NOTICE ********************************************************* NOTICE ********************************************************* This document was originally prepared in Word Perfect. If the original document contained-- * Footnotes * Boldface & Italics --this information is missing in this version The document format (spacing, margins, tabs, etc.) is changed too. If you need the complete document, download the Word Perfect version. For information about downloading documents (FTP) see file pnmc5021. File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** $// R&O, NY PSC, Petn CMRS Rate Reg'n, PR Dkt. 94-108, FCC 95-192 //$ $/ 300.332 Mobile services /$ $/ 20.13 State petitions for authority to regulate rates /$ FCC 95-192 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. In the Matter of ) ) Petition of New York State ) PR Docket No. 94-108 Public Service Commission ) To Extend Rate Regulation ) Report and Order Adopted: May 4, 1995; Released: May 19, 1995 By the Commission: I. INTRODUCTION 1. On August 9, 1994, the New York State Public Service Commission (hereinafter ``New York'' or ``NYPSC''), on behalf of that state, petitioned us to retain state regulatory authority over the rates for intrastate cellular service within New York State. Fourteen parties filed pleadings opposing the Petition, in whole or in part; two parties filed pleadings supporting it. By this action, we deny the Petition because it fails to satisfy the statutory standard Congress established for extending state regulatory authority over CMRS rates. II. BACKGROUND 2. In 1993, Congress amended the Communications Act (``Act'') to revise fundamentally the statutory system of licensing and regulating wireless (i.e., radio) telecommunications services. Among other things, Congress: (1) established new classifications of ``commercial'' and ``private'' mobile radio services (``CMRS'' and ``PMRS,'' respectively) in order to enable similar wireless services to be regulated symmetrically in ways that promote marketplace competition; (2) reallocated up to 200 megahertz of spectrum from government to private use so as to expand opportunities for innovative utilization of spectrum by the private sector; and (3) authorized competitive bidding as a means of improving licensing efficiency within the context of the Act's public interest goals, which include promoting investment in new and innovative wireless telecommunications technologies. 3. Congress also provided that, as of August 10, 1994, no state or local government shall have authority to regulate ``the entry of or the rates charged'' for CMRS and PMRS services, although states are permitted to regulate the ``other terms and conditions'' of CMRS. As an exception to this general rule, Congress also provided that, if a state had ``any regulation'' concerning the rates for any commercial mobile radio service in effect as of June 1, 1993, it could retain its rate regulation authority by petitioning the Commission no later than August 9, 1994, and demonstrating that either: (1) ``market conditions with respect to such services fail to protect subscribers adequately from unjust and unreasonable rates or rates that are unjustly or unreasonably discriminatory;'' or (2) ``such market conditions exist and such service is a replacement for land line telephone exchange service for a substantial portion of the telephone land line exchange service within such State.'' 4. In our proceeding to implement OBRA, we concluded that, since Congress intended generally to preempt state and local rate and entry regulation of CMRS, a state seeking to retain regulatory authority must ``clear substantial hurdles'' in demonstrating that continued regulation is warranted. We also determined that the nature of a state's burden of proof is delineated generally by the statute itself. Specifically, we found that: [I]n implementing the preemption provisions of the new statute, we have provided that states must, consistent with the statute, clear substantial hurdles if they seek to continue or initiate rate regulation of CMRS providers. While we recognize that states have a legitimate interest in protecting the interests of telecommunications users in their jurisdictions, we also believe that competition is a strong protector of these interests and that state regulation in this context could inadvertently become as [sic] a burden to the development of this competition. Our preemption rules will help promote investment in the wireless infrastructure by preventing burdensome and unnecessary state regulatory practices that impede our Federal mandate for regulatory parity. 5. We also concluded that, while a state should have discretion to submit whatever evidence it believes is persuasive, a petition to retain regulatory authority must be grounded on demonstrable evidence. In that regard, we adopted Section 20.13 of our Rules as a guide to the kinds of evidence and information that we would consider to be pertinent and helpful to our consideration of a state petition. Moreover, in addition to the evidence, information, and analysis that a state must submit, we determined that a petitioning state also is required to identify and provide a detailed description of the specific existing or proposed rules that it would continue or establish if we were to grant its petition. We noted that the standards for preemption established in Louisiana PSC do not apply to petitions submitted under Section 332 of the Act, nor to Section 20.13 of our Rules. In Louisiana PSC the Supreme Court found that Section 2(b) of the Communications Act prohibits the Commission from exercising Federal jurisdiction with respect to ``charges, classifications, practices, services, facilities, or regulations for or in connection with intrastate communications services.'' Here, Congress has explicitly amended the Communications Act to preempt state and local rate and entry regulation of commercial mobile radio services without regard to Section 2(b). III. DECISIONAL FRAMEWORK 6. The pleadings present two threshold procedural matters that we must address before addressing the NYPSC's Petition on its merits. First, some parties argue that the petition is fatally flawed because it requests regulatory authority only over cellular service rather than all CMRS services, thereby violating what these opponents claim is the fundamental OBRA goal of achieving symmetrical regulatory treatment of CMRS. Second, the parties take issue with each other's characterizations of the appropriate burden of proof in this proceeding. A. Cellular-Only Regulation 1. Pleadings of the Parties 7. Various opponents of the Petition argue that: (1) Congress revised Section 332 of the Act to establish regulatory parity, remedy the disparate regulatory treatment of similar forms of CMRS, and create a uniform, nationwide regulatory regime; (2) by seeking to impose regulation only on cellular services, the NYPSC would impose inconsistent regulations on different CMRS providers, thereby creating precisely the asymmetrical regulatory conditions Congress sought to remedy; and (3) accordingly, the NYPSC's Petition must be rejected because it seeks to impose a type of regulatory regime expressly rejected by Congress. A variant of this argument also is presented in the record. Essentially, some opponents of the Petition argue that: (1) regulatory parity is required by the statute; (2) in order to regulate any CMRS a state must demonstrate that market conditions warrant regulating all CMRS; (3) the NYPSC has not submitted a showing relating to non-cellular CMRS market conditions; and (4) accordingly, the Petition must be dismissed. 8. The NYPSC and its supporters dispute these arguments. While they acknowledge that regulatory parity is a goal of OBRA, these parties argue that Congress expressly recognized that differential regulatory treatment of CMRS providers is permissible under the Act. Some of these parties also claim that differential regulatory treatment of cellular and non-cellular services by a state is not only lawful, but it should be required because there is no evidence in this record or elsewhere that non-cellular CMRS providers currently possess market power, thus making regulation of their activities inappropriate. 