[Federal Register Volume 64, Number 194 (Thursday, October 7, 1999)]
[Rules and Regulations]
[Pages 54564-54577]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-25704]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 20 and 22
[WT Docket Nos. 98-205, 96-59, GN Docket No. 93-252; FCC 99-244]
1998 Biennial Regulatory Review--Spectrum Aggregation Limits for
Wireless Telecommunications Carriers
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: This document completes the Commission's re-assessment of the
45 MHz Commercial Mobile Radio Service (CMRS) spectrum cap and cellular
cross-interest rules initiated as part of our 1998 biennial review of
the Commission's regulations pursuant to section 11 of the
Communications Act. After careful analysis and extensive review of the
rules and the record in this proceeding, the Commission concludes that
at this time the spectrum cap and cellular cross-interest rules
continue to be necessary to promote and protect competition in CMRS
markets. However, the Commission finds that it is appropriate to modify
both rules to allow some greater cross-ownership at this time. The
Commission adopts a modest increase in the spectrum cap's current
aggregation limit in rural areas to reflect the differing costs and
benefits of limits on spectrum aggregation in rural areas, and a
separate attribution benchmark of 40 percent for passive institutional
investors. The Commission amends the cellular cross interest rule by
increasing the attribution benchmarks used in the rule. Finally, as
part of this proceeding, the Commission denied a petition to forbear
from enforcement of the CMRS spectrum cap filed by the Cellular
Telecommunications Industry Association (CTIA).
DATES: Effective November 8, 1999.
FOR FURTHER INFORMATION CONTACT: David Krech or Pieter van Leeuwen,
Commercial Wireless Division, Wireless Telecommunications Bureau, (202)
418-0620.
SUPPLEMENTARY INFORMATION: This Report and Order in WT Docket Nos. 98-
205, 96-59, GN Docket No. 93-252, adopted September 15, 1999, and
released September 22, 1999, is available for inspection and copying
during normal business hours in the FCC Reference Center, Room 230,
1919 M Street N.W., Washington D.C. The complete text may be purchased
from the Commission's copy contractor, International Transcription
Service,
[[Page 54565]]
Inc., 1231 20th Street, N.W., Washington D.C. 20036 (202) 857-3800.
Synopsis of the Report and Order
I. Background
A. CMRS Spectrum Cap
1. The CMRS Spectrum Cap. Under the CMRS spectrum cap, ``[n]o
licensee in the broadband PCS, cellular, or SMR services (including all
parties under common control) regulated as CMRS [] shall have an
attributable interest in a total of more than 45 MHz of licensed
broadband PCS, cellular and SMR spectrum regulated as CMRS with
significant overlap in any geographic area.'' 47 CFR 20.6(a). A
``significant overlap'' of a PCS licensed service area and CGSA(s) and
SMR service area(s) occurs when at least ten percent of the population
of the PCS licensed service area is within the cellular geographic
service area and/or SMR service area(s). 47 CFR 20.6(b).
2. History of the Spectrum Cap. The CMRS spectrum cap was
established in Implementation of Sections 3(n) and 332 of the
Communications Act, GN Docket No. 93-252, Third Report and Order, 59 FR
59945 (November 21, 1994) (CMRS Third Report and Order). Prior to the
adoption of the CMRS spectrum cap, the Commission had imposed service-
specific limitations on aggregation of broadband PCS spectrum and on
cellular/PCS cross-ownership. In adopting a general, multiple service
cap in addition to the PCS/cellular ownership rules, the Commission
explained that an overall spectrum cap for CMRS would add certainty to
the marketplace without sacrificing the benefits of pro-competitive and
efficiency-enhancing aggregation. The Commission found that if
licensees were to aggregate sufficient amounts of CMRS spectrum, it
would be possible for them, unilaterally or in combination, to exclude
efficient competitors, to reduce the quantity or quality of services
provided, or to increase prices to the detriment of consumers. The
Commission found that a 45 MHz cap provided a ``minimally intrusive
means'' for ensuring that the mobile communications marketplace
remained competitive and preserved incentives for efficiency and
innovation. The Commission further clarified that certain business
relationships could give rise to attributable ownership interests for
purposes of the CMRS spectrum cap. Implementation of Sections 3(n) and
332 of the Communications Act, GN Docket No. 93-252, Fourth Report and
Order, 59 FR 61828 (December 2, 1994) (CMRS Fourth Report and Order).
3. In 1996, the Commission reaffirmed the basic tenets of the CMRS
spectrum cap and provided additional economic rationale for its use.
Amendment of parts 20 and 24 of the Commission's Rules--Broadband PCS
Competitive Bidding and the Commercial Mobile Radio Service Spectrum
Cap; Amendment of the Commission's Cellular/PCS Cross-Ownership Rule,
WT Docket No. 96-59, GN Docket No. 90-314, Report and Order, 61 FR
33859 (July 1, 1996) (CMRS Spectrum Cap Report and Order, recon.
(BellSouth MO&O) aff'd. sub nom. BellSouth Corporation v. FCC, 162 F.3d
1215 (D.C. Cir. 1999). The Commission found that such a spectrum cap
would help ensure competition and would address concerns about
potential anticompetitive behavior in CMRS markets. The Commission also
reconsidered, but did not alter, the 20 percent ownership attribution
standard. It did, however, adopt a four-pronged test under which it
would review requests for waiver of the standard. The Commission also
declined to alter the geographic attribution standard. In 1997, the
Commission has also clarified that the CMRS spectrum cap is not limited
to real-time, two-way switched telephone service, but covers a variety
of services within the definition of CMRS. The D.C. Circuit affirmed
this position, and declined to impose a distinction between voice and
non-voice SMR in the context of spectrum acquisition. The court instead
found the inclusion of all SMR spectrum in the cap, including those
frequencies used to provide data services, to be reasonable. BellSouth
v. FCC, 162 F.3d 1215 (1999).
B. Cellular Cross-Interest Rule
4. The Rule. 47 CFR 22.942 prohibits any person from having a
direct or indirect ownership interest in licensees for both cellular
channel blocks in overlapping CGSAs. A party with a controlling
interest in a licensee for one cellular channel block may not have any
direct or indirect ownership interest in the licensee for the other
channel block in the same geographic area. A party may, however, have a
direct or indirect ownership interest of five percent or less in the
licensees for both channel blocks so long as neither of those interests
is controlling. 47 CFR 22.942(a). Divestiture of interests as a result
of an assignment of authorization or transfer of control must occur
prior to the consummation of the transfer or assignment. 47 CFR
22.942(b).
5. History of the Cellular Cross-Interest Rule. The cellular cross-
interest rule was adopted in 1991 in order to guarantee the competitive
nature of the cellular industry and to foster the development of
competing systems.
C. Notice of Proposed Rulemaking
6. In the Notice of Proposed Rulemaking in this proceeding, we
sought comment initiated this re-evaluation of the CMRS spectrum cap as
part of our 1998 biennial regulatory review. 1998 Biennial Regulatory
Review--Spectrum Aggregation Limits for Wireless Telecommunications
Carriers, WT Docket No. 98-205, Notice of Proposed Rulemaking, 63 FR
70727 (Dec. 22, 1998) (NPRM). The NPRM requested comment on whether the
Commission should retain, modify or repeal the spectrum cap. Specific
options set forth in the NPRM included: (1) Modification of the
significant overlap threshold; (2) modification of the 45 MHz
limitation; (3) modification of the ownership attribution thresholds;
(4) forbearance from enforcing the spectrum cap; (5) sunsetting the
spectrum cap; and (6) elimination of the spectrum cap. The NPRM also
sought comment on whether to retain, modify, or repeal the cellular
cross-interest rule. In addition, the NPRM incorporated a petition
filed by CTIA on September 30, 1998, requesting that the Commission
forbear from enforcing the CMRS spectrum cap pursuant to section 10 of
the Communications Act. Twenty-five parties filed comments on the NPRM,
and fifteen parties filed reply comments.
II. Report and Order
A. Assessment of the Need for the Spectrum Cap and Cellular Cross-
Interest Rules
7. The Commission concludes that bright-line spectrum cap and
cellular cross-interest rules remain necessary to serve the public
interest at this time. The Commission also determines that both our
spectrum cap and cellular cross-interest rules are appropriate and
effective tools to be used in conjunction with our case-by-case reviews
under 47 U.S.C. 310(d) as we evaluate proposed mergers and
acquisitions.
1. Public Policy Objectives
8. The Commission's re-evaluation of the need for CMRS spectrum
aggregation limits and cellular cross-interest limits is guided by four
central principles. First, the operation of market forces generally
better serves the public interest than regulation. As a general matter
of principle, we prefer to place ultimate reliance on the market,
rather than on regulation, to direct the course of development in the
CMRS and other markets. Second, we intend to foster vigorous
competition in all
[[Page 54566]]
telecommunications markets. In particular, we wish to ensure that there
are no regulatory impediments to the evolution of wireless carriers
into more effective competitors vis-a-vis the local wireline telephone
companies. Third, we seek to secure the benefits of modern
telecommunication services, including wireless services, for all areas
of our Nation, including high-cost and rural areas. Finally, our
regulations must promote, rather than impede, the introduction of
innovative services and technological advances.
