[Federal Register Volume 59, Number 149 (Thursday, August 4, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18942]


[[Page Unknown]]

[Federal Register: August 4, 1994]


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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 24

[GEN Docket No. 90-314, FCC 94-195]

 

New Personal Communications Services in the 2 GHz Band

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this Further Order on Reconsideration, the Commission 
adopts a multiplier for use to determine whether interests in cellular 
and broadband PCS licensees held indirectly through intervening 
corporate entities should be attributed for purposes of the 
Commission's broadband PCS/cellular cross-ownership rule and broadband 
PCS spectrum cap rule. This action is taken so that these rules can be 
more effectively enforced consistent with their intent, which is to 
ensure that broadband PCS licensees lack any incentive to impede the 
development of full competition with the cellular licensees or with 
other broadband PCS licensees in the same geographic area.

EFFECTIVE DATES: September 6, 1994.

FOR FURTHER INFORMATION CONTACT:
Jonathan Cohen, Office of Plans and Policy, (202) 418-2030.

SUPPLEMENTARY INFORMATION: This Further Order on Reconsideration is 
available for inspection and copying during normal business hours in 
the FCC Dockets Branch, 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, Inc., 2100 M Street, 
NW., Suite 140, Washington, DC. 20037, telephone (202) 857-3800.

Further Order On Reconsideration

    In the matter of: Amendment of the Commission's Rules to 
Establish New Personal Communications Services in the 2 GHz Band.
    Adopted: July 22, 1994.
    Released: July 22, 1994.

