 22 (an interconnection obligation risks hampering new providers with regulatory costs when the Commission is in the process of structuring and stimulating a vibrant, competitive CMRS marketplace).
Footnote 35 See McCaw Comments at 9-10. See also RCA Comments at 10 (interconnection may be illogical with respect to networks that provide different capabilities, i.e., interconnection of voice and data services).
Footnote 36 Horizon Reply Comments at 7-8.
Footnote 37 See, e.g., AirTouch Comments at 22-23; CTIA Comments at 26-28. See also Ameritech Comments at 4 (until a real ``problem'' develops in this area, it would be premature for the Commission to adopt regulations that could skew marketplace decisions).
Footnote 38 See McCaw Comments at 9-10. See also SNET Comments at 14 (mandatory interconnection increases the risks faced by new and existing providers by allowing competitors to benefit from the providers' innovations without incurring the risks).
Footnote 39 CTIA Reply Comments at 14.
Footnote 40 AirTouch Comments at 22; CTIA Comments at 28-29; E.F. Johnson Comments at 7; McCaw Comments at 10-11; New Par Comments at 22-23; Nextel Comments at 18; SBC Comments at 66-67; SNET Comments at 13; Vanguard Comments at 22.
Footnote 41 CTIA Comments at 28.
Footnote 42 Id. at 28-29; SBC Comments at 66-67.
Footnote 43 McCaw Comments at 10 (citing Nelson Declaration at para. 3).
Footnote 44 NABER Comments at 9-10.
Footnote 45 E.F. Johnson Comments at 7.
Footnote 46 Id. at 10.
Footnote 47 Id. at 11 (claiming that Geotek's FHMA technology, Motorola's MIRS technology, RAM's Mobitex technology, and Ericsson/GE's EDACS technology are not compatible with one another). See also RAM Comments at 7 (interconnection obligations for narrowband services, including 900 MHz SMR services unwarranted).
Footnote 48 PageNet Comments at 10-11.
Footnote 49 Pacific Bell Comments at 16-18.
Footnote 50 CSI/ComTech Comments at 6 and Reply Comments at 3-4; MCI Reply Comments at 10.
Footnote 51 MCI Comments at 12; accord DCR Comments at 2 (interconnection should be an automatic right and obligation of all carriers offering service to the public).
Footnote 52 MCI Reply Comments at 10-11.
Footnote 53 GSA Comments at 7 and Reply Comments at 10-11 (such interconnection should be pursuant to interstate tariffs).
Footnote 54 Expanded Interconnection with Local Telephone Company Facilities, CC Docket No. 91-141, Report and Order and Notice of Proposed Rule Making, 7 FCC Rcd 7369 (1992) (Special Access Expanded Interconnection Order), recon., 8 FCC Rcd 127 (1992), vacated in part and remanded sub nom., Bell Atlantic v. FCC, No. 92-1619 (D.C. Cir., June 10, 1994); recon., 8 FCC Rcd 7341 (1993); on remand Memorandum Opinion and Order, 9 FCC Rcd 5154 (1994) (Virtual Collocation Order). According to NCRA, such benefits include increasing LEC incentives for efficiency and encouraging LECs to deploy new technologies facilitating innovative service offerings; making LECs more responsive to customers; increasing the choices available to access customers who value redundancy and route diversity; and increasing competition resulting in reduced prices for services available from both the LECs and alternative suppliers. NCRA Comments at 12, citing Special Access Expanded Interconnection Order, at para. 14.
Footnote 55 NCRA Comments at 13.
Footnote 56 NCRA Comments at 16-18.
Footnote 57 TRW Comments at 5-8.
Footnote 58 PCIA Comments at 16-18 and Reply Comments at 7-8; accord APC Comments at 6-7. But see Nextel Reply Comments at 14 (even guidelines are premature in light of industry's infancy).
