270 F.3d 959 (D.C. Cir. 2001), 00-1304, AT&T Wireless Serv. v. Fed. Communications Commission

Docket Nº:00-1304
Citation:270 F.3d 959
Party Name:AT&T Wireless Services, Inc., et al., Appellants v. Federal Communications Commission, Appellee Northeast Communications of Wisconsin, Inc., d/b/a Cellcom, Intervenors
Case Date:November 09, 2001
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

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270 F.3d 959 (D.C. Cir. 2001)

AT&T Wireless Services, Inc., et al., Appellants


Federal Communications Commission, Appellee

Northeast Communications of Wisconsin, Inc., d/b/a Cellcom, Intervenors

No. 00-1304

United States Court of Appeals, District of Columbia Circuit

November 9, 2001

Argued October 1, 2001

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Appeal from an Order of the Federal Communications Commission

L. Andrew Tollin argued the cause for appellants. With him on the briefs were Michael Deuel Sullivan, Douglas I. Brandon, Carol L. Tacker and John T. Scott III.

Roberta L. Cook, Counsel, Federal Communications Commission, argued the cause for appellee. With her on the brief was Daniel M. Armstrong, Associate General Counsel.

Ronald J. Wiltsie II argued the cause for intervenors. With him on the brief were Michele C. Farquhar, Ronnie London, Donald J. Evans, Timothy Edward Welch, Russell D. Lukas and David L. Nace. David G. Leitch entered an appearance.

Before: Edwards, Rogers and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

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Rogers, Circuit Judge:

In the order on review, the Federal Communications Commission affirmed orders by the Bureau of Wireless Telecommunications granting a waiver of 47 C.F.R.§22.925 for two years to permit AirCell, Inc. and cellular licensees that had entered into resale agreements with AirCell to provide airborne cellular telephone service. See AirCell, Inc., 15 F.C.C. Rcd. 9622 (2000). Petitioners AT&T Wireless Services, Inc., Bell South Cellular Corp., SBC Wireless, Inc., and Cellco Partnership seek review of the Commission's order on three principal grounds.1 First, they contend that the Commission violated its rules as well as the licensing scheme of the 1934 Communications Act by granting a waiver that modifies the licenses of existing licensees, and by failing to require AirCell to apply for a license to provide a new nationwide air-ground radio communications service. Second, they contend that the waiver was arbitrary and capricious insofar as it eviscerates the rule, contravenes Commission precedent, and violates Commission policy to proceed by rulemaking when changing rules affecting a broad segment of industry. Third, they contend that the Commission failed to provide a reasoned explanation for its conclusion that harmful interference was not likely to result from the AirCell system. We grant the petitions in part, remanding the case to the Commission for further explanation of one aspect of its waiver decision; otherwise we deny the petitions.


Section 22.925 of the Commission's rules provides, in pertinent part:

Cellular telephones installed in or carried aboard airplanes, balloons or any other type of aircraft must not be operated while such aircraft are airborne (not touching the ground). When any aircraft leaves the ground, all cellular telephones on board that aircraft must be turned off.

47 C.F.R.§22.925 (2000). Under §1.3, the Commission has authority to waive its rules "if good cause therefor is shown." Id.§1.3.

AirCell, Inc. began developing and testing a low-power cellular system installed on general aviation aircraft under a Special Temporary Authority from the Commission in 1992. Two years later, the Commission's Office of Engineering Technology authorized AirCell to operate as an experimental radio station, providing service on a secondary basis. Pursuant to 47 C.F.R.§2.104(d)(3)(i) and (ii), stations with secondary status "[s]hall not cause harmful interference to stations of primary services to which frequencies are already assigned or may be assigned at later date," and "[c]annot claim protection from harmful interference" from such primary stations.

The AirCell system consists of specially engineered handsets, ground stations, and so-called "smart" aircraft antennae designed to provide low-power airborne cellular communications without creating harmful interference for other cellular networks. AirCell's ground stations are co-located in rural areas at the cell sites of participating cellular licensees, and customer traffic from the airborne mobile units is interconnected with the public switched network through the switches of AirCell's participating licensees. In addition to hardware and software modifications designed to provide cellular communications at relatively low power levels, the AirCell system seeks to minimize the potential

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for harmful interference through the use of horizontal polarization, specially shaped antenna patterns, non-standard control channels, and frequency coordination with non-participating cellular providers. The AirCell system was tested by AirCell and petitioners on July 10 and 11, 1997, using four sites in Texas and Oklahoma, and again by petitioners on September 22, 1998, in Florida.