2. Discussion 9. We have determined in other proceedings that while regulatory parity is a significant policy that can yield important pro-competitive and pro-consumer benefits when appropriately applied, parity for its own sake is not required by any provision of the Act. Indeed, the Act allows us to adopt a flexible regulatory scheme that treats certain CMRS in a streamlined fashion. Congress recognized that market conditions might warrant differential regulatory treatment of CMRS, and it explicitly granted us the authority to forbear from applying certain provisions of the Act. That Congress understood such forbearance might be exercised selectively is not in doubt. As the OBRA Conference Report states in explaining our forbearance authority: The purpose of this provision is to recognize that market conditions may justify differences in the regulatory treatment of some providers of commercial mobile services. While this provision does not alter the treatment of all commercial mobile services as common carriers, this provision permits the Commission some degree of flexibility to determine which specific regulations should be applied to each carrier. Nothing in the record of this proceeding, or elsewhere to our knowledge, demonstrates that Congress intended to deny states similar flexibility with regard to the exercise of their CMRS regulatory authority. Thus, we are not persuaded by arguments that the NYPSC's request to regulate only cellular services is fatally incongruent with the regulatory parity concepts established in OBRA. B. Burden of Proof 1. Pleadings of the Parties 10. A second threshold issue addressed by the parties concerns the evidentiary standard to be applied in assessing a state's petition on the merits. The NYPSC contends that, ``in a market such as the cellular market, where there are only two providers of a service and there are no currently available substitutes, actions taken by one firm may not result in a normal competitive reaction by the only other firm.'' The NYPSC argues, in essence, that the duopolist nature of the cellular industry, per se, provides sufficient evidence of failed market conditions to authorize continued rate regulation by the state. 11. NCRA, too, contends that the duopolist nature of the cellular industry, of itself, warrants continued rate regulation by the state. It alleges, in support, that ``since 1985, the [FCC] has classified licensed cellular carriers as dominant common carriers'' and has ``tentatively conclud[ed] that cellular carriers should have equal access obligations imposed upon them in accordance with [its] findings that there is not sufficient evidence to conclude that the cellular services marketplace is fully competitive.'' Nextel, as well, argues that the duopolist character of the cellular industry compels us to grant New York's Petition. It observes that, ``[u]nfortunately, the cellular industry has historically exhibited duopoly market conditions and has been a source of continuing concern for the petitioning states.'' 12. In opposition, many commenters emphasize that the existence of a duopolist market structure and arguments that such a market is thus less than ``fully competitive'' are, of themselves, insufficient to sustain a petitioning state's burden of proof. They variously characterize this burden of proof as ``substantial'' or ``extremely demanding'' or requiring a ``compelling showing.'' Several cite, in support, our statement in the CMRS Second Report and Order that a petitioning state must ``clear substantial hurdles'' in order to overcome the statutory presumption of preemption, and emphasize that a state must establish ``unique circumstances'' within its jurisdiction in order to prevail on the merits. 13. One commenter argues for a tripartite test, each element of which would be required to be satisfied before a state could continue to regulate intrastate CMRS rates: that there be substantially less competition in the particular state's market than exists at the national level; that Federal remedies be inadequate to redress the problem; and that the benefits of state regulation outweigh its costs. 14. Several commenters filing pleadings in various of the state petitions dockets currently pending before us have suggested with respect to the burden of proof issue that our findings in the CMRS Second Report and Order on competition in the CMRS market and, in particular, the cellular market, place a greater burden on petitioning states attempting to prove failed market conditions. They note, with respect to the latter, our determination in the CMRS Second Report and Order that ``there is some competition in the cellular marketplace.'' Others go further and claim that state rate regulation is ``presumptively inconsistent with the objectives of section 332(c),'' and is effectively barred in light of our decision to forbear from requiring the filing of interstate rates for CMRS. 15. In response, the NYPSC and Nextel argue that regulatory parity does not preclude intrastate rate regulation even if the Commission has forborne from tariffing, and that Congress could not have thought otherwise or it would not have provided for a state petitioning process in the face of possible Federal forbearance from rate regulation. 2. Discussion 16. In order to prevail on the merits, the NYPSC must sustain its statutory burden of demonstrating that ``market conditions with respect to [commercial mobile radio] services fail to protect subscribers adequately from unjust and unreasonable rates or rates that are unjustly or unreasonably discriminatory.'' A question arises as to what showing is necessary to sustain this burden. Although we addressed this issue in the CMRS Second Report and Order, we revisit it in view of the parties' debate in this record. As explained more fully below, we do not agree that our decision to forbear from regulating interstate CMRS under certain provisions of Title II makes it impossible to grant a state's petition. At the same time, we conclude that a state must do more than merely show that market conditions for cellular service have been less than fully competitive in the past. In order to retain regulatory authority, a state must show that, given the rapidly evolving market structure in which mobile services are provided, the conduct and performance of CMRS providers ill-serve consumer interests by producing rates that are not just and reasonable, or are unreasonably discriminatory. 17. Since the Budget Act does not explicitly construe or elaborate on the phrase ``market conditions ... fail to protect subscribers adequately from unjust and unreasonable rates or rates that are unjustly or unreasonably discriminatory,'' we look to the ``design of the statute as a whole and its object and policy'' to give that phrase meaning. We begin that task by reference to other Sections of the Communications Act, such as Section 201, which also speak of just and reasonable rates. We have generally described the measure of reasonableness under these Sections in terms of rates that reflect or emulate competitive market operations. The more formal description, however, is whether rates fall within a ``zone of reasonableness'' that is bounded at one end by the ``investor interest in maintaining financial integrity and access to capital markets'' and at the other by the ``consumer interest in being charged non-exploitative rates.'' Regardless of how the test is characterized, it is well established that determinations whether rates fall within this zone are not dictated by reference to carriers' costs and earnings, but may take account of non-cost considerations such as whether rates further the public interest by tending to increase the supply of the item being produced and sold. These principles define basic components of a state's demonstration under Section 332. Specifically, a state must show that market conditions fail to produce rates that fall within a ``zone of reasonableness,'' which is defined by reference to investor and consumer interests viewed in the context of relevant public policy considerations. 18. We also consider the meaning of the relevant language in the statute in the context of the overarching command of Section 332(c)(3), which is: ``no State ... shall have any authority to regulate'' CMRS rates. As we concluded in the CMRS Second Report and Order, that provision, as well as the title of Section 332(c)(3) (``State Preemption''), express an unambiguous congressional intent to foreclose state regulation in the first instance. Moreover, OBRA reflects a general preference in favor of reliance on market forces rather than regulation. Section 332(c), for example, empowers the Commission to reduce CMRS regulation, and it places on us the burden of demonstrating that continued regulation will promote competitive market conditions. 19. Unlike some of the opponents of the NYPSC Petition, we do not view the statutory preference for market forces rather than regulation in absolute terms. If Congress had desired to foreclose state and Federal regulation of CMRS entirely, it could have done so easily. It chose instead to delineate the circumstances in which such regulation might be applied. Tellingly, it did so in the context of a broad statutory framework with several other principal components. Under the OBRA: (1) substantial amounts of spectrum reserved for Federal government use are to be identified and transferred to commercial and public safety uses; (2) this and other available spectrum, if allocated to commercial telecommunications uses, are to be licensed ``rapidly'' through the use of competitive bidding systems to promote the development and deployment of new technologies, products, and services, with the goal of stimulating economic opportunity and competition; and (3) in contemplation of the deployment of spectrum to commercial wireless services, and to promote regulatory parity, Congress also articulated definitional criteria for determining common carrier status consistently so success in the marketplace will not be determined by regulatory strategies but by technological innovation, service quality, competition-based pricing decisions, and responsiveness to consumer needs. 