Footnote 59 Both PCIA and APC advocate classification of CMRS providers as "dominant" and "non-dominant" for purposes of their proposed guidelines. PCIA suggests that in the event of a dispute under Section 201(b), the interconnection rates of non-dominant CMRS providers should be presumed just and reasonable; CMRS providers (if any) that are considered dominant would have the burden, if challenged, of producing evidence that their interconnection rates are just and reasonable. PCIA states that as with LEC/CMRS interconnection, this standard can be satisfied by cost-based rates, but non-cost based rates may also be just and reasonable based on other considerations, such as technical challenges or uncertain demand for particular interconnection arrangements. PCIA Comments at 17. APC goes further, and argues that PCS providers should be classified as non-dominant CMRS providers and their rates be presumed just and reasonable. APC argues that cellular providers, on the hand, should be classified as dominant CMRS providers and accordingly bear the burden of demonstrating, if challenged, that their rates are just and reasonable. APC Comments at 6.
Footnote 60 APC Comments at 6-7; PCIA Comments at 16-18.
Footnote 61 PCIA Comments at 18.
Footnote 62 See, e.g., H.R. Report No. 103-111, 103d Cong., 1st Sess. 261 (1993)(House Report)("The Committee considers the right to interconnect an important one which the Commission shall seek to promote, since interconnection serves to enhance competition and advance a seamless national network.")
Footnote 63 See Nextel Comments at 18-19.
Footnote 64 See Press Release No. 52905, "PCS Auction Update: FCC Receives Full $1.4 Billion Deposit," dated March 21, 1995.
Footnote 65 See, e.g, Nextel Comments at 19; Comcast Comments at 17; NY DPS Comments at 6.
Footnote 66 See NY DPS Comments at 6.
Footnote 67 See note 62, supra, (citing Budget Act legislative history); CMRS Second Report and Order, 9 FCC Rcd at 1419-22.
Footnote 68 See, e.g., In the Matter of Establishment of Policies and Procedures for Consideration of Application to Provide Specialized Common Carrier Services in the Domestic Public Point-to-Point Microwave Radio Service and Proposed Amendments to Parts 21, 43, and 61 of the Commission's Rules, 29 FCC 2d 870 (1971); The Need to Promote Competition and Efficient Use of the Spectrum for Radio Common Carrier Services, Memorandum Opinion and Order, 59 RR 2d 1275, 1283 (App. B)(1986); Declaratory Ruling, 2 FCC Rcd 2910 (1987), aff'd Memorandum Opinion and Order on Reconsideration, 4 FCC Rcd 2369 (1989).
Footnote 69 See Equal Access NPRM, 9 FCC Rcd at 5425. There, we tentatively employed the definition of market power used by the Justice Department: "the ability profitably to maintain prices above competitive levels for a significant period of time. . . ." Id. at 5425 n.86, citing United States Department of Justice, Federal Trade Commission, "Horizontal Merger Guidelines," (Apr. 2, 1992), at 4 & n.6 (explaining that "[s]ellers with market power also may lessen competition on dimensions other than price, such as product quality, service, or innovation").
Footnote 70
Section 332(c)(1)(A) of the Act mandates the common carrier
treatment of commercial radio mobile services. It states,
in pertinent part:
A person engaged in the provision of a service that is
a commercial mobile service shall, insofar as such person
is so engaged, be treated as a common carrier for purposes
of this Act, except for such provisions of title II as
the Commission may specify be regulation as inapplicable
to that service or person. In prescribing or amending
any such regulation, the Commission may not specify any
provision of section 201, 202, or 208 . . .
47 U.S.C. § 332(c)(1)(A).
Footnote 71 The first clause of Section 201(a) states: "It shall be the duty of every common carrier engaged in interstate or foreign communication by wire or radio to furnish such communication service upon reasonable request therefor . . . ." 47 U.S.C. § 201(a).
Footnote 72 Id.
Footnote 73
The Budget Act amended the Communications Act to provide,
pursuant to Section 332(c)(1)(B), that:
Upon request of any person providing commercial mobile
service, the Commission shall order a common carrier to
establish physical connections with such service pursuant
to the provisions of section 201 of this Act. Except to
the extent that the Commission is required to respond to
such a request, this subparagraph shall not be construed
as a limitation or expansion of the Commission's authority
to order interconnection pursuant to this Act.