2. Current State of CMRS Competition and the Spectrum Cap
9. There is considerable evidence that competition is steadily
growing in many CMRS markets. Implementation of Section 6002(b) of the
Omnibus Budget Reconciliation Act of 1993; Annual Report and Analysis
of Competitive Market Conditions With Respect to Commercial Mobile
Services, Fourth Report, FCC 99-136 (rel. June 24, 1999) (Fourth Annual
CMRS Competition Report). Commenters generally agree that considerable
progress has been made in recent years toward more competitive CMRS
markets. There is also general agreement that further progress toward
competitive CMRS markets can be anticipated. Nevertheless, commenters
remain sharply divided in their assessments of the current state of
competition in these markets. Those favoring retention of a spectrum
cap typically distinguish among the various wireless product markets
and highlight barriers to entry over the near term, most notably, the
need to secure spectrum rights before they can enter these markets.
Commenters favoring elimination of the cap tend to define markets
broadly, raise de novo entry prospects associated with future spectrum
auctions, and predict dramatic changes from the adoption of third
generation (3G) wireless network technologies, such as IMT-2000.
10. Although we agree that competition is increasing in CMRS
markets, we find that there remain significant reasons to be concerned
about the effects of undue concentration of CMRS spectrum. Even in
major metropolitan markets, where numerous competitors are offering
mobile voice services, in almost all markets the two cellular carriers
still have in excess of 70 percent of the customers. In addition, the
amount of CMRS spectrum is fixed, and the discipline of market forces
is tempered by the reality that would-be market entrants must obtain
spectrum rights, which in practical terms requires that they find
willing sellers.
11. We also observe that, by and large, the current 45 MHz spectrum
aggregation limit does not appear to be constraining carriers.
Generally, PCS carriers have not yet deployed capacity up to the limits
of their licensed capacity. In addition, very few cellular carriers
have acquired spectrum up to the permissible limit. We also have
received only a handful of waiver requests to exceed the cap.
Consequently, at least for now, we determine that our spectrum cap rule
has not significantly constrained carriers in their ability to provide
service at low cost, deploy new services, or commit to innovation.
Recognizing the speed with which the industry is changing and the
biennial review mandate of the 1996 Act, however, we will revisit these
issues as part of our year 2000 biennial review. We decline to adopt a
sunset for either the spectrum cap or the cellular cross-interest rule
at this time. As we discuss in this Order, competition in CMRS markets
is changing rapidly. We do not believe that at this time we can
accurately predict when it would be proper to eliminate either of these
two rules. We believe it is more appropriate at this time to reassess
the state of CMRS markets, and the continuing need for these rules, as
part of our year 2000 biennial review.
3. Assessment of the State of CMRS Competition and the Effects of
Possible Spectrum Consolidation
a. Analytical Framework. 12. In determining whether to eliminate,
sunset, or modify the spectrum cap and cellular cross-interest rules we
take into consideration several factors. One factor that must be
considered is the ease or difficulty with which competitors can enter
CMRS markets. Our assessment must also take into account the effect of
the relevant rules on the long-term prospects for competition in CMRS
markets. Finally, when evaluating the spectrum cap and cellular cross-
interest rules, we must consider the potential risk of re-concentration
in CMRS markets. We are particularly concerned about the possibility of
coordinated behavior among CMRS carriers.
b. Discussion. 13. Market Entry. With respect to market entry,
``entry is * * * easy if entry would be timely, likely, and sufficient
in its magnitude, character and scope to deter or counteract the
competitive effects of concern.'' Merger Guidelines at Sec. 3.0. In
particular, we note that antitrust authorities ``will consider timely
only those committed entry alternatives that can be achieved within two
years from initial planning to significant market impact.'' Merger
Guidelines at Sec. 3.2. Because a license for use of government
spectrum is required to provide CMRS, we must conclude that entry into
CMRS markets is not ``easy.'' Markets function optimally only if one or
more firms are able to enter a market or expand current production
swiftly and effectively in response to the elevation of prices (or
degradation of service) by one or more firms attempting to exercise
market power. We believe that barriers to entry are significant, and
that the current state of competition requires continued vigilance over
at least the near term.
14. Prospects for Long-Term Competition. Turning to the second
factor, long-term prospects for competition, there is little dispute in
the record that considerable progress has been made toward the goal of
promoting competition in CMRS markets, but many commenters question
whether an adequate array of competitive options is now available to
all of the nation's wireless consumers. The Commission has had prior
occasion to point out the continuing need to promote competition and
the entrance of new participants in the CMRS markets even after
broadband licenses were awarded. Given the ongoing impediments to entry
into broadband CMRS markets, we believe that our spectrum cap and
cellular cross-interest rules continue to serve our competition goals.
15. Moreover, despite enormous progress in the past few years, the
broadband PCS sector remains in the early stages of deployment. While
many carriers are offering service now, facilities-based coverage often
is provided only to a portion of a new carrier's potential market.
Additionally, many licensees have yet to begin offering service at all,
and some have yet to begin constructing their networks. In this regard,
we find while our public interest standard and the Sherman and Clayton
Acts can deal with potential rather than actual competition, the
spectrum cap is a particularly effective way of addressing concerns
related to the loss of potential competition.
16. Our concern that competition in CMRS markets is not fully
developed is supported by the fact that, as conventional analyses of
market concentration show, even the largest urban markets for mobile
telephone services remain quite concentrated. We find persuasive the
submissions by several commenters with data on market concentration in
urban markets for mobile voice services. In addition, the Department of
Justice (DOJ) recently found that market concentration in the fourteen
markets in which SBC and Ameritech both control cellular licenses was
in the range of 3200 to 4100, well
[[Page 54567]]
above the 1800 threshold at which the DOJ normally considers a market
to be concentrated.
17. The data in the record indicate that in most of the nation's
200 largest markets the two cellular companies together have in excess
of 70 percent of mobile phone subscribers. Given the limited deployment
of PCS in less densely populated areas, one of these two firms, and in
many cases both, likely command market shares in excess of 35 percent.
18. We are not persuaded by the arguments of commenters who urge
elimination of the cap based on information other than market shares or
concentration as evidence of the competitive nature of CMRS markets.
However, the critical issue is whether these and other indicia of
increased competition would be threatened by a reconsolidation of the
industry. We agree with those commenters who contend that eliminating
the spectrum cap at this time could pose such a threat, by enabling
reconsolidation to occur.
19. Finally, while we agree with commenters who argue that the use
of historical or contemporaneous data on market performance potentially
understates the potential competitive impact of new entrants in a
dynamic industry and overstates the risks of anticompetitive conduct,
we remain concerned about the effects of possible consolidation of CMRS
spectrum over the next two years. We are concerned that if we abandon
our ownership rules at this time, the competitive success we have seen
in these markets may be reversed.
20. Reconsolidation. Given the current levels of market
concentration discussed above, we are particularly concerned that any
reconsolidation in the CMRS markets would either ``potentially raise
significant competitive concerns'' or ``create or enhance market power
or facilitate its exercise.'' Merger Guidelines at Secs. 1.51, 2.0. In
mature industries, the typical indicia of market power being exercised
would be curtailed usage, increased prices, or degraded service.
Because of the dynamic nature of CMRS markets, however, we think it
more likely that any exercise of market power would be evidenced by a
slowing in the rate of growth of new customers and usage, prices
falling less rapidly than would otherwise occur, or delays in the
introduction of newer services.
21. In this regard, we reject the view of commenters who suggest
that consolidation of CMRS markets to as few as three competitors would
not adversely affect CMRS competition. We believe that significant
benefits of competition are unlikely to be exhausted with the entry of
a third carrier. First, the value of additional entry by fourth and
fifth competitors need not be manifested solely through falling prices.
The benefits of further entry may appear in the form of improved
quality, product innovation, and product differentiation. Second,
economic theory generally supports the view that additional entry, and
the installation of additional capacity, will afford consumers
additional benefits, whether through pricing or otherwise. We are
persuaded that if mobile voice markets were to stabilize as three-firm
oligopolies, recently observed price competition could be reduced or
eliminated. Finally, we also draw upon our experience in other
telecommunications markets, where consumers generally have benefited
from their ability to choose from among more than three firms to obtain
the services they desire.
22. We are also not persuaded that the existence of nationwide
service and pricing plans substantially eliminates any concern that
carriers would amass spectrum in an effort to extract monopoly rents.
The fact that a major service provider may offer nationwide service and
pricing plans does not, in our view, mean that we should be unconcerned
about its level of spectrum accumulation in a particular market. To the
contrary, we conclude that the control of excessive spectrum by any
single market participant would be a matter of serious concern.
23. At this time, we also reject arguments by commenters for a more
broadly defined product market. Consumers obtain mobile phone services
principally from cellular, PCS and digital SMR carriers. While
consumers may be considering other services as alternatives, no
evidence was provided suggesting that these alternatives are capable of
constraining competitive behavior in this product market. In the case
of mobile voice telephone service, for example, no commenter furnished
evidence that consumers perceive any particular alternative
communication service as sufficiently interchangeable, such that it
could impede a hypothetical monopolist of mobile voice services from
profitably elevating prices--the standard test for defining a market.
In particular, no evidence was submitted that consumers are switching
between mobile voice telephone services and other services in response
to changes in relative prices.
4. Benefits of Bright-Line Rules Over Alternative Regulatory Tools
a. Benefits of Regulatory Certainty and Regulatory Efficiency 24.
