FCC



Before the

Federal Communications Commission

Washington, D.C.

In the Matter of )

)

Interconnection and Resale Obligations ) CC Docket No. 94-54

Pertaining to )

Commercial Mobile Radio Services )

Fourth Report and Order

Adopted: July 18, 2000 Released: July 24, 2000

By the Commission:

Table of Contents

Paragraph

I. INTRODUCTION ………………………………………………………………………………1

II. BACKGROUND ………………………………………………………………………………..2

III. DISCUSSION ………………………………………………………………………………… 6

A. Reseller Switch Interconnection

1. Whether the Communications Act Requires the Commission to Mandate Reseller Switch Interconnection…………………………………………………………………… 6

2. Whether the Commission Should Require the Interconnection of Reseller Switches

with CMRS Networks……………………………………………………………… 12

3. State Interconnection Requirements………………..………………………………… 20

B. CMRS-to-CMRS Interconnection………………………………………………………….. 23

IV. CONCLUSION ………………………………………………………………………………….26

V. PROCEDURAL MATTERS …………………………………………………………………….27

VI. ORDERING CLAUSES …………………………………………………………………………29

Appendix – List of Pleadings

I. INTRODUCTION

1. This Report and Order resolves issues raised in 1995 in the Second NPRM in this proceeding[1] concerning whether facilities-based commercial mobile radio service (CMRS) providers should be required to interconnect with CMRS resellers’ switches or with each others’ networks. Specifically, we adopt our tentative conclusion in that NPRM and deny requests for mandatory interconnection between resellers’ switches and CMRS providers’ networks. In the absence of any specific State interconnection requests pending before us, we also decline to take action preempting state requirements. Finally, we adopt our tentative conclusion in the NPRM and decline to impose general interconnection obligations between the networks of facilities-based CMRS providers. Consistent with the interconnection provisions of the 1996 Telecommunications Act, as interpreted in the Local Competition First Report and Order,[2] we conclude generally that efficient CMRS interconnection will be achieved between facilities-based CMRS providers through voluntary agreements.

II. BACKGROUND

2. Wireless resellers have on several occasions sought from cellular carriers interconnection of resellers’ switches with the cellular carriers’ networks. The resellers have proposed to place their switches between the mobile telephone switching office (MTSO) of the cellular carrier and the facilities of the local exchange carrier (LEC) or interexchange carrier (IXC). They claim these switches would allow them to route traffic and bill customers on a real-time basis, and thus reduce costs and improve their services. In most cases, these requests have not been granted by the cellular carriers.[3]

3. In proceedings dating back to 1994, wireless resellers Cellular Service, Inc. (CSI) and ComTech Mobile Telephone Company (ComTech) have sought Commission intervention to help them obtain such switch interconnection with CMRS networks. In the CMRS Second Report and Order,[4] the Commission decided to seek further comment on the issue of interconnection to facilities-based CMRS providers, and stated that it would initiate a new proceeding to examine such issues. On May 19, 1994, ComTech filed a petition for reconsideration of the CMRS Second Report and Order on the ground that the Commission's decision failed to recognize the right of a reseller to interconnect its switch with the MTSO of a cellular carrier. CSI and ComTech requested the Commission to issue a policy statement that would recognize the right of a reseller to interconnect its own switch with a cellular carrier’s network and the concomitant obligation of the cellular carrier to engage in good faith negotiations for the establishment of such interconnection arrangements.[5]

4. As it had indicated in the CMRS Second Report and Order, the Commission began in this proceeding an exploration of the reseller switch interconnection issue as part of a broad rulemaking proceeding. The Commission initiated this proceeding with a Notice of Proposed Rulemaking and a Notice of Inquiry that addressed a broad array of regulatory issues relating to CMRS interconnection, including CMRS interconnection and resale.[6] The Commission indicated that, until final disposition of the interconnection issues was reached, it would entertain requests for interconnection pursuant to Section 332(c)(1)(B) of the Communications Act[7] on a case-by-case basis.[8]

5. The Commission in the Second NPRM, on the issues before us now, tentatively proposed not to require facilities-based CMRS providers to interconnect with each other or to unbundle the elements of interconnection in order to permit resellers to interconnect their switches between the CMRS MTSO and the facilities of LECs. [9]

6. Subsequently, in the Telecommunications Act of 1996, Congress enacted provisions on interconnection, including Section 251(a), which imposes an obligation on each telecommunications carrier "to interconnect directly or indirectly with the facilities and equipment of other telecommunications carriers."[10]

III. DISCUSSION

A. Reseller Switch Interconnection

1. Whether the Communications Act or Commission Precedent Requires the Commission to Mandate Reseller Switch Interconnection

