******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 ) ) In the Matter of ) ) Bell Atlantic Mobile Systems, Inc. and ) File Nos. 00762-CL-AL-1-95 NYNEX Mobile Communications Company ) through 00803-CL-AL-1-95; 00804- ) CL-TC-1-95 through 00816-CL-TC- ) 1-95; 00817-CL-AL-1-95 through ) 00824-CL-AL-1-95; and 00825-CL- ) TC-1-95 through 00843-CL-TC-1-95 ) ) MEMORANDUM OPINION AND ORDER Adopted: October 8, 1997 Released: October 9, 1997 By the Commission: TABLE OF CONTENTS Paragraph No. I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . 1 II. CELLCO'S OWNERSHIP OF A-SIDE AND B-SIDE MARKETS AND THE POSSIBILITIES OF ANTICOMPETITIVE CONDUCT CONCERNING ROAMING. . . . . . . . . 4 III. OMISSION OF CERTAIN ORDERING CLAUSES IN THE ORDER. . . . 17 IV. REGIONAL OR NATIONAL GEOGRAPHIC MARKET. . . . . . . . . . 20 V. BELL ATLANTIC'S ALLEGEDLY ANTICOMPETITIVE ACTS. . . . . . 23 VI. CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . 29 VII. ORDERING CLAUSE. . . . . . . . . . . . . . . . . . . . . 30 I. INTRODUCTION 1. The Commission has before it an Application for Review ("Application") filed on June 19, 1995, by Comcast Cellular Communications, Inc. ("Comcast") seeking review of an Order by the Wireless Telecommunications Bureau (the "Bureau"), granting the applications of NYNEX Mobile Communications Company ("NYNEX Mobile") and Bell Atlantic Mobile Systems, Inc. ("BAMS") to transfer control of eighty-two cellular radio licenses to Cellco Partnership ("Cellco"). Cellco is a partnership consisting of subsidiaries of both NYNEX Corporation ("NYNEX") and Bell Atlantic Corporation ("Bell Atlantic"). Comcast's Application requests that the Commission set aside the Bureau's grant of BAMS and NYNEX Mobile's transfer of control of their cellular licenses to Cellco or, in the alternative, condition the grant on "firm rules of behavior" to prevent discrimination against Cellco's competitors. An Opposition to Application for Review ("Opposition") was filed by Cellco; and a Reply to Opposition ("Reply") was filed by Comcast. 2. The Bureau's Order found that the transfers of control and assignments of cellular radio licenses from affiliates of Bell Atlantic and NYNEX to Cellco (collectively, "the transfer") would have no anticompetitive effects and would have a significant pro-competitive impact. Therefore, the Order found, the transfer met the public interest standard of Section 310(d) of the Communications Act of 1934, as amended ("the Act"). 3. Comcast does not challenge the Bureau's finding that the transfer will have pro-competitive effects. Instead, its Application focuses on two technical errors in the Order and reiterates its argument that the Order underestimated the anticompetitive effects of the transfer concerning roaming. Comcast also repeats allegations of past anticompetitive conduct by Bell Atlantic and possible future anticompetitive conduct by Cellco. For the reasons discussed below, we deny the Application. II. CELLCO'S OWNERSHIP OF A-SIDE AND B-SIDE MARKETS AND THE POSSIBILITIES OF ANTICOMPETITIVE CONDUCT CONCERNING ROAMING 4. Contentions of the Parties. Comcast's first argument is that the Bureau's Order erroneously states that BAMS and NYNEX Mobile's divestiture plan contemplated that the post-transfer entity, Cellco, would have no A-side and B-side licenses in adjacent markets. Comcast alleges that this error has substantive significance for the Order's competitive analysis because it led the Bureau to discount the anticompetitive threat posed by Cellco having licenses in adjacent markets on both "sides" of the cellular market. Comcast states that Cellco, whose licenses are mainly on the B-side, now has a direct incentive to discriminate against non-affiliated A-side roamers and otherwise to interfere with the "development of technological interfaces that could benefit the competitors of Cellco's B-side market." Comcast maintains Cellco has an incentive to provide favorable rates and terms to its more extensive B- side markets, to the detriment of A-side competitors, and to disrupt non-affiliated A-side roaming. Comcast also claims that the pendency of a rulemaking involving roaming shows that the Commission recognized the possibilities of anticompetitive conduct concerning roaming. Comcast argues that the Bureau had sufficient evidence in the record to conclude that BAMS and NYNEX Mobile's transfer of control of their cellular licenses is inconsistent with the Commission's cellular roaming rules and that it was arbitrary and capricious for the Bureau to disregard Comcast's concerns. Comcast states it had met the standard under Section 309 and raised a substantial material question of fact by proving that there is the potential for discrimination and leveraging with respect to roaming and the A-side markets that Cellco will retain. 