P & R Temmer v. F.C.C., s. 83-1580

• Decision Date: 14 September 1984
• Docket Number: 83-1657,Nos. 83-1580,s. 83-1580
• Citation: 743 F.2d 918
• Parties: P & R TEMMER, d/b/a Mobile Communications Service Company, Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee. AAT ELECTRONICS CORPORATION, Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 918

743 F.2d 918

240 U.S.App.D.C. 74

P & R TEMMER, d/b/a Mobile Communications Service Company, Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee.

AAT ELECTRONICS CORPORATION, Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee.

Nos. 83-1580, 83-1657.

United States Court of Appeals, District of Columbia Circuit.

Argued Feb. 6, 1984.

Decided Sept. 14, 1984.

Appeals from an Order of the Federal Communications Commission.

George Petrutsas, Washington, D.C., with whom Robert A. DePont and Dan J. Alpert, Washington, D.C., were on the brief for P & R Temmer, appellant in No. 83-1580.

Angela J. Campbell, Washington, D.C., with whom Martin R. Leader and John Q. Hearne, Washington, D.C., were on the brief for AAT Electronics Corporation, appellant in No. 83-1657.

Sue Ann Preskill, Atty., Federal Communications Commission, Washington, D.C., for appellee in Nos. 83-1580 and 83-1657. Bruce E. Fein, General Counsel, Daniel M. Armstrong, Associate General Counsel and Michael Deuel Sullivan, Counsel, Federal Communications Commission, Washington, D.C., were on the brief for appellee in Nos. 83-1580 and 83-1657.

Before WALD, BORK and STARR, Circuit Judges.

Opinion for the Court filed by Circuit Judge BORK.

BORK, Circuit Judge:

On March 22, 1982, the Federal Communications Commission ("FCC" or "the Commission") revoked, in separate proceedings, the authorizations of AAT Electronics Corporation ("AAT") and P & R Temmer ("Temmer") (together "appellants") to operate fifteen of the twenty channels in their separate trunked specialized mobile radio communication systems. Both AAT and Temmer appealed the FCC's action to this court. Because of the similarity of facts and issues the two cases presented, we consolidated them into this single appeal. These companion cases present essentially three issues for resolution by this court: (1) whether the FCC's revocation of appellants' authorizations constituted an abuse of discretion; (2) whether the FCC's refusal to grant appellants a hearing before revocation of their authorizations violated section 316 of the Communications Act of 1934, 47 U.S.C. Sec. 316 (1982); and (3) whether the FCC's refusal to grant appellants an extension of time in which to meet the loading requirements of 47 C.F.R. Sec. 90.375(e) (1981) constituted an abuse of discretion. We affirm the Commission's decisions.

I.

During the 1970's the FCC conducted a rulemaking proceeding, Docket 18262, that allocated new radio frequencies for land mobile radio services, in order to meet the growing public demand for mobile communications services. See Land Mobile Radio Service, Docket 18262, Second Report and Order, 46 F.C.C.2d 752 (1974), recon. in part, 51 F.C.C.2d 945, clarified, 55 F.C.C.2d 771 (1975), aff'd sub nom. National Association of Regulatory Utility Commissioners v. FCC, 525 F.2d 630 (D.C.Cir.), cert. denied, 425 U.S. 922, 96 S.Ct. 2203, 48 L.Ed.2d 816 (1976). Land mobile radio services are radio communications based on land, where either the transmitting or receiving station is mobile. 47 C.F.R. Sec. 2.1 (1983). Land mobile radio services are of two general types. Public services are operated by common carrier licensees and made available to members of the public. The most common type of public services are radio telephone services which interconnect with existing telephone systems. 525 F.2d at 634. This type has recently become popularized as "cordless telephones" or "car telephones" although, strictly speaking, they are not telephones since they are merely connected to a telephone system by a radio link. The other type of land mobile radio service is known as private services and includes all those not subject to common carrier regulation. These include dispatch services such as those operated by police and fire departments and taxicab companies. Id. They also extend, however, to services provided to a limited group of users by third party operators. It is this last group that is involved in this case.

In the private land mobile services area, the Commission adopted policies that made it possible for entreprenuers seeking to operate radio systems for others on a commercial basis to obtain their own system licenses. These commercially operated private radio systems became known as "Specialized Mobile Radio Systems" ("SMRS"). 51 F.C.C.2d at 956-74. ¹ To promote efficiency, the FCC also made available frequencies for technologically advanced "trunked SMRS" providing service on as many as twenty channels to each mobile unit. 51 F.C.C.2d at 946-47, 982-86; 46 F.C.C.2d at 754, 767-82. ²

After the FCC's allocation of frequencies for these new trunked SMRS's, various manufacturers competed to develop and market the equipment required to utilize these frequencies. Not until the summer of 1979, however, did the FCC type-accept the first available twenty channel equipment. ³ Unfortunately, this early equipment generally performed inadequately. ⁴ This poor early performance of the new trunked SMRS equipment is the starting point for the events that led AAT and Temmer to this court.