By setting bright lines for permissible ownership interests, the
spectrum cap and cross-ownership rules benefit the public, the
telecommunications industry, and the Commission by providing regulatory
certainty and facilitating more rapid processing of transactions.
Providing regulatory certainty is particularly important in an
environment in which there is likely to be widespread restructuring of
CMRS spectrum holdings, for example, in apparent efforts to create
national footprints or as the by-product of larger mergers within the
telecommunications industry. We also agree with numerous commenters who
assert that regulatory certainty is critical to providing the industry
with incentives to make investments, including in new technologies such
as 3G service. Moreover, we believe that continuing to provide bright-
line guidance as to permissible ownership interests will assist CMRS
service providers to structure their transactions and plan their
investments efficiently, based on their knowledge of the relevant
regulatory requirements. This, in turn, will facilitate obtaining
financing for such transactions and investments.
25. Our bright-line rules also promote regulatory efficiency, both
by speeding the processing of transfers of control and assignment of
licenses and by conserving the resources of the Commission and of
interested parties. Abandoning our spectrum cap and cross-interest
rules inevitably would lengthen our review process. Given the rapid
pace of developments in the telecommunications industry, we believe
that any advantages that might accrue to market participants from
individualized review of spectrum concentration are outweighed by the
advantages to them of a shorter review period for their transactions.
We note in that regard that any party that believes that an
individualized analysis is appropriate in its case may request a waiver
of our spectrum cap and cross-interest rules.
b. Benefits of Preventing Spectrum Re-Concentration When 47 U.S.C.
310(d) Review is Not Available. 26. We further conclude that the
spectrum cap serves important public interest goals that are not
covered by 47 U.S.C. 310(d) . The Commission does not have the
opportunity to review under 47 U.S.C. 310(d) certain kinds of
transactions that may result in re-concentration of spectrum. For
example, our review authority under 47 U.S.C. 310(d) would
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not extend to a transaction in which less-than-controlling interest in
a licensee was transferred, even if the holder of one cellular license
in a particular service area obtained a substantial interest in the
other cellular block in that market. Such a transaction nonetheless
could give rise to competitive concerns. Because certain types of
transactions that may re-concentrate spectrum and reduce incentives to
compete would not be reviewable under 47 U.S.C. 310(d), we disagree
with commenters who suggest that 47 U.S.C. 310(d) is, by itself, an
adequate substitute for our spectrum cap and cross-interest.
c. Benefits for Ongoing Spectrum Management. 27. We also conclude
that bright-line rules are useful for the Commission's ongoing spectrum
management purposes. For example, bright-line rules greatly expedite
the assignment of spectrum using auctions. They are considerably less
costly from a public interest perspective than attempting to decide on
a case-by-case basis whether a particular bidder's acquisition of a
certain amount of spectrum in a service area would result in undue
spectrum concentration. Making that decision with respect to each
bidder for a particular service area before the start of an auction
would significantly and unnecessarily delay auctions. Even making the
decision only with respect to auction winners could delay substantially
the assignment of licenses and, if undue concentration were found,
presumably would require an entire re-auction.
d. Benefits Not Afforded By Antitrust Review. 28. The availability
on a case-by-case basis of antitrust review, which several commenters
raise, does not change our conclusions as to the benefits of our
spectrum cap and cross-interest rules. We note that we typically have
conducted a competitive analysis as part of our public interest
analysis under 47 U.S.C. 310(d), notwithstanding any independent
antitrust review. The courts have acknowledged our authority to engage
in such an analysis. We do not disagree with commenters that the
availability of case-by-case antitrust review constitutes a valuable
tool in furthering our competitive goals. We believe, however, that it
is important for us to retain our ability to employ more than one
regulatory tool, where necessary in the public interest, to protect and
promote competition in those areas within our particular expertise,
including spectrum mangement.
29. Moreover, for reasons related to resource constraints or
procedural priorities, other agencies with antitrust authority may
choose not to give detailed review to a particular merger that, from
this Commission's perspective, may adversely affect competition in CMRS
markets, or may otherwise be contrary to the public interest. Our
spectrum cap and cross-interest rules were designed specifically for
use in these markets. The spectrum cap rule, in particular, was
expressly conceived to achieve long-term objectives that stressed the
beneficial role of new entrants. By contrast, antitrust laws were
written primarily to address concerns involving mergers that threaten
to curtail actual competition.
e. Benefits Not Afforded by Regulation of Market Behavior. 30.
Finally, we note that several commenters identified alternative
regulatory tools that the Commission has at its disposal, in addition
to its public interest authority under 47 U.S.C. 310(d). These include:
(a) The Commission's build-out requirements; (b) resale obligations;
(c) 47 U.S.C. 201 and 202; and (d) the Commission's complaint and
enforcement procedures under 47 U.S.C. 208. We agree with these
commenters to the extent that we recognize the importance of retaining
our flexibility to employ a variety of regulatory tools where
particular circumstances may make alternative approaches useful. We are
not persuaded, however, that the alternatives suggested by commenters,
individually or collectively, constitute an adequate substitute for our
spectrum cap and cross-interest rules as efficient means for promoting
and protecting competition in the CMRS sector. Indeed, the greater
competition that the spectrum cap promotes makes reliance on those
other, arguably more intrusive, regulatory tools, which focus
principally on controlling licensees' market behavior, less necessary
and less frequent. As a general matter, we believe the better approach
is to have rules that promote competition and let competition regulate
market behavior, rather than rely in the first instance on this
Commission to directly regulate such behavior even if we have the legal
authority to do so.
5. Public Interest Costs
31. Some parties argue that there are potential public interest
costs associated with the use of the spectrum cap and cellular cross-
ownership rules and that such costs warrant the elimination of those
rules. We conclude, however, that we can address adequately the
concerns raised by these parties by resetting the parameters of the
cross-interest and the spectrum cap rules in certain markets, through
future spectrum allocations, and by other means.
32. New and Innovative Services. Some parties claim that the
current cap impairs the ability of wireless carriers to use existing
spectrum to develop 3G and other advanced services, such as high-speed
internet access. While these possibilities are a concern to us, we do
not believe these claims provide a basis for lifting the spectrum cap
at the present time. Initially, we note that the assertions in the
record along these lines are very general and do not provide any
concrete evidence regarding the amount of spectrum that will be needed
for 3G technologies or exactly when carriers will need access to that
spectrum. Our analysis shows that there are very few markets in which
carriers have spectrum holdings that are approaching the cap, which
suggests the cap is in most cases not a binding constraint, at least
not at the present time. Moreover, as parties explain, there are
numerous alternatives to CMRS spectrum that can be used to provide
certain types of new services. We also note that no party has submitted
an application for waiver to enable it to use additional spectrum to
implement a business plan for the development of 3G services. (To the
extent that a licensee can demonstrate that compliance with the
spectrum cap limits its ability to implement 3G or other advanced
services in a particular geographic area in an timely and efficient
manner, we would consider grant of a waiver of the spectrum cap for
that carrier in that geographic area.)
33. In addition, in our view any disincentives toward the
development of new services that arguably may be caused by the current
spectrum cap must be weighed against the disincentives toward the
development of new services that would exist in a regulatory world
without the current spectrum cap. Also, we believe that in many ways
the spectrum cap rule has in fact encouraged innovations.
34. Finally, we expect to make available in the near future
additional spectrum for the provision of 3G and other advanced wireless
services. We will be initiating proceedings to allocate spectrum for
those services. We believe it is more appropriate to address spectrum
requirements for 3G and other advanced services in the context of a
spectrum allocation proceeding than in this proceeding. In the
allocation proceeding we will consider whether any newly allocated
spectrum should be included in the cap. If we decide to include the
newly allocated spectrum under the cap, we will determine in that
proceeding how the cap should be adjusted to reflect that additional
spectrum.
[[Page 54569]]
35. Competition with Wireline Services. We find that the record
does not indicate the need to raise the spectrum cap to realize the
potential of wireless service as a source of competition to wireline
service. Although some parties argue that the spectrum cap deters
investment in technologies that may compete with wireline offerings, we
find that at least theorectically, it is equally plausible that the
spectrum cap encourages that development of wireless services that can
compete with wireline services. By guarding against the concentration
of ownership in a market, the spectrum cap rule helps to ensure that a
significant number of wireless licensees will compete in that market.
We believe that the likelihood of at least one licensee focusing on
wireless local loop service increases with the number of wireless
licensees.
36. Additional Efficiencies. We find that there is no showing in
the record that raising the cap would allow the realization of
significant additional efficiencies. First, we note that the record
indicates that few carriers have accumulated as much as 45 MHz of
spectrum in any one market and that, in general, carriers with 45 MHz
are not currently using their entire spectrum allocation. Second, we
find that raising the spectrum cap would not necessarily result in
significant improvement in allocation of resources because
digitalization and other capacity-enhancing innovations have permitted
more efficient allocation by carriers of existing spectrum under the
cap.
B. Modifications to the Cellular Cross-Interest and Spectrum Cap Rules
1. Modifications to Cellular Cross-Interest Rule
We conclude that the cellular cross-interest rule is still
necessary at this time, given the strong market position held by the
two cellular carriers in virtually all markets. The two cellular
carriers still have the vast majority of subscribers in all markets and
are still the only providers of mobile telephone service in many
markets. We recognize, however, that the cellular carriers' relative
market position has diminished and continues to do so as PCS and
digital SMR service providers initiate service in more areas of the
country and attract more subscribers. We therefore will reassess the
need for a separate cellular cross-interest rule as part of our year
2000 biennial review, by which time we expect that the market positions
of the two cellular carriers and PCS and digital SMR service providers
will have narrowed further.
