[Federal Register Volume 59, Number 231 (Friday, December 2, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29730]
[[Page Unknown]]
[Federal Register: December 2, 1994]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 20 and 24
[GN Docket No. 93-252, FCC 94-270]
Implementation of Sections 3(n) and 332 of the Communications
Act--Regulatory Treatment of Mobile Services
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this Fourth Report and Order the Commission adopts rules
that make certain non-equity relationships attributable interests for
purposes of applying the 40 MHz limitation on broadband Personal
Communications Service (PCS) spectrum, the PCS-cellular cross-ownership
rules, and the general Commercial Mobile Radio Service (CMRS) spectrum
cap. The Commission concluded that it is not in the public interest to
treat resale agreements as attributable interests for the purpose of
applying CMRS multiple-and cross-ownership rules. However, the
Commission found that joint marketing arrangements between competitors
in the same geographic area and certain management agreements should be
treated as attributable interests for purposes of spectrum caps. These
rules are necessary to ensure that a single entity will not have the
ability to influence or control a large portion of the available mobile
wireless spectrum and thereby undermine competitive pricing for
wireless services.
EFFECTIVE DATES: The rule changes made to Part 20 of the Commission's
Rules will become effective on January 2, 1995. The rule changes made
to Part 24 of the Commission's Rules will become effective upon
publication in the Federal Register.
FOR FURTHER INFORMATION CONTACT:
Office of Plans and Policy Contact: Greg Rosston, (202) 418-2030.
Common Carrier Bureau Contact: Leila Brown, (202) 418-1300.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Fourth
Report and Order in GN Docket No. 93-252, adopted October 20, 1994 and
released November 18, 1994. The full text of Commission decisions are
available for inspection and copying during normal business hours in
the FCC Public Reference Center, Room 239, 1919 M Street, NW.,
Washington, DC. The complete text of this decision may also be
purchased from the Commission's copy contractor, International
Transcription Service, Inc. 2100 M St., NW., Suite 140, Washington, DC
20037, (202) 857-3800.
Final Regulatory Flexibility Analysis
Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C.,
Section 604, a final regulatory flexibility analysis has been prepared
and is presented below. It is available for public viewing as part of
the full text of the decision, which may be obtained from the
Commission or its copy contractor. Written comments on the proposals in
the Notice, including the Regulatory Flexibility Analysis, were
requested.
A. Need for and Objective of Rules
This rule making proceeding was initiated to implement Sections
3(n) and 332 of the Communications Act of 1934, as amended. In prior
orders, the Commission has adopted spectrum caps and cross-ownership
rules to prevent excessive aggregation of spectrum. The goal of these
limitations is to promote competition by ensuring that the aggregation
of spectrum in a given geographic area does not result in
anticompetitive influence over price or service offerings. The Fourth
Report and Order in GN Docket No. 93-252 adopts attribution rules that
make certain management agreements and joint marketing arrangements
attributable interests for purposes of applying the Commission's
spectrum cap rules. In the absence of such attribution rules, there is
a risk that management agreements and joint marketing agreements may
undermine our efforts to foster a competitive marketplace for wireless
services.
B. Issues Raised by the Public in Response to the Initial Analysis
No comments were submitted specifically in response to the Initial
Regulatory Flexibility Analysis.
C. Significant Alternatives Considered
The rules adopted in this Order are narrowly tailored to minimize
any intrusive consequences with regard to the operations of CMRS
licensees. The Order does not prohibit management or joint marketing
agreements. It finds, however, that certain management or joint
marketing agreements will be treated as creating attributable interests
in the licensees for purposes of the Commission's spectrum cap
limitations. The regulatory burdens we have established for all CMRS
licensees, including small entities, are necessary to carry out our
duties under the Communications Act of 1934, as amended. We will
continue to examine alternatives in the future with objectives of
eliminating unnecessary regulations and minimizing any significant
impact on small entities. A copy of this Order will be sent to the
Chief Counsel for Advocacy of the Small Business Administration.
Synopsis of the Fourth Report and Order
On July 18, 1994, the Commission adopted a Second Further Notice of
Proposed Rule Making, 59 FR 37734 (July 25, 1994) in which we sought
comment on whether we should consider certain non-equity relationships
to be attributable interests for purposes of applying the 40 MHz
limitation on broadband Personal Communications Service (PCS) spectrum,
the PCS-cellular cross-ownership rules, and a more general Commercial
Mobile Radio Service (CMRS) spectrum cap. The Commission also requested
comment on whether any attribution rules we might adopt in this
proceeding should apply differently depending on whether the applicant
or licensee involved is a designated entity.