47 U.S.C. § 332(c)(1)(B).
Footnote 74 See generally Equal Access NPRM, 9 FCC Rcd at 5424 (tentatively concluding that the public interest determination with respect to CMRS equal access should include both a market power analysis and analysis of whether equal access would promote these other policy goals), citing Mid-Texas Communications v. AT& T, 615 F.2d 1372, 1379 (5th Cir. 1980), reh'g denied, 618 F.2d 716, cert. denied, 459 U.S. 1145 (1981)(Commission considers a number of specific non-competition-related factors in determining public interest in interconnection cases); Phonetele, Inc. v. AT&T, 664 F.2d 716, 722 (9th Cir. 1981), cert. denied, __ U.S. __, 112 S.Ct 1283 (1992)(such factors include network safety and efficiency, the need of the public for reliable service at reasonable rates, the proper allocation of the rate burden, the financial integrity of the carriers, and the future needs of both users and carriers), citing, inter alia, Proposal for New or Revised Classes of Interstate and Foreign Message Toll Telephone (MTS) and Wide Area Telephone Service (WATS), Second Report and Order, 58 FCC 2d 736,740 (1976)(there is a pro-competitive policy embodied in the Federal Communications Act, although it is a corollary of the more basic policy of favoring customer utility and freedom of choice). See also Virtual Collocation Remand Order, 9 FCC Rcd at 5184 (in absence of any other identified public interest benefits in mandating reciprocity, Commission found no reason to impose expanded interconnection requirements on parties that lack market power and do not control bottleneck facilities) and CMRS Second Report, 9 FCC Rcd at 1417-22 (identifying public interest goals of commercial mobile radio service regulation.
Footnote 75 See S. Salop & D. Scheffman, "Raising Rivals' Costs," AEA Papers and Proceedings, May 1983, at 267-271; T. Krattenmaker & S. Salop "Anticompetitive Exclusion: Raising Rivals' Costs to Achieve Power Over Price," 96 Yale L.J. 209 (1986).
Footnote 76 See Interconnection NOI, 9 FCC Rcd at 5468, stating: "In particular, if we decide not to impose interconnection obligations on some or all CMRS providers, should we preempt any state from imposing such obligations?" Although we received comments from some parties in response to this question in the Interconnection NOI, we seek additional comment in light of the discussion contained herein.
Footnote 77 Interconnection NOI, 9 FCC Rcd at 5464-465. The cellular databases are a Home Location Register (HLR) and a Visited Location Register (VLR). The HLR is owned by the service provider through which the customer has a subscription, and contains the customer's permanent database record. The HLR includes various sorts of proprietary customer information including mobile carrier number, electronic serial number, features which the customer has opted to purchase from the mobile system provider, the customer's pre-subscribed interexchange carrier (if required), whether the customer will accept or pay for out-of-territory calls and other information. The VLR contains similar information for customers roaming in to a foreign provider's territory. The VLR is used to keep a temporary copy of a customer's database record in the switch serving the customer at any moment and at any place.
Footnote 78 APC Comments at 6-7 and Reply Comments at 5.
Footnote 79 See Ex Parte Letter in CC Docket No. 94-54, from K. A. Wimmer, American Personal Communications, (Jan. 27, 1995).
Footnote 80 Southern Comments at 4-6.
Footnote 81 NABER Comments at 11.
Footnote 82 BellSouth Comments at 16.
Footnote 83 BellSouth Comments at 16-17; see also Pacific Comments at 11 (favoring queries via SS7 network between CMRS databases for information that permits call routing, but not unlimited IXC access to CMRS databases).