    By the Commission:
    1. In the Commission's Memorandum Opinion and Order in this 
proceeding, FCC 94-144, 59 FR 32830 (June 24, 1994) (``Memorandum 
Opinion and Order''), we reaffirmed our bright-line cross-ownership 
attribution standards, which apply to common ownership of licenses in 
the Domestic Public Cellular Radio Telecommunications Service 
(``cellular'') and the Personal Communications Services in the 2 GHz 
band (``broadband PCS''). We also ruled that no entity would be 
permitted to hold broadband PCS licenses comprising more than 40 MHz of 
spectrum in a particular PCS service area. The purpose of both the 
broadband PCS/cellular cross-ownership rule and the broadband PCS 
spectrum cap rule is to ensure that broadband PCS licensees lack any 
incentive to impede the development of full competition with the 
cellular licensees or with other broadband PCS licensees in the same 
geographic area.
    2. We determined that an interest of 20 percent or more in a 
cellular license will be attributable,\1\ and that an interest of 5 
percent or more in a broadband PCS license will be attributable. See 
Memorandum Opinion and Order at 109-110. Under the broadband PCS/
cellular cross-ownership rule, entities with attributable ownership of 
a cellular license covering 10 percent or more of the population of a 
broadband PCS service area are limited to holding one 10 MHz broadband 
PCS license in that broadband PCS service area until January 1, 2000. 
See 47 CFR 24.204. Under the broadband PCS spectrum cap rule, parties 
are not permitted to hold attributable interests in licenses covering 
more than 40 MHz in the same PCS service area. See 47 CFR 24.229(c). In 
determining how to calculate a party's interest in a cellular licensee 
when it is held through multiple tiers of entities, we stated that the 
interest of a subsidiary is attributed in full to the parent. See 
Memorandum Opinion and Order at 116. The same rule would apply to 
interests held in broadband PCS licenses through multiple tiers of 
entities.
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    \1\Certain entities are permitted to hold up to a 40 percent 
interest in a cellular license without attribution. See 47 CFR 
24.204(d)(2)(ii).
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    3. Herein we reconsider, on our own motion, the issue of whether to 
use a ``multiplier'' to determine how interests in cellular and 
broadband PCS licensees held indirectly through intervening corporate 
entities should be attributed. A multiplier is currently used by the 
Commission in our attribution rules in the broadcast context. See 47 
CFR 73.3555, note 2(d). To determine the ``true'' ownership interest of 
a party whose interest in a broadcast licensee is held through 
intervening entities, each non-majority, non-controlling interest is 
multiplied together. For example, a party that owns a 25 percent non-
controlling interest in a corporation that has a 10 percent non-
controlling interest in a licensee would be deemed to have a 2.5 
percent interest in the licensee. As we concluded in adopting a 
multiplier for broadcast attribution, use of a multiplier allows the 
Commission to accurately take account of a party's ``actual involvement 
with the ultimate licensee'' as well as its ability to exert control 
over the actions of the licensee. See Reexamination of the Commission's 
Rules and Policies Regarding the Attribution of Ownership Interests in 
Broadcast, Cable Television and Newspaper Entities, 97 FCC 2d 997, 1018 
(1984), recon., 58 RR 2d 604 (1985), further recon., 1 FCC Red 802 
(1986), 52 FR 1630 (Jan. 15, 1987). We concluded that ``use of a 
multiplier would more realistically reflect a party's attenuated 
interest in a licensee where there are intervening corporations, than 
does the present practice of fully attributing any interest above the 
benchmark through each intervening corporation. Id.
    4. In the Memorandum Opinion and Order, we favored a bright-line 
test because we believed that it would result in a faster, less 
burdensome licensing process. Memorandum Opinion and Order at  113. On 
reconsideration, however, we have concluded that adding use of a 
multiplier will allow us to more effectively enforce the broadband PCS/
cellular cross-ownership and broadband PCS spectrum cap rules 
consistent with their intent. We also conclude that using a multiplier 
is consistent with our policy goal of promoting full competition in 
wireless markets, because it will not cause the exclusion of firms that 
pose no threat to competition. Without a multiplier, parties that have 
neither the ability to exert control nor a substantial financial stake 
in the cellular or broadband PCS license could be unduly restricted in 
acquiring interests in such license. Furthermore, absent a multiplier, 
anomalous and unintended results occur. For example, if Company A holds 
a 21 percent non-controlling interest in Company B, which in turn holds 
a 30 percent non-controlling interest in Company X, a cellular 
licensee, Company A's attributable interest in Company X would be 
deemed to be 30 percent, in excess of the 20 percent threshold 
applicable to broadband PCS/cellular cross-ownership. Company A would 
thus be limited to acquiring a 10 MHz broadband PCS license in Company 
X's cellular service area, even though it has neither the ability to 
exert control or significant influence over the operations of Company 
X's cellular system nor a financial stake in Company X so substantial 
as to give rise to an incentive to engage in anticompetitive conduct. 
In comparison, by using a multiplier, Company A's attributable interest 
in Company X would be 6.3 percent (0.21 x 0.3), under the 20 percent 
attribution threshold, and Company A would not be restricted to 10 MHz 
broadband PCS licenses in Company X's cellular service area.
    5. Considerations of ``actual involvement'' with, true economic 
interest in, and ability to control a licensee are crucial in 
determining whether a particular indirect ownership interest should be 
attributed to the holder for purposes of our cross-ownership and 
multiple ownership rules. These considerations apply with equal force 
in the broadcast, broadband PCS and cellular contexts; thus, we 
conclude that a multiplier similar to that used in applying our 
attribution rules in the broadcast area should be adopted for purposes 
of determining attributable interests in cellular and broadband PCS 
licensees. We therefore will amend Sec. 24.204 of our Rules to include 
use of a multiplier to determine whether an entity holding indirect 
non-controlling interests in a cellular licensee or a broadband PCS 
applicant or licensee has an attributable interest for purposes of our 
broadband PCS/cellular cross-ownership rule and our broadband PCS 
spectrum cap rule. For purposes of applying the multiplier, where an 
entity's ownership interest in any particular link in the ownership 
chain is greater than 50 percent or is controlling, the interest will 
be treated as if it were 100 percent.
    6. Accordingly, It Is Ordered That Part 24 of the Commission's 
Rules is amended as set forth below.
    7. It Is Further Ordered That the rules changes made herein Will 
Become Effective 30 days after their publication in the Federal 
Register. This action is taken pursuant to Sections 4(i), 303(r) and 
309(j) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 
303(r) and 309(j).

List of Subjects in 47 CFR Part 24

    Personal communications services, Radio.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Final Rules

    Part 24 of Chapter I of Title 47 of the Code of Federal Regulations 
is amended as follows:

PART 24--PERSONAL COMMUNICATIONS SERVICES

    1. The authority citation of Part 24 continues to read as follows:

    Authority: Secs. 4, 301, 302, 303, 309 and 332, 48 Stat. 1066, 
1082, as amended; 47 U.S.C. 154, 301, 302, 303, 309 and 332, unless 
otherwise noted.

    2. Section 24.204 of the Commission's Rules is amended by adding 
paragraph (d)(2)(viii):


Sec. 24.204  Cellular eligibility.

* * * * *
    (d) * * *
    (2) * * *
    (viii) Ownership interests in a cellular licensee or a broadband 
PCS applicant or licensee 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 10 percent of Company X, 
which owns 35 percent of, and controls, Company Y, which owns 25 
percent of Licensee, then Company X's attributable interest in Licensee 
would be 25 percent, and A's attributable interest in Licensee would be 
2.5 percent (0.1 x 0.25).]
* * * * *
[FR Doc. 94-18942 Field 8-3-94; 8:45 am]
BILLING CODE 6712-01-M