38. We also find that it is necessary to maintain a separate
cellular cross-interest rule, and not rely solely upon the spectrum
cap. Reliance on the cap without the cellular cross-interest rule would
allow a party to have an attributable interest in one of the cellular
licensees, including control, and up to 20 percent equity ownership
interest in the other cellular licensee in the same market. We find
that such a high ownership interest by one cellular licensee in the
other cellular licensee would pose a substantial threat to competition.
It is also not appropriate for us to rely solely on the spectrum cap
because we have today modified the spectrum cap to allow a licensee to
have an attributable interest in up to 55 MHz in rural areas, defined
as RSAs. Without a separate cross-interest rule, this new provision of
the spectrum cap would allow a licensee to control both cellular
licenses in an RSA.
39. Although CMRS markets are not yet sufficiently competitive to
eliminate the cross-interest rule, we believe that given increased
competition it is appropriate to relax the attribution benchmarks used
in the rule. We amend the rule to allow a party with a controlling or
otherwise attributable interest in one of the cellular licensees to
have a non-controlling or otherwise non-attributable direct or indirect
ownership of up to five percent in the other cellular licensee in the
CGSA. We do not believe that such a cross-ownership limit would
generally pose a significant threat to competition. We continue to
insist that a party with a controlling interest in one cellular
licensee in a CGSA may not have a controlling interest, no matter how
small, in the other licensee in that market. Similarly, we amend the
rule to allow a party to have a non-controlling or otherwise non-
attributable direct or indirect ownership interest of up to 20 percent
in both licensees in the same CGSA. We believe that given the trend
towards more competitive markets, we can relax this attribution level
and use the general attribution benchmark set out in the spectrum cap.
We also amend the attribution rules relating to the cellular cross-
interest rule to bring them in line with the spectrum cap attribution
rules in certain other respects.
2. Modifications to Spectrum Cap Rule
a. Overview. 40. While we conclude that the spectrum cap should be
retained, upon review of the record and re-evaluation of the various
components of 47 CFR 20.6, we further conclude that some modifications
of the spectrum cap are warranted. As an initial matter, we find that
the cap should not generally be raised above 45 MHz. We conclude,
however, that an exception should be made in rural areas, defined as
RSAs, where a 55 MHz cap will provide additional benefits to the
carriers and consumers without substantial risk of anticompetitive
conduct. We also amend the attribution provisions of the rule to
establish a separate benchmark of 40 percent for equity interests held
by passive institutional investors. Finally, we adopt other changes to
the rule to clarify which SMR spectrum comes under the cap and to
clarify the divestiture provisions of the rule.
b. Spectrum Aggregation Limit. 41. We conclude that the spectrum
aggregation limit should remain at 45 MHz in most areas. This
limitation strikes an appropriate balance between the benefits of
spectrum aggregation, and the risk of undue economic concentration in
the CMRS markets. In 1996, the Commission set out the economic
arguments why a 45-MHz aggregation limit strikes an appropriate balance
between the concern about undue market concentration and the benefits
of spectrum aggregation. No commenter has persuaded us that this
economic analysis is not still valid. We further conclude that in major
markets any alleged detriments of a 45 MHz spectrum cap cited by some
commenters do not outweigh the benefits of a 45 MHz cap. We are not
persuaded that the cap has constrained the ability of carriers to
provide services.
42. Regarding the deployment of new, third-generation (3G)
technologies, we will be initiating a proceeding in the near future to
consider the allocation of spectrum for such services. However, some
carriers assert that they have an immediate need to access additional
existing CMRS spectrum to offer new services. Therefore, to the extent
that a carrier can credibly demonstrate that in a particular geographic
area the spectrum cap is currently having a significant adverse affect
on its ability to provide 3G or other advanced services, we will
consider granting a waiver of the cap for that geographic area. We urge
carriers requesting waivers to clearly identify what additional
services they would provide if the spectrum cap were waived, and why
such services can not be provided without exceeding the cap. In
evaluating a waiver request the Commission will also take into account
any potential adverse affects of granting the waiver, such as
diminution of competition, as well as the potential benefits from the
provision of advanced mobile services.
[[Page 54570]]
43. We are also concerned that raising the cap to a higher level
could lead to unacceptable concentration of these markets. Adoption of
a 90 MHz cap could lead to a market with only two competitors, both
with 90 MHz. That would, in essence, re-institute the cellular duopoly
that the Commission sought to eliminate by establishing PCS. The
introduction of new providers and the end of the cellular duopoly has
led to substantial consumer benefits through reductions in the price of
service and in new and enhanced services. We also reject suggestions to
raise the cap to 70 MHz, which would allow the re-concentration of the
market to three carriers. While a third competitor in a market provides
benefits relative to a duopoly, such a market would still be highly
concentrated, and would be less competitive than many markets are
today. Even a 50 MHz cap or 55 MHz cap, while maintaining at least four
competitors, could lead to excessive concentration in most markets.
44. We find, however, that the economics of serving rural areas are
different, and adopt a 55 MHz aggregation limit for those areas. For
purposes of the spectrum cap rule, we define rural areas as Rural
Service Areas (RSAs). See 47 CFR 22.909(b). A 55 MHz aggregation limit
in rural areas will permit carriers serving these areas to achieve
economies of scope and will allow greater partnering between PCS and
cellular in those areas, thereby helping to make competition in rural
areas more vigorous. Such partnering may enable carriers to reduce
roaming charges that rural subscribers now incur when traveling to
urban areas, and when urban residents travel to rural areas. Partnering
may also allow further deployment of PCS and other broadband services
to rural areas. In addition, the economics of serving high-cost and
low-density areas makes it is unreasonable to expect a large number of
independent carriers to be viable. As a result, the opportunity cost of
rural spectrum rights is likely near zero, and the risks of
anticompetitive conduct by foreclosing entry through the monopolization
of spectrum are low.
45. We decline to adopt a market-by-market approach. Although a
market-by-market approach may have initial appeal there are potential
difficulties in implementation, including determining the appropriate
geographic area to use since each service uses different market areas.
c. Attribution. 46. In reviewing the attribution benchmarks used
with the spectrum cap, we make several changes to clarify the rules and
to increase the availability of capital to CMRS carriers. We note that
the change in the aggregation limit to 55 MHz for rural areas adopted
today will increase the availability of capital to CMRS carriers
serving rural areas independent of the changes we make to the
attribution rules.
47. Control and Influence. We decline to adopt a control standard
because such a test does not take into account the variety of ways that
an investor can exert influence or control over a licensee. An
individual or firm does not need actual operational control over (or to
be in the management) of a licensee in order to exert influence over
that licensee. Further, our concerns about anticompetitive behavior are
not limited to what influence the party may exert on the licensee, but
also how another licensee may act in the market if it has a significant
interest in one of the other providers in that market. A carrier may
price its services differently if it has a substantial, yet non-
controlling interest in another carrier in the same market. Under such
circumstances, it may believe that it can recover some of the revenues
it would otherwise lose by its actions through its partial ownership in
the other carrier. That type of activity becomes even more fruitful to
a carrier as its stake in the other carrier increases. Such actions
would also restrict the competition between the two carriers and the
resultant benefits to consumers from robust competition.
48. Another difficulty with use of a control test is the burden it
would place on the Commission and industry. A control test would be
highly inefficient and would not provide regulatory certainty. Under a
control test, the Commission would have to engage in frequent case-by-
case determinations of control that would be time-consuming, fact-
specific, and subjective. We find that a bright-line attribution test
avoids these administrative burdens.
49. Similarly, we decline to adopt an exception for insulated
partners. Although the fact that a partner is insulated may have an
effect on the ability of that partner to directly influence the
licensee, it does not address our concerns regarding unilateral action
by the limited partner.
50. We also will not adopt a single majority shareholder exception,
but will maintain our test for waiving the attribution rules in
situations where there is a single majority shareholder. The fact that
there may be a single majority shareholder does not change the ability
or motive for a party with a significant non-controlling interest to
engage in anticompetitive behavior. We do recognize, however, that
there may be instances in which a non-controlling interest in a
licensee may not provide any incentive or ability for anticompetitive
conduct. In 1996, the Commission adopted a four-pronged test to
determine when the existence of a single majority shareholder mitigates
the competitive impact of common ownership and the ability of the non-
controlling interest holder to influence the licensee. 47 CFR 20.6 note
3. Under that test, if the non-controlling interest holder can show
that there is an unaffiliated single majority shareholder, that the
non-controlling interest holder has no ability to influence the
licensee, and that it is not likely to act in an anticompetitive
manner, the Commission may waive the attribution rules.
51. We also decline to adopt suggestions that we change the
spectrum cap attribution rules to more closely conform to the broadcast
attribution rules. Although the spectrum cap attribution rules find
their roots in the broadcast attribution rules, they differ, in some
respects, due to the different policy concerns that led to their
adoption. The primary basis for the spectrum cap attribution rules is
the Commission's concern with potential anticompetitive conduct by CMRS
carriers. In broadcasting and cable, the Commission also has concerns
regarding programming diversity. As a result, certain cross-ownership
interests that may be acceptable in broadcasting are inappropriate for
CMRS markets. For example, in the broadcast context, the Commission may
be less concerned with significant non-controlling ownership when there
is a single majority shareholder in charge of programming decisions. In
a CMRS setting, the same situation with a non-controlling but
significant owner may still be able to leverage its ownership to act
anticompetitively in the market.
