[Federal Register Volume 69, Number 63 (Thursday, April 1, 2004)]
[Rules and Regulations]
[Pages 17063-17070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-6822]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 22 and 24
[WT Docket No. 01-108; FCC 04-22]
Public Mobile Services and Personal Communications Services
AGENCY: Federal Communications Commission.
ACTION: Final rule; petition for reconsideration.
-----------------------------------------------------------------------
SUMMARY: In this document, the Commission affirms the decision to
establish a five-year sunset period for the removal of the Commission's
requirement that cellular carriers provide analog service. The
Commission also affirms the decision to remove the rule section
governing electronic serial numbers (ESNs) in cellular telephones, but
clarifies that the fraudulent and unauthorized use of ESNs remains
contrary to federal law and Commission policy. Further, the Commission
reconsiders and adopts a proposal to permit, in certain circumstances,
cellular carriers to extend into neighboring unserved areas without
prior Commission approval. The Commission also declines a request to
further modify its rules regarding emissions limitations.
DATES: Effective June 1, 2004, except for a provision in the preamble
this document permitting cellular carriers to extend into unserved
areas of less than fifty square miles on a secondary basis, that is not
effective until approved by the Office of Management and Budget (OMB)
because it modifies information collection requirements. The agency
will publish a document in the Federal Register announcing the
effective date of the modified information collection.
FOR FURTHER INFORMATION CONTACT: Roger Noel or Linda Chang, Wireless
Telecommunications Bureau, at (202) 418-0620.
SUPPLEMENTARY INFORMATION: This is a summary of the Federal
Communications Commission's Order on Reconsideration, FCC 04-22,
adopted February 4, 2004, and released February 12, 2004. The full text
of the Order on Reconsideration is available for public inspection
during regular business hours at the FCC Reference Information Center,
445 12th St., SW., Room CY-A257, Washington, DC 20554. The complete
text may be purchased from the Commission's duplicating contractor:
Qualex International, 445 12th Street, SW., Room CY-B402, Washington,
DC, 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-
mail at [email protected].
Synopsis of Report and Order
I. Background
1. As part of its Year 2000 Biennial Review of regulations, the
Commission issued a Report and Order, 67 FR 77175, December 17, 2002,
in which it amended part 22 of its rules by modifying or eliminating
various regulations relating to the Cellular Radiotelephone Service
that became outdated due to technological change, increased competition
in the Commercial Mobile Radio Services (CMRS), or supervening rules.
Pursuant to section 11 of the Communications Act of 1934, as amended
(Act), see 47 U.S.C. 161, the Commission re-examined its cellular rules
in order to determine whether any of the rules are no longer necessary
in the public interest as a result of the technological advances and
growth in competition that have occurred in mobile telephony since the
rules were first promulgated. As a result of this review, the
Commission made several changes to its cellular rules, including:
Modifying its rules to eliminate, after a five-year transition period,
the requirement that carriers provide analog service compatible with
Advanced Mobile Phone Service (AMPS) specifications; removing the
manufacturing requirements found in Sec. 22.919 governing electronic
serial numbers in cellular telephones, and; modifying language in
Sec. Sec. 22.917 and 24.238 regarding out-of-band emission limits. The
Commission also addressed a number of other part 22 issues raised by
commenters, such as various proposals seeking to overhaul its cellular
unserved area licensing framework.
2. In response to the Report and Order, petitions for
reconsideration were filed by AT&T Wireless Services (AWS), the
Cellular Telephone and Internet Association (CTIA), and Dobson
Communications Corporation (Dobson). Further, Lucent Technologies
(Lucent) submitted comments in response to a Public Notice seeking
comment regarding the 2002 Biennial Regulatory Review proceeding which
were incorporated into this proceeding.
II. Discussion
A. The Commission Did Not Err in Establishing a Five-Year Sunset Period
for the Analog Requirement
3. Background. Since the establishment of the Cellular
Radiotelephone Service in the early 1980s, all cellular carriers have
been required to provide service in accordance with the compatibility
standard for analog systems, known as
[[Page 17064]]
AMPS. The Commission mandated AMPS compatibility in order to accomplish
two goals: (i) To enable subscribers of one cellular system to be able
to use their existing terminal equipment (i.e. mobile handset) in a
cellular market in a different part of the country (roaming); and (ii)
to facilitate competition by eliminating the need for cellular
consumers to acquire different handset equipment in order to switch
between the two competing carriers within the consumers' home market
(thereby ensuring reasonable consumer costs). Pursuant to Sec. 22.901,
a carrier was required to provide service to any subscriber within the
carrier's cellular geographic service area (CGSA), including both the
carrier's subscribers and roaming customers that are using technically
compatible equipment.
