[Federal Register Volume 59, Number 231 (Friday, December 2, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29730]


[[Page Unknown]]

[Federal Register: December 2, 1994]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 20 and 24

[GN Docket No. 93-252, FCC 94-270]

 

Implementation of Sections 3(n) and 332 of the Communications 
Act--Regulatory Treatment of Mobile Services

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this Fourth Report and Order the Commission adopts rules 
that make certain non-equity relationships attributable interests for 
purposes of applying the 40 MHz limitation on broadband Personal 
Communications Service (PCS) spectrum, the PCS-cellular cross-ownership 
rules, and the general Commercial Mobile Radio Service (CMRS) spectrum 
cap. The Commission concluded that it is not in the public interest to 
treat resale agreements as attributable interests for the purpose of 
applying CMRS multiple-and cross-ownership rules. However, the 
Commission found that joint marketing arrangements between competitors 
in the same geographic area and certain management agreements should be 
treated as attributable interests for purposes of spectrum caps. These 
rules are necessary to ensure that a single entity will not have the 
ability to influence or control a large portion of the available mobile 
wireless spectrum and thereby undermine competitive pricing for 
wireless services.

EFFECTIVE DATES: The rule changes made to Part 20 of the Commission's 
Rules will become effective on January 2, 1995. The rule changes made 
to Part 24 of the Commission's Rules will become effective upon 
publication in the Federal Register.

FOR FURTHER INFORMATION CONTACT:
Office of Plans and Policy Contact: Greg Rosston, (202) 418-2030. 
Common Carrier Bureau Contact: Leila Brown, (202) 418-1300.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Fourth 
Report and Order in GN Docket No. 93-252, adopted October 20, 1994 and 
released November 18, 1994. The full text of Commission decisions are 
available for inspection and copying during normal business hours in 
the FCC Public Reference Center, Room 239, 1919 M Street, NW., 
Washington, DC. The complete text of this decision may also be 
purchased from the Commission's copy contractor, International 
Transcription Service, Inc. 2100 M St., NW., Suite 140, Washington, DC 
20037, (202) 857-3800.

Final Regulatory Flexibility Analysis

    Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C., 
Section 604, a final regulatory flexibility analysis has been prepared 
and is presented below. It is available for public viewing as part of 
the full text of the decision, which may be obtained from the 
Commission or its copy contractor. Written comments on the proposals in 
the Notice, including the Regulatory Flexibility Analysis, were 
requested.

A. Need for and Objective of Rules

    This rule making proceeding was initiated to implement Sections 
3(n) and 332 of the Communications Act of 1934, as amended. In prior 
orders, the Commission has adopted spectrum caps and cross-ownership 
rules to prevent excessive aggregation of spectrum. The goal of these 
limitations is to promote competition by ensuring that the aggregation 
of spectrum in a given geographic area does not result in 
anticompetitive influence over price or service offerings. The Fourth 
Report and Order in GN Docket No. 93-252 adopts attribution rules that 
make certain management agreements and joint marketing arrangements 
attributable interests for purposes of applying the Commission's 
spectrum cap rules. In the absence of such attribution rules, there is 
a risk that management agreements and joint marketing agreements may 
undermine our efforts to foster a competitive marketplace for wireless 
services.

B. Issues Raised by the Public in Response to the Initial Analysis

    No comments were submitted specifically in response to the Initial 
Regulatory Flexibility Analysis.

C. Significant Alternatives Considered

    The rules adopted in this Order are narrowly tailored to minimize 
any intrusive consequences with regard to the operations of CMRS 
licensees. The Order does not prohibit management or joint marketing 
agreements. It finds, however, that certain management or joint 
marketing agreements will be treated as creating attributable interests 
in the licensees for purposes of the Commission's spectrum cap 
limitations. The regulatory burdens we have established for all CMRS 
licensees, including small entities, are necessary to carry out our 
duties under the Communications Act of 1934, as amended. We will 
continue to examine alternatives in the future with objectives of 
eliminating unnecessary regulations and minimizing any significant 
impact on small entities. A copy of this Order will be sent to the 
Chief Counsel for Advocacy of the Small Business Administration.

