# Implementation of Sections 3(n) and 332 of the Communications ActRegulatory Treatment of Mobile Services > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A94-29730 ## Record - **Collection:** Federal Register - **Document type:** Uncategorized Document - **Published:** December 2, 1994 ## Text FEDERAL COMMUNICATIONS COMMISSION 47 CFR Parts 20 and 24 [GN Docket No. 93-252, FCC 94-270] Implementation of Sections 3(n) and 332 of the Communications Act--Regulatory Treatment of Mobile Services AGENCY: Federal Communications Commission. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: In this Fourth Report and Order the Commission adopts rules that make certain non-equity relationships attributable interests for purposes of applying the 40 MHz limitation on broadband Personal Communications Service (PCS) spectrum, the PCS-cellular cross-ownership rules, and the general Commercial Mobile Radio Service (CMRS) spectrum cap. The Commission concluded that it is not in the public interest to treat resale agreements as attributable interests for the purpose of applying CMRS multiple-and cross-ownership rules. However, the Commission found that joint marketing arrangements between competitors in the same geographic area and certain management agreements should be treated as attributable interests for purposes of spectrum caps. These rules are necessary to ensure that a single entity will not have the ability to influence or control a large portion of the available mobile wireless spectrum and thereby undermine competitive pricing for wireless services. EFFECTIVE DATES: The rule changes made to Part 20 of the Commission's Rules will become effective on January 2, 1995. The rule changes made to Part 24 of the Commission's Rules will become effective upon publication in the Federal Register. FOR FURTHER INFORMATION CONTACT: Office of Plans and Policy Contact: Greg Rosston, (202) 418-2030. Common Carrier Bureau Contact: Leila Brown, (202) 418-1300. SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Fourth Report and Order in GN Docket No. 93-252, adopted October 20, 1994 and released November 18, 1994. The full text of Commission decisions are available for inspection and copying during normal business hours in the FCC Public Reference Center, Room 239, 1919 M Street, NW., Washington, DC. The complete text of this decision may also be purchased from the Commission's copy contractor, International Transcription Service, Inc. 2100 M St., NW., Suite 140, Washington, DC 20037, (202) 857-3800. Final Regulatory Flexibility Analysis Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C., Section 604, a final regulatory flexibility analysis has been prepared and is presented below. It is available for public viewing as part of the full text of the decision, which may be obtained from the Commission or its copy contractor. Written comments on the proposals in the Notice, including the Regulatory Flexibility Analysis, were requested. A. Need for and Objective of Rules This rule making proceeding was initiated to implement Sections 3(n) and 332 of the Communications Act of 1934, as amended. In prior orders, the Commission has adopted spectrum caps and cross-ownership rules to prevent excessive aggregation of spectrum. The goal of these limitations is to promote competition by ensuring that the aggregation of spectrum in a given geographic area does not result in anticompetitive influence over price or service offerings. The Fourth Report and Order in GN Docket No. 93-252 adopts attribution rules that make certain management agreements and joint marketing arrangements attributable interests for purposes of applying the Commission's spectrum cap rules. In the absence of such attribution rules, there is a risk that management agreements and joint marketing agreements may undermine our efforts to foster a competitive marketplace for wireless services. B. Issues Raised by the Public in Response to the Initial Analysis No comments were submitted specifically in response to the Initial Regulatory Flexibility Analysis. C. Significant Alternatives Considered The rules adopted in this Order are narrowly tailored to minimize any intrusive consequences with regard to the operations of CMRS licensees. The Order does not prohibit management or joint marketing agreements. It finds, however, that certain management or joint marketing agreements will be treated as creating attributable interests in the licensees for purposes of the Commission's spectrum cap limitations. The regulatory burdens we have established for all CMRS licensees, including small entities, are necessary to carry out our duties under the Communications Act of 1934, as amended. We will continue to examine alternatives in the future with objectives of eliminating unnecessary regulations and minimizing any significant impact on small entities. A copy of this Order will be sent to the Chief Counsel for Advocacy of the Small Business Administration. Synopsis of the Fourth Report and Order On July 18, 1994, the Commission adopted a Second Further Notice of Proposed Rule Making, 59 FR 37734 (July 25, 1994) in which we sought comment on whether we should consider certain non-equity relationships to be attributable interests for purposes of applying the 40 MHz limitation on broadband Personal Communications Service (PCS) spectrum, the