4. In the Report and Order, the Commission concluded that, in light
of the present competitive state of mobile telephony, the nationwide
coverage achieved by cellular carriers, and the market demand for
nationwide, ubiquitous coverage by carriers, the analog requirement has
substantially achieved its purpose of ensuring that the public has
access to low-cost, compatible equipment and to nationwide roaming. The
Commission found that the objectives of the analog requirement can now
largely be accomplished by market forces without the need for
regulation, and therefore determined that the analog requirement should
be removed. The Commission, however, found that eliminating the analog
requirement immediately without a reasonable transition period would be
extremely disruptive to certain consumers, particularly those with
hearing disabilities as well as emergency-only consumers, who currently
continue to rely on the availability of analog service and lack digital
alternatives. Recognizing that telecommunications technology has become
an essential part of everyday life, and that those without ready access
are at a disadvantage with respect to both daily routine or emergency
services, the Commission determined that it is in the public interest
to establish a transition period during which time the wireless
industry could develop solutions for hearing aid-compatibility issues
and phones used by emergency-only callers can cycle from analog to
digital.
5. AWS asserts that the Commission has not adequately met its
burden to demonstrate that the analog rule remains ``necessary in the
public interest'' for five additional years, either for the original
purposes of the rule or in order to ensure that certain consumers have
access to wireless telephony. AWS argues that section 11 of the Act
mandates that once the Commission has made the determination that a
rule is no longer necessary as a result of meaningful economic
competition, the Commission must repeal the rule. AWS maintains that it
was improper for the Commission to use concerns regarding access by
persons with hearing disabilities and emergency-only consumers in
deciding whether to retain the rule because the Commission may only
consider the original purposes for which the rule was adopted.
6. Discussion. In the Report and Order, the Commission concluded
that the decision to defer the removal of the analog requirement in
order to avoid causing significant hardship to certain consumers fully
comports with its obligations under section 11 of the Act. The
Commission continues to conclude that the effects of an immediate
elimination of the analog requirement would have an inordinate impact
with respect to current analog consumers, particularly persons with
hearing disabilities and emergency-only users. The Commission affirms
the conclusion that the five-year transition period is appropriate to
ensure that persons with hearing disabilities and emergency-only
consumers continue to have access to wireless devices, and it believes
that the transition period is essential in ensuring a smooth migration
from analog to digital technology.
1. The Commission's Decision To Implement a Five-Year Sunset of the
Analog Requirement Is Consistent With the Original Purposes of the Rule
7. AWS argues that the analog requirement must be eliminated
because it no longer serves its original purpose, and that under the
Commission's own interpretation of section 11, the Commission may only
consider the purposes for which the rule was adopted in deciding
whether to retain a regulation. It is argued that, because the
Commission found that the analog requirement has achieved its purpose
of ensuring that the public has access to low-cost, compatible
equipment and to nationwide roaming, the rule is no longer necessary
and must be removed.
8. As noted, the Commission found that the original goals of
ensuring reasonable consumer costs and seamless, nationwide service
(i.e., roaming) have been substantially achieved for most consumers.
The Commission emphasized, however, that despite the multiple wireless
technologies and services that are currently available, there are
certain individuals, specifically emergency-only users and persons with
hearing disabilities, who may not have readily available and accessible
economic or technological alternatives to analog service. The
Commission found that such consumers do not currently have adequate
digital alternatives and would be unduly affected by the immediate
elimination of the analog requirement. In so doing, the Commission
recognized the reality that there is currently little or no meaningful
economic competition to such consumers. The analog requirement is still
necessary, at least in the near term, to ensure that emergency-only
consumers and persons with hearing disabilities continue to have access
to wireless telephony, and, accordingly, the decision to implement a
sunset period is consistent with the original purposes of the rule.
2. The Commission Is Not Limited to the Original Purpose of a Rule in
Determining Whether It Remains Necessary
9. Although the Commission's basis for establishing a five-year
transition period is consistent with the original purposes of the
analog requirement, the Commission notes that it would nonetheless be
permissible to retain the analog requirement for other reasons if it
concludes that it is in the public interest to do so. AWS is correct
that the Report and Order stated that, in reviewing a regulation, the
Commission must evaluate whether the concerns that led to the rule or
the rule's original purpose may be achieved without the rule or with a
modified rule. The Commission, however, did not conclude that it may
only look to the original purposes of the rule to determine whether it
remains necessary in the public interest. Instead, the Report and Order
itself noted that the Commission is not limited to the original
purposes of the analog requirement in determining whether the
requirement remained necessary. The U.S. District Court of Appeals for
the DC Circuit has found that nothing in the language of section 202(h)
of the Telecommunications Act of 1996, Public Law 104-104, 110 Stat.
56, indicates that the Commission is limited to the purposes for which
the rule was adopted when determining whether or not it remains
necessary. Similarly, there is no language in section 11 which suggests
that the Commission is limited to the original purpose behind a rule in
determining whether or not it should be retained. Indeed, it is
unreasonable to interpret section 11 as requiring that a rule must be
repealed if it has accomplished its original goals but yet remains
necessary
[[Page 17065]]
with respect to another purpose. There is nothing in the text of
section 11 or its legislative history that suggests that this is the
appropriate standard for a biennial review.
3. Sections 255 and 332 of the Act Do Not Preclude the Commission From
Finding That the Analog Requirement Remains Necessary
10. Section 255 of the Communications Act provides that
manufacturers and telecommunications services providers must ensure
that telecommunications equipment and telecommunications services are
accessible to persons with disabilities. See 47 U.S.C. 255(c).
