Telocator Network of America v. F. C. C., 78-2218

• Decision Date: 05 October 1982
• Docket Number: No. 78-2218,78-2218
• Citation: 691 F.2d 525,223 U.S.App.D.C. 336
• Parties: TELOCATOR NETWORK OF AMERICA, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 525

691 F.2d 525

223 U.S.App.D.C. 336

TELOCATOR NETWORK OF AMERICA, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of

America, Respondents.

No. 78-2218.

United States Court of Appeals, District of Columbia Circuit.

Argued Sept. 21, 1981.

Decided Oct. 5, 1982.

Petition for Review of an Order of the Federal Communications commission.

Kenneth E. Hardman, Washington, D.C., with whom Richard B. Severy, Washington, D.C., was on the brief for petitioner.

Michael D. Sullivan, Counsel, Washington, D. C., with whom Margorie S. Reed, Acting Gen. Counsel, Daniel M. Armstrong, Associate Gen. Counsel, and Eliot J. Greenwald, Counsel, F. C. C., Barry Grossman and Andrea Limmer, Attys., Dept. of Justice, Washington, D.C., were on the brief for respondents. C. Grey Pash, Jr., Counsel, F. C. C., Washington, D. C., also entered an appearance for respondent, F. C. C.

Before ROBINSON, Chief Judge, ROBB, Senior Circuit Judge, and GINSBURG, Circuit Judge.

Opinion for the Court filed by Chief Judge SPOTTSWOOD W. ROBINSON, III.

SPOTTSWOOD W. ROBINSON, III, Chief Judge:

In recent years, the Federal Communications Commission, facing a burgeoning demand for a variety of specialized communications services, increasingly has perceived the public interest to warrant infusion of new carriers into the Nation's communications markets. Commission action lowering regulatory barriers to competitive entry has won judicial sanction in the fields of microwave ¹ and domestic satellite ² transmission, international dataphone operations, ³ telegraph and telex service, ⁴ paging, ⁵ and experimental and mobile communications. ⁶ The rulemaking proceeding now before us ushers in the Commission's analogous policy in the area of mobile telephone operations, and a significant innovation in the technical methodology of these operations. With but one small though not unimportant caveat, we sustain the Commission's action.

I

Land mobile radio communication involves the use of radio signals to send messages between stationary transmitting points-land, or base, stations-and motile receiving units carried on the person or in vehicles-mobile stations. ⁷ Encompassed within the broad family of land mobile services are systems incorporating varying degrees of technical sophistication, from the simple paging unit, which is capable merely of receiving an audible tone or voice message; through dispatch systems, such as those used by taxicabs and police cruisers, which permit the mobile station to transmit messages to the base station when the latter is not itself transmitting; to mobile telephone service, which enables the mobile unit to receive and transmit simultaneously, just as an ordinary telephone. ⁸ The Commission regulates these operations in the Domestic Public Land Mobile Radio Service. ⁹ Involved in this petition for review are mobile telephone operations which comprise but a small segment of that Service. Mobile telephone communication is offered to the public ¹⁰ on a common carriage basis by two distinct types of carriers: local telephone companies, which generally have been subsidiaries of American Telephone and Telegraph Company (AT&T), and independent radio common carriers (RCCs), which are not affiliated with telephone companies. ¹¹ The petitioner, Telocator Network of America, is a trade association of RCCs. ¹²

The rulemaking activities underlying this litigation began over 15 years ago. Sensing that land mobile services had outgrown the amount of radio spectrum allocated to them, the Commission inaugurated an inquiry into the feasibility of designating for those services portions of the spectrum then assigned to ultra-high frequency (UHF) television broadcasting. ¹³ The Commission decided to proceed in two phases. One docket, No. 18262, was initiated to provide long-term growing space for land mobile services. ¹⁴ That proceeding eventuated in reallocation of UHF channels 70 to 83 to the services, a resolution ultimately affirmed by this court. ¹⁵ A second docket, No. 18261, was opened to afford immediate, short-term relief by reassigning UHF channels 14 to 20 in ten major urban areas to land mobile services. ¹⁶ Ironically, it is the Commission's final order implementing this ostensibly stopgap measure that is challenged here.