20. Viewing all three components together, the statutory plan is clear. Congress envisioned an economically vibrant and competitive market for CMRS services. It understood that such a market was still evolving, and it provided the resources (e.g., additional spectrum) and administrative authority (e.g., licensing through competitive bidding) to accelerate that process. Finally, Congress delineated its preference for allowing this emerging market to develop subject to only as much regulation for which the Commission and the states could demonstrate a clear-cut need. The public interest goal of this Congressional plan is readily discernable. Congress intended to promote rapid deployment of a wireless telecommunications infrastructure. Robust investment is a prerequisite to achieving that goal. Thus, in implementing the statute, we have attempted to facilitate the achievement of this goal by ensuring that regulation creates positive incentives for efficient investment -- rather than burdening entrepreneurial activities -- and by establishing a stable, predictable regulatory environment that facilitates prudent business planning. 21. We emphasize the important impact on our decisionmaking of these fundamental elements of the OBRA statutory framework, which have no counterparts in other sections of the Communications Act. They are devoted exclusively to wireless telecommunications services, and to CMRS in particular. Our analysis of ``market conditions'' in the context of Section 332(c)(3) necessarily is governed by that framework. 22. Section 332(c)(3) must be interpreted in this context; it is an exception to the general prohibition against state regulation. We conclude that New York or any other state, should not be allowed to continue regulating CMRS overall, or cellular service in particular, merely by demonstrating that the market for cellular service has been less than fully competitive. Such a standard would effectively allow an exception permitting regulation to nullify a general prohibition against it, because it is commonly understood that such conditions have in the past adhered in the cellular marketplace. On numerous occasions since the Commission established the two-carrier cellular market structure in 1982, we have acknowledged that such a structure provided less than optimal competitive opportunities. Other Federal agencies have taken similar positions. One year prior to adoption of the Budget Act, the General Accounting Office (GAO) -- the investigatory arm of Congress -- examined the industry and reported that ``[w]hile GAO found no evidence of anticompetitive or collusive behavior in the course of its work, the two- carrier (duopoly) market system that the FCC created may provide only limited competition in cellular telephone markets.'' It strains credulity to assert that Congress was blind to these conditions in 1993 when it broadly prohibited state regulation of CMRS. Thus, we reject a reading of the statute that allows continued rate regulation merely on a showing of duopoly conditions, because it is not plausible to conclude that Congress adopted a self-defeating statutory scheme. 23. It also is worth noting that this Agency's recognition of imperfect cellular market conditions has been matched by our commitment to rectify those conditions as quickly as possible by strengthening and expanding cellular competition rather than by resorting to heavy-handed regulation. For example, we have attempted to heighten cellular competition at the retail level by prohibiting restrictions on the resale of cellular services, except in narrow circumstances where we determined that restrictions intensify competition between the two licensees in each local market. We also have retooled policies initially tailored to promote competition in the wireline market upon determining that they were unlikely to have that effect in the unique setting of wireless telecommunications. Most especially, we have chosen to address the structural infirmity of the cellular market by vastly expanding the amount of spectrum available for two-way wireless voice communications and other innovative wireless services and technologies. 24. The framework of our CMRS regulatory policy -- moderate regulation, symmetrical regulation of all services as appropriate, and a preference for curing market imperfections by lowering entry barriers in order to encourage competition rather than by regulating existing licensees -- aligns closely with the principal building blocks of OBRA. Indeed, that statute is in a very real sense a validation of our approach. As the legislative history of OBRA makes plain, Congress intended those building blocks to establish a national regulatory policy for CMRS, not a policy that is balkanized state-by-state. 25. That intention informs our review of petitions filed by states under Section 332(c)(3). Put simply, Congress intended such petitions to be evaluated in light of a general preference for allowing the policies embodied in OBRA to have an opportunity to work. With regard to the statutory prohibition on state regulation in Section 332(c)(3) in particular, the legislative history leaves no room for doubt on this point by providing that: [i]n reviewing [state] petitions . . . the Commission also should be mindful of the Committee's desire to give the policies embodie[d] in section 332(c) an adequate opportunity to yield the benefits of increased competition and subscriber choice anticipated by the Committee. 26. In deference to the states, with whom we have and will continue to share telecommunications jurisdiction under the dual regulatory system of the Communications Act, we have not presumed to establish a rigid blueprint for the demonstration required under Section 332(c)(3). Moreover, unlike many opponents of the petition before us, we do not agree that a state's burden is so great that it is impossible to carry. For example, our decision to forbear from most CMRS regulation is not dispositive of the question whether states may initiate or continue rate regulation of such services. We think it unlikely that Congress would have established two separate statutory procedures -- one to govern our forbearance, and another to govern states' petitions -- if it intended our decisions under the former procedure to control automatically the outcomes under both of them. Instead, we conclude that the exemption in Section 332(c)(3) is designed to permit a state to demonstrate that market conditions in that state warrant a departure from national OBRA policies. 27. Such a demonstration begins but does not end with a showing of less than fully competitive market conditions. Almost all markets are imperfectly competitive, and such conditions can produce good results for consumers. In particular, as noted previously, Congress was aware of the duopoly cellular structure when it generally proscribed state regulation of CMRS. If a showing of less than perfect competition in the past could justify granting a state petition, regulation might be imposed in a great many circumstances. Nothing on this record convinces us that Congress intended that result. 28. Instead, we believe that a state must establish the existence of an environment of unjust and unreasonable, or unreasonably discriminatory, rates, given the dynamic and evolving structure in which CMRS is provided. When we implemented the Section 332(c)(3) state petition process in the CMRS Second Report and Order, we adopted a rule designed to elicit the information needed to make such a showing. Such information permits us to perform a Structure-Conduct-Performance (``SCP'') analysis, which is a standard paradigm of modern industrial organization analysis. This paradigm, as applied to the mobile telecommunications industry, holds that market structure is impacted by basic conditions such as the number of licenses issued by the Commission and the state of technology. Conduct, in turn, depends on the structure of the market, e.g., on the number of competitors, the cost structure, and the degree of integration with other wireless providers. Performance, in turn, depends on the conduct of providers and other industry participants with regard to activities such as pricing, inter-firm coordination, and technical standards. Such an analysis permits an evaluation of the degree of rivalry within a particular industry structure and allows us to determine whether and how consumer interests are being served by such activity. 