[Federal Register Volume 61, Number 86 (Thursday, May 2, 1996)]
[Notices]
[Pages 19622-19625]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10614]



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[[Page 19623]]


FEDERAL COMMUNICATIONS COMMISSION
[PP Docket No. 93-253; ET Docket No. 92-100; FCC 96-139]


Deferral of Licensing of MTA Commercial Broadband PCS

AGENCY: Federal Communications Commission.

ACTION: Determination on application for review.

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SUMMARY: The Commission released this Memorandum Opinion and Order 
(MO&O) to address an Application for Review filed by the National 
Association of Black Owned Broadcasters, Percy E. Sutton, and the 
National Association for the Advancement of Colored People. This MO&O 
denies the application. The MO&O is necessary to answer the issues 
addressed in the application. The intended affect of this action is to 
resolve the issues set forth in the application.

EFFECTIVE DATE: July 1, 1996.

FOR FURTHER INFORMATION CONTACT: John Greenspan, (202) 418-0620, 
Wireless Telecommunications Bureau, Commercial Wireless Division.

SUPPLEMENTARY INFORMATION: This is the text of the MO&O, adopted March 
28, 1996, released April 1, 1996. This order is available for 
inspection and copying during normal business hours at the Commercial 
Wireless Division Legal Branch, Room 7130, 2025 M Street, N.W., 
Washington, D.C., and also may be purchased from the Commission's copy 
contractor, International Transcription Service, at (202) 857-3800, 
2100 M Street, N.W., Suite 140, Washington, D.C. 20037.

Memorandum Opinion and Order

I. Introduction

    1. The Commission has before it an Application for Review filed on 
July 21, 1995 by the National Association of Black Owned Broadcasters, 
Percy E. Sutton, and the National Association for the Advancement of 
Colored People (collectively ``Petitioners''). Petitioners seek review 
of a June 23, 1995 Order by the Chief, Wireless Telecommunications 
Bureau (``the Bureau'') denying two previous requests, one filed by 
Petitioners, to delay the licensing of all MTA license winners in the 
Commission's PCS A and B block auction until the future C block auction 
winners were ready to be licensed.