Specifically, section 255(c) of the Act requires that ``[a] provider of
telecommunications service shall ensure that the service is accessible
to and usable by individuals with disabilities, if readily
achievable.'' Further, section 332 requires that the Commission ensure
that providers of CMRS services are subjected to technical and
operational rules comparable to those that apply to providers of
substantially similar common carrier services. See 47 U.S.C. 332. The
general goal behind section 332 is to ensure that economic forces
rather than disparate regulatory constraints shape the development of
the CMRS marketplace.
11. The Report and Order specifically discussed whether section 255
or other regulatory provisions, such as the Hearing Aid Compatibility
Act of 1988 (HAC Act), which requires the Commission to establish
regulations that ensure hearing-aid compatibility,\1\ are sufficient to
ensure accessibility to persons with hearing disabilities. The
Commission found that, given the scarcity of digital devices that may
be used with hearing aids, persons with hearing disabilities could be
left without access to mobile telephony services in the event that the
analog requirement is removed immediately, even with the existence of
measures such as section 255 of the Act. The Commission specifically
noted that it was establishing a transition period even though,
pursuant to section 255, carriers are otherwise obligated to ensure
that telecommunications service is accessible to persons with
disabilities. The Commission found that, the independent requirements
of section 255 notwithstanding, it was appropriate to also establish a
five-year transition period in order to address the particular current
problem of hearing aid-compatibility with digital handsets, and ensure
access to mobile telephony service for persons with hearing
disabilities.
---------------------------------------------------------------------------
\1\ The HAC Act requires almost all new telephones to ``provides
internal means for effective use with hearing aids that are designed
to be compatible with telephones which meet established technical
standards for hearing aid compatibility,'' but provided an exemption
for certain categories of phones including those used with CMRS and
private mobile radio services (or PMRS). The Commission recently
issued a Report and Order which modified the exemption to require
that digital wireless phones be capable of being used effectively
with hearing aids.
---------------------------------------------------------------------------
12. Given the possible consequences to persons with hearing
disabilities and emergency-only callers of the immediate removal of the
analog requirement, the Commission sought to ensure that wireless
services remain accessible to such consumers regardless of the mandates
of section 255, i.e., the Commission's action to defer the sunset of
the analog requirement was sepraate distinct from the requirements of
section 255. In the Report and Order, the Commission expressly stated
that, notwithstanding a carrier's obligation under section 255, a
transition period was being establish to safeguard access to mobile
telephony. The purpose in implementing the transition was to ensure
that persons with hearing disabilities have continuous access to
wireless telecommunications services independent of actions taken by
carriers to fulfill their statutory obligations. Because it is feasible
that a carrier will not be in compliance with section 255, it is
appropriate to establish a transition period to ensure uninterrupted
access.
13. The Commission also rejects arguments that the Commission
cannot require cellular carriers to bear the burden of maintaining a
specific technology at its competitive disadvantage while similar CMRS
providers are not subject to the same requirement. However, the
Commission has previously determined that while regulatory parity is a
significant policy that can yield important pro-competitive and pro-
consumer benefits, parity for its own sake is not required by any
provision of the Communications Act. Instead, section 332 empowers the
Commission to make a distinction between different CMRS at any time if
it becomes necessary to do so. Because the Commission has concluded
that it is in the public interest to ensure that persons with hearing
disabilities and emergency-only callers have access to mobile
telephony, cellular carriers, as a consequence, must continue to
provide analog service, as cellular is the only service in which every
carriers has analog facilities.
4. The Decision To Establish a Five-Year Transition Period for the
Removal of the Analog Requirement Was Not an Abuse of Discretion
14. AWS argues that the decision to select five years as the
transition period was arbitrary given the Commission's own findings
regarding the robust nature of the wireless industry and the
significant competitive harms and costs associated with maintaining an
analog network, as well as its failure to explain why the five-year
transition is necessary in the public interest. AWS argues that at the
very least the Commission must reduce the transition period to no
longer than 30 months.
15. The Commission rejects AWS's argument that the Commission did
not adequately demonstrate that the five-year transition period is in
the public interest, and it disagrees with arguments that a five-year
transition period is an inordinately long length of time. As AWS notes,
the Report and Order stated that in light of the present state of
competition in the wireless industry, the analog requirement has
substantially achieved its purpose of facilitating competition and
ensuring nationwide roaming. Throughout the Report and Order, however,
the Commission was very clear in stating that, although there is a
variety of wireless technologies and services available to most
consumers, consumers such as persons with hearing disabilities or
emergency-only users may not have readily available and accessible
economic or technological alternatives to analog service. While market
mechanisms will, for the most part, ensure access to digital services
for most consumers, the same economic incentives do not exist that
would ensure that emergency-only consumers and persons with hearing
disabilities have adequate access to digital wireless service because
they account for only a small percentage of mobile telephony
subscribers. Because emergency-only callers and persons with hearing
disabilities must currently continue to rely on analog technology for
access to wireless service, the Commission found that the record in the
proceeding supported a transition away from, rather than immediate
elimination of, the analog rule.
