Fresno Mobile Radio, Inc. v. F.C.C., s. 97-1459
| Decision Date | 05 February 1999 |
| Docket Number | Nos. 97-1459,97-1460,97-1536 and 97-1611,s. 97-1459 |
| Citation | 165 F.3d 965 |
| Parties | , 14 Communications Reg. (P&F) 1287 FRESNO MOBILE RADIO, INC., et al., Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents. Nextel Communications, Inc., Intervenor. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
On Petitions for Review of Orders of the Federal Communications Commission.
Frederick M. Joyce argued the cause for petitioners Fresno Mobile Radio, et al., and SMR WON. With him on the briefs were Christine McLaughlin and Robert H. Schwaniger, Jr. Dennis C. Brown entered an appearance.
Thomas P. Steindler argued the cause for petitioner Southern Company. With him on the briefs were Carole C. Harris and Christine M. Gill.
Roberta L. Cook, Counsel, Federal Communications Commission, argued the cause for respondents. With her on the brief were Joel I. Klein, Assistant Attorney General, U.S. Department of Justice, Catherine G. O'Sullivan and Marion L. Jetton, Attorneys, Christopher J. Wright, General Counsel, Federal Communications Commission, and John E. Ingle, Deputy Associate General Counsel. Mark S. Popofsky, Attorney, U.S. Department of Justice, and Daniel M. Armstrong, Associate General Counsel, Federal Communications Commission, entered appearances.
Robert S. Foosaner, Michael D. Hays and Michael Kovaka were on the brief for intervenor Nextel Communications, Inc. David E. Mills entered an appearance.
Before: EDWARDS, Chief Judge, WILLIAMS and GINSBURG, Circuit Judges.
Opinion for the Court filed by Circuit Judge GINSBURG.
Before us are petitions for review of two Federal Communications Commission rules creating a new class of radio spectrum licenses for bandwidth in the 800 MHz range. Petitioner Southern Company, which holds numerous licenses in that range, asserts that the rules violate a recently-enacted statute that requires the agency to treat all similarly situated commercial licensees comparably. Petitioners Fresno Mobile Radio, et al., and SMR WON, a trade association of incumbent licensees in the 800 MHz range contend that the Commission, among other things, exceeded its statutory authority when it decided to distribute the new licenses by auction, failed adequately to protect the interests of small businesses in setting the rules for the auction, and unlawfully modified existing licenses without holding evidentiary hearings. Nextel Communications, Inc., which purchased the great majority of the licenses awarded thus far under the new rules, has intervened in support of the Commission.
We hold that the Commission failed adequately to explain its disparate treatment of incumbent and new licensees, and therefore grant Southern's petition for review. We reject each of the other petitioners' arguments, however, and conclude that the agency acted within its discretion in deciding to allocate the new licenses by auction and otherwise proceeding as it did.
In 1974 the Commission created the Specialized Mobile Radio service. SMR licensees use bandwidth in the 800 MHz and 900 MHz ranges to provide "land mobile communications services" on a commercial basis. 47 C.F.R. § 90.7. Until recently the vast majority of SMR licensees provided local dispatch services for taxis, ambulances, and the like. In the last few years, however, an increasing number of SMR licensees have begun to use their spectrum for more ambitious purposes--in particular, the provision of cellular telephone and data transmission services over a wide area.
At first these licensees faced a difficult regulatory environment. For example, the Commission separately licensed each individual transmitter and small group of channels; that made it expensive and time-consuming for a licensee that wanted to provide cellular telephone, data transmission, or other services to get authorization for the large number of transmitters and channels required for those services. They were also hampered because most of the SMR bandwidth had already been licensed. Furthermore, the Commission's "build out" rule, which obligated the SMR licensee to complete its facility within one year of receiving its license, weighed particularly upon any licensee trying to build a wide area system.
The agency began to respond to these problems in 1993. First, it extended the time for an SMR licensee to build a wide-area broadcasting system to as much as five years. Next, it proposed to offer large blocks of bandwidth and coverage of a large geographic area in a single license. See 8 F.C.C.R. 3950 p 7 (1993).
