December 22, 1998

The Honorable William E. Kennard
Chairman
Federal Communications Commission
1919 M Street, N.W.
Washington, D.C. 20554

Dear Chairman Kennard:

In August 1993 Congress enacted section 309(j) of the Communications Act of 1934 (47 U.S.C. Sec. 309(j)) granting the Commission the authority to utilize competitive bidding to award radio licenses. As part of that law, Congress included paragraph 6(E), which states:

Nothing in this subsection, or in the use of competitive bidding, shall be construed to relieve the Commission of the obligation in the public interest to continue to use engineering solutions, negotiation, threshold qualifications, service regulations, and other means in order to avoid mutual exclusivity in application and licensing proceedings. 47 U.S.C. Sec. 309(j)(6)(E).

Since that time we have been concerned that, in both its general spectrum management activities and its implementation of section 309(j), the Commission has frequently ignored this provision of the law. Instead, the Commission has adopted policies resulting in mutual exclusivity that could have been avoided.

Nowhere has this practice been more apparent than with respect to the Commission's treatment of private wireless services.

Our concerns about the Commission's policies were heightened by recent trade press reports indicating that the Commission staff feels their "hands are tied" and that "additional tools for spectrum management" may be needed. See Jeffrey Silva, Phythyon Confirms FCC Proposal to Auction Private Wireless Spectrum, RCR News (Nov. 2, 1998). To the extent that these comments are an accurate reflection of the Commission's views, we would like to set the record straight before the Commission releases its Notice of Proposed Rulemaking ("NPRM") to address private wireless issues.

Because we were concerned that the Commission was ignoring its obligations under section 309(j)(6)(E), Congress amended section 309(j) to emphasize the Commission's responsibility to avoid mutual exclusivity whenever possible. Specifically, section 3002 of the Balanced Budget Act of 1997 ("BBA") amended the Commission's general authority to utilize competitive bidding to read as follows:

If, consistent with the obligations described in paragraph (6)(E), mutually exclusive applications are accepted for any initial license or construction permit, then, except as provided in paragraph (2), the Commission shall grant the license or permit to a qualified applicant through a system of competitive bidding that meets the requirements of this subsection. Pub. L. No. 105-33, Sec. 3002 (1997) (emphasis added).

Congress's explanation of this change is unambiguous. While a portion of this section expanded the Commission's authority to utilize competitive bidding, Congress emphasized that the Commission was obligated to consider ways to avoid mutual exclusivity among applicants before conducting an auction. Specifically, the Conferees stated that:

Notwithstanding its expanded auction authority, the Commission must still ensure that its determinations regarding mutual exclusivity are consistent with the Commission's obligations under section 309(j)(6)(E). The conferees are particularly concerned that the Commission might interpret its expanded competitive bidding authority in a manner that minimizes its obligations under section 309(j)(6)(E), thus overlooking engineering solutions, negotiations, or other tools that avoid mutual exclusivity. H.Rept. 105-217, at 572 (1997).

Congress did not engage in an idle act when it legislated this change. It did so for a reason. The Commission must not ignore what Congress enacted by reading this provision out of the law and adopting policies inconsistent with statutory requirements.

In addition to clarifying the Commission's obligations to avoid mutual exclusivity, the BBA also contained provisions that were intended to increase frequencies available for shared or exclusive use of private wireless services. In the explanation of section 3002(e) of BBA, the Conferees stated their expectation that "the Commission and the NTIA [would] consider the need to allocate additional spectrum for shared or exclusive use by private wireless services in a timely manner." H.Rept. 105-217, at 575 (1997) (emphasis added).

The remarks attributed to the Commission staff and reported in the trade press reveal at least two fundamental misunderstandings regarding the BBA amendments to the Communications Act.

As we noted above, it is our understanding that the Commission will soon release a NPRM that will reach tentative conclusions with respect to the private wireless service that are inconsistent with law and the intent of Congress when it passed the BBA. We are troubled by disclosures that the NPRM will tentatively conclude that the Commission has no alternative but to utilize competitive bidding. We are equally troubled that the NPRM apparently will not propose any additional frequencies for the private wireless service. In our view, the NPRM should be substantially revised before it is issued. In particular, any tentative conclusions on policy should incorporate the Commission's ongoing duty to use engineering solutions, negotiation, threshold qualifications, service regulations, and other means in order to avoid mutual exclusivity in application and licensing proceedings. It should also identify additional frequencies that have the potential to be allocated for private wireless services, consistent with Congress's instructions when the BBA was enacted.

We look forward to hearing from you regarding this important matter.

Sincerely,

REPRESENTATIVE JOHN D. DINGELL
REPRESENTATIVE BILLY TAUZIN
SENATOR TOM DASCHLE
SENATOR JOHN BREAUX
SENATOR SPENCER ABRAHAM
SENATOR SLADE GORTEN

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