7. Background. In the Second NPRM, the Commission sought comment on the question of whether the CMRS providers’ refusals to interconnect with resellers violated Sections 201 or 332 of the Act.[11] The cellular resellers and organizations representing resellers oppose the Commission's tentative conclusion not to require that interconnection, based on the argument that the Commission is legally required to mandate interconnection of reseller switches under Sections 201 and 332(c)(1)(B) of the Communications Act.[12] Furthermore, these commenters cite the Hush-A-Phone decision in arguing that the established standard for determining whether interconnection is in the public interest is whether it is “privately beneficial without being publicly detrimental.”[13]

8. By contrast, facilities-based CMRS providers argue that Hush-A-Phone does not set forth the relevant standard for applying Section 201 of the Communications Act. Rather, these commenters argue that the Hush-A-Phone rule — that interconnection is in the public interest if it is privately beneficial without being publicly detrimental — applies only in the context of connecting customer premises equipment to the facilities of a carrier with market power.[14] In other contexts, they assert, the Commission should balance all the costs and benefits in order to apply the public interest standard set out on the face of Section 201.[15] In particular, they argue, the Commission should be especially careful before finding that the public interest requires carriers to unbundle the elements of their network in order to interconnect with a reseller that has its own switch, but otherwise lacks its own network. Such a requirement, they state, would be unprecedented under Section 201.[16]

9. Discussion. We find that neither Sections 201 and 332 nor our past precedents require us to mandate interconnection between CMRS networks and resellers’ switches. The resellers argue that Hush-A-Phone established the standard for determining whether the interconnection is in the public interest and thus permissible. We disagree. Section 332 requires interconnection ‘pursuant to the provisions of section 201” and section 201 requires interconnection only when “the Commission, after opportunity for hearing, finds such action necessary or desirable in the public interest.”[17] Hush-A-Phone does not modify this requirement. That case concerned whether a telephone subscriber could be precluded from using an attachment to his telephone for the purpose of giving him privacy against eavesdroppers. The U.S. Court of Appeals for the D.C. Circuit ruled in that case that telephone company tariffs precluding such an attachment were an unwarranted interference with the telephone user’s right to reasonably use his telephone in ways that are privately beneficial without being publicly detrimental, and remanded the case to the Commission to prescribe changes in the tariffs to render them fair, just and reasonable.[18] We do not read Hush-A-Phone as establishing a standard for interconnection that we must apply here.

10. The U.S. Court of Appeals for the Sixth Circuit affirmed the position we take here, upholding our CMRS Resale First Report and Order in 1998.[19] The Court rejected the notion that Hush-A-Phone set out a “public detriment/private benefit” test for FCC action. Instead, the Cellnet court found that the D.C. Circuit in Hush -A-Phone determined only that a tariff "was neither just nor reasonable under §§ 201 and 202 because it was an unwarranted interference with a person's use of their own telephone"[20] and that the justness and reasonableness requirements set out in sections 201 and 202 remain the criteria for FCC action. As the court stated, “the Hush-A-Phone decision neither set forth other, more restrictive principles, nor did it recognize the existence of a customer’s right to resell services as long as such was not publicly detrimental.”[21] Accordingly, we determine that Hush-A-Phone does not require reseller switch interconnection, which does not involve a customer’s use of his telephone.

11. We similarly reject arguments by petitioners that our decisions in the 1960s and 1970s relying in part on the Hush-A-Phone standard require us to mandate interconnection of reseller switches.[22] Carterphone, like Hush-A- Phone, involved the right of end users to connect their private equipment to the network, not the interconnection of resellers to facilities–based providers. The Sixth Circuit’s decision in Cellnet is clear that Hush-A-Phone and its progeny do not establish a right of interconnection here. The AT&T Piece-Out Order, on which the petitioners rely, is similarly distinguishable. In that order, the Commission rejected tariff provisions restricting the interconnection of AT&T private line service to services provided by specialized common carriers. The Commission found that interconnection should be permitted, relying on previous decisions that had “established that AT&T is duty bound to honor reasonable requests for the interconnection of AT&T facilities with specialized carrier facilities.”[23] The Commission decision was based on its previous decisions requiring a particular kind of interconnection under Section 201 of the Act; the AT&T Piece-Out Order merely enforced these prior actions. No such finding has been made with respect to an obligation of facilities-based CMRS providers to interconnect with reseller switches, and we find below that establishment of a rule requiring such interconnection is not in the public interest.

12. Moreover, we note these cases involved AT&T, the dominant provider of telecommunications at that time. Thus, the Commission has not applied principles established there to interconnection to carriers without significant market power, such as CMRS providers.