52. Additionally, we decline to accept suggestions that we modify
the attribution rules with respect to directors. Directors, in general,
may possess the ability and incentive to use their positions of
authority and influence to coordinate behavior of the licensees on
whose boards they sit, and can be a conduit to pass non-public
information between the licensees on whose boards they sit. The record
in this proceeding specifically addressing director attribution is thin
and certainly is not sufficient to justify any generally-applicable
relaxation of our attribution rules in that regard. We would consider
granting a waiver, however, in a particular case if the specific
circumstances of a directorship allay the concerns that we have
identified.
[[Page 54571]]
53. Finally, we address ownership interests linked through
partnerships. Any partnership can provide the means for one licensee to
influence the actions of its partner in another market where both have
interests. In particular, either partner could seize on the goals of
their partner in one market to influence the actions of its partner in
the other market to anticompetitive effect. Of course, not all
partnerships will provide an opportunity for exercising such influence.
Consequently, we believe that it is most appropriate to evaluate these
ownership relationships on a case-by-case basis.
54. Waiver Test. The spectrum cap rule also includes a four-pronged
test for waiving attribution for investors with non-controlling,
minority interests where the licensee is controlled by a single
majority shareholder or controlling general partner. See 47 CFR 20.6
note 3. In considering whether a petitioner has met the second prong of
the test, we will examine actual competitive conditions in the relevant
markets at issue to determine whether an interest holder is likely to
affect the market in an anticompetitive manner. Regarding the third
prong of the test, in a situation involving a limited partner, we will
look to the criteria set forth in the Attribution Reconsideration
Order, 50 FR 27438 (July 3, 1985), to determine whether the interest
holder is involved in the licensee's operation and has the ability to
influence the licensee on a regular basis.
55. Passive Institutional Investors. We find that allowing passive
institutional investors to have a larger ownership interest in
licensees should facilitate access to capital for licensees, and
therefore we adopt a separate attribution benchmark for passive
institutional investors. In connection with the broadcast and cable
attribution rules, the Commission has found that passive institutional
investors, such as banks or insurance companies, can have a greater
interest in a licensee without incurring substantial risk that
investors who should be counted for purpose of applying the ownership
rules will avoid attribution. We establish the benchmark for passive
institutional investors at 40 percent of the outstanding voting stock
of a corporation.
56. Trusts. In reviewing the attribution rules used with the
spectrum cap, we find it appropriate to adjust our rule regarding the
use of trusts. In re-evaluating our attribution rules, we find that the
beneficiary maintains an economic interest in the licensee, as well as
potentially other interests in the same market. These overlapping
interests could provide it with incentives to undertake actions that
may impinge on competition in the relevant market, since its actions
can affect the benefits it receives from the trust. Consequently, we
will amend our attribution rules so that stock interests held in trust
will be attributable to both the trustee and the beneficiary. We will
grandfather any trust agreements that meet the requirements of the old
rule that were in effect on September 14, 1999. For any trust
agreements entered into beginning September 15, 1999, stock interests
held in trust will be attributed to the trustee, grantor, and the
beneficiary of the trust. Those interests will still be subject to the
general attribution benchmark, so that if the stock interests in the
trust are less than 20 percent of the stock of the company, they will
not be attributable. We will still allow the use of trusts for the
purpose of divesting an otherwise impermissible interest.
d. Significant Overlap. 57. We will not alter the 10 percent
overlap threshold for the CMRS spectrum cap. The record does not show
that a greater attribution threshold would not raise competitive
concerns given our retention of an aggregation limit. We recognize,
however, that there may be circumstances in which an overlap of 10
percent or greater would not raise competitive concerns, and may even
facilitate the provision of new, enhanced or expanded services to
consumers. To the extent that a party can show that in a particular
context an overlap of 10 percent or greater would not adversely affect
competition in the market at issue, we will consider a request for a
limited waiver of the overlap threshold.
e. SMR Spectrum Aggregation Limits. 58. We find that the wording of
47 CFR 20.6(b) does not accurately reflect the Commission's intent in
the CMRS Third Report and Order, and we will revise the language to
clarify that the cap includes 800- and 900-MHz SMR spectrum combined.
We are also revising 47 CFR 20.6(b) of our rules to provide that any
discrete 800- or 900-MHz channel shall be counted only once per
licensee within the relevant geographic area, even if the licensee in
question uses the same channel at more than one location.
f. Divestiture. 59. We are adopting several changes to the rule to
clarify the divestiture provision. First, we clarify that a licensee
must divest sufficient attributable interests to maintain compliance
with the spectrum cap prior to consummation of the transaction or final
grant of the assignment that would give them an attributable interest
in excess of the cap, unless they qualify for the additional ninety-day
divestiture period. Second, we also clarify that a licensee need meet
only one of the three conditions set out in the rule to qualify for the
additional ninety-day divestiture period. Third, in conjunction with
our changes to the attribution rules regarding the use of trusts, we
clarify that a licensee may use a trust for divestiture purposes if the
trust is of limited duration (six months or less) and the terms of the
trust are approved by the Commission prior to the transfer of the
assets to the trust. The applicant must not have any interest in or
control of the trustee. The trust agreement must clearly state that
there will be no communications with the trustee regarding the
management or operation of the subject facilities, and must give the
trustee authority to dispose of the license as the trustee sees fit.
Consistent with 47 CFR 0.5(c), we delegate authority to the Wireless
Telecommunications Bureau to review proposed trusts to ensure that they
comply with our rules.
C. CTIA Forbearance
60. On September 30, 1998, the Cellular Telecommunications Industry
Association filed a Petition for Forbearance. CTIA requests that the
Commission use its authority under 47 U.S.C. 160 to forbear from
applying 47 CFR 20.6. CTIA urges the Commission to rely upon a case-by-
case determination of permissible levels of horizontal ownership as
part of the 47 U.S.C. 310(d) license transfer review.
61. Upon review of the record in this proceeding, we find that
enforcement of the spectrum cap continues to be in the public interest.
Thus, we will not forbear from enforcement of the spectrum cap rule at
this time. While CMRS markets are becoming more competitive, we do not
find, for the reasons discussed above, that we can rely on market
forces alone to constrain anticompetitive practices by CMRS carriers.
The spectrum cap still plays an important role in protecting and
promoting competition within CMRS markets, and ensuring that rates and
practices of CMRS carriers are reasonable. We also do not find that
reliance on case-by-case review under antitrust law and our authority
under 47 U.S.C. 310(d) are an adequate substitute for the spectrum cap.
Particularly under circumstances where a party is transferring unbuilt
spectrum or a system that is not operational or lacks customers,
antitrust review can be especially burdensome. Similarly, reliance on
review under 47 U.S.C. 310(d) would not bring to the Commission's
attention many cross-
[[Page 54572]]
ownership situations comprising less than control yet raising
competitive concerns. Consequently, we find that the spectrum cap rule
is necessary to ensure that the charges, practices, classifications, or
regulations by, for, or in connection with that telecommunications
carrier or telecommunications service are just and reasonable and are
not unjustly or unreasonably discriminatory.
62. We find the spectrum cap is necessary for the protection of
consumers. As we discuss above in addressing the first prong of 47
U.S.C. 160, we find the spectrum cap is necessary to ensure that
carriers do not act in a manner that could lead to the imposition of
unreasonable rates or practices. Although CMRS markets are growing
increasingly more competitive as more carriers enter the market, we do
not find we can rely solely on market forces to protect consumers.
Thus, we find the spectrum cap serves a necessary purpose in protecting
consumers by promoting and protecting competition.
63. We find the spectrum cap serves the public interest. As the
D.C. Circuit Court recently recognized, ``[a] spectrum cap, unlike many
other regulations, might actually require a bright-line rule to be
effective.'' BellSouth v. FCC, 162 F.3d at 1225. A bright-line test
provides both the Commission and industry with regulatory certainty in
dealing with possible cross-ownership situations. As such, it reduces
burdens placed on both the Commission and industry. It gives industry
advance notice of which types of cross-ownership situations the
Commission finds would be anticompetitive. Use of a case-by-case review
would eventually lead to an understanding of which types of cross-
ownership interests the Commission believes are anticompetitive, but
would require the Commission and industry to expend significant
resources in reviewing individual cross-ownership proposals before
sufficient precedent would be set to establish the line. Under the
spectrum cap rule, a party that believes its proposed cross-ownership
interest would not be anticompetitive and would serve the public
interest is still able to make its case to the Commission through a
request for waiver of the cap. On balance, we find that our use of
bright-line tools better serve the public interest than a case-by-case
approach.
III. Other Issues
A. Third FNPRM in GN Docket 93-252
64. Background. In 1995, the Commission sought comment on whether
the spectrum cap should be extended to all cellular, SMR, and broadband
PCS providers regardless of whether they are classified as Private
Mobile Radio Services (PMRS) or CMRS providers. Implementation of
Sections 3(n) and 332 of the Communications Act--Regulatory Treatment
of Mobile Services, GN Docket No. 93-252, Third Further Notice of
Proposed Rulemaking, 60 FR 26861 (May 19, 1995). We find that such a
rule change is unnecessary at this time. Under the definitions of CMRS
and PMRS contained in the statute and our regulations, mobile service
that is the functional equivalent of CMRS will be treated as CMRS. To
the extent that a licensee provides service that is the functional
equivalent of CMRS in the frequency bands included within the spectrum
cap it will be treated as CMRS and thus subject to the cap. Therefore,
we will not include PMRS under the spectrum cap.