On October 9, 1997, AirCell filed a petition requesting that the Commission waive, among other things,§22.925 of its rules to permit commercial deployment of AirCell service. Ten months later, AirCell and a number of cellular licensees entering into resale agreements with AirCell filed an amended petition to join the waiver request, thereby establishing that the participating licensees had agreed to modifications of their existing cellular licenses to authorize this secondary use of their licensed spectrum. The Bureau of Wireless Telecommunications ("Bureau") conditionally granted the waiver requests on December 24, 1998. Determining that the AirCell system's potential for interference should be evaluated according to its performance under normal operating conditions, the Bureau found that "the record fully supports the conclusion that because of the lower power, special antennas, and other features unique to the AirCell mobile unit, the risk of harmful interference that use of an ordinary cellular telephone[ ] in an airborne aircraft poses has been addressed." Consequently, in the Bureau's view, the harm that§22.925 is intended to prevent "will most likely not occur," and special circumstances justified a waiver of the general rule. The Bureau concluded a waiver was also warranted because the public safety benefits to aircraft that will accrue from the use of the AirCell system serve the public interest. Further, the Bureau observed, AirCell's voice and data link promotes competition by providing small aircraft and general aviation consumers an alternative to existing air-ground services.

The Bureau imposed nine special conditions on the waiver, including the requirement that cellular service to airborne terminals be a secondary service, and that participating licensees provide at least thirty days prior notice of service or testing to co-block licensees with transmitter sites within 270 kilometers of their ground stations. The Bureau's conditions further stipulated that participating licensees had a duty to provide information promptly on request of the Commission regarding any complaint of interference, and an obligation to resolve any instance of harmful interference, which was defined as "serious degradation, obstruction, or repeated interruption of cellular service."

On three occasions, the Bureau conditionally granted waivers for additional licensees. In so doing, the Bureau rejected the opposing carriers' arguments that, among other things, AirCell had taken over obligations of the participating licensees and failed to provide proper advance notice to opposing carriers. On reconsideration the Bureau also clarified several waiver conditions and reduced the notification distance from 270 to 151 kilometers, noting that during the Texas Oklahoma tests the airborne received signal "was not strong enough to interfere with terrestrial cellular communications, except when the AirCell power control system was deliberately disabled for testing purposes."

The Commission largely affirmed the Bureau's orders granting conditional waivers and reset the two-year term of the waivers to begin on June 9, 2000, the effective date of its order. The Commission "agree[d] with the Bureau's technical assessment of the AirCell system, including its judgment that there is little risk the system will cause harmful interference to non-participating carriers, as well as its

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evaluation of the system's potential benefit for general aviation." AirCell, 15 F.C.C. Rcd. at 9627. Based primarily on the design characteristics of the AirCell system and the results of the first day of the Texas-Oklahoma field tests on July 10 and 11, 1997, the Commission concluded that AirCell had carried its burden of affirmatively showing that its system is not likely to cause harmful interference to terrestrial cellular operations. The Commission noted that for the July 10, 1997, test,

AirCell chose a "worst case" scenario for site location, i.e., the tests were conducted in a rural area where there was no urban noise to mask the AirCell signal, and in a manner such that the AirCell airborne mobile unit was close to the "victim" site and far from the AirCell partner site. With this configuration, the AirCell mobile has to emit its highest power level in order to reach its partner site. Even under this configuration, the data from the first day of testing show that there is little likelihood of harmful interference.

Id. at 9630 n.60. The Commission rejected as unpersuasive the evidence presented by the opposing carriers and rejected the opposing carriers' remaining arguments that, for example, the AirCell system violated their exclusive channel block assignments under 47 C.F.R.§22.905(a), and that their licenses were improperly modified by the AirCell order. By relegating the AirCell system to secondary status in the cellular band and requiring advance notification to help ensure that all primary cellular service is protected from harmful interference throughout the waiver term, the Bureau had, in the Commission's view, provided nonparticipating licensees with...

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