Specifically, the Second Further Notice asked whether resale
agreements, management contracts, and joint marketing arrangements that
do not confer de facto control on a party should be considered
attributable because these interests may affect the incentive or
ability of PCS and other CMRS licensees to compete vigorously in the
marketplace or because they may affect the number of effective
competing providers or the independence of pricing decisions by service
providers. After close of the comment period, the Commission released
the Third Report and Order, 59 FR 59945 (Nov. 21, 1994), in this
docket. In that Order, the Commission adopted a spectrum cap of 45 MHz
on the combined ownership of broadband PCS, cellular radio, and
Specialized Mobile Radio (SMR) licenses that are classified as CMRS.
This spectrum cap is in addition to the existing 40 MHz cap on
broadband PCS ownership and the PCS-cellular cross-ownership rules. The
Third Report and Order also conformed the rules relating to station
management and control for CMRS providers and stated that we would
address whether standards regarding indicia of control in connection
with CMRS management contracts should be further conformed or modified
in the context of our examination of whether to attribute non-
controlling management contracts.
In an effort to ensure that the significant changes that will be
occurring in wireless services produce a robustly competitive market
with a diversity of efficient providers serving a variety of consumer
needs, the Commission has taken steps to prevent excessive aggregation
of spectrum through various spectrum caps and cross-ownership rules.
The goal of these limitations is to ensure that a single entity will
not have the ability to influence or control a large portion of the
available mobile wireless spectrum and thereby undermine competitive
pricing for wireless services. This Order makes attributable management
agreements and joint marketing agreements between licensees that confer
the ability to determine or significantly influence price or service
offerings. While such arrangements are considered attributable, they
will not be prohibited by our rules so long as those with attributable
interests remain below the various spectrum thresholds after
considering all attributable spectrum.
The Order concludes that management agreements, resale, and joint
marketing arrangements can enhance the competitiveness of wireless
service providers. Management agreements had been used in the SMR
industry and have proven to be beneficial to the introduction of new
technology such as trunked systems and new wide area systems. In
certain contexts, however, they may also be used to facilitate the
exercise of market power and produce anticompetitive results.
This Order is concerned with the effects on competition from non-
equity arrangements. In the current wireless marketplace joint
marketing arrangements such as MobiLink and Cellular One can be
beneficial to consumers. These types of arrangements facilitate roaming
and brand identity without conferring the ability to set or
significantly influence the price or service offerings of individual
licensees. However, there may be other joint marketing arrangements
that may confer the ability to significantly influence price and
service offerings. In these cases, those arrangements will be
considered attributable and would be prohibited if a party to the
agreement exceeded the applicable caps.
The Order is also concerned about the effects attributing such
arrangements might have on the competitiveness of designated entities.
It finds that considering management contracts attributable interests
for purposes of spectrum caps will not harm competition or efficiency,
nor will it harm the ability of designated entities to find suitable
expertise should they wish to do so. Investor/manager agreements are
one of many alternatives available to designated entities and the
Commission does not believe that treating management agreements as
attributable for designated entities in exactly the same manner for
spectrum cap purposes as for other entities will hamper the
competitiveness of designated entities. This does not mean, however,
that these management agreements will be deemed ``attributable'' for
purposes of the revenue thresholds in the entrepreneur's blocks. The
Order points out that this decision in no way restricts designated
entities (or other licensees) from entering into management or joint
marketing agreements with entities with no attributable interests in
the same market.
The Commission concludes that it is not in the public interests to
treat resale agreements as attributable interests for the purpose of
applying CMRS multiple-and cross-ownership rules. However, the
Commission has determined that joint marketing arrangements between
competitors in the same geographic area and certain management
agreements should be treated as attributable interests for purposes of
spectrum caps and pursuant to the rules and criteria we adopt in the
Fourth Report and Order.
Ordering Clauses
Accordingly, it is ordered that the rule changes made to Part 20 of
the Commission's Rules specified below will become effective on January
2, 1995. This action is taken pursuant to Sections 4(i), 7(a) 302,
303(c) 303(f) 303(g) and 303(r) of the Communications Act of 1934, as
amended, 47 U.S.C. Sections 154(i), 157(a), 302, 303(c), 303(f),
303(g), and 303(r).