II. Background

    2. On April 12, 1995, the Wireless Telecommunications Bureau issued 
an Order denying the ``Emergency Motion to Defer MTA PCS Licensing'' 
filed by Communications One., Inc. (``CommOne''), which sought to delay 
issuance of the 99 A and B block licenses in the 2 GHz Personal 
Communications Service (``broadband PCS''). Two pleadings sought review 
of the CommOne Order and a stay of some or all grants of A and B block 
licenses until the conclusion of the broadband PCS C block auction. 
First, on May 12, 1995, CommOne, joined by GO Communications 
Corporation (``GO''), filed a petition for reconsideration of the 
CommOne Order and requested a stay of licensing of the three largest A 
and B block auction winners: AT&T Wireless PCS, Inc. (``AT&T 
Wireless''), PCS Primeco, L.P. (``PCS Primeco''), and WirelessCo, L.P. 
(``WirelessCo''). Second, on May 12, 1995, Petitioners filed an 
application for review of the CommOne Order and a stay of all A and B 
block licensing. The Bureau denied both requests for relief. 
Petitioners have also filed an Application for Review of the A and B 
Block Order. We are dismissing the Application for Review of the A and 
B Block Order in a separate Order adopted today. Although both parties 
sought Commission review, the Bureau determined that because CommOne/GO 
presented arguments not previously considered by the Bureau, Commission 
review would be inappropriate. In addition, the Bureau felt that it 
should reevaluate the arguments of all parties in light of the decision 
by the United States Supreme Court in Adarand Constructors, Inc. v. 
Pena, 115 S. Ct. 2097 (1995).
    3. In the Stay Denial Order, the Bureau rejected Petitioners' claim 
that the decision to hold the C Block auction after the A and B block 
auction, combined with the absence of specific provisions for women and 
minorities in the A and B block auction, violated 47 U.S.C. 
Sec. 309(j). The Bureau deemed Petitioners' stay request an untimely 
attempt to seek reconsideration of the Commission's rules adopted in PP 
Docket No. 93-253 with respect to the structure and sequencing of the 
PCS auctions. The Bureau noted that these rules were adopted in the 
Fifth Report and Order, 59 FR 37566 (July 22, 1994), and reviewed on 
reconsideration in the Fourth Memorandum Opinion and Order, 59 FR 53364 
(October 24, 1994), in that docket, and that the deadline for 
reconsideration had long since passed. Finally, in addressing the stay 
request, the Bureau held that Petitioners and CommOne/Go failed to 
satisfy the Holiday Tours test for determining whether a stay is 
appropriate. The test includes four elements: (1) likelihood of success 
on the merits; (2) the probability of irreparable harm in the absence 
of relief; (3) the probability of harm to third parties if a stay is 
granted; and (4) whether a stay would serve or disserve the public 
interest. Washington Metropolitan Transit Commission v. Holiday Tours, 
Inc., 559 F.2d 841 (D.C. Cir. 1977)).
    4. First, the Bureau determined that the parties were unlikely to 
prevail on the merits. It rejected the contention that licensing of the 
A and B Block winners should be delayed until the C Block winners were 
ready to be licensed. The Bureau concluded that the statute did not 
require the Commission ``to promote diversity at the cost of delaying 
much needed service that could otherwise be provided to the public.'' 
The Bureau also rejected an economic analysis submitted by CommOne/GO 
purporting to show excessive concentration of PCS licenses. The Bureau 
determined that the study was flawed because, inter alia, it improperly 
assumed that the relevant product market was PCS, thus excluding the 
potential competitive impact of cellular and other wireless services 
from the model. The Bureau also found that the analysis ignored the 
fact that licensing of the A and B blocks would substantially increase 
competition while staying the license grants would perpetuate a more 
highly concentrated market. Second, the Bureau disagreed with 
Petitioners' claim of irreparable harm resulting from a headstart given 
to the A and B block winners. It noted that the Commission's decision 
to license the A and B blocks before the C block was not contingent 
upon any particular timetable or date for the C block auction. It also 
noted that the C block bidders could adjust their bids to account for 
any impact on the value of the C block licenses as a result of prior 
licensing of the A and B blocks. Third, the Bureau concluded that a 
stay would significantly harm the A and B block winners. The Bureau 
noted that at the time of the Stay Denial Order, the A and B block 
winners had already paid $1.4 billion to the United States Treasury as 
a downpayment (they paid the balance of approximately $5.6 billion on 
June 30, 1995) and did not earn interest on their deposits. The Bureau 
further found that the winners had already invested significant funds 
in start-up costs. Finally, the Bureau concluded that the public 
interest would best be served by not delaying a new service to the 
public. It found that ``rapidly providing new competitive sources of 
wireless services outweighs any possible competitive harm that might 
result from the A and B block winners being licensed ahead of auction 
winners in other PCS blocks.''

[[Page 19624]]

Accordingly, it refused to stay the licensing of the A and B block 
winners.
    5. Petitioners filed the instant Application for Review on July 21, 
1995. On August 24, 1995, Petitioners filed an Erratum to their 
application. On August 3, 1995, Petitioners filed an Emergency Motion 
for Stay with the United States Court of Appeals for the District of 
Columbia Circuit asking the court to stay issuance of the A and B block 
licenses (which had, in fact, been issued six weeks earlier) until the 
Commission was ready to license the winners in the C block auction as 
well. The Court denied the stay request on August 10, 1995.