Synopsis of the Fourth Report and Order

    On July 18, 1994, the Commission adopted a Second Further Notice of 
Proposed Rule Making, 59 FR 37734 (July 25, 1994) in which we sought 
comment on whether we should consider certain non-equity relationships 
to be attributable interests for purposes of applying the 40 MHz 
limitation on broadband Personal Communications Service (PCS) spectrum, 
the PCS-cellular cross-ownership rules, and a more general Commercial 
Mobile Radio Service (CMRS) spectrum cap. The Commission also requested 
comment on whether any attribution rules we might adopt in this 
proceeding should apply differently depending on whether the applicant 
or licensee involved is a designated entity.
    Specifically, the Second Further Notice asked whether resale 
agreements, management contracts, and joint marketing arrangements that 
do not confer de facto control on a party should be considered 
attributable because these interests may affect the incentive or 
ability of PCS and other CMRS licensees to compete vigorously in the 
marketplace or because they may affect the number of effective 
competing providers or the independence of pricing decisions by service 
providers. After close of the comment period, the Commission released 
the Third Report and Order, 59 FR 59945 (Nov. 21, 1994), in this 
docket. In that Order, the Commission adopted a spectrum cap of 45 MHz 
on the combined ownership of broadband PCS, cellular radio, and 
Specialized Mobile Radio (SMR) licenses that are classified as CMRS. 
This spectrum cap is in addition to the existing 40 MHz cap on 
broadband PCS ownership and the PCS-cellular cross-ownership rules. The 
Third Report and Order also conformed the rules relating to station 
management and control for CMRS providers and stated that we would 
address whether standards regarding indicia of control in connection 
with CMRS management contracts should be further conformed or modified 
in the context of our examination of whether to attribute non-
controlling management contracts.
    In an effort to ensure that the significant changes that will be 
occurring in wireless services produce a robustly competitive market 
with a diversity of efficient providers serving a variety of consumer 
needs, the Commission has taken steps to prevent excessive aggregation 
of spectrum through various spectrum caps and cross-ownership rules. 
The goal of these limitations is to ensure that a single entity will 
not have the ability to influence or control a large portion of the 
available mobile wireless spectrum and thereby undermine competitive 
pricing for wireless services. This Order makes attributable management 
agreements and joint marketing agreements between licensees that confer 
the ability to determine or significantly influence price or service 
offerings. While such arrangements are considered attributable, they 
will not be prohibited by our rules so long as those with attributable 
interests remain below the various spectrum thresholds after 
considering all attributable spectrum.
    The Order concludes that management agreements, resale, and joint 
marketing arrangements can enhance the competitiveness of wireless 
service providers. Management agreements had been used in the SMR 
industry and have proven to be beneficial to the introduction of new 
technology such as trunked systems and new wide area systems. In 
certain contexts, however, they may also be used to facilitate the 
exercise of market power and produce anticompetitive results.
    This Order is concerned with the effects on competition from non-
equity arrangements. In the current wireless marketplace joint 
marketing arrangements such as MobiLink and Cellular One can be 
beneficial to consumers. These types of arrangements facilitate roaming 
and brand identity without conferring the ability to set or 
significantly influence the price or service offerings of individual 
licensees. However, there may be other joint marketing arrangements 
that may confer the ability to significantly influence price and 
service offerings. In these cases, those arrangements will be 
considered attributable and would be prohibited if a party to the 
agreement exceeded the applicable caps.
    The Order is also concerned about the effects attributing such 
arrangements might have on the competitiveness of designated entities. 
It finds that considering management contracts attributable interests 
for purposes of spectrum caps will not harm competition or efficiency, 
nor will it harm the ability of designated entities to find suitable 
expertise should they wish to do so. Investor/manager agreements are 
one of many alternatives available to designated entities and the 
Commission does not believe that treating management agreements as 
attributable for designated entities in exactly the same manner for 
spectrum cap purposes as for other entities will hamper the 
competitiveness of designated entities. This does not mean, however, 
that these management agreements will be deemed ``attributable'' for 
purposes of the revenue thresholds in the entrepreneur's blocks. The 
Order points out that this decision in no way restricts designated 
entities (or other licensees) from entering into management or joint 
marketing agreements with entities with no attributable interests in 
the same market.
    The Commission concludes that it is not in the public interests to 
treat resale agreements as attributable interests for the purpose of 
applying CMRS multiple-and cross-ownership rules. However, the 
Commission has determined that joint marketing arrangements between 
competitors in the same geographic area and certain management 
agreements should be treated as attributable interests for purposes of 
spectrum caps and pursuant to the rules and criteria we adopt in the 
Fourth Report and Order.