16. In setting out a transition period, it was necessary for the
Commission to establish a time frame that reflected its policy goals
with respect to the analog requirement; that is, the transition period
should be long enough to ensure that certain categories of individuals
continue to have access to wireless telecommunications until digital
solutions are readily available and
[[Page 17066]]
accessible to them, yet be limited in duration in recognition that the
analog rule is no longer necessary to ensure competition and nationwide
service for most consumers. Although a number of commenters argued that
the analog requirement should be maintained indefinitely until
emergency-only callers can be assured of service, or until digital
technologies are fully compatible with hearing aid devices, the
Commission concluded that a transition period is necessary to
facilitate the orderly migration of consumers with analog handsets to
digital multimode handsets. To allay concerns by certain commenters who
argued that the analog requirement should not be removed until access
to digital devices is assured for emergency-only users, the Commission
observed that, although there is a sizable number of emergency-only
consumers using analog handsets, it could be assumed that the total
number of such users will decline in the future, as digital networks
expand and carriers migrate current analog customers to digital
services. The Commission concluded that, because subscribers turn over
handsets approximately every 18 to 30 months, the five-year transition
period should be sufficient to ensure that recipients of donated mobile
telephones have access to digital equipment.
17. Similarly, the Commission also found that a five-year period
provides a reasonable time frame for the development of solutions to
hearing aid-compatibility issues. The progress made in developing
digital solutions in other areas caused the Commission to determine
that the industry will also likely be able to develop digital solutions
for wireless telephones within a five-year period.
18. AWS claims that the Commission's statement indicating that, on
average, a consumer owns a handset for 1.5 to 2.5 years before
acquiring a new one, supports at most a transition period of 30 months.
Too much emphasis, however, is being placed on the statement that the
typical recycling period for a handset is 18 to 30 months. In the
Report and Order, the Commission sought to explain that it was
unnecessary to retain the analog requirement indefinitely despite the
large numbers of emergency-only callers because it is likely that
digital equipment will be made available over time. The Commission
surmised that, given that both digital and analog phones are being
donated, that digital subscribers outnumber analog phone subscribers,
and that there is a rapid turnover rate of phones, i.e. a turnover
frequency of every 18-30 months, it is likely that a sufficient number
of digital phones will be made available to emergency-only consumers by
the end of the five-year transition period. The 18-30 month period
relates only to the turnover rate of a phone. It was not intended to
reflect the time it will take for a donated digital phone to get into
the hands of any given emergency-only consumer, much less the period of
time necessary to migrate the large numbers of emergency-only callers
from analog service. Moreover, although the Commission agrees that
there is indeed robust competition in the wireless telephony
marketplace, it reiterates that persons with hearing disabilities and
emergency-only consumers do not benefit in large part from such
competition.
19. Moreover, the Commission recently found that ensuring greater
availability of hearing aid-compatible digital phones requires at least
a five-year time frame. The Commission determined in the HAC Report and
Order, 68 FR 54173, September 16, 2003 that it is feasible for certain
digital wireless phones to be made hearing aid compatible, and set out
certain performance standards as well as a schedule for implementation
of those requirements. See Sec. 68.4(a) of the Commission's Rules
Governing Hearing Aid-Compatible Telephones, Report and Order, 68 FR
54173, September 16, 2003. Specifically, the Commission adopted certain
performance levels set forth in ANSI C63.19 as a technical standard to
govern digital wireless phone compatibility with hearing aids.\2\ In
the HAC Report and Order, the Commission required that, within two
years, each digital wireless handset manufacturer and each carrier
providing digital wireless services must make commercially available at
least two handsets for each interface in its product line which meet
the ANSI C63.19 performance level (i.e. U3) for acoustic coupling. By
the end of three years, manufacturers and carriers must offer at least
two digital wireless handsets meeting the U3T performance level of
providing telecoil coupling capability for each air interface offered.
Further, in order to ensure consumers continued accessibility and a
range of product options, the Commission determined that 50 percent of
all digital wireless phone models offered by manufacturers and service
providers must be compliant with requirements for acoustic coupling by
February 18, 2008, the termination date of the five-year transition
period. The Commission determined that providing such compatibility in
half of all phone models by the end of the five-year transition is a
feasible interim goal, and that further progress would be made over
time to make even more digital equipment hearing aid-compatible. The
Commission concluded, however, that requiring more (i.e. extend the
requirements to all digital wireless phones in the near term) could not
be done given technical and resource difficulties. It is evident then,
in light of the Commission's findings in the HAC Report and Order, that
at least a five-year transition period is required to provide persons
with hearing disabilities with adequate access to hearing aid-
compatible digital devices.
---------------------------------------------------------------------------
\2\ ANSI C63.19 is the technical standard developed by Task
Group C63.19 of ANSI 63 (the Accredited Standards Committee on
Electromagnetic Compatibility) that is predictive of the successful
use of digital wireless phones with hearing aids. Hearing aids
operate in either acoustic or inductive (i.e. telecoil) coupling
modes. With respect to acoustic coupling mode, ANSI C63.19 specifies
ratings for digital wireless phones, U1 through U4, based on their
RF emissions levels, with U1 being the highest emissions and U4
being the lowest emissions. The standard also provides a methodology
for rating hearing aids from U1 to U4 based on their immunity to
interference, with U1 being the least immune. As to telecoil
coupling mode, the ANSI standard specifies the axial field and
radial field intensity of the audio signal's magnetic field required
for satisfactory operation of digital wireless phones with hearing
aids. The standard also specifies ratings for the magnetic field
quality of digital wireless phones as well as the immunity of
hearing aids to undesired magnetic fields, U1T through U4T. The
applicable ANSI C63.19 ratings identified for acoustic and telecoil
coupling mode are U3 and U3T, respectively.