13. Finally, we find that Section 251(a) of the 1996 Act does not require a different result. As noted above, that section requires that each telecommunications carrier "interconnect directly or indirectly with the facilities and equipment of other telecommunications carriers."[24] As we have stated in the past, CMRS providers are obligated to comply with this section, but that indirect interconnection (e.g., two carriers other than incumbent LECs connecting with an incumbent LEC’s network) satisfies this obligation.[25] Thus we do not find that the Communications Act or Commission precedent requires the Commission to mandate reseller switch interconnection.

2. Whether the Commission Should Require the Interconnection of Reseller

Switches with CMRS Networks

14. Background. The Commission tentatively concluded in the Second NPRM that the resellers’ switch interconnection proposal should not be generally imposed on facilities-based CMRS providers at this time, on the grounds that competition in the market for interconnected switched voice mobile services would likely render mandatory switch-based resale unnecessary to control anticompetitive behavior.[26] The Commission also tentatively concluded that the switch interconnection proposal may impose unwarranted costs on consumers and the wireless industry and may subject the Commission to administrative burdens.[27] The Commission requested comment on its tentative conclusion, and on the costs and benefits of a mandatory switch-based resale rule.[28]

15. The reseller parties argue that interconnection of their switches not only would serve the private interests of resellers but also would benefit the public. First, several commenters challenge the tentative conclusion of the Commission that the market for interconnected switched mobile voice services is or soon will be highly competitive.[29] Second, commenters state that switch interconnection will allow resellers both to increase their efficiency and to offer innovative and bundled services to the public, thereby resulting in lower prices and better and more diverse service offerings.[30] In addition, some commenters argue that switch interconnection would promote the public interest by providing an avenue for small businesses to compete in the wireless market.[31]

16. Third, proponents of the switch proposal argue that interconnection would not impose substantial costs on carriers or consumers, or create administrative burdens for the Commission. They argue that claims that interconnection is technically infeasible have no merit and that arguments that switch interconnection will degrade service or prevent roaming are without foundation, given that resellers will have an incentive not to harm the underlying network.[32] Although carriers may incur costs modifying their networks to accept calls from resellers’switches, these costs would be borne by the resellers, and therefore, according to proponents, the proposal should be of no concern to the Commission.[33] Finally, advocates of the switch interconnection proposal argue that the attendant administrative costs will be small. On the one hand, they contend that carriers should incur little cost in unbundling their services because they presumably already know their costs and this should facilitate cost recovery on an unbundled basis.[34] At the same time, the Commission will necessarily incur some administrative costs in maintaining the interconnection rule but, these commenters argue, the Commission's experience with LEC interconnection suggests that these costs will be relatively small, and furthermore it would be even more costly for the Commission to hear individual complaints in the absence of a rule.

17. Applying a cost-benefit analysis, commenters opposing interconnection argue that the public will realize few if any benefits from mandatory switch interconnection and that there may be detrimental effects on competition. This argument is based largely on the premise that the market for switched voice mobile services is competitive because of the presence of resellers and, more importantly, the entry of facilities-based competitors such as PCS providers.[35] Commenters also contend that the switch proposal would permit resellers to obtain a “free ride” on the investments of licensed carriers, thereby penalizing entrepreneurs who have bid on spectrum and invested in innovative technology. [36] The Rural Cellular Coalition (RCC) further argues that resellers would have an unfair advantage over licensed carriers because they would not be subject to regulatory requirements such as spectrum caps, user fees, and reporting requirements.[37]

18. In addition to arguing that such a requirement would have detrimental effects on the market, opposing commenters also contend that other significant costs would result from the reseller switch proposal. AT&T, in particular, describes a series of technical obstacles that it contends will obstruct the interconnection of the switches.[38] Similarly, facilities-based carriers allege that introducing a switch into the network will interfere with their planning, introduce inefficiencies and duplication of functions, and cause degradation of service, including interfering with roaming.[39] To the extent these problems can be overcome, doing so would assertedly require substantial investment in developing new equipment, the cost of which would be passed on to consumers.[40] In response to resellers’ statements that they would pay the direct costs of interconnection, opponents argue that as a practical matter it would be difficult to set prices accurately to recover all relevant costs, including a pro rata portion of network costs and a premium for risk.[41] Finally, in addition to any technical obstacles, these commenters argue that an unbundling requirement would impose substantial administrative costs both on carriers and on the Commission. [42]