B. Separate Cap for SMR
65. We decline to adopt a separate spectrum cap for SMR services
using 800 MHz frequencies as suggested by Southern Communications
Services. We find that the appropriate service(s) for a spectrum cap
are all broadband CMRS, as CMRS carriers generally compete or have the
potential to compete against each other. We can decide on a case-by-
case basis under authority pursuant to 47 U.S.C. 310(d) whether a
different market definition is appropriate in the context of a specific
ownership situation.
C. Pending Petitions for Reconsideration
66. In the NPRM we stated our intent to consolidate in this
proceeding certain spectrum-cap-related issues pending in other
proceedings, and accordingly incorporated the records of those
proceedings into this one. We therefore also consider here certain
petitions for reconsideration which raise issues regarding the spectrum
cap: (1) A petition for reconsideration of the CMRS Third Report and
Order filed by SMR Won; (2) a petition for reconsideration of the CMRS
Fourth Report and Order filed by McCaw Cellular; and, (3) petitions for
reconsideration of the CMRS Spectrum Cap Report and Order filed by
Omnipoint and Radiofone. In this Report and Order we have conducted a
comprehensive review of the spectrum cap. For the reasons discussed
herein, we find that the use of a spectrum aggregation limit for
broadband CMRS services serves the public interest and advances the
goals of the Commission including the promotion of competition, the
protection of existing competition, and provision of new and enhanced
services to consumers throughout the country. Given our thorough re-
examination of the cap and our findings regarding its public interest
benefit, we find the petitions for reconsideration to be moot and
consequently dismiss them.
IV. Procedural Issues
A. Regulatory Flexibility Analysis
67. As required by the Regulatory Flexibility Act, 5 U.S.C. 603
(RFA), an Initial Regulatory Flexibility Analysis (IRFA) was
incorporated in the Notice of Proposed Rulemaking (NPRM) in WT Docket
No. 98-205. The Commission sought written comments on the proposals in
the NPRM, including the IRFA. The Commission's Final Regulatory
Flexibility Analysis for the Report and Order conforms to the RFA, as
amended by the Contract With America Advancement Act of 1996.
1. Need for and Purpose of the Action
68. The Report and Order in this docket concludes CMRS spectrum cap
and cellular cross-interest rules continue to be appropriate and
effective tools to promote and protect competition in CMRS markets. The
recent and rapid growth of competition in these markets--resulting from
Commission decisions to allocate spectrum for PCS and assign licenses
subject to the spectrum cap (thereby assuring multiple providers in
most markets)--has been a great success. The Commission finds that
undue consolidation of CMRS ownership would jeopardize the continued
realization of these benefits. The Commission concludes that the public
interest is better served by the continued use of a bright-line test of
spectrum ownership rather than by exclusive reliance on case-by-case
review of proposed ownership arrangements. The Commission finds that it
is not sufficient to rely solely on case-by-case review of CMRS
transactions, whether through the Commission's transfer of control
process under 47 U.S.C. 310(d) or antitrust review, to protect and
promote competition in CMRS markets. Therefore, the Commission
concludes that the spectrum cap and cellular cross-interest rules
continue to play an important role in guiding the development of
competition and services in CMRS markets.
69. Although the Commission concludes in the Report and Order that
the spectrum cap and cellular cross-interest rules should be retained,
it finds that the rules can be modified to allow certain additional
cross-ownership interests without significantly
[[Page 54573]]
increasing the risk of undue market concentration or anticompetitive
behavior by licensees. Consequently, in the Report and Order the
Commission makes the following modifications to the spectrum cap and
cellular cross-interest rules: (1) Adopts a 55 MHz spectrum aggregation
limit for licensees serving rural areas, defined as Rural Service Areas
(RSAs); (2) allows up to 40 percent investment for passive
institutional investors (as opposed to 20 percent for other investors);
and (3) amends the cellular cross-interest rule to allow a cellular
investor to have a limited non-controlling interest in the other
cellular license in the same market. Finally, the Commission states
that it will reevaluate the continuing need for these rules as part of
our year 2000 biennial review.
70. Finally, for the reasons outlined above, the Commission finds
that enforcement of the spectrum cap continues to be in the public
interest, and therefore denies a request to forbear from enforcing the
spectrum cap filed by the Cellular Telecommunications Industry
Association pursuant to 47 U.S.C. 160.
2. Issues Raised in Response to the IRFA
71. The Commission sought comment generally on the IRFA. No
comments were submitted specifically in response to the IRFA.
3. Description and Estimates of the Number of Small Entities to Which
the Rules Adopted in This Report and Order Will Apply
72. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that will be
affected by our rules. 5 U.S.C. 603(b)(3), 604(a)(3). The RFA generally
defines the term ``small entity'' as having the same meaning as the
terms ``small business,'' ``small organization,'' and ``small
governmental jurisdiction.'' 5 U.S.C. 601(6). A small organization is
generally ``any not-for-profit enterprise which is independently owned
and operated and is not dominant in its field.'' 5 U.S.C. 601(6).
Nationwide, there are 275,801 small organizations. ``Small governmental
jurisdiction'' generally means ``governments of cities, counties,
towns, townships, villages, school districts, or special districts,
with a population of less than 50,000.'' 5 U.S.C. 601(5). As of 1992,
there were 85,006 such jurisdictions in the United States.
73. In addition, the term ``small business'' has the same meaning
as the term ``small business concern'' under Section 3 of the Small
Business Act. 5 U.S.C. 601(3). Under the Small Business Act, a ``small
business concern'' is one which: (1) Is independently owned and
operated; (2) is not dominant in its field of operation; and (3) meets
any additional criteria established by the Small Business
Administration (SBA). 15 U.S.C. 632.
74. The rule changes adopted in this Report and Order will affect
all small businesses that currently are or may become licensees of the
broadband PCS, cellular and/or specialized mobile radio (SMR) services.
The Commission estimates the following number of small entities may be
affected by the proposed rule changes:
75. Cellular Licensees. Neither the Commission nor the SBA has
developed a definition of small entities applicable to cellular
licensees. Therefore, the applicable definition of small entity is the
definition under the SBA rules applicable to radiotelephone (wireless)
companies. This provides that a small entity is a radiotelephone
company employing no more than 1,500 persons. 13 CFR 121.201. According
to the Bureau of the Census, only twelve radiotelephone firms from a
total of 1,178 such firms which operated during 1992 had 1,000 or more
employees. Therefore, even if all twelve of these firms were cellular
telephone companies, nearly all cellular carriers were small businesses
under the SBA's definition. In addition, we note that there are 1,758
cellular licenses; however, a cellular licensee may own several
licenses. In addition, according to the most recent Trends in Telephone
Service data, 732 carriers reported that they were engaged in the
provision of either cellular service or Personal Communications Service
(PCS) services, which are placed together in the data. Trends in
Telephone Service, Table 19.3 (Feb. 19, 1999). We do not have data
specifying the number of these carriers that are not independently
owned and operated or have more than 1,500 employees, and thus are
unable at this time to estimate with greater precision the number of
cellular service carriers that would qualify as small business concerns
under the SBA's definition. Consequently, we estimate that there are
fewer than 732 small cellular service carriers that may be affected by
the policies adopted in this Report and Order.
76. Broadband PCS. The broadband PCS spectrum is divided into six
frequency blocks designated A through F, and the Commission has held
auctions for each block. The Commission defined ``small entity'' for
Blocks C and F as an entity that has average gross revenues of less
than $40 million in the three previous calendar years. For Block F, an
additional classification for ``very small business'' was added and is
defined as an entity that, together with their affiliates, has average
gross revenues of not more than $15 million for the preceding three
calendar years. These regulations defining ``small entity'' in the
context of broadband PCS auctions have been approved by the SBA. No
small businesses within the SBA-approved definition bid successfully
for licenses in Blocks A and B. There were 90 winning bidders that
qualified as small entities in the Block C auctions. A total of 93
small and very small business bidders won approximately 40% of the
1,479 licenses for Blocks D, E, and F. Based on this information, we
conclude that the number of small broadband PCS licensees will include
the 90 winning C Block bidders and the 93 qualifying bidders in the D,
E, and F blocks, for a total of 183 small entity PCS providers as
defined by the SBA and the Commission's auction rules.
77. SMR Licensees. Pursuant to 47 CFR 90.814(b)(1), the Commission
has defined ``small entity'' in auctions for geographic area 800 MHz
and 900 MHz SMR licenses as a firm that had average annual gross
revenues of less than $15 million in the three previous calendar years.
This definition of a ``small entity'' in the context of 900 MHz SMR has
been approved by the SBA. Approval concerning 800 MHz SMR is being
sought. The rules adopted in this Reconsideration may apply to SMR
providers in the 800 MHz and 900 MHz bands that either hold geographic
area licenses or have obtained extended implementation authorizations.
We do not know how many firms provide 800 MHz or 900 MHz geographic
area SMR service pursuant to extended implementation authorizations,
nor how many of these providers have annual revenues of less than $15
million. We assume, for purposes of this FRFA, that all of the extended
implementation authorizations may be held by small entities, which may
be affected by the policies adopted in this Report and Order.