It is further ordered that the rule changes made to Part 24 of the
Commission's Rules herein will become effective immediately upon
publication in the Federal Register. This action is taken pursuant to
Sections 4(i), 7(a), 302, 303(c), 303(f), 303(g) and 303(r) of the
Communications Act of 1934, as amended, 47 U.S.C. Sections 154(i),
157(a), 302, 303(c), 303(f), 303(g) and 303(r).
List of Subjects
47 CFR Part 20
Commercial mobile radio services.
47 CFR Part 24
Personal communications services.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Rule Amendments
47 CFR Parts 20 and 24 are amended as follows:
PART 20--COMMERCIAL MOBILE RADIO SERVICES
1. The authority citation for Part 20 continues to read as follows:
Authority: Secs. 4, 303, and 332, 48 Stat. 1066, 1082 as
amended; 47 U.S.C. 154, 303, and 332, unless otherwise noted.
2. Section 20.6 is amended by adding new paragraphs (d)(9) and
(d)(10) to read as follows:
Sec. 20.6 CMRS spectrum aggregation limit.
* * * * *
(d) * * *
(9) Any person who manages the operations of a broadband PCS,
cellular, or SMR licensee pursuant to a management agreement shall be
considered to have an attributable interest in such licensee if such
person, or its affiliate has authority to make decisions or otherwise
engage in practices or activities that determine, or significantly
influence,
(i) The nature or types of services offered by such licensee;
(ii) The terms upon which such services are offered; or
(iii) The prices charged for such services.
(10) Any licensee or its affiliate who enters into a joint
marketing arrangements with a broadband PCS, cellular, or SMR licensee,
or its affiliate shall be considered to have an attributable interest,
if such licensee, or its affiliate has authority to make decisions or
otherwise engage in practices or activities that determine, or
significantly influence,
(i) The nature or types of services offered by such licensee;
(ii) The terms upon which such services are offered; or
(iii) The prices charged for such services.
* * * * *
PART 24--PERSONAL COMMUNICATIONS SERVICES
1. The authority citation for Part 24 continues to read as follows:
Authority: 47 U.S.C. 154, 301, 302, 303, 309, and 332, unless
otherwise noted.
2. Section 24.204 is amended by adding new paragraphs (d)(2)(ix)
and (d)(2)(x), by redesignating paragraphs (f)(1), (2) and (3) as
(f)(2), (3) and (4), and by redesignating the introductory text of
paragraph (f) as paragraph (f)(1) and revising it to read as follows:
* * * * *
Sec. 24.204 Cellular eligibility.
* * * * *
(d)* * *
(2)* * *
(ix) Any person who manages the operations of a broadband PCS or
cellular licensee pursuant to a management agreement shall be
considered to have an attributable interest in such licensee, if such
person, or its affiliate has authority to make decisions or otherwise
engage in practices or activities that determine, or significantly
influence,
(A) The nature or types of services offered by such licensee;
(B) The terms upon which such services are offered; or
(C) The prices charged for such services.
(x) Any licensee who enters into a joint marketing arrangement with
a broadband PCS or cellular licensee, or its affiliate, shall be
considered to have an attributable interest, if such licensee has
authority to make decisions or otherwise engage in practices or
activities that determine, or significantly influence,
(A) The nature or types of services offered by such licensee;
(B) The terms upon which such services are offered; or
(C) The prices charged for such services.
* * * * *
(f) Cellular Divestiture. (1)(i) Parties holding controlling or
attributable ownership interests in cellular licensees may be a party
to a broadband PCS application (i.e., have a controlling or
attributable interest in a broadband PCS applicant), and such PCS
applicant will be eligible for more than one 10 MHz broadband PCS
license and/or 30 MHz broadband PCS license(s) pursuant to the
divestiture procedures set forth in paragraphs (f)(2) through (4) of
this section; Provided, however, that these divestiture procedures
shall be available only to:
(A) Parties with controlling or attributable ownership interests in
cellular licenses where the CGSA(s) covers 20 percent or less of the
PCS service area population;
(B) Parties with attributable interests solely due to management
agreements or joint marketing agreements; and
(C) Parties with non-controlling attributable interests in cellular
licenses, regardless of the degree to which the CGSA(s) covers the PCS
service area population.
(ii) For purposes of this paragraph, a ``non-controlling
attributable interest'' is one in which the holder has less than a
fifty (50) percent voting interest and there is an unaffiliated single
holder of a fifty (50) percent or greater voting interest.
* * * * *
[FR Doc. 94-29730 Filed 12-1-94; 8:45 am]
BILLING CODE 6712-01-M