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UNITED STATES v. WESTERN ELEC. CO.

November 1, 1983

UNITED STATES OF AMERICA, Plaintiff,
v.
WESTERN ELECTRIC COMPANY, INC., AND AMERICAN TELEPHONE AND TELEGRAPH COMPANY, Defendants; UNITED STATES OF AMERICA, Plaintiff, v. AMERICAN TELEPHONE AND TELEGRAPH COMPANY, et al., Defendants



The opinion of the court was delivered by: GREENE

 The Operating Companies have petitioned the Court for a ruling pursuant to section VIII(C) of the decree *fn1" that, in particular areas (see infra)2 they be permitted to offer mobile radio services across LATA boundaries. *fn3" The Operating Companies claim that, without the requested relief, they will be significantly hindered in their legitimate efforts to provide important new services, particularly cellular radio, *fn4" and they will be forced unnecessarily to dismantle existing systems *fn5" which have transmitters in two or more LATAs. Comments in response to the petition have been received from the Department of Justice, the Federal Communications Commission, and numerous intervenors, *fn6" some of them objecting to the requested relief.

 I

 Mobile radio services are radio communication services in which, in contrast to the typical communication over the land-based telephone network, either the transmitting or the receiving station is mobile. *fn7" The Bell System companies presently provide several different types of mobile radio services which use radio frequencies to permit either one-way communications (such as with paging systems) or two-way communications (such as with mobile radio telephone systems) between mobile units and the land-based telephone network. *fn8" Although different technologies are used in the various types of systems, each requires the use of radio transmitters and receivers as well as central control facilities. *fn9" Transmission facilities connect the central control facilities to the radio transmitters, and they also connect the central control facilities to the landline telephone network. *fn10"

 All parties to this proceeding are in agreement regarding this basic technology as well as regarding two of the relevant issues. First, mobile radio services are "exchange telecommunications services" within the meaning of section II(D)(3) of the decree, and on this basis their provision by the Operating Companies within LATA boundaries does not, under the decree, require special Court approval. *fn11" Second, the transmitters of a number of existing systems send out powerful radio signals which do not and cannot conform strictly to the geographic boundaries of the LATAs: they will inevitably be received by mobile units located outside the LATA from which they originate. *fn12"

 The dispute here relates to those systems, existing or planned, which have a capability to provide wider service across LATA boundaries because (1) their transmitters are located in more than one LATA and (2) they are connected to a single central control facility to form an integrated, multi-LATA system. *fn13" Such systems constitute an "interexchange telecommunications service" which the Operating Companies may not offer under section II(D) absent Court approval. Hence this petition for an exception.

 II

 The most important of the mobile radio services planned to be offered by the Operating Companies is cellular radio service. *fn14" Conventional mobile telephone systems -- which cover large service areas with one or two high-powered transmitters located at prominent elevations -- suffer from three defects: they cannot serve a large number of subscribers, their range is limited, and their technology limits the quality of voice transmissions. In contrast, cellular systems -- which employ several moderately-powered transmitters centered in small, hexagonal-shaped geographic areas called "cells" -- serve many more subscribers, *fn15" cover a wider service areas, and provide more consistent transmission quality. *fn16" It is predicted, moreover, that cellular radio will be far more affordable than conventional mobile telephone service. *fn17" With the petition presently before the Court, the Operating Companies seek permission *fn18" to build multi-LATA cellular radio systems in particular geographic areas to conform to FCC rulings. *fn19"

 III

 As originally presented to the Court, the Operating Companies' petition was unclear as to the scope of the market they were seeking to enter; indeed, these companies appeared to seek the right to provide any and all mobile radio services without regard to LATA boundaries. This led the Department of Justice and several intervenors to oppose the petition. These opponents expressed particular concern that the Operating Companies would not only be permitted to combine several SMSAs into a single system but that, depending on new technology, they might be able to link distant metropolitan areas into one, expansive mobile radio system. See Department of Justice Memorandum, May 19, 1983, at 4, 18. Under such circumstances, telephone users would have had the option of routing long distance calls over either the landline interexchange networks or over a mobile radio system, thus in effect overriding on a large scale the decree's limitations on the territorial reach of the Operating Companies. Such a development would have been entirely inconsistent with the terms and purposes of the decree, and the Court would not have authorized it.

 Since that time, the original Operating Company petition has been -- depending upon the point of view -- either clarified or modified. The Operating Companies now request that they be permitted to construct and operate systems which have cells in more than one LATA in only nine specific geographic areas *fn20" each of them constituting one metropolitan complex. *fn21" The Court finds that, as so limited, the petition is meritorious, for the following reasons.

 First. The LATA boundaries were drawn with reference to such factors as the existing arrangement of the landline telephone system, landline calling patterns, the location of toll switching centers, and the attractiveness of areas to interexchange carriers. See April 20, 1983 Opinion at 8-12. In contrast, the technological and competitive issues implicated by mobile radio services are, in some locations, significantly different. For example, while the existence of a high volume of daily automobile traffic across LATA boundaries was not a significant factor in the drawing of those boundaries (e.g., between New York and Northern New Jersey), it is of central importance to the design of cellular service areas, since subscribers will want and expect to be in communication with mobile units in this traffic which regularly crosses from one LATA to another.

 It is clear that if the Operating Companies' cellular systems were in all instances restricted to LATA boundaries, their customers would be substantially inconvenienced. Under such a system, whenever a mobile unit crossed a LATA boundary, the communication between that unit and another mobile unit or a landline telephone would be suddenly disconnected, simply because the MTSO in one LATA could not serve cells in another LATA. After the disconnect, the customer would have to redial and reestablish contact through the MTSO for the "new" LATA -- the one which the mobile unit had just entered. Indeed, a customer using a landline telephone might have to guess into which LATA the mobile unit had ventured, and he would therefore have to place more than one call to re-establish contact. If a mobile unit were traveling along a LATA border, repeated disconnections of this kind could occur. *fn22" None of this is at all practical. *fn23"


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