Ordering Clauses

    Accordingly, it is ordered that the rule changes made to Part 20 of 
the Commission's Rules specified below will become effective on January 
2, 1995. This action is taken pursuant to Sections 4(i), 7(a) 302, 
303(c) 303(f) 303(g) and 303(r) of the Communications Act of 1934, as 
amended, 47 U.S.C. Sections 154(i), 157(a), 302, 303(c), 303(f), 
303(g), and 303(r).
    It is further ordered that the rule changes made to Part 24 of the 
Commission's Rules herein will become effective immediately upon 
publication in the Federal Register. This action is taken pursuant to 
Sections 4(i), 7(a), 302, 303(c), 303(f), 303(g) and 303(r) of the 
Communications Act of 1934, as amended, 47 U.S.C. Sections 154(i), 
157(a), 302, 303(c), 303(f), 303(g) and 303(r).

List of Subjects

47 CFR Part 20

    Commercial mobile radio services.

47 CFR Part 24

    Personal communications services.

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

Rule Amendments

    47 CFR Parts 20 and 24 are amended as follows:

PART 20--COMMERCIAL MOBILE RADIO SERVICES

    1. The authority citation for Part 20 continues to read as follows:

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

    2. Section 20.6 is amended by adding new paragraphs (d)(9) and 
(d)(10) to read as follows:


Sec. 20.6  CMRS spectrum aggregation limit.

* * * * *
    (d) * * *
    (9) Any person who manages the operations of a broadband PCS, 
cellular, or SMR licensee pursuant to a management agreement shall be 
considered to have an attributable interest in such licensee if such 
person, or its affiliate has authority to make decisions or otherwise 
engage in practices or activities that determine, or significantly 
influence,
    (i) The nature or types of services offered by such licensee;
    (ii) The terms upon which such services are offered; or
    (iii) The prices charged for such services.
    (10) Any licensee or its affiliate who enters into a joint 
marketing arrangements with a broadband PCS, cellular, or SMR licensee, 
or its affiliate shall be considered to have an attributable interest, 
if such licensee, or its affiliate has authority to make decisions or 
otherwise engage in practices or activities that determine, or 
significantly influence,
    (i) The nature or types of services offered by such licensee;
    (ii) The terms upon which such services are offered; or
    (iii) The prices charged for such services.
* * * * *

PART 24--PERSONAL COMMUNICATIONS SERVICES

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

    Authority: 47 U.S.C. 154, 301, 302, 303, 309, and 332, unless 
otherwise noted.

    2. Section 24.204 is amended by adding new paragraphs (d)(2)(ix) 
and (d)(2)(x), by redesignating paragraphs (f)(1), (2) and (3) as 
(f)(2), (3) and (4), and by redesignating the introductory text of 
paragraph (f) as paragraph (f)(1) and revising it to read as follows:
* * * * *


Sec. 24.204  Cellular eligibility.

* * * * *
    (d)* * *
    (2)* * *
    (ix) Any person who manages the operations of a broadband PCS or 
cellular licensee pursuant to a management agreement shall be 
considered to have an attributable interest in such licensee, if such 
person, or its affiliate has authority to make decisions or otherwise 
engage in practices or activities that determine, or significantly 
influence,
    (A) The nature or types of services offered by such licensee;
    (B) The terms upon which such services are offered; or
    (C) The prices charged for such services.
    (x) Any licensee who enters into a joint marketing arrangement with 
a broadband PCS or cellular licensee, or its affiliate, shall be 
considered to have an attributable interest, if such licensee has 
authority to make decisions or otherwise engage in practices or 
activities that determine, or significantly influence,
    (A) The nature or types of services offered by such licensee;
    (B) The terms upon which such services are offered; or
    (C) The prices charged for such services.
* * * * *
    (f) Cellular Divestiture. (1)(i) Parties holding controlling or 
attributable ownership interests in cellular licensees may be a party 
to a broadband PCS application (i.e., have a controlling or 
attributable interest in a broadband PCS applicant), and such PCS 
applicant will be eligible for more than one 10 MHz broadband PCS 
license and/or 30 MHz broadband PCS license(s) pursuant to the 
divestiture procedures set forth in paragraphs (f)(2) through (4) of 
this section; Provided, however, that these divestiture procedures 
shall be available only to:
    (A) Parties with controlling or attributable ownership interests in 
cellular licenses where the CGSA(s) covers 20 percent or less of the 
PCS service area population;
    (B) Parties with attributable interests solely due to management 
agreements or joint marketing agreements; and
    (C) Parties with non-controlling attributable interests in cellular 
licenses, regardless of the degree to which the CGSA(s) covers the PCS 
service area population.
    (ii) For purposes of this paragraph, a ``non-controlling 
attributable interest'' is one in which the holder has less than a 
fifty (50) percent voting interest and there is an unaffiliated single 
holder of a fifty (50) percent or greater voting interest.
* * * * *
[FR Doc. 94-29730 Filed 12-1-94; 8:45 am]
BILLING CODE 6712-01-M