AAT

AAT was a pioneer in the new technology designed to take advantage of the opportunities in trunked SMRS. AAT applied to the FCC for a license to operate a twenty channel trunked SMRS on February 26, 1979. Brief of AAT at 6. On April 23, 1979, the FCC granted a five-year trunked system license to AAT. The license was limited, however, to a five channel system because the FCC had yet to type-accept twenty channel equipment. On August 23, 1979, after the FCC type-accepted twenty channel equipment, AAT applied for a modification of its license to authorize a twenty channel system. AAT subsequently sought to delay the FCC's decision on this modification until such a time as AAT would be able to obtain from the manufacturer the twenty channel equipment it required. AAT Joint Appendix ("AAT J.A.") at 38. On January 21, 1980, AAT resubmitted its twenty channel application. This application was granted on February 6, 1980. Id. at 42.

The FCC had originally required that all trunked SMRS licensees complete construction of their systems within one year and certify that at least 70% of the mobile units specified in the application are in operation before the term of the license expires. Land Mobile Radio Service, 46 F.C.C.2d at 794-95. This process of selling use of the trunked SMRS so as to put mobile units into service is referred to as "loading". On reconsideration, however, the Commission modified this requirement to allow the licensee to elect to construct and load in five channel stages. Under this system, the licensee need only complete construction of the first five channel trunked group within the first year, but must demonstrate that it is loaded to at least 70% of its capacity at the end of two years from the grant of authorization. 51 F.C.C.2d at 986. AAT elected in its application to construct the system in five channel stages. AAT J.A. at 29.

AAT constructed and put into operation its first five channel group long before expiration of the one year construction deadline (by March 15, 1980). When AAT commenced operation of these first five channels on its trunked SMRS, however, it encountered serious technical problems with the new equipment. AAT J.A. at 57-59, 77-78. ⁵ These technical difficulties persisted for approximately a year and a half and caused AAT to stop marketing the equipment. Brief of AAT at 11. New defect-free equipment was not available for marketing by AAT until September 1981. By then AAT was faced with the task of loading the first five channels of its system to 70% by February 6, 1982--a matter of less than five months.

On September 16, 1981, AAT discussed its loading problem with a Commission attorney. ⁶ On October 26, 1981, AAT advised the Commission that it was proceeding with construction on the remainder of its system. AAT J.A. at 50. AAT also informed the FCC that it would no longer be constructing the system in five channel stages and therefore was subject to the five year loading deadline, not the two year loading deadline. Id. AAT proceeded to complete construction of the entire twenty channel system by March 12, 1982. Id. at 52.

On March 22, 1982, the Chief of the Private Radio Bureau of the FCC notified AAT that because AAT had not satisfied the loading requirement for the first stage of its system, fifteen channels would be deleted from its authorization. AAT J.A. at 1. The FCC noted that the two year loading period had expired on February 6, 1982, and that AAT had only loaded 62 of the 350 mobile units necessary to meet that requirement. Id. Moreover, the FCC made clear that AAT's attempt to change retroactively its election to construct the system in stages in order to avoid the impending loading deadline was invalid. Id. ⁷

AAT filed a "Petition for Reconsideration and Request for Waiver or Hearing" with the FCC on April 21, 1982. AAT J.A. at 53. AAT requested the FCC to vacate its order deleting fifteen channels from its authorization, to allow AAT to change its election, and to waive the one year construction deadline. Alternatively, AAT sought a waiver and extension to September 6, 1983 of the two year loading deadline. Id. AAT also requested a hearing pursuant to section 316(a) of the Communications Act of 1934, 47 U.S.C. Sec. 316(a) (1982), which requires the FCC to afford a radio licensee, such as AAT, a hearing before modifying its license.

The Commission denied AAT's petition September 21, 1982. AAT Electronics Corp., AAT J.A. at 3. The Commission took the position that a change in a licensee's initial construction election is not permitted. Id. at 10-11. As for the equipment problems, the FCC noted that in an area of new technology such problems should have been anticipated and allowed for in AAT's planning. Finally, the FCC denied that AAT was entitled to a hearing because AAT's channel authorization had not been modified but rather was merely...