29. Nothing in our rule governing the state petition process suggests that merely showing the existence of a cellular duopoly structure is enough to support a petition. In the first instance, the rule signals our insistence that a petition must be based on demonstrable evidence of anticompetitive activity, or unjust and unreasonable, or unreasonably discriminatory, rates. For example, in order to determine whether an anticompetitive environment presently exists within a state, we requested that a petitioning state produce ``specific allegations of fact,'' to be supported by a sworn affidavit of an individual with personal knowledge thereof, regarding ``anticompetitive or discriminatory practices or behavior by commercial mobile radio service providers.'' We also requested ``[e]vidence, information and analysis demonstrating with particularity instances of systematic unjust and unreasonable rates ... [or a] pattern of such rates, that demonstrates the inability of the commercial mobile radio service marketplace in the state to produce reasonable rates through competitive forces,'' and we indicated that we would consider such evidence ``especially probative.'' 30. In order to assess present market conditions so as to predict the future effectiveness of market forces within the state, we requested information on the number and type of CMRS providers in the state as well as their respective customers, and ``an assessment of the extent to which services offered by the commercial mobile radio service providers the state proposes to regulate are substitutable for services offered by other carriers in the state.'' We also requested information and complaint statistics revealing customer satisfaction with CMRS providers within the state. In addition to this information, and as a further aid in projecting CMRS growth rates and other trends within the state, we also requested information on ``trends'' in each commercial radio provider's rates and customer base and on ``opportunities for new providers to enter into the provision of competing services'' as well as ``an analysis of any barriers to such entry.'' In short, although states have the discretion to adduce such evidence in support of continued rate regulation as they see fit, the comprehensive list of anticipated documentation in Section 20.13 gives states guidance concerning the evidence of structure, conduct, and performance that we would find persuasive in evaluating their petitions. 31. The purposes to which such evidence must be put also are straightforward. For example, with regard to industry structure, while a state seeking to regulate two-way mobile voice services may draw attention to the cellular duopoly, it is incumbent on that state to consider factors that have a direct and substantial impact on that structure. In particular, in evaluating a cellular-oriented petition, we will look with disfavor on any petition that fails to consider the immediate and near-term impact of PCS. Given the general statutory purpose of facilitating PCS-type services, it would be difficult to ignore or downplay the importance of fundamental structural changes when considering Section 332(c) petitions. 32. While PCS is not yet available to the public, it is an accepted antitrust principle that a firm may be considered in competitive analysis if it could enter the market in question. Under the case law potential entry must be reasonably prompt, a typical period being two years from the present in order to expect a significant impact on existing competitors, and there is little doubt that PCS licensees will enter the market for CMRS in competition with cellular providers within this timeframe. We recently concluded an auction designed to license rapidly two additional competitive providers of wireless two-way voice and data communications in every local market in the country. As shown in the table below, the winning bidders in markets encompassing New York have committed to pay substantial sums for the right to operate wireless systems in that state. Having done so, it is reasonable to conclude they will deploy the facilities necessary to become operational as quickly as possible so as to begin recouping their investment. Broadband PCS Auction Results New York MTA # Freq. Blk. State Market Winning Bidder Winning Bid M001 A New York New York Omnipoint Corporation $347,518,309 M001 B New York New York WirelessCo, L.P. $442,712,000 M035 A New York Buffalo-Rochester WirelessCo, L.P. $18,893,000 M035 B New York Buffalo-Rochester AT&T Wireless PCS Inc. $19,864,000 33. The nature of this impending competitive entry bears emphasis. Unlike the typical ``ease of entry'' case, where entry by new competitors is hypothetical or may occur only at an industry's margin, PCS activity is undeniably real. It is not something that ``may'' occur, or that will occur only sporadically. It is happening, and it is happening on a nationwide scale. As the recently-completed auction demonstrates, some of this entry is being mounted by large, well-financed entities with long experience and success in the telecommunications business. That field of competitors will be strengthened further upon completion of additional spectrum auctions in the near future. Available evidence indicates that cellular companies, faced with the near-term entry of PCS, have reacted by preparing for impending competition, i.e., by lowering prices and adopting new technologies. For example, there are reports that observable declines in cellular prices are attributable in part to cellular carriers' knowledge that reasonably soon they will face new competition from PCS licensees. The advent of PCS also appears unambiguously to be having an impact on the present marketplace; it is repeatedly cited as a precipitating factor in major mergers and joint ventures in the wireless industry. Thus, the available evidence indicates strongly that such entry is not speculative. Instead, all evidence suggests that it is empirically real and in the very near term will be substantial and pervasive. This warrants our consideration when evaluating a state petition to regulate rates under Section 332(c)(3). 34. Evidence of industry conduct and performance is also relevant. For example, a state might demonstrate specific instances of collusive behavior on the part of licensees. A state also might demonstrate that the statutory purposes of OBRA were not coming to fruition in that state, or were not likely to do so. We would find highly relevant any evidence that demand for CMRS services in general and cellular service in particular is too low to promote market entry by the number of licensees needed to ensure that facilities-based competition will occur at a level adequate to warrant reliance on market forces, rather than rate regulation, as a means of protecting consumer interests. 35. Moreover, a very strong indication that industry conduct and performance are failing to serve consumer interests adequately would be evidence of a lack of investment on the part of licensees in CMRS facilities, or a failure by licensees to deploy adequately new facilities, technologies, and services. Such a showing might support a conclusion that licensees were restricting the output of a service solely to increase its price, and such activity might warrant an appropriate regulatory response. Of course, a successful showing of this nature requires more than evidence that a licensee is earning economic rents (i.e., pricing above cost). It is readily conceivable that economic rents earned in the cellular industry also might advance important public policies, such as if they were applied in furtherance of the statutory goal of promoting investment in the cellular infrastructure. In that event, the rates underlying such profits would have been paid by those who ultimately benefit from reinvestment in cellular facilities. Specifically, as a cellular carrier adds large numbers of customers, it must expand capacity so that the quality of service to existing and new customers is not degraded. Thus, an analysis of economic performance must place great weight on reinvestment of profits in this high-growth industry, for, without such reinvestment, consumers might receive less value for their money. In short, the significance of economic rents under our Section 332(c)(3) analysis is found not simply in their existence in the first instance but in their subsequent application. 