19. Discussion. Based upon our review and analysis of the record, we adopt our tentative conclusion that the public interest does not support the establishment of a rule requiring that facilities-based CMRS carriers interconnect with reseller switches. As a preliminary matter, we note that no decision by facilities-based CMRS providers not to interconnect with reseller switches will raise issues regarding unreasonable restrictions on resale. Under our CMRS resale policies, facilities-based CMRS providers need not take affirmative actions to facilitate resale.[43] Unlike switch-based long-distance resale, switch-based CMRS resale would require the facilities-based carrier to take significant affirmative action. In long-distance resale, a reseller can purchase a facilities-based carrier’s service, substitute its switch as the CPE, and have its customers call into the switch to originate traffic. By contrast, a CMRS reseller's switch, as described in this proposal, would not replace the wireless CPE at the end of a call, but would either replace or supplement the facilities-based CMRS provider's Mobile Telephone Switching Office switch in the “middle” of a CMRS call.

20. We decline to adopt the requested interconnection rule for a number of reasons. First, we note that petitioners would have us impose this specific form of interconnection on CMRS carriers, which we have never regulated as dominant carriers. Second, since the adoption of the Second NPRM, we have decided to sunset our general CMRS resale requirement in November 2002 based on the steady growth of competition in CMRS markets.[44] There are now three or more mobile telephone operators providing service in Basic Trading Areas serving over 241 million people, or 95.8 percent of the U.S. population. This has resulted in declines of over 40% in three years in the average price per minute of mobile telephone service and high usage.[45] We find that, in these circumstances, imposing a new interconnection obligation on facilities-based CMRS providers is not required to overcome competitive barriers. Moreover, to the extent that resale switch interconnection is an economically attractive way of providing CMRS service, we anticipate that the increasing degree of CMRS competition should provide incentives for facilities-based CMRS providers to agree to switch interconnection to increase their revenues.[46]

21. Third, we find that a resale switch interconnection requirement would result in significant intrusion in CMRS providers’ networks. Such interconnection may result inraise a number of technical issues relating to possible potential for degraded service to CMRS consumers, controversies about the type and quality of interconnection that would have to be provided, or both. [47] For example, the resellers claim that issues such as the responsibility for 911, call waiting, three-way calling, and call transfer willwould have to be resolved between the facilities-based providers and the resellers.[48] We do not think there is an adequate record to support regulations addressing such issues, nor do we think the benefits of this form of interconnection outweigh the costs of intruding into the detailed technical operations of facilities-based carriers’ networks.

22. Fourth, while resellers have agreed to pay for the direct costs of interconnection, we find that determining interconnection costs in the wireless context for the first time involves a substantial administrative burden. To the extent that the use of resellers’ switches make use of CMRS provider switches largely redundant or lead to direct interconnection between that switch and the LEC over non-CMRS providers’ facilities, we would foresee arguments that resellers should not have to pay for, or should pay reduced rates for, unused components of the resold CMRS service. Thus, interconnection to a facilities-based provider to allow real-time processing in the middle of a call will inevitably lead to unbundling of the facilities-based provider’s network. This would require even more difficult cost and rate issues to be determined by the Commission. The 1996 Telecommunications Act ordered unbundling for wireline carriers, but promulgated no such requirement for wireless carriers. Based on all of these reasons, we conclude that a rule mandating CMRS reseller switch interconnection is not in the public interest.

3. State Interconnection Requirements

23. Background. In August, 1994, the California Public Utilities Commission ordered resale switch interconnection, including mandatory unbundling.[49] In addition to opposing the reseller switch proposal as federal policy, some commenters therefore argue that the Commission should preempt the states from requiring CMRS carriers to interconnect with switch-based resellers, that mandatory unbundled interconnection necessarily involves rate regulation, and therefore that it is forbidden to the states under Section 332(c)(3) of the Communications Act.[50]

24. Furthermore, these commenters continue, preemption is justified even aside from Section 332(c)(3) because it is impossible to separate the regulation of interstate and intrastate reseller-switched calls, and therefore state-mandated interconnection of intrastate communications would necessarily govern interstate communications as well, contrary to federal policy.[51] Proponents of the interconnection proposal, however, oppose preemption. They argue that California's interconnection mandate does not involve rate regulation, and that state-mandated interconnection of switches is not inconsistent with sound federal policy.[52]

25. Discussion. We conclude that the Commission has jurisdiction over CMRS reseller switch interconnection. First, in Iowa Utilities Board, the Eighth Circuit upheld the authority of the Commission to establish nationwide interconnection rules for wireless interconnection under Sections 201 and 332(c)(1)(B) of the Act.[53] Second, as several parties have argued, it appears impossible to segregate interstate from intrastate calls that would traverse the switch.[54] There appears no need, however, to take any action at this time. We note that the California action requiring unbundled resale interconnection has been indefinitely stayed by the California Public Utilities Commission, in view of our denial of the California Commission's petition for rate regulation authority.[55] Because no specific state actions, other than the California PUC decision, have been brought before us, we need not take any further action at this time.