III. Contentions of the Parties

    6. In their Application for Review, Petitioners repeat the same 
arguments rejected by the Bureau in the Stay Denial Order. They claim 
that the Commission failed to comply with its statutory mandate under 
47 U.S.C. Sec. 309(j) to provide adequate opportunities for minorities. 
The failure to provide specific incentives for minorities in the A and 
B blocks, according to Petitioners, has resulted in an unlawful 
territorial allocation. Petitioners also assert that they have met all 
of the requirements for obtaining a stay. They allege irreparable harm 
in the absence of a stay, including loss of access to capital, loss of 
base station cell sites, loss of access to distributors and retailers, 
and loss of market share. They also allege that the A and B block 
auction winners would not be harmed by issuance of a stay. Initially, 
Petitioners based this argument on the erroneous assumption that the A 
and B block winners had not received their licenses, and therefore 
would not be required to pay the 80% balance of their bids while a stay 
was in effect. In their Erratum Petitioners acknowledge that the 
Commission granted licenses to the A and B block winners on June 23, 
1995 and that all of the auction winners timely paid their balances on 
June 30, 1995. Nevertheless, Petitioners continue to assert that this 
does not constitute irreparable harm to the A and B block winners. 
Petitioners also allege that all of the A and B block winners were on 
notice that the legality of their licenses was subject to challenge. 
Petitioners further assert that they are likely to prevail on the 
merits of their claim that the Commission violated its statutory 
mandate to disseminate licenses to and promote economic opportunity for 
minorities. Finally, Petitioners assert that a stay would serve the 
public interest by furthering the statutory obligation of the FCC to 
promote participation in PCS by minorities and other designated 
entities.
    7. In a Supplement filed on August 4, 1995, Petitioners note that 
on July 27, 1995, the United States Court of Appeals for the District 
of Columbia Circuit stayed the C block auction. Omnipoint Corporation 
v. FCC, No. 95-1374 (D.C. Cir., July 27, 1995). Omnipoint Corporation 
objected to the Commission's extension of the 50.1% equity option to 
all applicants rather than to just women and minority applicants. This 
meant that the applicant's control group must hold at least 50.1% of 
the applicant's equity, and a single investor could hold the remaining 
49.9% equity. Omnipoint argued that despite the facial neutrality of 
the rule, it violated the equal protection guarantee because business 
not owned by women or minorities did not have adequate time to take 
advantage of the rule change prior to the filing deadline for C block 
bidders. Petitioners cite a statement by Chairman Hundt that this delay 
could push back the start of the C block auction for at least six 
months. Petitioners allege that ``[T]he longer the time period between 
the date of the A and B block licenses are issued and the date the C 
block licenses are issued, the greater and more profound this 
irreparable injury will become.'' The court dissolved the stay on 
September 28, 1995, and the C block auction began on December 18, 1995. 
Omnipoint Corp. v. FCC, No. 95-1374 (D.C. Cir., September 28, 1995).
    8. All of the parties filing oppositions allege that Petitioners 
have not satisfied the four prong test for a stay as set forth in 
Holiday Tours. Western PCS Corporation (``Western'') asserts that 
Petitioners would not succeed on the merits because they ``misread the 
Congressional directives of 309(j).'' PCS PRIMECO, L.P. (``Primeco'') 
disputes Petitioners' claim of excessive harm. It contends that the 
granting of a stay of the A and B block licensing would not remove the 
uncertainty concerning the timing of the C block auction nor would it 
remedy the problem of losing base station cell sites if indeed such a 
problem did exist. Primeco argues that it is unclear how the A and B 
block licensees could preclude the eventual C block licensees from 
entering into distribution, resale, or other agreements and that 
Petitioners' claim of loss of market share was ``purely speculative and 
unsupported by the facts.'' WirelessCo, L.P. and PhillieCo, L.P. 
(``WirelessCo'') dispute Petitioners' claim that a stay would not harm 
other parties. WirelessCo submits that it already paid over $2.1 
billion and PhillieCo paid $85 million to the United States Treasury. 
WirelessCo indicates that it has taken significant steps toward 
providing PCS service, including entering into negotiations with 
equipment manufacturers for subscriber equipment, network equipment, 
switching equipment and cell sites. It also submits that it has hired 
employees in more than 20 cities and is presently negotiating facility 
leases in multiple locations. Finally, WirelessCo argues that a stay 
would harm the public interest by delaying the realization by potential 
customers of the benefits of a new and innovative technology that would 
provide needed competition to incumbent cellular providers. Western 
raises the additional argument that Petitioners failed to comply with 
Section 1.115(b)(2) of the Commission's rules, 47 CFR Sec. 1.115(b)(2), 
pertaining to the requirements for filing applications for review by 
not stating the grounds upon which review should be granted and then 
citing the appropriate section.