36. Finally, we note that SCP evidence typically may be segregated into two categories: static factors and dynamic factors. For example, prices or rates of return in a given year are static factors. Growth and investment are dynamic factors. In addition, a dynamic analysis views price and other static factors at a given point in time in their relationship to static factors such as price in the future. Thus, a rate of return that looks high today may be fair and reasonable when looked at in terms of its impact on future prices. Furthermore, static factors are, as the name implies, static, or even temporary, whereas the long-term impact of dynamic factors is more important because their effects are cumulative and more permanent. Thus, we believe that evidence concerning dynamic factors is a more persuasive market indicator than evidence concerning static factors. Given the rapidly changing nature of the market in which wireless services are provided and the statutory purposes of OBRA, we conclude that evidence of where a market is going is more relevant than evidence of where it has been. 37. No single factor, standing alone, necessarily would tip the balance for or against a particular state petition. The statute allows the states flexibility to make their showings in the best manner they see fit, and it is conceivable that we might find a showing based primarily on one factor to be persuasive. Those demonstrations that are tied most closely to the statutory scheme are, of course, the most determinative. Our decisions in this proceeding and similar proceedings are based on the totality of the evidence. IV. NEW YORK PETITION A. Summary of NYPSC Request 38. The NYPSC requests that it be authorized to continue to regulate the rates of cellular telephone companies and resellers of cellular telephone service. It states that it is not proposing any new regulations and that its request is limited to enforcing those regulations presently in place for cellular carriers. The NYPSC advises that it presently lacks statutory authority to regulate one-way paging or two-way mobile telephone services other than cellular services and that it will seek Commission authority to regulate the rates for such services only if, and at such time, it is accorded that regulatory authority by state law. 39. The NYPSC argues that competition in the New York State (or any) cellular market is imperfect because of the duopolist nature of the cellular industry, but contends that the industry's anticompetitive impulses have been held in check in New York by the NYPSC's regulatory ``oversight.'' It proffers information on prices, return on equity, and market share as evidence of a potential lack of competition in the New York cellular market and attributes the ``nondispositive,'' ``mixed record'' it has compiled with respect to price levels and market structure to the ameliorative effects of the present regulation that it seeks to continue. The NYPSC argues that ``to wait until New York can establish that there are major problems before allowing it to regulate cellular carriers is not the solution'' and that ``regulatory oversight [must] remain in place in order to ensure that the affordability of cellular service continues to improve.'' B. Regulation for Which Continued Authority Is Sought 40. The NYPSC emphasizes that cellular providers are ``lightly regulated'' in New York. Under this regulatory scheme the NYPSC permits carriers to file tariffs that establish a range of rates (minimum and maximum rates), effective not less than 30 days from the date of filing. Rate changes within this range can be made with as little as one day's notice to customers and the NYPSC. The NYPSC states that ``carrier rates are based on what each carrier believes the market will bear'' and contends that this regulatory scheme allows carriers ``wide latitude in meeting their initial rates and making changes to those rates in response to competitive forces and customer demand.'' 41. The NYPSC does not review rate ranges proposed by cellular carriers unless and until a complaint is lodged. Staff review of individual rate changes within the proposed range is limited to ensuring that ``carriers are not seeking to engage in discriminatory practices.'' An evidentiary hearing is required only if a carrier proposes to increase its rates above the maximum set forth in its tariff and the change would increase its gross operating revenues by more than 2.5 percent or $100,000, whichever is greater. Such hearings must be completed in 11 months, and the NYPSC explains that very few are held because it encourages cellular carriers to file rates with ``wide flexible rate minimum to maximum ranges.'' 42. The NYPSC emphasizes that it does not require cellular carriers to file cost information to support tariff rate changes and that it does not set rates based on carrier costs or return on equity. The NYPSC states that its ``simplified regulatory approach is aimed at protecting consumers from anticompetitive and discriminatory practices, should the need arise.'' The NYPSC has provided a copy of its regulations in support of its contentions and in compliance with Section 20.13(a)(4) of our Rules. Section 630.14 of the NYPSC's regulations addresses maximum and minimum rates. C. Description of New York State Market 43. According to the NYPSC, New York State is divided into 17 Cellular Geographic Service Areas (CGSA), 11 of which encompass Metropolitan and Surrounding Areas (MSAs) and 6 of which cover rural areas (RSAs). Each CGSA, except for one RSA, is served by two cellular carriers. This has been the case in each of the MSAs for the past nine years. All but one of the RSAs have been served by two cellular carriers for at least the last three years. The New York City MSA generates 73 percent of total cellular revenues in the state. Another 20 percent are divided among four Upstate MSAs. The remaining seven percent is divided among the other 12 CGSAs. The NYPSC states that, ``[a]s of June 1994, there were approximately 32 resellers in New York.'' V. CASE ON THE MERITS A. General Positions of the Parties 44. Both NCRA and Nextel vigorously support the NYPSC's Petition to continue intrastate rate regulation of cellular carriers. AMTA, PCIA, E.F. Johnson, and MTel are also supportive of the Petition to the extent that it does not seek to extend rate regulation to paging services or other commercial mobile services. These commenters, and Nextel, deny that disparate rate treatment for cellular and other commercial mobile services controverts the statutory objective of regulatory parity among providers of comparable mobile services. 45. The following commenters oppose the Petition: CCI, CTIA, RTC, SWB, NYNEX, McCaw, GTE, RCA, and Vanguard. Of these, CTIA, RTC, McCaw, GTE, and RCA argue that singling out cellular services for rate regulation is prohibited by Section 332 of the Act. PageNet, PageMart, and E.F. Johnson oppose the Petition only with respect to paging services, arguing that the NYPSC has failed to sustain its burden of proof with respect to those services. 46. The NYPSC argues, in essence, that the duopolist nature of the cellular industry, per se, provides sufficient evidence of failed market conditions to authorize continued rate regulation by the state. It contends that: [e]ffective competition requires strong mutual pressure on firms to perform well (by minimizing costs, by holding prices down to these costs, by providing good service quality and by innovating rapidly) in order to survive. However, in a market such as the cellular market, where there are only two providers of a service and there are no currently available substitutes, actions taken by one firm may not result in a normal competitive reaction by the only other firm. With but one real competitor in each market area, a cellular provider has less incentive to innovate or price competitively than it would in a multi-vendor market. Therefore, absent a fully competitive market, continued light rate regulation is required to ensure that rates do not become discriminatory, unjust or unreasonable. 47. In support, NCRA and Nextel argue that facilities-based cellular providers have a ``transmission bottleneck'' that enables them to limit competition and ``exact supracompetitive profits from the public.'' NCRA contends that the duopolist nature of the cellular industry warrants continued state rate regulation and alleges, in support, that ``since 1985, the [FCC] has classified licensed cellular carriers as dominant common carriers'' and has tentatively conclud[ed] that cellular carriers should have equal access obligations imposed upon them in accordance with the [FCC's] findings that there is not sufficient evidence to conclude that the cellular services marketplace is fully competitive. NCRA has listed in an appendix to its comments the reports of eight Federal agencies which it alleges have concluded that the cellular industry is anticompetitive. 48. Nextel, too, argues that the duopolist character of the cellular industry compels us to grant New York's Petition: The future CMRS marketplace is only beginning to develop. It is anticipated, for instance, that approximately six alternative CMRS providers, including PCS, cellular, and wide area SMR, ultimately will provide comparable service in any given geographic area. If this were presently the case, there would be little doubt that state regulation of all classes of CMRS would be preempted. However, the current CMRS market is far more limited. Accordingly, the Commission is forced to make its preemption determinations based only on its analysis of a single class of CMRS -- cellular service. Unfortunately, the cellular industry has historically exhibited duopoly market conditions and has been a source of continuing concern for the petitioning states. 