Footnote 84 Recently, various cellular providers and independent "signaling backbone" network providers have begun to implement a ubiquitous, seamless roaming infrastructure utilizing out-of-band Signaling System Number 7 (SS7), an American National Standards Institute (ANSI) standard that specifies how data messages are packaged and then transported from one point on the network to another. Several CMRS carriers, and a least one independent network provider, have established signaling networks for the transport of IS-41 data messages for cellular call set-up, routing and customer service purposes. IS-41 is an industry standard adopted by the cellular industry that defines a protocol to enable switches of various types to communicate with each other. Seamless roaming is currently available only on cellular analog networks, because such roaming requires a common air interface. Seamless roaming enables roaming customers to make and receive calls without taking any action other than turning on their mobile phones and placing outgoing or receiving incoming calls. We have been told that similar networks are being established to provide roaming for PCS subscribers on other PCS systems, although it is unclear what the common air interface for PCS roaming can be, other than the analog cellular Advanced Mobile Phone Service (AMPS) standard.
Footnote 85 Southwestern Bell Comments at 61-62.
Footnote 86 Ameritech Reply Comments at 5.
Footnote 87 Pacific Bell Comments at 19-20.
Footnote 88 See Ex Parte Letter in CC Docket No. 94-54, from G. Harrison, Director, Federal Regulatory Relations, Pacific Telesis (Feb. 28, 1995).
Footnote 89 CSI\ComTech Comments, Attachment 1, Widmar Testimony at 5-6.
Footnote 90 See Ex Parte Letter in CC Docket No. 94-54, from A. D. Williams, CTIA (Feb. 9, 1995), referring to Ex Parte meeting on Feb. 9, 1995, between CTIA and Commission staff.
Footnote 91 See Resale and Shared Use of Common Carrier Services and Facilities, 60 FCC 2d 261, 263 (1976) (Resale and Shared Use Decision), reconsideration, 62 FCC 2d 588 (1977), aff'd sub nom. AT&T v. FCC, 572 F.2d 17 (2d Cir.), cert. denied, 439 U.S. 875 (1978).
Footnote 92 Resale and Shared Use Decision, 60 FCC 2d at 282-84.
Footnote 93
Section 201(b) of the Act provides that:
All charges, practices, classifications, and regulations for and in connection with such communication service, shall be just and reasonable, and any such charge, practice, classification or regulation that is unjust or unreasonable is hereby declared to be unlawful . . .
Footnote 94 Resale and Shared Use Decision, 60 FCC 2d at 283, 321.
Footnote 95
Section 202(a) makes it unlawful:
for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service . . . .
Footnote 96 Resale and Shared Use Decision, 60 FCC 2d at 281, 282-84, 321.
Footnote 97 Resale and Shared Use of Common Carrier Domestic Public Switched Network Services, 83 FCC 2d 167 (1980) (Resale of Switched Services); recon. denied, 86 FCC 2d 820 (1981).
Footnote 98 Id. at 193.
Footnote 99 Id. at 172.
Footnote 100 Cellular Communications Systems, 86 FCC 2d 469, 511, 642 (1981) (Cellular Order), modified, 89 FCC 2d 58 (1982), further modified, 90 FCC 2d 571 (1982), appeal dismissed sub nom. United States v. FCC, No. 82-1526 (D.C. Cir. Mar. 3, 1983).
Footnote 101 Cellular Order, 86 FCC 2d at 482.
Footnote 102 Id. at 483, 490 n.56. The other block was reserved for the use of the non-wireline carriers.
Footnote 103 Id. at 511, 642.
Footnote 104 See Petitions for Rule Making Concerning Proposed Changes to the Commission's Cellular Resale Policies, Notice of Proposed Rule Making and Order, CC Docket No. 91-33, 6 FCC Rcd 1719, 1724 (1991) (Cellular Resale NPRM and Order); Petitions for Rule Making Concerning Proposed Changes to the Commission's Cellular Resale Policies, Report and Order, CC Docket No. 91-33, 7 FCC Rcd 4006, 4008 (1992) (Cellular Resale Order), aff'd sub nom Cellnet Communications v. F.C.C., 965 F.2d 1106 (D.C. Cir. 1992).
Footnote 105 Cellular Resale Order, 7 FCC Rcd at 4008.
