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July 31, 2000

SEPARATE STATEMENT OF COMMISSIONER SUSAN NESS

Re: In the Matter of Amendments to Parts 1, 2, 87, and 101 of the Commission's Rules to License Fixed Services at 24 GHz, WT Docket No. 99-327.

I support our decision today making available spectrum in the 24 GHz band for fixed wireless service. We have attempted to promulgate flexible rules that will permit fixed wireless service providers using this spectrum to compete aggressively with fixed wireless providers using other spectrum and other technologies to provide broadband data and voice services to consumers on a local and nationwide basis.

In this order, we license the 24 GHz band on the basis of 172 Economic Areas ("EAs"), with additional areas covering the United States' territories and possessions. In adopting EAs, we choose a service area size that balances the needs of national service providers and the needs of smaller, regional providers. In addition, since we also used EAs for fixed wireless services in the 39 GHz band, the use of EAs here will apply a consistent licensing scheme providing for fair competition between services in each band.

While I support this decision, I am troubled about the difficulties that rural carriers face in obtaining spectrum to provide fixed wireless services to their communities. A review of the issues raised in this proceeding, and in other contexts, indicates that our current policies may not maximize the potential of wireless technology to serve rural areas. While it may not be appropriate to address these issues in this proceeding, I believe that we need to undertake a more comprehensive review of the ways in which we can encourage the more rapid build-out of rural wireless systems. There are at least three areas of relevant inquiry:

Service Areas of License. We need to evaluate our trend to use larger service areas in our licensing processes. Auction of larger service areas limits the ability of smaller providers with rural strategies to obtain spectrum. While the theory behind our partitioning and disaggregation rules (1)

would suggest that rural carriers could obtain access to spectrum, there is evidence that in practice this has not happened. (2) We should determine whether our use of larger service areas promotes or inhibits the development of service in rural areas, and whether we can adjust our policies to provide greater incentives for the deployment service in rural areas if we license spectrum using large service areas.

Substantial Service Requirement. We have adopted a "substantial service" option in the construction and coverage requirements for various spectrum licensees. (3)

This standard is intentionally flexible. The vagueness of the current standard, however, may inhibit the deployment of wireless service to rural areas. We must examine whether licensees satisfying their construction requirements by providing "substantial service" provide service to rural areas, or whether they rely on service in more densely populated areas to justify a claim that they substantially serve their entire licensed area.

Intermountain Microwave Test. Under Section 310(d) of the Communications Act, a licensee cannot relinquish or transfer "control" of a wireless license without Commission approval. The factors the Commission uses to determine the locus of de facto control were set forth in Intermountain Microwave, decided more than thirty-five years ago. (4)

The indicia of control in that case were developed in the context of a "mom-and-pop" owner of a stand-alone microwave system. Modern wireless systems and providers, to put it mildly, are often organized quite differently, making the test less useful.

I think it is time we revisited the Intermountain Microwave test for de facto control, at least as it is applied in the context of Section 310(d). The modern realities of financing and operating telecommunications systems using wireless technology argue for adoption of a test that would permit licensees to extend service throughout their service area by permitting other operators to use spectrum without formal partitioning or disaggregation. We should consider whether and how we could adopt such an approach, and whether it would further speed deployment of wireless services into rural areas. (5)


1    47 C.F.R. 101.535.

2    In particular, as indicated by NTCA, rural telephone companies may not be successful in obtaining partitioned areas because licensees are generally able to meet our performance requirements by only serving urban areas. See Report and Order, Amendments to Parts 1, 2, 87 and 101 of the Commission's Rules To License Fixed Services at 24 GHz, WT Docket No. 99-327, at 17.

3    See e.g., Second Report and Order and Second Further Notice of Proposed Rulemaking, Amendment of the Commission's Rules to Establish New Personal Communications Services, Narrowband PCS, GEN Docket No. 90-314, ET Docket No. 92-100 (rel. May 18, 2000); Fourth Report and Order, Rule Making to Amend Parts 1, 2, 21 and 25 of the Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band, To Reallocate the 29.5-30.0 GHz Frequency Band, To Establish Rules and Policies for Local Multipoint Distribution Service and for Fixed Satellite Services, 13 FCC Rcd 11655 (1998).

4    12 F.C.C.2d. 559 (1963) (Intermountain Microwave). The factors in Intermountain Microwave are:

(1) Does the licensee have unfettered use of all facilities?
(2) Who controls daily operations?
(3) Who determines and carries out the policy decisions, including preparing and filing applications with the Commission?
(4) Who is in charge of employment, supervision, and dismissal of personnel?
(5) Who is in charge of the payment of financing obligations, including expenses arising out of operation?
(6) Who receives monies and profits from the operation of the facilities?

See also Ellis Thompson Corporation, 10 FCC Rcd 12554 (1995) (Ellis Thompson); Baker Creek Communications, L.P., 13 FCC Rcd 18709 (1998).

5    While we have applied the Intermountain factors and permitted licensees to enter into "turn-key" management agreements under which third parties construct and operate communications systems, we require the licensees to engage in certain actions that may needlessly inhibit service to the public to avoid an unauthorized transfer of control. See generally, Ellis Thompson, supra note 4; Miller Communications, Inc., 3 FCC Rcd 6477 (Mob. Serv. Div 1987); Jacksonville Cellular Telephone Corp., 2 FCC Rcd 6416 (Mob. Serv. Div. 1987), aff'd, 3 FCC Rcd 5386 (1988).