832 F.2d 171 (D.C. Cir. 1987), 84-1552, Gencom Inc. v. F.C.C.

Docket Nº:84-1552.
Citation:832 F.2d 171
Party Name:GENCOM INCORPORATED, Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee, Metro Mobile CTS of Phoenix, Inc., Intervenor.
Case Date:October 30, 1987
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

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832 F.2d 171 (D.C. Cir. 1987)

GENCOM INCORPORATED, Appellant,

v.

FEDERAL COMMUNICATIONS COMMISSION, Appellee,

Metro Mobile CTS of Phoenix, Inc., Intervenor.

No. 84-1552.

United States Court of Appeals, District of Columbia Circuit

October 30, 1987

Argued April 6, 1987.

As Amended .

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[Copyrighted Material Omitted]

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Carl W. Northrop, with whom Rachelle B. Chong, Washington, D.C., was on the brief, for appellant. Eliot J. Greenwald, Washington, D.C., Jennifer S. Reader, New Orleans, La., and W. Theodore Pierson, Washington, D.C., also entered appearances for appellant.

Roberta L. Cook, Counsel, F.C.C., with whom Jack D. Smith, General Counsel, and Daniel M. Armstrong, Associate General Counsel, F.C.C., Washington, D.C., were on the brief, for appellee.

Stuart F. Feldstein, with whom Robert J. Keller, Washington, D.C., was on the brief, for intervenor. Aaron I. Fleischman and Robert J. Miller, Washington, D.C., also entered appearances for intervenor.

Before WALD, Chief Judge, and MIKVA and BORK, Circuit Judges.

Opinion for the Court filed by Circuit Judge BORK.

BORK, Circuit Judge:

This case arises from a decision by the Federal Communications Commission ("FCC" or "Commission") to grant the application of Metro Mobile CTS of Phoenix, Inc. ("Metro Mobile") for a permit to establish a new cellular radio communications system and to deny the mutually exclusive application of Gencom, Inc. ("Gencom"). In its petition for review, Gencom attacks the FCC's determination on a variety of both procedural and substantive grounds. First, Gencom claims that the Commission erred in refusing to grant its request for an evidentiary hearing to determine whether Metro Mobile misrepresented the availability of one of its proposed antenna sites. Second, Gencom contends that the Commission erred in awarding its rival a comparative preference for the greater geographic and population coverage of its system, without considering evidence tendered by Gencom that Metro Mobile's superior coverage was not cost-justified. Third, Gencom argues that the FCC committed reversible error in refusing to award it a comparative preference for its assessment of demand in the Phoenix market. Finally, Gencom asserts that the FCC "failed to engage in reasoned decisionmaking" when it refused to award it a comparative preference on the issue of system expansion. Because we find that the Commission acted lawfully in all respects, we deny the petition for review.

I.

Cellular radio systems use a number of low-power transmitters to provide mobile telephone communications service in a given metropolitan area. 1 Recognizing the many benefits this new technology offered to the public, the FCC promulgated rules mandating expedited hearing procedures and establishing comparative criteria directed to selecting the best qualified applicants to establish such systems with a minimum of bureaucratic delay. See Cellular Communications Systems, 86 F.C.C.2d 469 (1981) (Report and Order) (hereinafter Cellular Rulemaking ), modified, 89 F.C.C.2d 58, further modified, 90 F.C.C.2d 571 (1982), petition for review dismissed sub nom. United States v. FCC, No. 82-1526 (D.C.Cir. Mar. 3, 1983).

In its Cellular Rulemaking the FCC outlined the procedures for the evaluation of competing cellular applications. Based on its "goal of having cellular service available to the public as quickly as possible" and its recognition that the evidence presented in comparative proceedings would be largely technical and economic, the Commission found that comparative

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evaluations "would not ordinarily be enhanced by the traditional courtroom drama of oral presentation by witnesses on the stand." See Cellular Rulemaking, 86 F.C.C.2d at 498-99. The Commission concluded that "a procedure involving only a 'paper' hearing and evidence, decided by the administrative law judge, will best serve the public interest while protecting the procedural interests of the competing private parties." 2 Id. at 499.

As to the substance of the hearings, the Commission identified two major criteria that would be central in its comparative evaluation of proposed cellular systems. First, the FCC indicated that:

Because nationwide availability of service is a primary goal, a major basis of comparison will be the geographic area that an applicant proposes to serve. In comparing proposed service areas, other significant factors to be considered will be the presence of densely populated regions, highways, and areas likely to have high mobile usage characteristics....

Cellular Rulemaking, 86 F.C.C.2d at 502.

The second major comparative factor established by the Commission is the applicant's ability to expand its system capacity in a coordinated manner in order to accommodate increasing demand for service. See Cellular Rulemaking, 86 F.C.C.2d at 502.

  1. The Phoenix Proceeding

    On June 7, 1982, three companies--Metro Mobile, Gencom and Cellular Mobile Systems ("CMS")--filed applications for a construction permit to establish a new cellular radio system in Phoenix, Arizona. By order dated January 31, 1983, the FCC found each of the three applicants for the Phoenix market to be legally, technically, and financially qualified to construct and operate its proposed cellular system. See Advanced Mobile Phone Service, Inc., 48 Fed.Reg. 6030 (1983) (hereinafter Phoenix Designation Order ). The Commission, through its Common Carrier Bureau, designated the applications for comparative hearing and ordered that the applicants be compared on the following factors: (a)(1) the geographic and population area that each applicant proposed to serve, (a)(2) the relative demand for cellular service within those areas, (a)(3) the ability of each applicant's proposed system to accommodate the anticipated initial demand; (b) the proposed expansion plans of each applicant to meet future demand; and (c) the rates, maintenance, personnel and facilities proposed. 3

    1. The Site No. 5 Dispute

    At the time the Phoenix cellular applications were filed, FCC rules required applicants to supply evidence that each proposed antenna site was available for use. 4

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    Pursuant to this requirement, Metro Mobile stated in its application that it had "received from the owner or authorized agent of each of the cell sites proposed herein a commitment to lease or to negotiate a lease for the land, building, and/or tower space necessary to construct the facilities proposed at each location." See Metro Mobile Application, FCC Form 401, Exhibit 10 at 4, Joint Appendix ("J.A.") at 96.

    For its proposed cell site No. 5, Metro Mobile submitted a letter, dated May 13, 1982, from Mike and Helene Eslinger, to Jack Brennan, a Vice-President of Metro Mobile. 5 The letter stated that the Eslingers would be willing to enter into a lease with Metro Mobile for space at 5335 E. Hillery, Scottsdale, Arizona. The Eslinger letter went on to state that to the best of their knowledge, Metro Mobile's antenna could be accommodated on their premises "without any interference to or from any apparatus presently on the building." J.A. at 101.

    On February 24, 1983, some three weeks after release of the FCC's designation order framing the issues, Gencom filed a "Motion to Enlarge Issues Concerning Site Availability, Site Suitability and Possible Misrepresentation." See J.A. at 269-312. In its motion, Gencom noted that Metro Mobile's proposed site No. 5 was the home of the Eslingers and that Helene Eslinger was a real estate agent retained by Metro Mobile to locate antenna sites for its proposed system. Id. at 274. Gencom asserted that Metro Mobile had no bona fide intention of using proposed site No. 5 and had no reasonable assurance that the site was genuinely available for use. In fact, Gencom alleged, Metro Mobile had already completed negotiations for the use of a site other than the Eslingers' property.

    In support of these allegations, Gencom submitted the affidavit of Ronald Zemaitis, a real estate broker hired by Gencom to "investigate" site No. 5. See J.A. at 291. The Zemaitis affidavit, dated October 25, 1982, purported to relate a conversation which occurred between Zemaitis and Mrs. Eslinger on September 9, 1982. Zemaitis stated that Mrs. Eslinger had informed him that the site Metro Mobile had anticipated using for cell No. 5 was not available when its application was filed, and that she had substituted her own home as a cell location until negotiations could be completed regarding the preferred site. Id. at 291-92. 6 Gencom also submitted evidence that the East Hillery location was in the middle of a residential neighborhood and that only limited space was available at the proposed site.

    In opposition to Gencom's motion, Metro Mobile claimed that it had, and continued to have, a reasonable assurance that the site would be available for its intended use. See J.A. at 315-23. In support of this claim, Metro Mobile submitted two affidavits--one from Mrs. Eslinger--the other from its Vice-President, Jack Brennan. In her affidavit, Mrs. Eslinger confirmed that the East Hillery property "was available for use as a tower site when my husband, Michael, and I signed a letter to that effect on May 13, 1982; it has been continually

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    available since that time; and it is still available." J.A. at 333. Mrs. Eslinger also denied ever having spoken to Mr. Zemaitis concerning Metro Mobile and indicated that to the best of her knowledge Metro Mobile had not obtained any alternative site for cell No. 5. Id. The Brennan affidavit affirmed that the Eslinger property "remains the intended location" for Metro Mobile's site No. 5. It further stated that "[n]o alternative location for cell Number 5 has been obtained. Nor is it Metro...

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