Footnote 106 Id. at 4007-08. This rule originally was codified in Section 22.914 of the Commission's Rules, 47 C.F.R. § 22.914. Id. at 4011.
Footnote 107 Id. When the Commission established the wireline frequency set aside and filing requirements, it indicated that there was a possibility that wireline carriers would have an unfair ``headstart'' over non-wireline carriers in the introduction of cellular service to the public. Id. at 4007 n.13. In the cellular context, the term ``headstart'' generally refers to any potential competitive advantage that may be gained by one cellular carrier because it is granted a construction permit and begins providing service over its own facilities prior to its competitor providing service. See id. at 4007. See also Cellular Resale NPRM and Order, 6 FCC Rcd at 1721.
Footnote 108
See Id. at 4009. The Commission recently revised Part
22 of its rules, moving the cellular resale requirement
to Section 22.901 of its rules, 47 C.F.R. § 22.901 (1994).
See Revision of Part 22 of the Commission's Rules Governing
the Public Mobile Services, CC Docket No. 92-115, Amendment
of Part 22 of the Commission's Rules to Delete Section
22.119 and Permit the Concurrent Use of Transmitters in
Common Carrier and Non-Common Carrier Service, CC Docket
No. 94-46, RM 8367, Amendment of Part 22 of the Commission's
Rules Pertaining to Power Limits for Paging Stations Operating
in the 931 MHz Band in the Public Land Mobile Service,
9 FCC Rcd 6513, 6571, 6660 (1994). The text of the rule
reads as follows:
Provision of resale capacity. Each cellular systems licensee
must permit unrestricted resale of its service, except
that a licensee may apply resale restrictions to licensees
of cellular systems on the other channel block in its market
after the five year build-out period for licensees on the
other channel block has expired.
Footnote 109 Interconnection NOI, 9 FCC Rcd at 5466.
Footnote 110 Id. Id. at 5467.
Footnote 112 Id. at 5467, para. 141 & n. 256, citing Resale and Shared Use Decision, 60 FCC 2d at 283; Hush-a-Phone Corp. v. U.S., 238 F.2d 266 (D.C. Cir. 1956).
Footnote 113 Allnet Comments at 7; Ameritech Reply Comments at 6; APC Comments at 8 (should include appropriate restrictions so that CMRS providers do not abuse resale opportunities to avoid building out their systems); Bell Atlantic Comments at 16; BellSouth Comments at 18, 22-23 (also impose on CMRS resellers); CTIA Comments at 35; GSA Comments at 7; LDDS Comments at 21-22; McCaw Comments at 21; MCI Comments at 13; NYNEX Reply Comments at 8; PCIA Comments at 18-19; Rochester Comments at 12-13; SBC Comments at 54-55.
Footnote 114 Bell Atlantic Comments at 17-18; SBC Comments at 54-55.
Footnote 115 McCaw Comments at 21.
Footnote 116 See Allnet Comments at 7 (may need to consider stronger measures in the future to protect resale); MCI Comments at 13. See also LDDS Comments at 21.
Footnote 117 LDDS Reply Comments at 14.
Footnote 118 Ameritech Reply Comments at 6; AT&T Comments at 14; Bell Atlantic Comments at 18; CTIA Comments at 35; McCaw Comments at 21; New Par Reply Comments at 8; NYNEX Reply Comments at 8; SBC Comments at 55-56; SNET Comments at 15.
Footnote 119 Bell Atlantic Comments at 16-18.
Footnote 120 See CTIA Comments at 34-35 citing H.R. Rep. No. 103-111, 103d Cong., 1st Sess. 259 (1993). See also CTIA Reply Comments at 15-16.
Footnote 121 CTIA Comments at 34-35; Bell Atlantic Comments at 16-18; PCIA Comments at 19 (as long as cellular providers remain subject to resale obligations, regulatory parity demands that all providers of substantially similar services be treated consistently); SBC Comments at 55.
Footnote 122 BellSouth Comments at 22-23. For further discussion of facilities-based resale see paras. 68-73, infra.