---------------------------------------------------------------------------
20. Finally, although the Commission concluded that roaming and
interoperability concerns advanced by small and regional carriers as
well as telematics providers were not sufficient in themselves to
justify an indefinite retention of the analog requirement, the
Commission nonetheless determined that the five-year transition period
would be useful in mitigating any significant impacts that an immediate
elimination of the analog requirement might cause. Indeed, although the
concerns expressed by regional carriers and telematics providers derive
from business decisions that are generally within the control of the
individual provider, the Commission is not unmindful of the potential
impacts of the elimination of the analog requirement on these service
providers and their customers.
21. In this regard, the Commission continues to believe that the
five-year period is desirable to smooth the transition from analog to
digital. A five-year time frame will enable regional carriers to
evaluate their current and future technology choices as well as those
of their current roaming partners, and will provide carriers with
adequate time to negotiate new contracts where
[[Page 17067]]
needed to ensure the availability of roaming services to their
customers. As noted in the Report and Order, demand will likely
increase for multimode/multiband handsets such that by the end of the
five-year period, these handsets should be widely available and
customers may choose to migrate to these new handsets depending on
their roaming needs. Similarly, a five-year period will give telematics
providers time to partner with various carriers to secure service on
the carriers' digital networks and develop multimode devices that will
provide interoperability and facilitate roaming on digital networks.
Further, given the public safety uses of many telematics devices, the
five-year transition will allow continued access to such applications
for a reasonable period of time until telematics providers are able to
switch their customers over to digital technology. Moreover, the
transition period will provide additional time for other CMRS
providers, particularly Personal Communications Service (PCS) carriers,
to further build out their licensed service areas thereby enhancing
roaming opportunities for all consumers.
B. It Is Appropriate To Reconsider Dobson Communications' Proposal To
Allow Cellular Licensees To Extend, on a Secondary Basis, Into Adjacent
Unserved Areas of Less Than 50 Square Miles Without Prior Commission
Approval
22. Background. The Commission's cellular unserved area rules
provide that, once the initial licensee of a market completes a five-
year build-out period, the portion of the market that is not being
served becomes available for re-licensing. Under the Commission's
unserved area rules, carriers are only licensed for areas that they
intend to serve, and applications for new cellular systems must propose
a contiguous cellular geographical service area of at least 50 square
miles. Applications of an entity seeking to establish a new cellular
system, or an existing licensee requesting an authorization that would
expand its CGSA or that would produce a de minimis service area
boundary extension into unserved area must be placed on public notice
for thirty days.
23. In the Report and Order, the Commission addressed proposals by
various commenters seeking significant revision of the Commission's
unserved area rules. Among the alternatives submitted included a
proposal by Dobson which requested that the Commission permit existing
licensees to cover adjacent unserved areas of less than 50 square miles
on a secondary basis without approval from the Commission. Dobson
asserted that the rules regarding unserved areas between a cellular
licensee's CGSA and the market boundaries or CGSAs of neighboring
licensees impose filing obligations and delays in the introduction of
new coverage. Dobson asserted that if it seeks to make engineering
modifications to its CGSA-defining cell sites (i.e., sites along the
periphery of its CGSA) in order to improve existing coverage inside the
CGSA, it must file a major modification application if the
modifications cause extensions into unserved area. Dobson argued that
because of this extension, a licensee must file a major modification
application, wait approximately 60-90 days for the application to be
accepted for filing, and wait another 30 days once the public notice is
issued before grant can be made.
24. The Commission generally rejected the proposals submitted by
Dobson and other commenters, stating that the proposed modifications
constituted fundamental changes to the Commission's cellular unserved
licensing framework, and as such were beyond the scope of the biennial
review. The Commission also noted that, under the current process, it
receives approximately 40 unserved area applications each month, and
typically processes the applications within 45-60 days. Given the low
number of unserved area applications that are filed as well as the
speed with which such applications are processed, the Commission was
not persuaded that the burdens imposed by a major overhaul of the rules
would be offset by any corresponding benefits.
25. In response to the Report and Order, Dobson requests
reconsideration of the Commission's decision to reject its proposal.
Dobson asserts that the reasons advanced by the Commission in rejecting
the unserved area proposals appear to have been directed at those
advanced by other commenters rather than at Dobson's request. Dobson
asserts that the Commission's failure to adopt its specific proposal
without advancing any reasons for doing so is contrary to section 11 as
well as the fundamental requirements of reasoned decision making.
Further, Dobson argues that, consistent with the Commission's current
new rural service-oriented initiatives, Dobson's proposal advances and
improves service to rural areas and should be adopted upon
reconsideration.