IV. Discussion

    9. We agree with Western that Petitioners' Application for Review 
is procedurally defective and must be dismissed. Section 1.115(b)(2) of 
the Commission's rules, 47 CFR Sec. 1.115(b)(2), requires applications 
for review to:

specify with particularity, from among the following, the factors 
which warrant Commission consideration of the questions presented:
    (1) The action taken pursuant to delegated authority is in 
conflict with statute, regulation, case precedent, or established 
Commission policy.
    (ii) The action involves a question of law or policy which has 
not previously been resolved by the Commission.
    (iii) The action involves application of precedent or policy 
which should be overturned or revised.
    (iv) An erroneous finding as to important or material question 
of fact.
    (v) Prejudicial or procedural error.

As we indicate in the companion order we are adopting today, 
Petitioners' pleading is defective because it fails to ``specify with 
particularity'' any of the above subsections as grounds for granting 
its Application for Review. See Chapman S. Root Revocable Trust, 59 FR 
44340 (August 29, 1994), where we held that procedurally defective 
applications for review will be dismissed. Petitioners' statement of 
general disagreement with the Bureau's Stay Denial Order will not 
suffice. Accordingly, we will dismiss petitioners' Application for 
Review. Although we are dismissing Petitioners' pleading, we also 
conclude on the merits that the Bureau correctly determined that 
Petitioners failed to

[[Page 19625]]