Footnote 123 AT&T Reply Comments at 15.
Footnote 124 AT&T Comments at 14. AT&T contends that if there are particular areas within the CMRS market where resale could be effective, competitive market forces will ensure that resale opportunities are made available. AT&T notes that it is skeptical of the link between the existence of resale and the stimulation of competition and claims that in the rapidly expanding CMRS market there will probably be enough direct competition that resale will be unnecessary and uneconomical. Id. ALLTEL Comments at 9; AMTA Comments at 14-15; Comcast Reply Comments at 25-26; Nextel Comments at 19-20; OneComm Comments at 21 (premature to impose general resale requirements).
Footnote 126 ALLTEL Comments at 9; AMTA Comments at 14-15.
Footnote 127 ALLTEL Comments at 9.
Footnote 128 Nextel Reply Comments at 15.
Footnote 129 Nextel Comments at 19-20, Reply Comments at 15.
Footnote 130 E.F. Johnson Comments at 8; GTE Comments at 48-49 (not on air-to-ground service); NABER Comments at 9 (not on SMR systems); PageNet Comments at 12-13 (not on paging).
Footnote 131 PageNet Comments at 12-13.
Footnote 132 Id. at 12.
Footnote 133 See E.F. Johnson Comments at 8. See also GTE Comments at 48-49; NABER Comments at 9. See also PCIA Comments at 18-19 (no compelling reason to exempt broadband providers from the resale obligation).
Footnote 134 NABER Comments at 11-12, Reply at 2-3; OneComm Comments at 21, Reply Comments at 10-11.
Footnote 135 NABER Comments at 11-12, Reply at 2-3.
Footnote 136 GTE Comments at 49-50.
Footnote 137 Id. at 51.
Footnote 138 Id. at 50.
Footnote 139 AT&T Reply Comments at 15.
Footnote 140 Bell Atlantic Reply Comments at 15.
Footnote 141 Allnet Reply Comments at 10-11.
Footnote 142 CTIA Comments at 35.
Footnote 143 Pacific Bell Reply Comments at 14-15.
Footnote 144 See GSA Comments at 7, Reply Comments at 11-12; NCRA Comments at 21. See also Ameritech Reply Comments at 6; McCaw Comments at 21
Footnote 145 APC Comments at 8.
Footnote 146 Ameritech Reply Comments at 6; Bell Atlantic Comments at 17-18.
Footnote 147 See McCaw Comments at 22; AT&T Reply Comments at 15.
Footnote 148 See Pacific Bell Comments at 25-27. See also BellSouth Comments at 23-24 (encouraging stricter limitation of resale to facilities-based competitors); New Par Reply Comments at 8-9 (12-month limit); Rochester Comments at 12-13 (not for a lengthy period of time).
Footnote 149 See Pacific Bell Comments at 28. See also Ex Parte Letter in CC Docket No. 94-54, from G. Harrison, Director, Federal Regulatory Relations, Pacific Telesis, (Feb. 2, 1995), Attached Letters.
Footnote 150 SBC Comments at 58-59; RCA Comments at 11.
Footnote 151 SBC Comments at 59-60.
Footnote 152 Id. at 59.
Footnote 153 Pacific Bell Comments at 24-26.
Footnote 154 APC Comments at 8.
Footnote 155 PCIA Comments at 19.
Footnote 156 BellSouth Reply Comments at 5.
Footnote 157 AT&T Reply Comments at 15.
Footnote 158 WilTel Comments at 2, n.2.
Footnote 159 Implementation of Sections 3(n) and 332 of the Communications Act, Regulatory Treatment of Mobile Services, GN Docket No. 93-252, Amendment of Part 90 of the Commission's Rules to Facilitate Future Development of SMR Systems in the 800 MHz Frequency Band, PR Docket No. 93-144, Amendment of Parts 2 and 90 of the Commission's Rules to Provide for the Use of 200 Channels Outside the Designated Filing Areas in the 896-901 MHz and 935-940 MHz Band Allotted to the Specialized Mobile Radio Pool, PR Docket No. 89-553, Third Report and Order, 9 FCC Rcd 7988 (1994) (CMRS Third Report and Order).