26. Discussion. While the Commission continues to believe that
major changes to its cellular unserved area licensing framework are
beyond the scope of a biennial review proceeding, it finds that it is
appropriate to reconsider certain aspects of Dobson's request. Unlike
proposals advanced by other commenters which sought significant
revision to existing rules, Dobson proposes only slight modification to
its unserved area rules. The Commission concludes that adopting
Dobson's proposal that licensees be allowed to extend into adjacent
unserved areas of less than 50 square miles on a secondary basis
without prior Commission approval will provide licensees with
additional flexibility to respond to operational demands in a manner
that remains consistent with its unserved area rules. Moreover, the
Commission believes that providing licensees with this added
flexibility will help to encourage carriers to expand into rural areas.
27. The Commission does not agree with Dobson's assertion that the
cellular unserved area rules are no longer necessary. The basic premise
of cellular service licensing is that carriers are only licensed and
provided protection from incursions from other licensees for areas that
they actually serve. The Commission put in place this licensing scheme
to ensure that licensees could not claim as protected CGSA areas that
they were not actually serving and prevent other entities from
providing service instead. Because a licensee's protected CGSA is
defined by actual coverage, it remains necessary for licensees to file
for approval with the Commission if it seeks to add new areas to its
protected service area. Further, as noted in the Report and Order,
proposals seeking to significantly overhaul, or remove as unnecessary,
the unserved area rules are actually advocating a fundamental change to
the Commission's cellular service licensing model, and, as such, are
beyond the scope of a biennial review proceeding.
28. While the Commission finds that major changes to its cellular
licensing framework are not appropriate here, it nevertheless finds
that it should reconsider and adopt Dobson's proposal. The Commission
agrees with Dobson's argument that the Commission's licensing rules may
be burdensome in certain cases, such as where design changes or
engineering modifications aimed only at improving coverage within a
licensee's existing CGSA results in an extension into adjacent unserved
area. Although the Commission disagrees with Dobson's assertion that
there is an inordinate delay in processing applications, it finds that
the process is nevertheless burdensome if the licensee is not
[[Page 17068]]
actually seeking to expand its service area.
29. The Commission concludes that Dobson's proposal provides
licensees with flexibility to respond to operational demands yet
remains within the framework of the Commission's existing cellular
unserved rules. Any extension would be on a secondary basis only and
will not become part of the licensee's CGSA unless the licensee files a
major modification application. Although the Commission is permitting
carriers to bypass the formal major modification filing process in such
circumstances, the Commission will continue to require carriers to
notify the Commission as to its actual service contours so that others
are on notice of their presence. Licensees may submit such filings as
minor modifications through the Commission's Universal Licensing System
(ULS). If another licensee is granted approval to incorporate the
unserved area as part of its CGSA, the first licensee must pull back
its coverage. Because any extension into unserved area will be on a
secondary basis only, the proposal provides licensees with operational
flexibility while also being consistent with existing unserved area
rules because the licensee does not seek to claim the extension as
protected CGSA. Moreover, the Commission believes that adopting this
proposal may expedite expansion of cellular coverage into rural areas.
By providing licensees with the flexibility to extend into unserved
areas without first having to go through the major modification filing
process, the Commission believes that licensees will be more likely to
extend operations into rural areas.
C. The Commission Appropriately Removed Sec. 22.919 Which Set Out
Electronic Serial Number Hardware Design Requirements
30. Background. In the Report and Order, the Commission removed
Sec. 22.919 of its rules, which established ESN design requirements
for cellular telephone manufacturers. An ESN is a number that uniquely
identifies a cellular mobile transmitter to a cellular system. Former
Sec. 22.919 required that each cellular mobile unit have an ESN that
is not ``alterable, transferable, removable or otherwise able to be
manipulated.'' The rule also required that equipment be designed in
such a way that any attempt to remove, tamper with, or change the ESN
chip or other related components would render the mobile transmitter
inoperative. This rule section was originally promulgated to address
the problem of cellular ``cloning'' fraud that was prevalent in the
mid-1990s, and which resulted in millions of dollars in losses to the
cellular industry. Over the years, however, other measures were
developed to combat cloning fraud, such as authentication, radio
frequency fingerprinting, and call profiling. Moreover, Congress
enacted the Wireless Telephone Protection Act of 1998 (WTPA) to address
fraudulent and unauthorized use of wireless telecommunications
services. See 18 U.S.C.A. 1029. After reviewing the original purpose of
the rule, the advanced fraud control technologies measures developed to
combat fraud since the adoption of the rule, as well as comments
submitted in the proceeding, the Commission concluded that the ESN
requirements were no longer necessary as a preventative measure against
cellular cloning fraud. The Commission therefore removed Sec. 22.919
of its rules.
31. In response, two entities seek reconsideration of the decision
to remove the ESN rule. AWS argues that the ESN rule remains essential
to fulfill its original purpose of deterring cloning fraud and reducing
incentives to steal handsets. AWS asserts that not only does the
Commission's removal of the ESN requirements increase the carrier's
risk of fraud, it could also make wireless subscribers a target for
thieves seeking expensive ``next generation'' handsets for resale.