49. On the issue of substitutability and consequent competition from other types of commercial mobile services, Nextel contends that there are presently no ``voice-grade'' mobile services offering viable competition to cellular service. Nextel points out that: PCS spectrum has not yet been assigned and will not pose a competitive threat to cellular operators until proposed systems are constructed and placed into operation. Even in the most commercially attractive markets, this could take a minimum of several years, during which cellular operators will be permitted to enhance their already considerable market position. Moreover, although Nextel has made impressive strides in implementing its ESMR service in California, it cannot yet challenge the significant market power of cellular incumbents.... There is no near-term competition in the wireless marketplace sufficient to discipline the current cellular marketplace. Until effective competition develops, continued rate regulation may be necessary in some states to restrain the dominant market power of cellular duopolists. 50. In opposition, many commenters emphasize that the existence of a duopolist market structure and arguments that the market is thus less than ``fully competitive'' are, of themselves, insufficient to sustain the state's burden of proof. They argue, further, that the mere ``threat'' of future problems absent continuing regulation is insufficient to require us to grant the New York Petition. One commenter, in particular, points out that ``[t]he NYPSC never explicitly claims that its cellular marketplace is anticompetitive or that rates are unjust or unreasonable or discriminatory,'' and that the State's Petition is grounded on a policy of ``deterrence,'' which is not a statutorily cognizable basis for authorizing continuing rate regulation of intrastate cellular rates. In this regard, several commenters point to the NYPSC's statements, made in its 1989 proceeding to review, on its own motion, its regulatory policies for ``Segments of the Telecommunications Industry Subject to Competition,'' that cellular service ``is furnished competitively... [and that] these carriers do not need to be regulated....'' 51. Those opposing the NYPSC's Petition point to various indicia that the cellular market in New York is sufficiently competitive to protect consumers adequately from unreasonable rates. One commenter recites the following litany of developments in the New York cellular market, which it alleges proves that the market is ``driven by carriers responding competitively to the needs of the marketplace:'' decreasing rates (including equipment), larger calling scopes, an increasing variety of ancillary services (including joint service), voice mail and other functionality, as well as extensive customer service organizations, and disparity in financial results and market shares. It contends that customer equipment costs have decreased from $1000 to $100 per cellular phone, that there are a greater number of service plans now available, that most Upstate New York MSAs have now been built out, eliminating ``holes'' previously common to those markets, that roaming rates per airtime minute among most carriers have decreased from $3 per day and $.99 per minute in 1985 to $.50 or less per minute and no daily charge, that customer service is now provided on a 24-hour basis with the assistance of ``extremely sophisticated, essentially real time databases,'' that cumbersome and inaccurate billing systems have been replaced, and that joint services and special services such as voice mail are now available to a significant portion of the customer base. 52. Supportive of these allegations are the comments of another cellular company, which states that ``competitive pressure to expand its coverage area and to improve call quality has required it to invest hundreds of millions of dollars in a network infrastructure that includes almost 600 cell sites.'' Yet another cellular company comments similarly: In addition to an increase in the number of providers, since 1989 the industry has experienced significant growth in network capacity and coverage, and in subscribers. In the particular case of Cellular One of New York, the nonwireline carrier owned by McCaw's LIN Broadcasting subsidiary, capital investment has more than quadrupled since 1990, and cell sites now number more than 300 -- a tenfold increase during the past 8 years. Similarly, subscribership has risen tenfold over the same period. This increase of providers, subscribers and infrastructure investment, coupled with declining service rates, indicates that the NYPSC was correct initially in finding that cellular carriers are vigorously pursuing the market and do not need to be regulated. 53. Several other commenters also point to the growth rate for cellular as indicative of a competitive market. One alleges that cellular is growing domestically at an annual rate of more than 40 percent and that only 16.7 percent of the national market has been tapped. It contends that this growth potential, in combination with high intra-industry and inter- industry ``churn'' rates and rapid technological development, creates a dynamic and highly competitive cellular market. Another commenter emphasizes that 73 percent of cellular revenues for New York State are generated in the New York City MSA, which has two facilities-based carriers and approximately 32 resellers. Many commenters argue that alternative commercial mobile services already exist, such as wide-area Specialized Mobile Radio (SMR), and that they constitute viable competitors to cellular and must be taken into account in assessing the competitiveness of CMRS in New York. Several commenters remark that this already-competitive market will become more competitive with the advent of PCS and wide-area SMR and that these impending changes affect today's market and must also be taken into account when evaluating its present capacity to protect consumers. B. Elements of the NYPSC Case 1. Pricing 54. As one element of its case concerning failed market conditions, the NYPSC addresses rates and revenues for the New York State cellular market: Statewide cellular operating revenues in the six MSAs increased 20% from 1991 to 1992. On average, revenues per access number declined by 8% from 1991 to 1992. Airtime minutes of use increased by 24% and the number of access lines increased almost 30% during this period. Overall revenues per airtime minutes declined by 3% from 1991 to 1992. The NYPSC contends that ``[d]ue to the number of different rate plans . . . and the changes in average customer usage patterns caused by continued growth it is difficult to measure changes in price levels.'' The NYPSC concedes, however, that ``overall average prices are declining,'' but notes that they ``remain considerably higher than comparable land line telephone services.'' The NYPSC argues that its continued regulatory oversight is necessary ``in order to ensure that the affordability of cellular service continues to improve.'' 55. Commenters in opposition state that the NYPSC's concession regarding declining rates undercuts its case for failed market conditions and they interpose a variety of objections to its comparing cellular to landline rates. Several note that residential land line rates are an improper basis for comparison because they are regulated and allegedly priced below cost. Others contend that higher cellular rates merely reflect the fact that market risks and expenses are greater for cellular service. Still others challenge the comparison as incomplete or inapposite either because it fails to address ancillary services or because the two services have different service and cost structures that are nowhere addressed by the NYPSC. 56. Both the NYPSC and Nextel address the issue of prices in their replies. Reiterating its concession that rates are declining, the NYPSC attributes the decline to the ``presence of regulation'' and its deterrent effect on cellular rates. Nextel, in comments largely addressed to market conditions in California, contends that decreasing cellular prices are not the result of competition but mere market strategies to encourage subscribers to ``lock in'' to long-term cellular service contracts with substantial termination penalties. 2. Rate of Return on Common Equity 57. The NYPSC offers the following information concerning return on common equity in the New York cellular market: In 1991 the return on common equity for those companies which provided information ranged from a high of 142% to a low of -42%. The average return was 47% for this period. In 1992, the returns ranged from 85% to a low of -118%, with an overall average return of 38.60%. In 1993, the returns, based on available data, ranged from a high of 79% to a low of 0% with the average return of approximately 38%. This compares to 10- 15% returns on equity for high tech companies from 1991-1993. The NYPSC states that, while these data are not ``dispositive of the competitiveness of the market,'' the returns of several companies exceed those for land line companies and ``most unregulated high tech companies.'' In its reply to comments critical of its rate of return analysis, the NYPSC emphasizes that it has adduced this information not to advocate, much less adopt, rate of return regulation for cellular services but as evidence that ``cellular carriers could exercise excessive market power, absent regulatory oversight.'' 