Footnote 160 NABER Reply Comments at 5.
Footnote 161 See NCRA Comments at 2, 20; CSI/ComTech Comments at 3-4. See also California PUC Comments at 4. NCRA also proposes to maintain their own customer records and be responsible for the intercept of both the land-to-mobile and mobile-to-land calls of their mobile customers and may also provide a variety of enhanced services to their customers. NCRA Comments at Appendix A. In order to implement the switch effectively, NCRA claims that the resellers would need carriers to identify the following service charges: (1) per minute charges for airtime, mobile handoff, cell site backhaul; (2) a monthly line termination charge for each T-1 channel terminating at the MTSO; (3) any non-recurring charge(s) associated with establishing service according to this format. Id.
Footnote 162 NCRA Comments at 2-4, 9-16; CSI/ComTech Comments at 5-9.
Footnote 163 CSI/ComTech Comments at 6 citing AT&T, 60 FCC 2d 939 (1976).
Footnote 164 NCRA Comments at 8-9.
Footnote 165 California PUC Comments at 4.
Footnote 166 AirTouch Comments at 24-26; BellSouth Comments at 18; Comcast Comments at 17-18; GTE Comments at 46; McCaw Comments at 14-16; RCA Comments at 10-11.
Footnote 167 See, e.g., AirTouch Comments at 24-26, Reply Comments at 3-12; BellSouth Comments at 18; Comcast Comments at 17-18, Reply Comments at 24-26; GTE Comments at 46; McCaw Comments at 14-16; RCA Comments at 10-11.
Footnote 168 AirTouch Comments at 24-26, Reply Comments at 6-8; BellSouth Comments at 18; Comcast Comments at 17-18; McCaw Comments at 14-16 (unbundling not required to promote retail competition).
Footnote 169 GTE Comments at 46-47.
Footnote 170 NCRA Reply Comments at 6-7.
Footnote 171 CSI/ComTech Reply at 1-4.
Footnote 172 BellSouth Comments at 25, Reply Comments at 5-6.
Footnote 173 Since the filing of BellSouth's Comments, Part 22 was amended. Consequently, the rule section to which BellSouth refers is now found in Section 22.903 of the Commission's Rules, 47 C.F.R. § 22.903.
Footnote 174 BellSouth Comments at 25.
Footnote 175 Id. at 26. BellSouth recently submitted an ex parte letter detailing certain regulatory changes in the State of Georgia. See Ex Parte Letter in CC Docket No. 94-54, from W. Barfield, Associate General Counsel, BellSouth Corporation, (Mar. 27, 1995).
Footnote 176 Ameritech Reply Comments at 6-7; Bell Atlantic Reply Comments at 15-16; NYNEX Reply Comments at 8-9; SBC Reply Comments at 13 n.34.
Footnote 177 See paragraph 87, infra.
Footnote 178 See, e.g., Resale and Shared Use Decision, 60 FCC 2d 261 (1976); Resale of Switched Services, 83 FCC 2d 167 (1980); Cellular Order, 86 FCC 2d 469, 511, 642 (1981); Cellular Resale Order, 7 FCC Rcd 4006 (1992). See also notes 91, 97, 100 and 104, supra.
Footnote 179 See Section 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. § 303(r). See also WBEN, Inc. v. FCC, 396 F.2d 601, 618 (2d Cir.), cert. denied, 393 U.S. 914 (1968); Upjohn, Inc. v. FDA, 811 F.2d 1583, 1585 (D.C. Cir. 1987).
Footnote 180 See Cellular Resale NPRM and Order, 6 FCC Rcd at 1724-25.
Footnote 181 47 U.S.C. § 202(a).
