Just to clerify. 

All aircraft must have a transponder and mode C altitude reporting and it must be turned on in ALL airspace in CONUS above 10,000' MSL unless you are within 2500' of the ground (unless you have ATC authorization to do so without it).    All aircraft with transponders/encoders must have them on in ALL controlled airspace plus the airspace listed in 91.215 (b).  The only way you can fly in controlled airspace without a transponder is in aircraft that don't have an electrical system such as balloons, gliders, ultralights, vintage aircraft without certified electrical systems, or some other home built aircraft.  Even those aircraft have to have a transponder above 10,000' MSL if they are more than 2500' AGL, or operating in the airspace listed in 91.125(b). 

Ron Galbraith

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wrongo--- it says in all airspace listed in para (b) or in all controlled airspace.

Part (c) doesn't apply outside the airspace listed in (b) though.

Yes, but not everywhere.  Note that the part you quoted references 91.215 (b), which lists all the airspace that requires use of a transponder (i.e. in class A, B and C airspace, within 30 nm of most class B airports, above 10,000 ft MSL, etc).  Part (c) doesn't apply outside the