B. CMRS-to-CMRS Interconnection

26. Background. With respect to direct CMRS-to-CMRS interconnection, the Second NPRM tentatively concluded that it was premature to impose a general interconnection obligation on all CMRS providers.[56] It further tentatively concluded that private discussions were a more appropriate vehicle than Commission requirements to spur interconnection, that market power is an important determinant of whether interconnection should be required, and it sought comment on the degree of market power in the CMRS industry as part of a determination of policy guidelines to be used in future rulemaking or complaint proceedings concerning interconnection. [57]

27. In a record filed before the passage of the 1996 Telecommunications Act, the majority of commenters contend that there is no need for a CMRS-to CMRS interconnection requirement because of the CMRS providers’ lack of market power, and because interconnection through the LECs will remain the most efficient way of routing calls through mobile networks.[58] Some small CMRS providers contend that interconnection through the LECs will be inadequate because of the disparity of their market power compared with the LECs’ market power.[59] GSA also supports a requirement for mandatory interconnection on the grounds that CMRS providers should be held to the same standards as landline carriers.[60]

28. Discussion. We have not been persuaded by the commenters that we should revise our rules or require mandatory interconnection at this time. As noted above, in the Local Competition First Report and Order, we determined that indirect interconnection (e.g.,two carriers other than incumbent LECs connecting with an incumbent LECs network) is all that is required by the 1996 Act. Moreover, the Commission made clear that such indirect interconnection applied to CMRS providers.[61] In view of the growth of competition in the CMRS market, as referred to above, we continue to believe that the best way of achieving interconnection is through voluntary private agreements. Nothing in the record here supports imposing more stringent obligations on CMRS providers.

IV. CONCLUSION

29. For the reasons expressed above, we adopt our tentative conclusion in the Second NPRM that neither the switch interconnection proposal or CMRS-to-CMRS interconnection should be generally imposed on CMRS providers.

V. PROCEDURAL MATTERS

30. This action is taken pursuant to Sections 4(i), 5(c), 201(a), and 332(c)(1)(B) of the Communications Act of 1934, 47 U.S.C. §§ 154(i), 155(c), 201(a), 332(c)(1)(B).

31. For further information regarding this Order, contact Peter G. Wolfe at the Wireless Telecommunications Bureau, Policy Division, at 418-1310.

VI. ORDERING CLAUSES

32. Accordingly, IT IS ORDERED that the CSI/ComTech request for a policy statement recognizing the right of resellers to interconnection IS DENIED.

33. IT IS FURTHER ORDERED that this proceeding IS TERMINATED..

34. IT IS FURTHER ORDERED that this Report and Order SHALL BECOME EFFECTIVE 30 days after publication in the Federal Register.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