PCS-cellular cross-ownership rules, and a more general Commercial Mobile Radio Service (CMRS) spectrum cap. The Commission also requested comment on whether any attribution rules we might adopt in this proceeding should apply differently depending on whether the applicant or licensee involved is a designated entity. Specifically, the Second Further Notice asked whether resale agreements, management contracts, and joint marketing arrangements that do not confer de facto control on a party should be considered attributable because these interests may affect the incentive or ability of PCS and other CMRS licensees to compete vigorously in the marketplace or because they may affect the number of effective competing providers or the independence of pricing decisions by service providers. After close of the comment period, the Commission released the Third Report and Order, 59 FR 59945 (Nov. 21, 1994), in this docket. In that Order, the Commission adopted a spectrum cap of 45 MHz on the combined ownership of broadband PCS, cellular radio, and Specialized Mobile Radio (SMR) licenses that are classified as CMRS. This spectrum cap is in addition to the existing 40 MHz cap on broadband PCS ownership and the PCS-cellular cross-ownership rules. The Third Report and Order also conformed the rules relating to station management and control for CMRS providers and stated that we would address whether standards regarding indicia of control in connection with CMRS management contracts should be further conformed or modified in the context of our examination of whether to attribute non- controlling management contracts. In an effort to ensure that the significant changes that will be occurring in wireless services produce a robustly competitive market with a diversity of efficient providers serving a variety of consumer needs, the Commission has taken steps to prevent excessive aggregation of spectrum through various spectrum caps and cross-ownership rules. The goal of these limitations is to ensure that a single entity will not have the ability to influence or control a large portion of the available mobile wireless spectrum and thereby undermine competitive pricing for wireless services. This Order makes attributable management agreements and joint marketing agreements between licensees that confer the ability to determine or significantly influence price or service offerings. While such arrangements are considered attributable, they will not be prohibited by our rules so long as those with attributable interests remain below the various spectrum thresholds after considering all attributable spectrum. The Order concludes that management agreements, resale, and joint marketing arrangements can enhance the competitiveness of wireless service providers. Management agreements had been used in the SMR industry and have proven to be beneficial to the introduction of new technology such as trunked systems and new wide area systems. In certain contexts, however, they may also be used to facilitate the exercise of market power and produce anticompetitive results. This Order is concerned with the effects on competition from non- equity arrangements. In the current wireless marketplace joint marketing arrangements such as MobiLink and Cellular One can be beneficial to consumers. These types of arrangements facilitate roaming and brand identity without conferring the ability to set or significantly influence the price or service offerings of individual licensees. However, there may be other joint marketing arrangements that may confer the ability to significantly influence price and service offerings. In these cases, those arrangements will be considered attributable and would be prohibited if a party to the agreement exceeded the applicable caps. The Order is also concerned about the effects attributing such arrangements might have on the competitiveness of designated entities. It finds that considering management contracts attributable interests for purposes of spectrum caps will not harm competition or efficiency, nor will it harm the ability of designated entities to find suitable expertise should they wish to do so. Investor/manager agreements are one of many alternatives available to designated entities and the Commission does not believe that treating management agreements as attributable for designated entities in exactly the same manner for spectrum cap purposes as for other entities will hamper the competitiveness of designated entities. This does not mean, however, that these management agreements will be deemed ``attributable'' for purposes of the revenue thresholds in the entrepreneur's blocks. The Order points out that this decision in no way restricts designated entities (or other licensees) from entering into management or joint marketing agreements with entities with no attributable interests in the same market. The Commission concludes that it is not in the public interests to treat resale agreements as attributable interests for the purpose of applying CMRS multiple-and cross-ownership rules. However, the Commission has determined that joint marketing arrangements between competitors in the same geographic area and certain management agreements should be treated as attributable interests for purposes of spectrum caps and pursuant to the rules and criteria we adopt in the Fourth Report