58. Commenters discount completely the use of this rate of return data to suggest failed market conditions. They variously argue that rates of return on landline companies are inapposite because landline companies are subject to cost of service regulation, that the NYPSC's computational methodology is unclear, that high returns may be attributable to efficiency and length of investment and time in the market rather than to market power, and that the variety of rates of return among cellular carriers confirms rather than refutes the existence of competition in the New York cellular market. One commenter contends that return on common equity is a misleading ratio when used to measure the operational performance of an entity because it is significantly influenced by an entity's debt-to-equity ratio and thus is meaningful only to shareholders. It explains that cellular carriers could be very highly leveraged or negligibly leveraged, as a result of which comparing the return on common equity of any two cellular providers would give no indication of the efficiency of operations or of the rates and charges of either. Another commenter claims that more highly leveraged capital structures typify cellular operations as compared to those of local exchange carriers. 3. Market Share 59. The NYPSC contends, on the issue of market share, that ``there is some evidence of market concentration in three out of the five major MSAs'' and provides the following information on cellular market shares within those MSAs: For 1991, market share, as evidenced by total revenues, was roughly equal in two MSAs. In each of three MSAs one company had 80% of the market and the other had 20%. For 1992, in two MSAs one company had 70% of the market and the other had 30%. In one MSA, one company had 80% of the market and the other had 20%. In the other two MSAs, market shares were split 50/50. This data may indicate that one company had a dominant position and that absent continued oversight could have the incentive and opportunity to engage in anticompetitive pricing. The NYPSC contends that, ``[w]hile a 20% market share may be enough for a competitor to be successful in the telecommunications market, the purpose of market share data is to detect patterns within a market'' and concludes that the data adduced, while ``not dispositive,'' ``suggest caution.'' 60. Several commenters challenge the NYPSC's interpretation and use of this market share data, arguing that market share, standing alone, is insufficient proof of market power, that market share shifts in a fluid industry such as cellular, that factors other than market power, such as operational efficiencies and facility size, could account for differences in market share, that a 20 percent market share is sufficient to make a telecommunications firm competitive, and that the NYPSC's reliance on the concept of dominance to make a case for noncompetitiveness is misplaced given Congress's and the Commission's explicit rejections of the distinction between dominant and nondominant firms as a conceptual tool for establishing regulatory distinctions among commercial mobile services. 4. Consumer Complaints and Anticompetitive Practices 61. The NYPSC proffers the following information concerning consumer complaints and anticompetitive practices in furtherance of its contentions concerning failed market conditions in the New York cellular market. The NYPSC states that over the 12-month period ending May 31, 1994, it received 146 complaints against cellular companies, 66 of which were ``rate-related (excessive, erroneous or disputed bills)'' and the remaining 80 of which were related to service quality and other nonrate matters. The NYPSC acknowledges that ``the complaint rate is low,'' but, based on the fact that it received only 77 complaints for 1991 and 1992 (undifferentiated by the NYPSC as to content), observes that ``the absolute number of complaints has increased significantly, by close to 100%.'' 62. The NYPSC also provides information on two occurrences that it alleges constitute anticompetitive practices. The first involves a special pricing plan proposed for law enforcement organizations which NYPSC staff identified as discriminatory in the course of its routine review of tariff filings and which it successfully prevailed upon the cellular carrier to withdraw. The NYPSC characterizes the second example as a ``dispute between two cellular companies regarding roaming rates,'' in which one company blocked access to 911 and other emergency services when its customers were roaming in another carrier's service territory. The NYPSC resolved this dispute by ordering the two companies to enter into an interim roaming agreement, at a compensation schedule proposed by NYPSC staff. The NYPSC concludes that: [w]hile interconnection between carriers is the subject of another proceeding, this problem reflects the importance of state regulators having the authority to step in and resolve disputes which arise out of their rate authority which could have a significant impact on health and safety. 63. Commenters addressing the NYPSC's evidence on the issues of both consumer satisfaction and anticompetitive practices discount it as immaterial or irrelevant, or both. Several call attention to the NYPSC's admission that the complaint rate is ``low.'' Others challenge the validity of the data, arguing that it is unclear which of the 66 complaints concerning ``excessive, erroneous or disputed bills'' are truly related to ``rate levels,'' that a 100 percent increase in consumer complaints is unimpressive where the original number was so small, and that any increase in complaints must be measured against the 30 percent per year growth in the number of cellular access lines reported by the NYPSC. 64. On the issue of anticompetitive practices, one commenter observes that the special pricing plan for law enforcement organizations ``was no more offensive than previously accepted plans for other organizations.'' Two commenters challenge the validity and significance of the evidence concerning the roaming dispute, arguing that it is insufficiently detailed, that the NYPSC may have lacked jurisdiction to impose an agreement on the carriers, and that the NYPSC's authority to settle these kinds of disputes will not be jeopardized by denial of its petition here because such matters involve interconnection and are subject to the NYPSC's ``continuing authority to regulate the terms and conditions under which cellular service is provided.'' 65. As a general matter, commenters also contend that the NYPSC's information concerning alleged improper practices is of marginal utility and evidentiary value because it is unaccompanied by supporting affidavits required under Section 20.13(a)(2)(vi) and that ``one dispute between two cellular carriers over the ten-year history of the provision of cellular service within the State dramatically underscores the lack of any need for a continuation of intrastate rate regulation.'' C. Discussion 66. Section 332(c)(3) provides that a state petition shall be granted if it ``demonstrate[s]'' that market conditions for the service at issue fail to protect subscribers adequately from unjust, unreasonable, or unreasonably discriminatory rates. On this record we conclude that New York has not made such a demonstration and, accordingly, we deny its petition. 67. Our decision is based in principal part on several factors. First, the NYPSC does not address the direct and fundamental changes to the duopoly cellular market structure that are being realized by PCS and other services, such as wide area SMR. Second, the NYPSC presents no systematic or authenticated evidence of collusive or otherwise anticompetitive practices concerning the provision of any CMRS. Third, the NYPSC does not present evidence showing widespread consumer dissatisfaction with CMRS providers in that state, or discuss what specific rate regulations are needed to address whatever level of dissatisfaction may exist. Fourth, the NYPSC fails to advance any persuasive analysis regarding the critical issue of investment by cellular licensees (or by any other CMRS providers). 68. Our decision also is based in part on the NYPSC's own statements concerning market conditions. For example, it acknowledges that ``overall average prices are declining'' and that ``the complaint rate is low.'' It requests continued rate regulation authority in order to ``ensure that the affordability of cellular service continues to improve,'' and thereby concedes that conditions already are improving. It asserts that this Commission should not ``wait until New York can establish that there are major problems[,]'' and thereby acknowledges the absence of any ``major problems'' today. And, by requesting authority for continued ``light'' regulation to ``ensure that rates do not become discriminatory, unjust or unreasonable,'' it essentially admits that cellular rates are not presently unjust, unreasonable, or discriminatory. 