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FCC PROPOSES GOVERNING SMRS BY PRIVATE AND COMMERCIAL REGS

WASHINGTON-Federal regulators are preparing to propose a novel regulatory scheme combining private and commercial mobile radio rules under one license, while work continues on crafting final wireless common carrier rules.

The two rulemakings are offshoots of landmark 1993 legislation that restructured the wireless telecommunications industry by authorizing auctions and establishing a new regulatory paradigm of commercial and private mobile radio services.

The broad objectives of that legislation were to level the wireless playing field by lightly regulating like services similarly, increasing competition and getting licenses in the hands of firms as fast as they could pay for them.

Both initiatives must be completed by early August, when the three-year transition period for converting private wireless services, like specialized mobile radio and private carrier paging, to commercial mobile radio service ends.

SMRs, in particular, present policymakers with a unique challenge in that regard. Is an SMR private or commercial?

The Federal Communications Commission believes SMRs can be private or commercial and they can be regulated as such: private mobile radio rules for dispatch and CMRS for the interconnected telephony part of the business. Such a two-pronged approach to wireless regulation does not exist today. SMRs, unlike other wireless services, do not fit neatly into either private or commercial wireless regulatory regimes.

Whether interconnected SMRs will be subject to the same level of CMRS regulation as paging, cellular and personal communications services is another issue. The FCC has the discretion to set different levels of CMRS regulation, but the agency has yet to decide which carrier obligations associated historically with local and long-distance telephone companies will apply to commercial wireless carriers.

In regulatory jargon, it is a question of federal regulatory forbearance. So far, commercial wireless carriers have been told not to worry about tariffs. But that is just one of many common carrier regulations out there.

The transition to this brave new world of wireless regulation has gone smoothly for nearly everyone, except SMR operators.

The SMR industry, which will boast 2 million subscriber units by year’s end, has been caught in the middle of powerful regulatory, marketplace and technological crosswinds.

As a result, the real potential of the industry has not been realized. A great divide exists between large SMRs, like Nextel Communications Inc., and small SMRs that finally seem to have awakened to the sea of change that is at hand.

The digital age, regulatory reform, auctions and the prospect of being moved to new frequencies to make room for well-funded, wide-area SMR operators have produced high anxiety in the dispatch radio world. Most of the 3,000 SMR operators have 5,000 or fewer radios in service. Nextel, by contrast, has about 900,000 (61,000 digital and 840,000 analog) radios on the air.

But even with 800 MHz, 900 MHz and 220 MHz dispatch radio licensing in limbo in recent years, the industry grew 13 percent this year. And Wall Street has taken note.

“When you look at the winners and losers,” said American Mobile Telecommunications Association President Alan Shark, “cellular has not been hurt at all by this so-called transition. The PCS industry has not been hurt. We are the ones that are suffering the most.”

Some of the gridlock is clearing, though. The FCC recently processed 40,000 backlogged 800 MHz and granted 6,300 licenses. Next week, more than 1,000 900 MHz SMR licenses will be auctioned.

“This is the FCC’s transition,” remarked Shark, who took over AMTA four- and-a-half years ago. “Maybe the industry needs a transition period as well.”

Rules for 800 MHz SMR licensing and auctions should be completed in December. Auctions will be held next year despite loud and angry protests of small operators, some of whom have banded together-shunning AMTA-to lobby the FCC and Congress against competitive bidding.

In addition, some private wireless users have objected to the FCC decision to shut off access to 800 MHz general category channels, which the agency wants to reserve for SMR licensing only in the future.

Shark, insisting that AMTA represents big and small SMRs alike (350 members), said auctions are a false issue and the real issue is how small SMRs can grow. And the key to that, according to Shark, is to secure more spectrum and exploit advanced technologies that increase channel capacity.

“When I look at some of these groups (of small SMRs), I think they’re fooling themselves into believing that a few congressional smiles can win them the outcome they’re looking for,” said Shark.

Shark notes that AMTA in early 1992 proposed a regulatory blueprint to accommodate the trend toward cellular-like wide-area digital systems while preserving rights and promoting opportunities for small dispatch radio operators. But it wasn’t acted on promptly and by the time the FCC got serious about it, Congress in 1993 began to rewrite wireless telecom regulations.

The AMTA chief also stressed the industry is in need of sales savvy.

“I think what has hurt has been a lack of marketing on behalf of many operators,” said Shark. “They’re wonderful at understanding radios; they’re not as good at understanding marketing.”

It would help, too, said Shark, if the price of SMR radios would drop below the $500-600 range. But more importantly, Shark said the industry needs to come together. “When you look at our competitive marketplace we’re at a competitive disadvantage if we remain this fragmented,” he warned.

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