and Order. Ordering Clauses Accordingly, it is ordered that the rule changes made to Part 20 of the Commission's Rules specified below will become effective on January 2, 1995. This action is taken pursuant to Sections 4(i), 7(a) 302, 303(c) 303(f) 303(g) and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. Sections 154(i), 157(a), 302, 303(c), 303(f), 303(g), and 303(r). It is further ordered that the rule changes made to Part 24 of the Commission's Rules herein will become effective immediately upon publication in the Federal Register. This action is taken pursuant to Sections 4(i), 7(a), 302, 303(c), 303(f), 303(g) and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. Sections 154(i), 157(a), 302, 303(c), 303(f), 303(g) and 303(r). List of Subjects 47 CFR Part 20 Commercial mobile radio services. 47 CFR Part 24 Personal communications services. Federal Communications Commission. William F. Caton, Acting Secretary. Rule Amendments 47 CFR Parts 20 and 24 are amended as follows: PART 20--COMMERCIAL MOBILE RADIO SERVICES 1. The authority citation for Part 20 continues to read as follows: Authority: Secs. 4, 303, and 332, 48 Stat. 1066, 1082 as amended; 47 U.S.C. 154, 303, and 332, unless otherwise noted. 2. Section 20.6 is amended by adding new paragraphs (d)(9) and (d)(10) to read as follows: Sec. 20.6 CMRS spectrum aggregation limit. * * * * * (d) * * * (9) Any person who manages the operations of a broadband PCS, cellular, or SMR licensee pursuant to a management agreement shall be considered to have an attributable interest in such licensee if such person, or its affiliate has authority to make decisions or otherwise engage in practices or activities that determine, or significantly influence, (i) The nature or types of services offered by such licensee; (ii) The terms upon which such services are offered; or (iii) The prices charged for such services. (10) Any licensee or its affiliate who enters into a joint marketing arrangements with a broadband PCS, cellular, or SMR licensee, or its affiliate shall be considered to have an attributable interest, if such licensee, or its affiliate has authority to make decisions or otherwise engage in practices or activities that determine, or significantly influence, (i) The nature or types of services offered by such licensee; (ii) The terms upon which such services are offered; or (iii) The prices charged for such services. * * * * * PART 24--PERSONAL COMMUNICATIONS SERVICES 1. The authority citation for Part 24 continues to read as follows: Authority: 47 U.S.C. 154, 301, 302, 303, 309, and 332, unless otherwise noted. 2. Section 24.204 is amended by adding new paragraphs (d)(2)(ix) and (d)(2)(x), by redesignating paragraphs (f)(1), (2) and (3) as (f)(2), (3) and (4), and by redesignating the introductory text of paragraph (f) as paragraph (f)(1) and revising it to read as follows: * * * * * Sec. 24.204 Cellular eligibility. * * * * * (d)* * * (2)* * * (ix) Any person who manages the operations of a broadband PCS or cellular licensee pursuant to a management agreement shall be considered to have an attributable interest in such licensee, if such person, or its affiliate has authority to make decisions or otherwise engage in practices or activities that determine, or significantly influence, (A) The nature or types of services offered by such licensee; (B) The terms upon which such services are offered; or (C) The prices charged for such services. (x) Any licensee who enters into a joint marketing arrangement with a broadband PCS or cellular licensee, or its affiliate, shall be considered to have an attributable interest, if such licensee has authority to make decisions or otherwise engage in practices or activities that determine, or significantly influence, (A) The nature or types of services offered by such licensee; (B) The terms upon which such services are offered; or (C) The prices charged for such services. * * * * * (f) Cellular Divestiture. (1)(i) Parties holding controlling or attributable ownership interests in cellular licensees may be a party to a broadband PCS application (i.e., have a controlling or attributable interest in a broadband PCS applicant), and such PCS applicant will be eligible for more than one 10 MHz broadband PCS license and/or 30 MHz broadband PCS license(s) pursuant to the divestiture procedures set forth in paragraphs (f)(2) through (4) of this section; Provided, however, that these divestiture procedures shall be available only to: (A) Parties with controlling or attributable ownership interests in cellular licenses where the CGSA(s) covers 20 percent or less of the PCS service area population; (B) Parties with attributable interests solely due to management agreements or joint marketing agreements; and (C) Parties with non-controlling attributable interests in cellular licenses, regardless of the degree to which the CGSA(s) covers the PCS service area population. (ii) For purposes of this paragraph, a ``non-controlling attributable interest'' is one in which the holder has less than a fifty (50) percent voting interest and there is an unaffiliated single holder of a fifty (50) percent or greater voting interest. * * * * * [FR Doc. 94-29730 Filed 12-1-94; 8:45 am] BILLING CODE 6712-01-M --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A94-29730. Public record. Not legal advice.