5. In its Opposition, Cellco states that its retention of A-side and B-side cellular properties in different markets does not create any new anticompetitive risk. Cellco observes that Bell Atlantic has held a mixture of A-side and B-side systems for years and that Comcast fails to mention how this arrangement has led to impaired competition. Cellco also states that Comcast's allegation of potential anticompetitive effects flowing from Cellco's ownership of A-side and B-side systems in different markets is an unpersuasive argument that has been considered and rejected by the Commission in other proceedings. Cellco also avers there is no nexus between the grant of the applications and Comcast's allegation that Cellco's ownership of both A-side and B-side systems would competitively disadvantage Comcast. Cellco maintains it presented evidence in its applications, including affidavits from an industry expert and an economist, concerning why the ownership of A-side and B-side systems in different markets does not raise competitive concerns. Cellco further states that competitive concerns regarding cellular carriers owning interests in both A-side and B-side properties in the same or adjacent markets should be addressed through the rulemaking process because this situation is not unique to BAMS and NYNEX Mobile. 6. In its Reply, Comcast states that Cellco's post-transfer A-side and B-side licenses are distinguishable from Bell Atlantic's mixture of A-side and B-side systems because Cellco will hold A- side licenses in markets that are either directly adjacent to, or, in the same marketing or financial corridor as their B-side licenses. Comcast also alleges that although it has raised additional roaming issues in the rulemaking proceeding, raising the issues in the rulemaking context does not "moot" the roaming issues already raised regarding the Cellco transfer. Comcast points out that the cases Cellco cites are inapposite because both cases involved petitions opposing applications for transfer of cellular licenses on the basis of the Commission's "wireline fence" policy. Comcast also asks that the Commission conduct a detailed investigation of Cellco's business plans and ascertain whether structural separation and other protections are necessary. Comcast argues that, in an attempt to lead customers away from Cellco's competitors, BAMS and NYNEX Mobile have recently mounted major marketing campaigns to announce deep roaming rate cuts throughout the Cellco region. 7. Discussion. We note at the outset that Comcast's pleading before the Bureau was titled "Comments" rather than "Petition to Deny" and, for the most part, requested further investigation rather than denial of the applications by BAMS and NYNEX Mobile. Accordingly, its citation of Section 309 is inapposite. We also note that Comcast's Application does not purport to comply with the requirements of Section 1.115 of our Rules, which clearly state criteria for Applications for Review. Nevertheless, we shall address Comcast's arguments on the merits. 8. In the text of the Order, the Bureau stated that upon divestiture "BAMS and NYNEX will have no interests in A-side cellular systems." This statement was in error. A review of the Order's Ordering Clause and Appendix shows that the Bureau explicitly granted the assignment and transfer applications which resulted in A-side and B-side licenses for Cellco. 9. We do not find, as Comcast suggests, that this misstatement in the text of the Order affects the Bureau's competitive analysis. The Bureau's error was not material to the Order. Contrary to Comcast's claims, the Bureau's Order did not find that the retention of both A-side and B-side interests by Cellco would be anticompetitive. The existence or not of adjacent A-side and B-side interests was one factor in a pro-competitive analysis. The Order stated that if Cellco had no A-side interests, that would be "pro-competitive because it [would] avoid the hypothetical possibility alleged by Comcast of BAMS remaining an A-side carrier in a few areas" and that "[a]rguably, such a presence after the proposed merger would enable BAMS to disrupt cooperation among A-side carriers in order to benefit the applicants' predominant interest on the B-side of the industry." That Cellco does have A-side interests does not mean that anticompetitive disruption is either certain or likely to occur. It does not establish that Cellco has any rational incentive to cause disruption or other anticompetitive effects. After the Order's error is corrected, there remains no more than a hypothetical possibility that an anticompetitive effect will result from the transfer. Mere possibilities are not of decisive significance in competitive analysis. "[T]he agency's responsibility is to deal with 'probabilities,' not 'ephemeral possibilities.'" As discussed below, we find that Comcast has failed to meet this standard. 