meet the strict standards for obtaining a stay as requested here.
A. Likelihood of Success on the Merits
    10. Petitioners' assertion that they will ultimately prevail on the 
merits is based upon their erroneous contention that the Commission has 
failed to comply with its statutory mandate. That mandate includes, 
according to Petitioners, the obligation to disseminate licenses to a 
wide variety of applicants, including businesses owned by minorities. 
Petitioners state that only way under Section 309(j)(3)(B) of the Act 
to implement this goal in a meaningful way is to delay licensing the A 
and B block auction winners until the Commission is ready to license 
the eventual C block auction winners. Otherwise, according to 
Petitioners, the value of the C block licenses will decrease as a 
result of the headstart granted to the A and B block licensees. Nothing 
in the statute or legislative history requires such a result. In 
directing the Commission to establish bidding rules for PCS, Congress 
enumerated three other objectives in Section 309(j)(3) besides the one 
Petitioners cite: (1) development and rapid deployment of services with 
a minimum of administrative and judicial delay; (2) recovery for the 
public of a portion of the value of the spectrum; and (3) promoting 
efficient and intensive use of the spectrum. In its auction rules, the 
Commission has properly balanced these objectives with the Section 
309(j)(3)(B) goal of diversity of ownership by establishing PCS 
frequency blocks of varying sizes and service areas, reserving certain 
of these blocks for entrepreneurs, and creating special provisions for 
designated entities to bid for licenses in those blocks. We do not 
believe the statute further requires the Commission to promote 
diversity at the cost of delaying much needed service that could 
otherwise be provided to the public. A stay would serve the 
individualized interest of Petitioners rather than the broader public 
interest. The Commission is not at liberty to subordinate the public 
interest to the interest of ``equalizing competition.'' SBC 
Communications, Inc. v. FCC, 56 F.3d 1484, 1491 (D.C. Cir. 1995) 
quoting Hawaiian Telephone v. FCC , 498 F.2d 771, 776 (D.C. Cir. 1974). 
The Bureau correctly rejected Petitioners' argument that minorities 
will be unable to enter the PCS market because of illegal and unfair 
``territorial allocations'' in violation of the antitrust laws by the A 
and B block bidders. In our companion order, we find that the Bureau 
correctly concluded that these allegations were too vague to meet the 
requirements of a petition to deny. We conclude here that Petitioners 
have not shown any likelihood of success on the merits.
B. Irreparable Harm
    11. We agree with the Bureau that Petitioners' allegations of 
irreparable harm are speculative, and that Petitioners have overstated 
the ``headstart'' advantage of the A and B block winners over 
prospective C block winners. First, the A and B block winners 
themselves will have to compete with well-entrenched cellular 
companies, who enjoy a ten-year headstart over all broadband PCS in 
terms of business arrangements, market share, and investment in 
infrastructure. Furthermore, Petitioners' alleged injuries from loss of 
cell sites, loss of access to distributors, and difficulty in obtaining 
market share do not constitute ``irreparable'' harm of the type that 
would warrant grant of a stay. Nothing prevents Petitioners and other 
prospective C block bidders from entering into agreements that are 
contingent upon their winning the auction. As the Bureau noted, to the 
extent that late entry in fact disadvantages C block winners, that 
disadvantage will translate into lower prices at auction as bids are 
adjusted downward to compensate for any such detriment. Finally, C 
block entrants may actually benefit from late entry because they will 
be able to evaluate the business strategies and performances of the A 
and B block winners.
C. Harm to Others
    12. The third prong of the Holiday Tours test is the potential harm 
a stay would cause to others. Petitioners acknowledge that the A and B 
block winners have paid over $7 billion to the United States Treasury 
for their PCS licenses. Since winning the licenses, A and B block 
winners have also invested significant funds to cover start-up and 
development costs which they cannot begin to recoup until they are able 
to use their licenses to provide service. In light of these 
considerations, we believe that a stay would cause significant harm to 
other parties.
D. Public Interest
    13. Finally, we conclude that a stay of A and B block licensing 
would not be in the public interest. The Bureau correctly found that 
besides imposing a financial burden on the A and B block winners 
themselves, a stay would delay the introduction of new competition and 
new services to the public. Conversely, granting the licenses will 
further the Congressional directive to promote the development and 
rapid deployment of PCS for the benefit of the public with a minimum of 
administrative or judicial delay. 47 U.S.C. Sec. 309(j)(3)(A) We 
continue to believe that the public interest in rapidly providing new 
competitive sources of wireless services outweighs any possible 
competitive harm that might result from the A and B block licensees 
being licensed ahead of auction winners in other PCS blocks.

V. Conclusion

    14. For the reasons discussed above, we are dismissing Petitioners' 
Application for Review for failure to comply with Section 1.115(b)(2) 
of our rules. Although our action renders further discussion 
unnecessary, we agree with the Bureau's disposition of the issues 
Petitioners raised in their original stay request.

VI. Order Clauses

    15. Accordingly, it is ordered that, pursuant to Section 4 (i) of 
the Communications Act of 1934, as amended, 47 U.S.C. Sec. 154(i) and 
47 CFR Sec. 1.115(c)(2), the Application for Review filed by 
Petitioners on July 21, 1995, is denied
    16. It is further ordered that pursuant to Section 4 (i) of the 
Communications Act of 1934, as amended, 47 U.S.C. Sec. 154(i) the 
Motion for Leave to File Supplement to Application for Review filed by 
Petitioners on August 4, 1995, is granted.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-10614 Filed 5-01-96; 8:45 am]
BILLING CODE 6712-01-P