Footnote 182 See Amendment of the Commission's Rules To Preempt State and Local Regulation of Tower Siting For Commercial Mobile Radio Service Providers, Cellular Telecommunications Industry Association's Petition for Rulemaking, RM 8577, Public Notice, Report No. 2052 (rel. Jan. 18, 1995).
Footnote 183 Cellular Resale Order, 7 FCC Rcd at 4009-10.
Footnote 184 See Allnet Reply Comments at 10-11.
Footnote 185 See, e.g., Bell Atlantic Comments at 17-18 (no resale to facilities-based competitors after five years); BellSouth Comments at 23-24 (encouraging stricter limitation of resale to facilities-based competitors); McCaw Comments at 22 (18-month limit); New Par Reply Comments at 8-9 (12-month limit); Pacific Comments at 25-27 (should not require resale of PCS among licensees serving the same territory, but should allow PCS resale of cellular service for 10 years).
Footnote 186 See Cellular Resale Order, 7 FCC Rcd at 4009 (five-year period is appropriate termination point for resale obligation because the Commission provided flexibility to cellular carriers to construct their systems for five years). See also Section 22.947 of the Commission's Rules, 22 C.F.R. § 22.947 (1994). PCS, however, has a 10-year build-out requirement and does not use the concept of a carrier-defined service area, such as a Cellular Geographic Service Area. See Sections 24.103 and 24.203 of the Commission's Rules, 24 C.F.R. § 103 (narrowband PCS); 24 C.F.R. § 203 (broadband PCS) (1994).
Footnote 187 See 47 C.F.R. § 22.901(e).
Footnote 188 CMRS Third Report and Order, 9 FCC Rcd at 7996, 8009-12.
Footnote 189 Id. at 8011.
Footnote 190 See, e.g., Note 149, supra.
Footnote 191 See Amendment of Part 22 of the Commission's Rules Relative to the Domestic Public Cellular Radio Telecommunications Service, CC Docket No. 85-25, 59 Rad. Reg. 2d 209, 212 (1985). See also Cincinnati SMSA Limited Partnership, Memorandum Opinion and Order, Mimeo No. 4124 (Com.Car. Bur., released April 30, 1985) (finding that where ``the wireline carrier is able to accommodate a request for a separate, transferable number block by a non-wireline permittee or applicant wishing to resell during the headstart period, the public interest requires it to negotiate with the non-wireline party in good faith to make such arrangements available''); Tucson Cellular Telephone Company v. Tucell Limited Partnership, Memorandum Opinion and Order, 1986 WL 291347 (Com.Car.Bur., released Feb. 18, 1986).
Footnote 192 Number portability issues are important in wireline as well as wireless settings. Whether to adopt rules governing number transferability for cellular resellers may be determined in the instant proceeding or, alternatively, in a more general proceeding on number portability that has yet to be initiated.
Footnote 193 See NCRA Comments, passim, and Reply Comments, passim; CSI/Comtech Comments, passim, and Reply Comments, passim.
Footnote 194 The relevant product market here may differ from the relevant product market for general CMRS interconnection because resellers advocating the reseller switch proposal focus on mobile voice services. In this case, the resellers' universe of suppliers is therefore limited to the wireless voice facilities-based providers and the market should not include wireline facilities to the extent they do not currently provide significant direct competition for wireless services.
Footnote 195 See, e.g., AirTouch Comments at 24-26, Reply Comments at 3-12; McCaw Comments at 14-16.
Footnote 196 See, e.g., NCRA Comments at 16-18; CSI/ComTech Comments at Exh. 2, pp. 5-9, Reply Comments at 3-4.
Footnote 197 See Cellnet Communications, Inc. v. New Par, Inc., d/b/a Cellular One, File No. WB/ENF-F-ENF-95-010, filed Feb. 16, 1995; Nationwide Cellular Service, Inc. v. Comcast Cellular Communications, Inc., File No. WB/ENF-F-ENF-95-011, filed Feb. 16, 1995.
Footnote 198 See Section III. A. 1. c., supra.
Footnote 199 See generally, Section 1.1206(a) of the Commission's Rules, 47 C.F.R. § 1.1206(a).