69. Although NYPSC views any evidence of market imperfection as proof of a need for continued rate regulation, while it attributes all countervailing evidence to its regulatory oversight, it has not established the factual predicate of that line of reasoning. The NYPSC does not appear to have prescribed any particular CMRS pricing or rate development formula, and with minor exceptions, all currently effective and previously effective cellular rates in New York appear to have been carrier-initiated. On this record, we are not persuaded by the NYPSC's implicit argument that, absent continuation of its rate regulation authority, even for a limited period of time, cellular or other CMRS rates will quickly fall outside the zone of reasonableness. Given the nature of the NYPSC's regulatory system, we think it is reasonable to attribute improving market conditions to the operation of market forces rather than the NYPSC's regulatory system. 70. The rate of return on equity information the NYPSC offers in support of its Petition is unpersuasive. In general, we do not believe rate of return evidence alone constitutes sufficient ground to support a petition. In this regard, the relevant observation is not how such returns compare with those earned by traditionally regulated public utilities in mature, stable environments. Rather, any such observation must account for the fact that CMRS is a dynamic and relatively infant industry that is still developing. A key element of the study of markets is the recognition that not all industries and markets are at the same stage of development. Thus, the comparison necessary for determining whether prices are just and reasonable is not with a mature industry, but with high growth industries. It has been shown that the rate of growth of output is one of the most important determinates of profitability, that is, all other things being equal, high growth firms (such as the cellular industry) tend to earn high profits. Furthermore, even if profits are high now, the entry of PCS should contain those profits increasingly forcefully. Thus, evidence that cellular industry profits are higher than that we might allow, for example, for local exchange carriers, is not automatically disturbing. 71. Against this background, we conclude that the NYPSC's case is unpersuasive. As noted previously, this is largely due to the spare nature of the evidence on which the NYPSC's case is constructed. In addition to the specific evidentiary shortcomings discussed above, we note that the NYPSC submitted no provider-specific information on customers and customer trends for cellular or any other commercial mobile services. Its evidence concerning revenues is limited to the observation that 73 percent of cellular revenues are garnered in the New York City market, a market in which there appear to exist approximately 32 resellers, which suggests substantial competition at the retail level. The information proffered by the NYPSC on rates of return on common equity is unpersuasive because the NYPSC fails to provide accompanying data, such as the debt/equity ratios underlying such returns, that would enable us to assess those data meaningfully. New York also provides no information on infrastructure investment or the deployment of new services, facilities, or technologies in the State of New York. The NYPSC identifies only two instances of anticompetitive behavior by CMRS providers, neither of which is supported by affidavit testimony, as required by our rules. Even if such evidence were supported by affidavit, two examples do not constitute a sufficient showing to support a request to regulate an entire industry. For these reasons, and those discussed previously, we deny the NYPSC's Petition. VI. REGULATION OF OTHER TERMS AND CONDITIONS 72. Prior to OBRA, Section 332 prohibited the states from imposing ``rate ... regulation'' upon certain wireless telecommunications carriers. This prohibition was construed broadly to preclude almost all state regulatory activity. As revised by OBRA, Section 332(c)(3) now prohibits states from regulating ``the rates charged'' for CMRS, but it expressly reserves to them the authority to regulate the ``other terms and conditions of commercial mobile services.'' Although there is no definition of the term ``the rates charged'' in the statute or its legislative history, there is legislative history regarding the ``other terms and conditions'' language. We believe it is sufficient to allow us to comment in a preliminary manner on what regulatory activities the New York PSC is entitled to continue, despite our denial of its Petition. 73. The House of Representatives Committee on Energy and Commerce, reporting on the House bill that was incorporated into the amended Section 332, noted that even where state rate regulation is preempted, states nonetheless may regulate other terms and conditions of commercial mobile radio services. The Committee stated: By ``terms and conditions,'' the Committee intends to include such matters as customer billing information and practices and billing disputes and other consumer protection matters; facilities siting issues (e.g., zoning); transfers of control; the bundling of services and equipment; and the requirement that carriers make capacity available on a wholesale basis or such other matters as fall within a state's lawful authority. This list is intended to be illustrative only and not meant to preclude other matters generally understood to fall under ``terms and conditions.'' 74. Establishing with particularity a demarcation between preempted rate regulation and retained state authority over terms and conditions requires a more fully developed record than is presented by the New York Petition and related comments. Thus, we will not expound at any length on this matter. The legislative history largely speaks for itself. It is possible to extrapolate certain findings from the legislative history, however, and we do so here in the interest of minimizing future proceedings directed at this issue. 75. First, although the NYPSC may not prescribe, set, or fix rates in the future because it has lost authority to regulate ``the rates charged'' for CMRS, it does not follow that its complaint authority under state law is entirely circumscribed. Complaint proceedings may concern carrier practices, separate and apart from their rates. In consequence, it is conceivable that matters might arise under state complaint procedures that relate to ``customer billing information and practices and billing disputes and other consumer matters.'' We view the statutory ``other terms and conditions'' language as sufficiently flexible to permit New York to continue to conduct proceedings on complaints concerning such matters, to the extent that state law provides for such proceedings. 76. Second, under the same logic, we also conclude generally that several other aspects of a state's existing regulatory system may fall outside the statutory prohibition on rate regulation. For example, a requirement that licensees identify themselves to the public utility commission, or whatever other agency the state decides to designate, does not strike us as rate regulation, so long as nothing more than standard informational filings is involved. Moreover, nothing in OBRA indicates that Congress intended to circumscribe a state's traditional authority to monitor commercial activities within its borders. Put another way, we believe New York retains whatever authority it possesses under state law to monitor the structure, conduct, and performance of CMRS providers in that state. We expect that, to the extent any interested party seeks reconsideration on this issue, it will specify with particularity the provisions of the New York regulatory practice at issue. VII. ORDERING CLAUSES 77. Accordingly, pursuant to Section 332(c)(3) of the Communications Act, 47 U.S.C.  332(c)(3), IT IS ORDERED that the Petition of the New York State Public Service Commission To Extend Rate Regulation IS DENIED for the reasons set forth above. 78. IT IS FURTHER ORDERED, pursuant to Sections 1.4(b), 1.4(b)(2), and 1.106(f) of the Commission's Rules, that any petition for reconsideration of this order SHALL BE FILED within thirty days of the day after the day on which public notice of this action is given. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary APPENDIX A List of Parties Filing Comments Party (and Short Title) American Mobile Telecommunications Association, Inc. (AMTA) Cellular Telecommunications Industry Association (CTIA) Contel Cellular, Inc. (CCI) E.F. Johnson Company (E.F. Johnson) McCaw Cellular Communications, Inc. (McCaw) Mobile Telecommunication Technologies Corp. (MTel) National Cellular Resellers Association (NCRA) Nextel Communications, Inc. (Nextel) NYNEX Mobile Communications Company (NYNEX) Paging Network, Inc. (PageNet) Personal Communications Industry Association (PCIA) Rochester Tel Cellular Holding Corporation (RTC) Southwestern Bell Mobile Systems, Inc. (SWB) Vanguard Cellular Systems, Inc. (Vanguard) List of Parties Filing Reply Comments Cellular Telecommunications Industry Association (CTIA) GTE Service Corporation (GTE) McCaw Cellular Communications (McCaw) Mobile Telecommunication Technologies Corp. (MTel) Nextel Communications, Inc. (Nextel) NYNEX Mobile Communications Company (NYNEX) PageMart, Inc. (PageMart) Rochester Tel Cellular Holding Corporation (RTC) Rural Cellular Association (RCA) State of New York, Public Service Commission (NYPSC)