In its First Report and Order in Docket No. 18261, the Commission found a severe public need for additional service in land mobile communications as a whole. ¹⁷ It announced its resolve to pursue a dual approach in meeting this need: first, immediate allocation of additional spectrum space ¹⁸ and, second, long-range implementation of technological advances and spectral assignment techniques that would enhance the efficiency with which the available spectrum could be utilized. ¹⁹ Up to this point in the proceeding, the Commission's primary focus had been on the land mobile communication demands of public health and safety organizations and certain industrial users. At the request of Telocator, however, the Commission agreed to add RCCs to the groups benefiting from frequency reassignment. ²⁰

Further rulemaking then followed to determine precisely how the newly-available spectrum should be allocated among the various land mobile services. ²¹ With respect to the RCCs, the Commission's notice proposed "to follow the pertinent rules and procedures currently used in authorizing common carrier land mobile radio systems." ²² The Commission also made known its "intent to limit the use of the frequencies to those licensees currently authorized to serve the areas involved." ²³ Typifying the minor role the RCCs thus far had played in the Commission's planning, these proposals were unelaborated by discussion. More particularly, the notice contained no explanation of why the Commission thought it might be appropriate to limit access to the new frequencies to those already providing radio common carrier service.

In its ensuing Second Report and Order, the Commission specifically identified a need for additional RCC service in the metropolitan areas involved, and announced its intention to allocate portions of two UHF channels, representing a total of 24 mobile radio channels, to the RCCs. ²⁴ For the first time, the Commission addressed in detail the question of who ought to be permitted to apply for the reallocated frequencies. It noted that Telocator strongly supported its proposal to disqualify new carriers from consideration for these channels by arguing that an entry barrier was necessary to enable existing RCCs to compete effectively with each other and with telephone companies offering mobile telephone service. ²⁵ The Commission also observed that at least one commentator had opposed such restriction on grounds that the public interest would not be served by excluding new carriers. ²⁶ The Commission responded to these competing positions at some length:

While we are generally of the view that the preservation of opportunity for additional entry into a market is an important objective of public policy, we also feel that reasonable restrictions to the entry of additional licensees in certain markets might become necessary in order to prevent injury to the public interest by ruinous competition among a multitude of marginally viable carriers. We are persuaded, however, that additional entry by qualified applicants should be permitted on these frequencies in this service because the record in this proceeding does not support the conclusion that ruinous competition would result from open entry at this time. Allowing open entry does not foreclose the Commission from considering on a case by case basis in the future whether the public interest would be adversely affected by such a policy. The fact that we are more than doubling the number of available frequencies also supports the conclusion that it would be inappropriate to limit the new frequencies to existing licensees. ²⁷

Telocator promptly and vigorously opposed the Commission's decision to permit all qualified applicants to seek authorization to operate on the new frequencies. Moving for partial reconsideration and stay of the Second Report and Order, Telocator argued that a policy of restricted eligibility would speed assignment of the new frequencies, promote more efficient use of the spectrum, ²⁸ and enable existing RCCs to compete more effectively with their fellows and with the telephone companies. ²⁹ It also complained that the Commission had failed to identify any positive value to be served by additional competition in the form of new entry. The Commission responded by granting a stay pending action on the petition for reconsideration and by inviting comments on what had become known as the "open entry" issue. ³⁰

For some unexplained and perhaps inexplicable reason, proceedings in this docket then ground to a halt. After three years, Telocator, understandably dismayed that the promised stopgap relief still was unimplemented, withdrew its petition for reconsideration. Two more years passed, however, before the Commission again spoke on the subject. In January, 1977, the Commission proposed an entirely different and, at least in the area of mobile telephone service, unprecedented method of allocating the 24 new channels among the RCCs. ³¹ Until that time, the Commission had been assigning mobile telephone channels to applicants on a unitary, exclusive-use basis. On making a satisfactory showing of public need for the service, an applicant would be licensed to operate on one channel dedicated to his sole use; ³² when that channel was filled to capacity with mobile units, the applicant would return to the Commission and attempt to justify assignment to him of an additional channel. ³³ What the Commission now proposed was assignment of the 24 new channels in two 12-channel blocks, each of which would be shared by multiple RCCs. ³⁴ In essence, the Commission contemplated "convert(ing) the radio spectrum into a common right-of-way like a...