Accordingly, AWS not only requests that the Commission reinstate the
ESN hardening rule, it also asks the Commission to extend the
requirements to cover all CMRS devices regardless of technology or
frequency band. CTIA also asks the Commission to revisit the ESN issue
but does not request that the Commission reverse its decision to remove
the ESN requirement. Instead, CTIA requests that the Commission remove
language in paragraph 39 of the Report and Order that stated that
analog cellular cloning by legitimate subscribers would no longer be a
violation of the Commission's rules. CTIA argues that the language is
inconsistent with federal law and Commission policy and has serious
consequences with respect to carrier operations.
32. Discussion. The Commission is not persuaded by arguments that
it must continue to mandate ESN design requirements in order to prevent
fraud. The Commission prefers, as a general policy, to allow market
forces to determine technical standards wherever possible, and to avoid
mandating detailed hardware design requirements for telecommunications
equipment, except where doing so is necessary to achieve a specific
public interest goal. Although there may be instances in which the
Commission concludes that it is necessary to establish specific design
requirements, the Commission continues to find that mandating ESN
design specifications is no longer necessary or warranted because of
other measures that the wireless industry has developed to accomplish
the same goal. Moreover, the Commission notes that in removing the ESN
requirements from its rules, the Commission was not precluding
equipment manufacturers from continuing to produce handsets using ESN
hardening. Wireless equipment manufacturers and carriers may continue
to utilize hardened ESN as a fraud deterrent if they wish to do so. The
Commission also declines to mandate specific design requirements for
non-cellular CMRS for the same reasons. The Commission does not
currently impose such anti-fraud measures in its rules affecting other
CMRS services, and, the Commission is not aware that the industry has
had problems with its fraud prevention efforts in the absence of
Commission rules requiring that equipment manufacturers design handsets
to become inoperable if tampered with.
33. While the Commission finds that the decision to eliminate the
ESN design requirements was appropriate, the Commission agrees with
CTIA that it is necessary to clarify language in paragraph 39 of the
Report and Order regarding the use of cellular cloning by legitimate
subscribers. The Report and Order provided that in the absence of Sec.
22.919, the cloning of phones by legitimate subscribers is not a
violation of the Commission's rules but is instead a contractual matter
to be judged according to the terms of the applicable contract. CTIA
argues that paragraph 39 should be reconsidered for a variety of
reasons, for example, that it may encourage entities not affiliated
with carriers to offer ``cloning service'' to the carriers'
subscribers, thereby leading to a panoply of operational problems:
Misdirected incoming calls, the inability to make simultaneous calls on
handsets with the same MIN/ESN, fraud losses from cloned devices not
under the control of the subscriber as well as denial of service by the
subscriber's own carrier when the carrier's anti-fraud software is
triggered by the cloned handsets.
34.The Commission notes that the language in paragraph 39 was
directed toward legitimate cell phone uses as agreed to by carriers and
their subscribers. The intent of the paragraph was to allow carriers,
in the absence of Sec. 22.919, to examine whether there are
permissible, legitimate uses of a cloned
[[Page 17069]]
phone by its own subscribers, and, if so, to control such use
contractually. In reviewing this matter, however, the Commission agrees
that the language in paragraph 39 was imprecise and may be
misconstrued. The Commission is certainly cognizant of the operational
problems that could occur with phones having the same ESN, and the
Commission continues to believe that the altering of cellular phones to
emulate ESNs without receiving the permission of the relevant cellular
licensee should not be permitted. Accordingly, the Commission clarifies
that the fraudulent or unauthorized use of a cloned phone, whether by a
third party or a legitimate subscriber, remains prohibited by federal
law and by Commission policy.
D. It Is Not Necessary To Further Modify the Commission's Rules
Regarding Emission Limits for Cellular and PCS
35. Background. In the Report and Order, the Commission amended
Sec. Sec. 22.917 and 24.238 of its rules, which specify out-of-band
radio frequency emissions limits with respect to cellular and PCS
operations. The Commission sought to define the out-of-band emission
limits in such a way as to provide an adequate measure of interference
protection to other licensees and services in adjacent spectrum, while
also allowing licensees the flexibility to establish a different limit
where appropriate. The Commission specifically sought to make its rules
more technology-neutral in order to encourage greater deployment of
advanced technologies. In adopting these changes, the Commission
pointed out that, in the Wireless Communications Service (WCS),
licensees are provided certain flexibility with respect to operations
at the edge of their authorized spectrum. Because the Commission seeks
to ensure regulatory uniformity where possible, the Commission found it
appropriate to amend Sec. Sec. 22.917 and 24.238 to also provide
similar flexibility to cellular and PCS licensees regarding emissions
limits. Also, the specific language adopted for the modified rules is
consistent with International Telecommunications Union (ITU) standards
for emissions.
36. Lucent argues that the measurement procedures for emissions in
Sec. Sec. 22.917(b) and 24.238(b), as modified in the Report and
Order, subjects carriers that employ Universal Mobile
Telecommunications Systems (UMTS) to more stringent requirements than
carriers that deploy CDMA2000. Lucent argues that because a UMTS system
would be operating on a wider bandwidth than a CDMA2000 system, a UMTS
carrier may not operate as close to the edge of its assigned spectrum
at the same transmitting power as a CDMA2000 carrier. Lucent believes
that emissions from either CDMA2000 or UMTS spread spectrum systems
into the spectrum immediately outside and adjacent to the frequency
block will be similar, and that the emission limitations should not
discriminate between these spectrum technologies.