APPENDIX

List of Parties Filing Comments and Reply Comments

Comments

1. AirTouch Communications Inc. (AirTouch)

2. Allnet Mobile Communications, Inc. (ALLTEL Mobile)

3. American Mobile Telecommunications Associations, Inc. (AMTA)

4. American Personal Communication (APC)

5. Ameritech

6. AT&T Corporation (AT&T)

7. Bell Atlantic Mobile Systems, Inc. (Bell Atlantic Mobile)

8. BellSouth

9. Cellnet Communications, Inc.

10. Cellnet of Ohio, Inc.

11. Cellular Service, Inc. & ComTech. Mobile Telephone Company (CSI/ComTech)

12. Cellular Telecommunications Industry Association (CTIA)

13. Comcast Cellular Communications, Inc. (Comcast)

14. Connecticut Telephone and Communications Systems, Inc. (Connecticut Telephone)

15. E.F. Johnson Company (E.F. Johnson)

16. Frontier Cellular Holding, Inc. (Frontier)

17. General Communications, Inc. (GCI)

18. General Services Administration (GSA)

19. Geotek Communications, Inc. (Geotek)

20. GTE

21. Horizon Cellular Telephone Company (Horizon)

22. In-Flight Phone Corporation (In-Flight)

23. Information Technology Association of America (ITAA)

24. MCI Telecommunications Corporation (MCI)

25. MobileMedia Communications, Inc. (MobileMedia)

26. National Telephone Cooperative Association (NTCA)

27. National Wireless Resellers Associations (NWRA)

28. NewPar

29. Nextel Communications, Inc. (Nextel)

30. NYNEX

31. Pacific Telesis Mobile Services and Pacific Bell Mobile Services (Pacific Bell)

32. Paging Network, Inc. (PageNet)

33. PCS Prime Co., L.P. (PCS Prime Co.)

34. Personal Communications Industry Associations (PCIA)

35. Rural Cellular Coalition (RCC)

36. SNET Cellular, Inc. (SNET Cellular)

37. The Southern Company (Southern)

38. Southwestern Bell Mobile Systems, Inc. (SBMS)

39. Sprint Telecommunications Venture (Sprint)

40. Telecommunications Resellers Associations (TRA)

41. Time Warner Telecommunications (TWT)

42. Vanguard Cellular Systems, Inc. (Vanguard)

43. Western Wireless Corporation (WWC)

44. WJG MariTEL Corporation (MariTel)

45. World Com, Inc d/b/a LDDS WorldCom (LDDS WorldCom)

Reply Comments

1. AirTouch Communications, Inc. (AirTouch)

2. Allnet Communications Services (Allnet)

3. American Mobile Telecommunications Associations, Inc. (AMTA)

4. Ameritech

5. AT&T Corporation (AT&T)

6. Bell Atlantic NYNEX Mobile, Inc. (Bell Atlantic/NYNEX)

7. BellSouth

8. Cable & Wireless, Inc. (CWI)

9. Cellular Service Inc. & ComTech Mobile Telephone Company (CSI/ComTech)

10. Cellular Telecommunications Industry Association (CTIA)

11. Connecticut Telephone and Communications Systems, Inc. (Connecticut Telephone)

12. E.F. Johnson Company (E.F. Johnson)

13. General Services Administration (GSA)

14. Geotek Communications, Inc. (Geotek)

15. GTE

16. In-Flight Phone Corporation (In-Flight)

17. MCI Telecommunications Corporation (MCI)

18. National Association of Regulatory Utility Commissioners (NARUC)

19. National Wireless Resellers Association (NWRA)

20. New Par

21. Nextel Communications, Inc. (Nextel)

22. Pacific Bell Mobile Services (PTMS)

23. Paging Network, Inc. (PageNet)

24. PCS PRIMECO L.P. (PCS PRIMECO)

25. People of the State of California and Public Utilities Commission of California (California)

26. Personal Communications Industry Association (PCIA)

27. SNET Cellular, Inc. (SNET Cellular)

28. The Southern Company (Southern)

29. Southwestern Bell Mobile Systems, Inc. (SBMS)

30. Sprint Telecommunications Venture (Sprint)

31. Telecommunications Resellers Association (IRA)

32. U.S. Airwaves, Inc. (AirWaves)

33. Vanguard Cellular Systems, Inc. (Vanguard)

-----------------------

[1] Interconnection and Resale Obligations Pertaining to Commercial Mobile Radio Services, CC Docket No. 94-54, Second Notice of Proposed Rulemaking, 10 FCC Rcd 10666 (1995) (Second NPRM).

[2] Implementation of the Local Competition Provisions in the Telecommunications Act of 1996 and Interconnection between Local Exchange Carriers and Commercial Mobile Radio Service Providers, First Report and Order, CC Docket Nos. 96-98 and 95-185, 11 FCC Rcd 15499, 15987-89 (1996) (Local Competition First Report and Order).

[3] In a case involving somewhat different issues, Bell Atlantic NYNEX Mobile granted interconnection for one year as part of a settlement agreement. See Cellexis v. Bell Atlantic, File No. WB/ENF-F-97-001.

[4] Implementation of Sections 3(n) and 332 of the Communications Act and Regulatory Treatment of Mobile Services, GN Docket No. 93-252, Second Report and Order, 9 FCC Rcd 1411, 1499-1500 (paras. 237-238) (1994) (CMRS Second Report and Order), partial recon., 11 FCC Rcd 19729 (1996) (CMRS Partial Reconsideration Order), affirmed, Telecommunications Resellers Association v. FCC, 141 F.3d 1193 (D.C.Cir. 1998) (TRA Decision), further recon. pending.

[5] See CSI/ComTech Comments at 9. 6. The Comtech/CSI petition for reconsideration of the CMRS Second Report and Order was denied by the Commission in the CMRS Partial Reconsideration Order, 11 FCC Rcd 19729, on the ground that the resellers' interconnection rights would be determined in this proceeding. The Court of Appeals affirmed our Order, recognizing that we have the discretion to determine in which proceeding to consider the issue raised by Comtech/CSI. See TRA Decision.