10. Comcast argues that an A-side presence after the transfer would enable Cellco to engage in "discriminatory conduct," and "discriminatory roaming practices and other similar misconduct." Comcast mentions the disruption of cooperation among A-side carriers in order to benefit Cellco's predominant interest on the B-side of the industry, the inflation of roaming charges to A-side carriers, and "discriminat[ion] against non-affiliated A-side roamers and other interfer[ence] with the development of technological interfaces that could benefit the competitors of Cellco's B-side markets," as examples of such discriminatory conduct. We find these general allegations, without more, to be insufficient to show a significant risk of anticompetitive effects resulting from the transfer. Cellular firms for many years have controlled both A-side and B-side licenses with our approval. Comcast does not allege that BAMS, NYNEX Mobile, or Cellco has engaged in any misconduct concerning roaming at any place or at any time. 11. Nor has Comcast shown how Cellco, even assuming it now has an unprecedented ability to engage in discriminatory misconduct, would have the incentive to do so. For example, Comcast appears to believe that Cellco, in order to advantage itself on the B-side of the business (where its predominant interests lie), is likely to degrade roaming service purposely in its A-side market in Fairfield County, Connecticut, which is adjacent to a market where Cellco controls the B-side system, in New York City. There is no indication in the record that Cellco would have any incentive to do so. We conclude that our existing rules that require roaming, as well as the traditional pro-competitive provisions of the Communications Act, are sufficient to prevent any anticompetitive conduct by Cellco involving roaming. 12. The only new circumstance that appears to have resulted from the transfer is that now Cellco controls A-side and B-side systems in several immediately adjacent markets. While the ownership of A- side and B-side systems in adjacent markets appears to be unprecedented, individual companies have controlled nearby A-side and B-side systems for years without any findings of anticompetitive abuses. Comcast does not allege, much less show, that anticompetitive misconduct is more likely with adjacent A-side and B-side licenses than was possible with those simply located nearby. We also note that, in the more than two years since the Order was released, Comcast has not brought to our attention in this proceeding any misconduct by Cellco concerning roaming either in Cellco's adjacent A-side and B-side markets or elsewhere. Without more, we conclude that Comcast is raising only ephemeral possibilities, not probabilities, of anticompetitive misconduct. 13. Comcast is also mistaken in its claim that it is raising a question of fact concerning roaming. The substantial and material facts are not in dispute: Cellco now has interests in A-side and B-side licenses in nearby markets and, in several cases, in adjacent markets. The inferences and conclusions about what Cellco will now do with A-side and B-side licenses in adjacent markets are what is in dispute. In the face of all the countervailing factors we discuss in this Section, Comcast's speculation about anticompetitive effects does not amount to a showing that the Bureau's Order was prima facie inconsistent with the public interest. 14. Comcast's assertion that a Commission rulemaking concerning roaming indicates that anticompetitive abuses by Cellco are probable is misguided. Rulemakings may be convened to re-visit existing policies in light of changed circumstances. Our rulemaking concerning roaming was begun to consider expanding our pre-existing roaming requirements to account for changed circumstances since adoption of our original roaming rules. These changed circumstances include technological developments, the licensing of broadband PCS, and the emergence of interconnected SMR systems as possible competitors to cellular systems. The existence of a rulemaking does not indicate that the transfer that created Cellco is likely to lead to increased anticompetitive activity. 15. In light of Comcast's failure to demonstrate with specificity the likely occurrence of any anticompetitive abuses concerning roaming as a result of the transfer, or even to explain the incentive that Cellco would have to engage in such abuses, we affirm the Bureau's finding that the rulemaking process is the proper forum for Comcast's general concerns about roaming. Likewise, the complaint process under Section 208 of the Act is the proper forum to raise any future anticompetitive abuses by Cellco. Matters affecting the industry as a whole and misdeeds whose occurrence is based upon mere speculation are better considered in rulemakings than in specific licensing proceedings. In the latter, they may serve only to complicate and delay transactions that will benefit the public. Likewise, we dismiss as unnecessary and unsupported Comcast's general requests that the Commission conduct a detailed investigation of Cellco's business plans to ascertain whether structural separation and other protections are necessary to protect competition. Without a showing that specific or anticompetitive abuses will result from the transfer, no investigation is necessary. 16. Finally, Comcast argues that as a result of the Bureau's Order Cellco has reduced its roaming rates. We do not agree that a reduction in roaming rates shows anticompetitive behavior. Generally, lower prices are a product of improved competition that benefits consumers. Our statutory duty is to protect efficient competition, not competitors. III. OMISSION OF CERTAIN ORDERING CLAUSES IN THE ORDER 17. Contentions of the Parties. Comcast also alleges that the Order improperly allows Cellco to hold interests in two licenses in the same markets, in violation of Section 22.942 of our rules. Comcast states that the ordering clauses of the Order erroneously required divestitures of only four of the ten markets in which, before the transfer, BAMS and NYNEX Mobile held both cellular licenses (or interests in them). Comcast argues that the Order erroneously omitted requiring either that BAMS divest the A-side licenses it controls or that NYNEX Mobile divest the "minority interests" in the B-side licenses that it holds through an entity named Springwich Cellular in six markets. 