Meanwhile, in August, 1993 the Congress amended § 332 of the Communications Act of 1934 to require the Commission to classify all mobile radio services as either "commercial" or "private." 47 U.S.C. § 332(c). As to certain services that had been considered private under the prior definition but now would be classified as commercial, the Commission was required to promulgate "technical requirements that are comparable to the technical requirements that apply to licensees that are providers of substantially similar [commercial] services." Pub.L. No. 103-66, § 6002(d)(3)(B), 107 Stat. 312 (1993). To fulfill this mandate, the Commission began a new proceeding in which it concluded that SMR licensees offering for-profit interconnected services--i.e. those involving both radio and landline telephone communications--are "substantially similar" to cellular telephone and Personal Communication Service (PCS) providers, and should therefore be subject to comparable regulatory regimes.
In order to put SMR on a footing more nearly equal to those of other licensees, the Commission then adopted a system for the upper 200 channels of the SMR bandwidth pursuant to which it would auction off licenses for each of 175 newly-designated "Economic Areas." Each EA license would include a large block of spectrum for the entire geographic area, thereby making transmitter-by-transmitter and channel-by-channel licensing unnecessary. To help EA licensees obtain the contiguous spectrum needed to provide competitive wide-area services, the Commission also determined that any EA licensee shall be able to force any incumbent SMR licensee to relocate to the lower 230 channels of SMR spectrum, provided the EA licensee gives the displaced licensee comparable facilities and spectrum, pays the expenses associated with its relocation, and ensures it a "seamless" transition between the old and new frequencies. The Commission also relaxed the build out rule for EA licensees Under its new "interim coverage requirement," an EA licensee must provide service to one-third of the population in its area within three years, and to two-thirds of the population within five years, of the award of the license. The agency declined, however, to extend this rule to incumbent SMR licensees. Instead, it gave them a maximum of two years to complete construction of their systems. See Amendment of Part 90 of the Commission's Rules, First Report and Order, 11 F.C.C.R. 1463, pp 105-114 (1995) [First Report and Order].
On reconsideration, the Commission adhered to this new regulatory scheme for the upper 200 channels of SMR bandwidth but changed its pre-existing method for giving small businesses an advantage in the auction process. Specifically, the Commission rescinded its policy of allowing small businesses to pay for licenses in installments, and instead created a system of bidding credits for which only small businesses could qualify. See Amendment of Part 90 of the Commission's Rules, Memorandum Opinion and Order on Reconsideration, 12 F.C.C.R. 9972, pp 125-32 (1997) [Reconsideration Order].
In June, 1997 the Commission adopted a similar set of rules for the lower 230 channels. Again, the agency decided to auction off new EA licenses, each of which would cover a wide geographic area and a large block of spectrum. It did not, however, grant EA licensees in the lower 230 channels the right involuntarily to displace incumbents. As before, the Commission chose to aid small businesses at the auction with bidding credits, but this time deferred deciding whether to stop accepting installment payments. See Amendment of Part 90 of the Commission's Rules, Second Report and Order, 12 F.C.C.R. 19079, pp 276-80 (1997) [Second Report and Order].
In October, 1997, after this Court denied SMR WON's motion for a stay, the Commission conducted an auction for EA licenses in the upper 200 channels. Nextel purchased 475 of the 525 licenses and 33,640 of the 35,000 channels offered. See Public Notice, 12 F.C.C.R. 20417 (1997). The Commission has not yet scheduled an auction for EA licenses in the lower 230 channels.
Insofar as the petitioners challenge the Commission's view of the authority delegated to it by statute, this court's review is governed by Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). We must first determine whether the Congress, in the Communications Act as amended, unambiguously addressed the "precise question[s] at issue" here. 467 U.S. at 842, 104 S.Ct. 2778. If it did not, then the agency's interpretation, assuming it is reasonable, must prevail. See id. at 844, 104 S.Ct. 2778. Insofar as the petitioners attack the Commission's exercise of its statutory authority, this court's review is limited to determining whether the agency's decisions were arbitrary and capricious within the meaning of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A). See Arent v. Shalala, 70 F.3d 610, 616 (D.C.Cir.1995). The agency has met this standard if it "examined the relevant data and articulated a satisfactory explanation for its action." Atlantic Tele-Network, Inc. v. FCC, 59 F.3d 1384, 1389 (D.C.Cir.1995).
The Commission allows cellular, PCS, and EA licensees to provide service after...
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