[6] See Equal Access and Interconnection Obligations Pertaining to Commercial Mobile Radio Service, CC Docket No. 94-54, Notice of Proposed Rulemaking and Notice of Inquiry, 9 FCC Rcd 5408 (1994) (Interconnection NOI).

[7] 47 U.S.C. § 332(c)(1)(B).

[8] Interconnection NOI at 5458 n. 213. Two resellers filed complaints with the Commission in February 1995, alleging that cellular carriers had refused to discuss interconnection proposals made by the resellers. The merits of these requests will be addressed promptly in those complaint proceedings.

[9] Forty-five parties filed comments and thirty-three parties filed replies. These parties included LECs and their affiliated cellular companies, non-wireline facilities-based CMRS providers, resellers of CMRS service, IXCs, industry trade associations, and State and Federal agencies. A list of parties (together with short title references) filing comments and reply comments in the Second NPRM is contained in the Appendix.

[10] 47 U.S.C. § 251(a)(1).

[11] Second NPRM, 10 FCC Rcd at 10713.

[12] 47 U.S.C. §§ 201, 332(c)(1)(B).

[13] Hush-A-Phone Corp. v. United States, 238 F.2d 266, 269 (D.C.Cir. 1956) (Hush-A-Phone); see also Regulatory Policies Concerning Resale and Shared Use of Common Carrier Domestic Public Switched Network Services, 83 FCC 2d 167, 171 (1980); Use of the Carterphone Device in Message Toll Telephone Service, Docket Nos. 16942, 17073, Memorandum Opinion and Order, 13 FCC 2d 420 (Carterphone Order), recon. denied, 14 FCC 2d 571 (1968); American Telephone and Telegraph Company Restrictions on Private Line Service, Transmittal Nos. 12171 and 12306, Memorandum Opinion and Order, 60 FCC 2d 939, 943 (1976) (AT&T Piece Out Order).

[14] See CTIA Reply Comments at 14-15; New Par Reply Comments at 4-5.

[15] See AT&T Reply Comments at 18-19; GTE Reply Comments at 25; New Par Reply Comments at 5-6.

[16] See New Par Comments at 24-26; CTIA Reply Comments at 15; Sprint Reply Comments at 2.

[17] 47 U.S.C. §§ 201(a), 332 (c)(1)(B).

[18] 238 F. 2d at 269.

[19] Cellnet Communications, Inc. v. FCC, 149 F.3d 429, 437 ( 6th Cir. 1998) (Cellnet).

[20] Id (italics in original).

[21] Id.

[22] See, e.g., Carterphone; AT&T Piece-Out Order.

[23] AT&T Piece-Out Order, 60 FCC 2d at 943 (para. 11).

[24] 47 U.S.C. § 251(a)(1).

[25] Implementation of the Local Competition Provisions in the Telecommunications Act of 1996 and Interconnection between Local Exchange Carriers and Commercial Mobile Radio Service Providers, First Report and Order, CC Docket Nos. 96-98 and 95-185, 11 FCC Rcd 15499, 15989-91 (1996).

[26] Second NPRM, 10 FCC Rcd at 10712-13 (paras. 95-96).

[27] Id.

[28] Id. at 10713-14 (para. 97). The Commission further noted that its tentative conclusions would not prejudge the outcome of specific complaints that resellers have filed against cellular licensees based on the refusal of the licensees to interconnect with switches operated by the resellers. Id.

[29] Other commenters argue that even if cellular carriers may not currently have market power, it is nonetheless valuable for the Commission to promote increased competition. See Connecticut Telephone Comments at 4; NWRA Comments at 12-14 (rule is useful in case Commission has erred in evaluating market); NWRA Reply Comments at 6 n.7 (cellular carriers may obtain market power in absence of reseller switch rule).

[30] See, e.g., Connecticut Telephone Comments at 5-6; GSA Comments at 7; NWRA Comments at 5-7.

[31] See Connecticut Telephone Comments at 9-10; Connecticut Telephone Reply Comments at 9-10; NWRA Reply Comments at 10-11.

[32] See NWRA Comments at 11-12; Connecticut Telephone Reply Comments at 5-6.

[33] See, e.g., NWRA Comments at 10; TRA Comments at 31 (noting that recovery from party seeking interconnection has worked in other contexts); Time Warner Comments at 20.

[34] See Connecticut Telephone Comments at 4-5; CSI/ComTech Reply Comments at 11-12; Connecticut Telephone Reply Comments at 7-8 (noting that commenters do not request unbundling of all elements, only airtime).

[35] See, e.g., Alltel Comments at 4; AT&T Comments at 31; GTE Comments at 24; CTIA Reply Comments at 9-14 (even if market is not currently competitive, it makes no sense to impose costly regulatory requirements for only short-term benefit); see also PCS Primeco Reply Comments at 9 (Commission can impose requirement later if market failure subsequently occurs).

[36] See Comcast Comments at 27-29; AirTouch Comments at 20; APC Comments at 12; Alltel Comments at 5; CTIA Comments at 37; CTIA Reply Comments at 15-16

[37] RCC Comments at 9-10.

[38] AT&T Comments at 29-30 and Exhibit 3 (Declaration of R. Nelson); see also AirTouch Comments at 21; BellSouth Comments at 10-11; PCS Primeco Comments at 12-13; SNET Reply Comments at 9-10 (citing alleged inability of Connecticut Telephone to overcome technical problems with its own proposal); Vanguard Reply Comments at 4.

[39] See, e.g., AT&T Comments at 30; CTIA Comments at 38-39; Nextel Comments at 16.

[40] See CTIA Comments at 38; RCC Comments at 8-9; Sprint Comments at 12; AirTouch Reply Comments at 6; AT&T Reply comments at 17-18.

[41] See CTIA Comments at 32; see also CTIA Reply Comments at 9 n.17 (noting that carrier would run risk of non-recovery of costs in case of reseller's bankruptcy).

[42] See, e.g., CTIA Comments at 32; PCS Primeco Comments at 12; PCIA Comments at 22; see also New Par Reply Comments at 13-15 (noting Commission's recognition in prior proceedings that excessive unbundling is inefficient).

[43] Interconnection and Resale Obligations Pertaining to Commercial Mobile Radio Services, CC Docket No. 94-54, First Report and Order,11 FCC Rcd 18455, 18462 (para. 12) (CMRS Resale Order).

[44] Id.

[45] Implementation of Section 6002(b) of the Omnibus Budget Reconcilation Act of 1993 and Annual Report and Analysis of Competitive Market Conditions With Respect to Commercial Mobile Services, Fourth Report, FCC 99-136 (rel. June 24, 1999).

[46] See AirTouch Comments at 20; Horizon Comments at 4; Bell Atlantic NYNEX Reply Comments at 8; SNET Reply Comments at 9-13 (citing reported progress of MCI in negotiating reseller switch connections); see also Vanguard Comments at 13-14; Vanguard Reply Comments at 4 (success of resellers to date shows that switch-based interconnection is not needed).

[47] See Comments of AT& T at 230 and Declaration of Roderick Nelson, which describes such problems as the lack of call waiting, three-way calling and call transfer; the lack of standards for intercept messages; the lack of provision for handling 911 calls, repeated attempts to access the reseller switch which result in congestion on the cellular carrier’s switch; the lack of roaming agreements; increased call set-up times; and increased cost of transmission.

[48] NWRA Reply Comments at 12.

[49] CPUC Decision 94-08-002.

[50] See AirTouch Comments at 23-24; GTE Comments at 25-26.

[51] See AirTouch Comments at 24-26; CTIA Comments at 39-40; GTE Comments at 25.

[52] See California Reply Comments at 3; CSI/ComTech Reply Comments at 14-16; NWRA Reply Comments at 19-20.

[53] Iowa Utilities Board v. F.C.C., 135 F. 3d 535,120 F. 3d 753, 800 n.21 (8th Cir. 1997), vacated on other grounds, 119 S. Ct. 1022AT&T Corp. v. Iowa Utilities Board, 522 U.S. 1089 (1999) (Iowa Utilities Board).

[54] See Louisiana PSC v. FCC, 476 U.S. 355 (1986).

[55] Investigation on the Commission's Own Motion into Mobile Telephone Service and Wireless Communications, I-93-12-007, Decision 96-12-071 (Dec. 1996); see Petition of the People of the State of California and the Public Utilities Commission of the State of California to Retain Regulatory Authority Over Interstate Cellular Service Rates, PR Docket No. 94-105, Report and Order (May 19, 1995).

[56] Second NPRM at 10681-87 (paras. 29-42).

[57] Id.

[58] See, e.g., BellSouth Comments at 2-3; AT&T Comments at 5-9; Ameritech Comments at 2-3; AMTA Comments at 3-4; Alltel Comments at 2.

[59] See, e.g., APC Comments at 2-4; U.S. Airwaves Reply Comments at 4.

[60] GSA Comments at 4.

,

[61] Implementation of the Local Competition Provisions in the Telecommunications Act of 1996 and Interconnection between Local Exchange Carriers and Commercial Mobile Radio Service Providers, First Report and Order, CC Docket Nos. 96-98 and 95-185, 11 FCC Rcd 15499, 15987-89 (1996)

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