18. In its Opposition, Cellco responds that the Bureau's Order noted in paragraphs 5 and 6 both that Bell Atlantic and NYNEX had committed to divest interests in all ten markets in question, and that the Bureau expected that those divestitures would be accomplished. Furthermore, Cellco alleges the issue is moot, because when Bell Atlantic and NYNEX transferred their respective interests to Cellco on July 1, 1995, they divested either an A-side or a B-side interest in each of the ten markets. 19. Discussion. The Bureau's omission of six ordering clauses requiring the divestiture of certain markets was an inadvertent error. The Order did state that Bell Atlantic and NYNEX had committed to divest either the A-side or B-side cellular interests in all ten markets and the Bureau expected that those divestitures would be accomplished. Indeed, all the divestitures were accomplished in full, eliminating all overlapping interests. We find that Comcast has, as before, noted a technical error in the Bureau's Order that is now moot. IV. REGIONAL OR NATIONAL GEOGRAPHIC MARKET 20. Contentions of the Parties. In the Order, the Bureau declined to find a regional or national geographic market as a result of the transfer. According to Comcast, the Bureau made little effort to ascertain whether Cellco would be operating on a regional or national basis and ignored Comcast's evidence of just such types of conduct. Specifically, Comcast argues that the overriding goal of the BAMS-NYNEX merger is to (i) sell its product on a regional or national basis; (ii) adopt a national centralized management structure; (iii) set rates on a national basis; (iv) sell a large percentage of portable units as opposed to car-bound units; and (v) offer widespread subscription to regional or national service options. This, according to Comcast, is exactly the type of conduct that the Bureau in the Order stated would demonstrate that Cellco was operating in a regional or nationwide market. Comcast also maintains that the Order ignores Cellco's publicly revealed plans to integrate cellular systems and develop advanced intelligent networks and circuit and packet-switched data transmission services to be deployed "over larger territory." Comcast further asserts that these actions are the types of conduct that the Order specified would raise anticompetitive concerns and would have "antitrust consequences." 21. Discussion. Comcast has misread the Bureau's Order. The Order noted Comcast's implication that the relevant geographic market (for purposes of analyzing the competitive effects of the transfer) was regional. Nevertheless, the Bureau concluded that the Commission-licensed areas in which BAMS and NYNEX Mobile provided cellular service were the relevant geographic markets in which to analyze the competitive effects of the transfer. 22. Further, the Order did not state that evidence demonstrating a regional or national geographic market would show that the transfer would cause anticompetitive effects. Instead, the Order declined to make any finding regarding regional or national geographic markets on the record before it and indicated that more substantive showings supporting the finding of a regional or geographic market may be presented in future cases. Moreover, we find no merit to Comcast's claim that Cellco's plans to capture regional economies would raise anticompetitive concerns and have antitrust consequences. If sufficient evidence were presented, we do not foreclose a finding of anticompetitive conduct in a regional or national market. However, based on the record before us, Comcast has failed to support such a finding. V. BELL ATLANTIC'S ALLEGEDLY ANTICOMPETITIVE ACTS 23. Contentions of the Parties. Comcast raises before us, as it did before the Bureau, allegations of four anticompetitive acts by both Bell Atlantic (BAMS's ultimate parent company) and BAMS. The four alleged acts in question consisted of: (1) Bell Atlantic denying Comcast access to a directory database as promptly as it offered access to BAMS; (2) Bell Atlantic foreclosing Comcast from advertising in Veteran's Stadium in Philadelphia; (3) Bell Atlantic inviting Comcast to participate in a personal numbering trial only on very short notice; and (4) BAMS forcing Comcast to turn off a cellular service tower in the Spectrum Arena in Philadelphia. Comcast alleges that the Bureau had sufficient evidence in the record to conclude that these acts demonstrate Bell Atlantic's ability to leverage its monopoly power improperly to discriminate against non-affiliated cellular operators. Comcast maintains that this evidence amounted to a prima facie showing that grant of the transfer was not in the public interest. 