78. The Commission recently held auctions for geographic area
licenses in the 900 MHz SMR band. There were 60 winning bidders who
qualified as small entities in the 900 MHz auction. Based on this
information, we conclude that the number of geographic area SMR
licensees affected by the rule adopted in this Report and Order
includes these 60 small entities. No auctions have been held for 800
MHz geographic area SMR licenses. Therefore, no small entities
currently hold these licenses. A total of
[[Page 54574]]
525 licenses will be awarded for the upper 200 channels in the 800 MHz
geographic area SMR auction. The Commission, however, has not yet
determined how many licenses will be awarded for the lower 230 channels
in the 800 MHz geographic area SMR auction. There is no basis,
moreover, on which to estimate how many small entities will win these
licenses. Given that nearly all radiotelephone companies have fewer
than 1,000 employees and that no reliable estimate of the number of
prospective 800 MHz licensees can be made, we assume, for purposes of
this FRFA, that all of the licenses may be awarded to small entities
who, thus, may be affected by the decisions adopted in this Report and
Order.
4. Reporting, Recordkeeping, and Other Compliance Requirements
79. The rules adopted in this Report and Order pose no additional
reporting, record keeping or other compliance measures.
5. Steps Taken To Minimize Burdens on Small Entities and Significant
Alternatives Considered
80. In the Report and Order, the Commission concludes that
retention of the CMRS spectrum cap and cellular cross-interest rules
serves the public interest. The Commission concludes that the benefits
of these bright-line tests in addressing concerns about increased
spectrum aggregation continue to make these approaches preferable to
exclusive reliance on case-by-case review under section 310(d). By
setting bright lines for permissible ownership interests, the rules
benefit the public, the telecommunications industry and the Commission
by providing regulatory certainty and facilitating more rapid
processing of transactions.
81. The Commission finds that the CMRS spectrum cap and cellular
cross-interest rule promote regulatory efficiency, both by speeding the
processing of transfers of control and assignment of licenses and by
conserving the resources of the Commission and of interested parties.
Moving from the spectrum cap and cross-interest rules to case-by-case
review inevitably would lengthen the review process. The Commission
recognized the concerns raised by several commenters about the burdens
on the resources of the Commission and of interested parties that are
inherent in case-by-case determinations regarding permissible ownership
structures. For example, case-by-case analysis is especially expensive
and time-consuming for small businesses, which often do not have the
requisite resources.
6. Report to Congress
82. The Commission shall send a copy of the Report and Order,
including a copy of this Final Regulatory Flexibility Analysis, in a
report to Congress pursuant to Section 251 of the Small Business
Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 801(a)(1)(A). In
addition, the Commission shall send a copy of this Report and Order,
including this Final Regulatory Flexibility Analysis, to the Chief
Counsel for Advocacy of the Small Business Administration. A copy of
this Regulatory Flexibility Analysis will also be published in the
Federal Register.
B. Paperwork Reduction Act Analysis
83. This Report and Order has been analyzed with respect to the
Paperwork Reduction Act of 1995, Public Law No. 104-13, and does not
contain any new or modified information collections subject to Office
of Management and Budget review.
V. Ordering Clauses
84. Accordingly, it is ordered that, pursuant to sections 4(i), 11
and 332 of the Communications Act of 1934, as amended, 47 U.S.C.
154(i), 161 and 332, this Report and Order is hereby adopted, and
sections 20.6 and 22.942 of the Commission's Rules, 47 CFR 20.6,
22.942, are amended as set forth in Appendix B, effective November 8,
1999.
85. It is further ordered that, pursuant to sections 1, 2, 4, and
10 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152,
154 and 160, the Petition for Forbearance filed by the Cellular
Telecommunications Industry Association is denied.
86. It is further ordered that the Petition for Partial
Reconsideration of the Third Report and Order in GN Docket No. 93-252
filed by SMR Won is dismissed as moot to the extent discussed herein.
87. It is further ordered that the Petition for Reconsideration of
the Fourth Report and Order in GN Docket No. 93-252 filed by McCaw
Comunications, Inc. is dismissed as moot.
88. It is further ordered that the Petition for Reconsideration of
the Report and Order in WT Docket No. 96-59 filed by Omnipoint
Corporation is dismissed as moot.
89. It is further ordered that the Petition for Reconsideration of
the Report and Order in WT Docket No. 96-59 filed by Radiofone, Inc. is
dismissed as moot.
90. It is further ordered pursuant to section 5(c) of the
Communications Act of 1934, as amended, 47 U.S.C. 155(c), and
Secs. 0.5(c), 0.131 and 0.331 of the Commission's rules, 47 CFR 0.5(c),
0.131, 0.331, the Chief of the Wireless Telecommunications Bureau is
granted delegated authority to review and approve proposals to hold
ownership interests in broadband Personal Communications Service,
cellular, and Special Mobile Radio services licenses regulated as
Commercial Mobile Radio Services in a trust to ensure that the trust
complies with the Commission's rules.
91. It is further ordered that the Commission's Office of Public
Affairs, Reference Operations Division, shall send a copy of this
Report and Order, including the final regulatory flexibility analysis,
to the Chief Counsel for Advocacy of the Small Business Administration,
in accordance with paragraph 603(a) of the Regulatory Flexibility Act,
5 U.S.C. 601 et seq.
List of Subjects
47 CFR Part 20
Communications common carrier.
47 CFR Part 22
Communications common carrier.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
Rule Changes
Part 20 and 22 of Title 47 of the Code of Federal Regulations is
amended as follows:
PART 20--COMMERCIAL MOBILE RADIO SERVICES
1. The authority citation for Part 20 continues to read as follows:
47 U.S.C. 154, 160, 251-54, 303, and 332 unless otherwise noted.
2. Section 20.6 is revised to read as follows:
Sec. 20.6 CMRS spectrum aggregation limit.
(a) Spectrum limitation. No licensee in the broadband PCS,
cellular, or SMR services (including all parties under common control)
regulated as CMRS (see 47 CFR 20.9) shall have an attributable interest
in a total of more than 45 MHz of licensed broadband PCS, cellular, and
SMR spectrum regulated as CMRS with significant overlap in any
geographic area, except that in Rural Service Areas (RSAs), as defined
in 47 CFR 22.909, no licensee shall have an attributable interest in a
total of more than 55 MHz of licensed broadband PCS, cellular, and SMR
[[Page 54575]]
spectrum regulated as CMRS with significant overlap in any RSA.
(b) SMR spectrum. To calculate the amount of attributable SMR
spectrum for purposes of paragraph (a) of this section, an entity must
count all 800 MHz and 900 MHz channels located at any SMR base station
inside the geographic area (MTA or BTA) where there is significant
overlap. All 800 MHz channels located on at least one of those
identified base stations count as 50 kHz (25 kHz paired), and all 900
MHz channels located on at least one of those identified base stations
count as 25 kHz (12.5 kHz paired); provided that any discrete 800 or
900 MHz channel shall be counted only once per licensee within the
geographic area, even if the licensee in question utilizes the same
channel at more than one location within the relevant geographic area.
No more than 10 MHz of SMR spectrum in the 800 and 900 MHz SMR services
will be attributed to an entity when determining compliance with the
cap.
(c) Significant overlap. (1) For purposes of paragraph (a) of this
section, significant overlap of a PCS licensed service area and CGSA(s)
(as defined in Sec. 22.911 of this chapter) or SMR service area(s)
occurs when at least 10 percent of the population of the PCS licensed
service area for the counties contained therein, as determined by the
latest available decennial census figures as complied by the Bureau of
the Census, is within the CGSA(s) and/or SMR service area(s).
(2) The Commission shall presume that an SMR service area covers
less than 10 percent of the population of a PCS service area if none of
the base stations of the SMR licensee are located within the PCS
service area. For an SMR licensee's base stations that are located
within a PCS service area, the channels licensed at those sites will be
presumed to cover 10 percent of the population of the PCS service area,
unless the licensee shows that its protected service contour for all of
its base stations covers less than 10 percent of the population of the
PCS service area.
(d) Ownership attribution. For purposes of paragraph (a) of this
section, ownership and other interests in broadband PCS licensees,
cellular licensees, or SMR licensees will be attributed to their
holders pursuant to the following criteria:
(1) Controlling interest shall be attributable. Controlling
interest means majority voting equity ownership, any general
partnership interest, or any means of actual working control (including
negative control) over the operation of the licensee, in whatever
manner exercised.
(2) Partnership and other ownership interests and any stock
interest amounting to 20 percent or more of the equity, or outstanding
stock, or outstanding voting stock of a broadband PCS, cellular or SMR
licensee shall be attributed, except that ownership will not be
attributed unless the partnership and other ownership interests and any
stock interest amount to at least 40 percent of the equity, or
outstanding stock, or outstanding voting stock of a broadband PCS,
cellular or SMR licensee if the ownership interest is held by a small
business or a rural telephone company, as these terms are defined in
Sec. 1.2110 of this chapter or other related provisions of the
Commission's rules, or if the ownership interest is held by an entity
with a non-controlling equity interest in a broadband PCS licensee or
applicant that is a small business.