37. Discussion. The Commission finds insufficient basis to further
modify Sec. Sec. 22.917 and 24.238 as requested by Lucent. The changes
made to Sec. Sec. 22.917 and 24.238 in the Report and Order enable
licensees to operate transmitters on frequencies closer to the edge of
their authorized spectrum than full compliance with Sec. Sec. 22.917
and 24.238 would normally allow by modifying how out-of-band emissions
are measured. Sections 22.917 and 24.238 affect how close to the edge
of its authorized spectrum that a licensee may operate as a function of
the emission bandwidth in which it operates. In other words, the
emissions standard is one of proportionality: the wider the bandwidth
used by a licensee, the farther the licensee must operate from the edge
of its assigned spectrum in order to avoid affecting operations in
adjacent spectrum.
38. Although Lucent argues that the Commission's rules regarding
out-of-band emissions impose greater restrictions on UMTS as compared
with CDMA2000, Sec. Sec. 22.917 and 24.238 in fact apply the same
emissions requirement on both types of systems. The Commission finds
that the modifications previously made to Sec. Sec. 22.917 and 24.238
were sufficient to provide ample flexibility to licensees, while also
treating all technologies consistently, and, accordingly, the
Commission declines to further modify these rules.
III. Procedural Matters
A. Supplemental Regulatory Flexibility Act Certification
39. The Regulatory Flexibility Act of 1980, as amended (RFA),
requires that a regulatory flexibility analysis be prepared for
rulemaking proceedings, unless the agency certifies that ``the rule
will not have a significant economic impact on a substantial number of
small entities.'' See 5 U.S.C. 605(b). The RFA generally defines
``small entity'' as having the same meaning as the terms ``small
business,'' ``small organization,'' and ``small governmental
jurisdiction.'' See 5 U.S.C. 601(b). In addition, the term ``small
business'' has the same meaning as the term ``small business concern''
under the Small Business Act. See 5 U.S.C. 601(3). A small business
concern is one which: (i) Is independently owned and operated; (ii) is
not dominant in its field of operation; and (iii) satisfies any
additional criteria established by the Small Business Administration.
As required by the RFA, a Final Regulatory Flexibility Analysis was
incorporated in the Report and Order. This Supplemental Final
Regulatory Flexibility Analysis is limited to matters raised on
reconsideration.
40. In this Order on Reconsideration, the Commission affirms the
decision to establish a five-year sunset period for the analog
requirement. The Commission also affirms the decision to remove the
rule section governing electronic serial numbers in cellular
telephones, but clarify that the fraudulent and unauthorized use of
ESNs remains contrary to federal law and Commission policy. Further,
the Commission reconsiders and adopts a proposal to permit, in certain
circumstances, cellular carriers to extend on a secondary basis into
neighboring unserved without prior Commission approval. The Commission
also declines a request to further modify its rules regarding emission
limitations.
41. The general effect of this decision on small business entities
will be to allow cellular carriers to avoid processing delays only in
certain situations. Otherwise, the Order on Reconsideration affirms or
codifies decisions previously made in the Report and Order.
Accordingly, the Commission certifies that this decision will not have
a significant economic impact on a substantial number of small
entities. The Commission will send a copy of the Order on
Reconsideration including a copy of this certification, in a report to
Congress pursuant to the Congressional Review Act of 1996. See 5 U.S.C.
801(a)(1)(A). In addition, the Order on Reconsideration and this
certification will be sent to the Chief Counsel for Advocacy of the
Small Business Administration.
B. Paperwork Reduction Act Analysis
42. The Order on Reconsideration has been analyzed with respect to
the Paperwork Reduction Act of 1995, Public Law 104-13, and found to
impose modified recordkeeping requirements or burdens on the public.
Implementation of these modified reporting or recordkeeping
requirements will be subject to approval by the Office of Management
and Budget (OMB) and will go into effect upon publication in the
Federal Register of OMB approval.
[[Page 17070]]
IV. Ordering Clauses
43. Pursuant to sections 1-4, 222, 227, and 303(r) of the
Communications Act of 1934, as amended, 47 U.S.C. 151-154, 222 and 227;
and Sec. 1.429 of the Commission's Rules, 47 CFR 1.429, this Order on
Reconsideration in WT Docket No. 01-108 is adopted. The Order on
Reconsideration will be effective June 1, 2004, except for a provision
in the Order on Reconsideration permitting cellular carriers to extend
into unserved areas of less than fifty square miles on a secondary
basis that is not effective until approved by the Office of Management
and Budget (OMB) because it modifies information collection
requirements. The agency will publish a document in the Federal
Register announcing the effective date of the modified information
collection.
List of Subjects in Parts 22 and 24
Communications common carriers.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 04-6822 Filed 3-31-04; 8:45 am]
BILLING CODE 6712-01-U