24. Based on these allegations, Comcast argues that the threat of Bell Atlantic leveraging its local landline monopoly power into wireless markets is real. Comcast maintains that a complaint filed under Section 208 of the Communications Act is not the correct remedy for such alleged abuses. Comcast also objects to the Order's implication that any misconduct by BAMS should not be considered because, if it did occur, it would occur regardless of the transfer. 25. In its Opposition, Cellco states that the Bureau correctly dismissed these charges, noting that (1) Comcast raised local exchange carrier issues and not cellular issues, and (2) Comcast did not raise any questions as to Cellco's qualifications. Cellco also denies Comcast's characterization of the facts of all four incidents. Cellco maintains that, if Comcast is seeking new rules to prevent such alleged "leveraging" by a landline telephone company, it should ask for a rulemaking. Furthermore, Cellco alleges that, if Comcast wants to charge Bell Atlantic with violating existing rules, it should file a complaint. 26. Discussion. We agree with the Bureau's analysis of Comcast's four allegations and with the Bureau's decision about them. The Bureau found that the conduct alleged does not implicate any specific Commission rule and therefore was to be evaluated under the range of relevant non-FCC misconduct set out in Character Qualifications and Character Qualifications Modification. The acts alleged by Comcast are not adjudicated violations of any antitrust or other law protecting competition. Therefore, there is no legal basis upon which to include the alleged acts as weighing against a finding that Cellco is qualified to be a Commission licensee under Section 309. Consequently, the assignments and transfers of control of the BAMS and NYNEX Mobile cellular licenses to Cellco meet the public interest test of Section 310(d) and its competitive component. The small number of acts by Bell Atlantic and BAMS, even if they occurred as Comcast alleges, do not rise to the level of a showing that the transfer may harm competition as a whole or frustrate any Commission policy. We also agree with the Bureau that Comcast complains about conduct that may be the kind of vigorous competition in which competitors may engage. In addition, as stated by the Bureau, our complaint processes are available to remedy individual acts that violate the Act and our rules. We believe the proper fora for adjudicating claims of isolated misconduct are the Section 208 complaint process and the antitrust courts, not a license transfer proceeding. We will promptly and appropriately address any complaints of anticompetitive conduct within our prescribed complaint process. 27. Most important, the Bureau properly concluded that Comcast has neither alleged nor shown that such acts (assuming again that they occurred and were anticompetitive) are either likely to be repeated more often after the transfer than they were before, or that they are likely to be more severe in effect after the transfer than they were before. For the Bureau and the Commission to apply this standard in license transfer proceedings is not "chilling." On the contrary, the Order properly limits the scope of the competitive analysis in such proceedings to changes that will occur as a result of the transfer in question. 28. Finally, Comcast is mistaken in comparing the present case to our decision in McCaw, where we imposed conditions to protect against anticompetitive abuses. The conditions we imposed there were to minimize the risks of anticompetitive effects that arose for the first time as a result of the transfer. Here, on the contrary, Comcast is complaining about alleged conduct that pre-dates the transfer. Even assuming that the conduct in question were anticompetitive, Comcast has neither claimed nor shown that, if it is repeated post-transfer, it will occur more often or be more severe in effect as a result of the transfer. VI. CONCLUSION 29. We find that the Bureau properly evaluated and granted the applications of NYNEX Mobile Communications Company and Bell Atlantic Mobile Systems, Inc., to transfer control of eighty-two cellular radio licenses to Cellco. The central fact remains that, in each cellular market involved, there were and will remain fully independent and competing A-side and B-side carriers. The errors in the Order caused no substantive harm or confusion, and one was cured at consummation of the transfer. The Bureau properly found, in addition, that the transfer would result in pro-competitive efficiencies and economies that would not be achievable without the transfer. We find, as the Bureau did, that these effects will benefit competition, consumers, and the public interest. For the reasons discussed above, we deny Comcast's Application for Review. VII. ORDERING CLAUSE 30. ACCORDINGLY, IT IS ORDERED pursuant to Sections 4(i) and 310(d) of the Communications Act, as amended, 47 U.S.C.  154(i) and 310(d) and Section 1.115 of the Commission's rules, 47 C.F.R.  1.115, that the Application for Review of the Wireless Telecommunications Bureau's May 19, 1995 Order filed by Comcast Cellular Communications, Inc. IS DENIED. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary