1998 Biennial Regulatory ReviewSpectrum Aggregation Limits for Wireless Telecommunications Carriers

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

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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

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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.

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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