(3) Investment companies, as defined in 15 U.S.C. 80a-3, insurance
companies and banks holding stock through their trust departments in
trust accounts will be considered to have an attributable interest only
if they hold 40 percent or more of the outstanding voting stock of a
corporate broadband PCS, cellular or SMR licensee, or if any of the
officers or directors of the broadband PCS, cellular or SMR licensee
are representatives of the investment company, insurance company or
bank concerned. Holdings by a bank or insurance company will be
aggregated if the bank or insurance company has any right to determine
how the stock will be voted. Holdings by investment companies will be
aggregated if under common management.
(4) Non-voting stock shall be attributed as an interest in the
issuing entity if in excess of the amounts set forth in paragraph
(d)(2) of this section.
(5) Debt and instruments such as warrants, convertible debentures,
options, or other interests (except non-voting stock) with rights of
conversion to voting interests shall not be attributed unless and until
converted, except that this provision does not apply in determining
whether an entity is a small business, a rural telephone company, or a
business owned by minorities and/or women, as these terms are defined
in Sec. 1.2110 of this chapter or other related provisions of the
Commission's rules.
(6) Limited partnership interests shall be attributed to limited
partners and shall be calculated according to both the percentage of
equity paid in and the percentage of distribution of profits and
losses.
(7) Officers and directors of a broadband PCS licensee or
applicant, cellular licensee, or SMR licensee shall be considered to
have an attributable interest in the entity with which they are so
associated. The officers and directors of an entity that controls a
broadband PCS licensee or applicant, a cellular licensee, or an SMR
licensee shall be considered to have an attributable interest in the
broadband PCS licensee or applicant, cellular licensee, or SMR
licensee.
(8) Ownership interests that are held indirectly by any party
through one or more intervening corporations will be determined by
successive multiplication of the ownership percentages for each link in
the vertical ownership chain and application of the relevant
attribution benchmark to the resulting product, except that if the
ownership percentage for an interest in any link in the chain exceeds
50 percent or represents actual control, it shall be treated as if it
were a 100 percent interest. (For example, if A owns 20% of B, and B
owns 40% of licensee C, then A's interest in licensee C would be 8%. If
A owns 20% of B, and B owns 51% of licensee C, then A's interest in
licensee C would be 20% because B's ownership of C exceeds 50%.)
(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.
(e) Divestiture. (1) Divestiture of interests as a result of a
transfer of control or assignment of authorization must occur prior to
consummating the transfer or assignment, except that a licensee that
meets the requirements set forth in paragraph (e)(2) of this section
[[Page 54576]]
shall have 90 days from final grant to come into compliance with the
spectrum aggregation limit.
(2) An applicant with:
(i) Controlling or attributable ownership interests in broadband
PCS, cellular, and/or SMR licenses where the geographic license areas
cover 20 percent or less of the applicant's service area population;
(ii) Attributable interests in broadband PCS, cellular, and/or SMR
licenses solely due to management agreements or joint marketing
agreements; or
(iii) Non-controlling attributable interests in broadband PCS,
cellular, and/or SMR licenses, regardless of the degree to which the
geographic license areas cover the applicant's service area population,
shall be eligible to have its application granted subject to a
condition that the licensee shall come into compliance with the
spectrum limitation set out in paragraph (a) within ninety (90) days
after final grant. 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.
(3) The applicant for a license that, if granted, would exceed the
spectrum aggregation limitation in paragraph (a) of this section shall
certify on its application that it and all parties to the application
will come into compliance with this limitation. If such an applicant is
a successful bidder in an auction, it must submit with its long-form
application a signed statement describing its efforts to date and
future plans to come into compliance with the spectrum aggregation
limitation. A similar statement must also be included with any
application for assignment of licenses or transfer of control that, if
granted, would exceed the spectrum aggregation limit.
(4)(i) Parties holding controlling interests in broadband PCS,
cellular, and/or SMR licensees that conflict with the attribution
threshold or geographic overlap limitations set forth in this section
will be considered to have come into compliance if they have submitted
to the Commission an application for assignment of license or transfer
of control of the conflicting licensee (see Secs. 24.839 (PCS), 22.39
(cellular), and 90.158 of this chapter (SMR)) by which, if granted,
such parties no longer would have an attributable interest in the
conflicting license. Divestiture may be to an interim trustee if a
buyer has not been secured in the required period of time, as long as
the applicant has no interest in or control of the trustee, and the
trustee may dispose of the license as it sees fit. Where parties to
broadband PCS, cellular, or SMR applications hold less than controlling
(but still attributable) interests in broadband PCS, cellular, or SMR
licensee(s), they shall submit a certification that the applicant and
all parties to the application have come into compliance with the
limitations on spectrum aggregation set forth in this section.
(ii) Applicants that meet the requirements of paragraph (e)(2) of
this section must tender to the Commission within ninety (90) days of
final grant of the initial license, such an assignment or transfer
application or, in the case of less than controlling (but still
attributable) interests, a written certification that the applicant and
all parties to the application have come into compliance with the
limitations on spectrum aggregation set forth in this section. If no
such transfer or assignment application or certification is tendered to
the Commission within ninety (90) days of final grant of the initial
license, the Commission may consider the certification and the
divestiture statement to be material, bad faith misrepresentations and
shall invoke the condition on the initial license or the assignment or
transfer, cancelling or rescinding it automatically, shall retain all
monies paid to the Commission, and, based on the facts presented, shall
take any other action it may deem appropriate.
Note 1 to Sec. 20.6: For purposes of the ownership attribution
limit, all ownership interests in operations that serve at least 10
percent of the population of the PCS service area should be included
in determining the extent of a PCS applicant's cellular or SMR
ownership.
Note 2 to Sec. 20.6: When a party owns an attributable interest
in more than one cellular or SMR system that overlaps a PCS service
area, the total population in the overlap area will apply on a
cumulative basis.
Note 3 to Sec. 20.6: Waivers of Sec. 20.6(d) may be granted upon
an affirmative showing:
(1) That the interest holder has less than a 50 percent voting
interest in the licensee and there is an unaffiliated single holder
of a 50 percent or greater voting interest;
(2) That the interest holder is not likely to affect the local
market in an anticompetitive manner;
(3) That the interest holder is not involved in the operations
of the licensee and does not have the ability to influence the
licensee on a regular basis; and
(4) That grant of a waiver is in the public interest because the
benefits to the public of common ownership outweigh any potential
anticompetitive harm to the market.
PART 22--PUBLIC MOBILE SERVICES
3. The authority citation for part 22 continues to read as follows:
47 U.S.C. 154, 222, 303, 309, and 332.
4. Section 22.942 is revised to read as follows:
Sec. 22.942 Limitations on interests in licensees for both channel
blocks in an area.
(a) Controlling interests. A licensee, an individual or entity that
owns a controlling or otherwise attributable interest in a licensee, or
an individual or entity that actually controls a licensee for one
channel block in a CGSA may have an direct or indirect ownership
interest of 5 percent or less in the licensee, an individual or entity
that owns a controlling or otherwise attributable interest in a
licensee, or an individual or entity that actually controls a licensee
for the other channel block in an overlapping CGSA.
(b) Non-controlling interests. A direct or indirect non-
attributable interest in both systems is excluded from the general rule
prohibiting multiple ownership interests.
(c) Divestiture. Divestiture of interests as a result of a transfer
of control or assignment of authorization must occur prior to
consummating the transfer or assignment.
(d) Ownership attribution. For purposes of paragraphs (a) and (b)
of this section, ownership and other interests cellular licensees will
be attributed to their holders pursuant to the following criteria:
(1) Controlling interest shall be attributable. Controlling
interest means majority voting equity ownership, any general
partnership interest, or any means of actual working control (including
negative control) over the operation of the licensee, in whatever
manner exercised.
(2) Partnership and other ownership interests and any stock
interest amounting to 20 percent or more of the equity, or outstanding
stock, or outstanding voting stock of a cellular licensee shall be
attributed.
(3) Non-voting stock shall be attributed as an interest in the
issuing entity if in excess of the amounts set forth in paragraph
(d)(2) of this section.
(4) Debt and instruments such as warrants, convertible debentures,
options, or other interests (except non-voting stock) with rights of
conversion to voting interests shall not be attributed unless and until
converted.
(5) Limited partnership interests shall be attributed to limited
partners and shall be calculated according to both the percentage of
equity paid in and the percentage of distribution of profits and
losses.
(6) Officers and directors of a cellular licensee shall be
considered to have an
[[Page 54577]]
attributable interest in the entity with which they are so associated.
The officers and directors of an entity that controls a cellular
licensee shall be considered to have an attributable interest in the
cellular licensee.
(7) Ownership interests that are held indirectly by any party
through one or more intervening corporations will be determined by
successive multiplication of the ownership percentages for each link in
the vertical ownership chain and application of the relevant
attribution benchmark to the resulting product, except that if the
ownership percentage for an interest in any link in the chain exceeds
50 percent or represents actual control, it shall be treated as if it
were a 100 percent interest. (For example, if A owns 20% of B, and B
owns 40% of licensee C, then A's interest in licensee C would be 8%. If
A owns 20% of B, and B owns 51% of licensee C, then A's interest in
licensee C would be 20% because B's ownership of C exceeds 50%.)
(8) Any person who manages the operations of a 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,
(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.
(9) Any licensee or its affiliate who enters into a joint marketing
arrangements with a cellular, 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.
[FR Doc. 99-25704 Filed 10-6-99; 8:45 am]
BILLING CODE 6712-01-P