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. ***************************************************************** ******** $// R&O, Conn. Dept. PUC, Petn CMRS Rate Reg'n, PR Dkt. 94-106, FCC 95-199 //$ $/ 300.332 Mobile services /$ $/ 20.13 State petitions for authority to regulate rates /$ FCC 95-199 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. In the Matter of Petition of the Connecticut Department ) Public Utility Control To Retain ) Regulatory Control of the Rates of ) PR Docket No. 94-106 Wholesale Cellular Service Providers in ) the State of Connecticut ) Report and Order Adopted: May 8, 1995; Released: May 19, 1995 By the Commission: I. INTRODUCTION 1. On August 8, 1994, the Connecticut Department of Public Utility Control (``DPUC''), on behalf of the state, filed a petition with this Commission, requesting authority to continue regulating wholesale cellular service providers. Six parties filed pleadings opposing the petition, and eleven 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. In order to prevail on the merits, the DPUC 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. 7. Since the Budget Act does not explicitly construe or elaborate on the statutory 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. 8. 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. 9. Unlike some of the opponents of the DPUC 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. 10. 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. 11. 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. 12. Section 332(c)(3) must be interpreted in this context; it is an exception to the general prohibition against state regulation. We conclude that Connecticut, 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. 13. 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. 14. 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. 15. 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. 16. 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. 17. 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. 18. 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. 19. 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.'' 20. 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. 21. 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. 22. 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 Connecticut 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 Connecticut MTA # Freq. Blk. State Market Winning Bidder Winning Bid M008 A Maine Boston- Providence AT&T Wireless PCS Inc. $121,660,000 M008 B Maine Boston- Providence WirelessCo, L.P. $127,065,892 M001 A New York New York Omnipoint Corporation $347,518,309 M001 B New York New York WirelessCo, L.P. $442,712,000 23. 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). 24. 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. 25. 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. 26. 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. 27. 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. CONNECTICUT PETITION A. Procedural Issues 28. The pleadings present two threshold procedural matters that we must address before addressing the Connecticut DPUC's petition on its merits. First, some parties argue that the petition should not be granted 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, Bell Atlantic has filed an application for review of the Bureau's determination to include the record of the Connecticut state proceeding in this Docket, subject in part to confidentiality procedures. 1. Cellular-Only Regulation a. Pleadings of the Parties 29. Various parties argue that: (1) Congress revised Sec. 332 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 Connecticut DPUC would impose inconsistent regulations on different CMRS providers, thereby creating precisely the asymmetrical regulatory conditions Congress sought to remedy; accordingly (3) the DPUC's petition must be rejected because it seeks to impose a type of regulatory regime expressly rejected by Congress. 30. The Connecticut DPUC and its supporters dispute these arguments. While they acknowledge that regulatory parity is a goal of the OBRA, these parties argue that Congress expressly recognized that differential regulatory treatment of CMRS providers is permissible under the Act. Many parties claim as well that 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. b. Discussion 31. We have determined in other proceedings that while regulatory parity is an important 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 Communications Act. Indeed, the amended 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 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 (at 491) 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. 32. 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 Connecticut DPUC's request to regulate only cellular services is incongruent with regulatory parity concepts embedded in the OBRA. 2. Confidentiality 33. In the First Confidentiality Order, the Wireless Telecommunications Bureau (Bureau) noted that, while Connecticut twice submitted supporting materials accompanied by requests for confidential treatment, these requests failed to comply with our procedural rules. BAMM and Springwich separately filed rate of return materials accompanied by requests for confidential treatment; these materials previously had been subject to limited disclosure pursuant to a protective order in the Connecticut proceeding. The Bureau adopted in this proceeding the same protective order as Connecticut applied in its own investigation. 34. In the Second Confidentiality Order, the Bureau considered Connecticut's third request for confidential treatment of supporting materials and granted that request as well as Connecticut's motion to accept the materials for filing. These materials, confidential and public, were developed in the state's independent investigation of market conditions in Connecticut. The decision in that proceeding originally was submitted as an attachment to the DPUC petition. The Bureau granted the confidentiality request only in part, however, under discretion provided by Section 0.459(f) of the Commission's Rules. The Bureau treated as confidential certain materials, and denied confidential treatment to other materials, because the DPUC filing did not identify which of these materials were allegedly deserving of confidential treatment, nor describe reasons for their confidential treatment. 35. Subsequently, BAMM and the Resellers filed applications for review of the Second Confidentiality Order. On its own motion, the Bureau reconsidered its decision to exclude from the record certain of the Connecticut materials, which resolved the Resellers' application. BAMM, however, also contends that the Bureau violated unspecified Commission Rules by granting Connecticut's motion, and also violated Section 20.13 (a)(5) of our Rules by accepting a substantial pleading several months after the filing deadline specified in that rule. 36. The Bureau granted Connecticut's motion for leave to accept the materials submitted because those materials are germane to the demonstration the state is required to make to support its petition. The material submitted by Connecticut with this motion already was part of the state's proceeding. Excluding such materials effectively would have denied Connecticut the opportunity to make the demonstration required by the amended statute. BAMM acknowledges that Commission Staff advised it to await review of the proffered state materials, and the corrective confidentiality order on reconsideration. At that time, BAMM was afforded an opportunity to file supplemental comments on these materials and it has done so. BAMM was a participant in the DPUC state proceedings, as are other parties to this docket; the Bureau's late acceptance of materials with which BAMM already was familiar imposes no hardship on BAMM given the opportunity for supplemental comments. The state proceedings, initiated with a view to filing an OBRA petition, are uniquely germane to the state's assertion of its residual rights under the amended Act. In these circumstances BAMM has not been harmed by the acceptance of the materials submitted. Further, any error committed as a result of the Bureau's failure to explicitly waive Section 20.13 when granting Connecticut's motion was harmless. BAMM's application for review accordingly is denied. 37. The excluded materials were entered into the record and given limited disclosure only to outside counsel and outside experts for parties to this proceeding, pursuant to the protective order adopted in the First Confidentiality Order. The analysis of the Connecticut petition reflects consideration of supplemental comments and replies, based on these materials, submitted on March 10 and March 17, 1995. B. Summary of Request 38. Pursuant to its regulatory authority under state law, the Connecticut DPUC conducted a proceeding to examine cellular market conditions, including consumer protection issues. The DPUC held seven days of hearings on this matter. Connecticut states that the evidence offered in DPUC Docket No. 94-03-27 ``indicates'' that current market conditions sustain anti-competitive and discriminatory practices on the part of wholesale cellular providers. Principally on this basis, Connecticut asserts that since current market conditions do not effectuate ``true competition,'' it should retain jurisdiction over wholesale cellular providers. Evidence of discriminatory and anti-competitive conduct on the part of the wholesale cellular carriers and their retail arms, Connecticut asserts, includes (1) market tampering, (2) price fixing, (3) upside-down pricing (setting wholesale prices for resellers above the underlying carrier's retail price), and (4) unfair billing practices; as well as conduct arising directly from the wholesale carriers' relationship to their affiliated retail operations, specifically, (5) the use of information acquired from independent resellers by the wholesale carrier for the benefit of its resale affiliate, and (6) preferential pricing and practices designed to benefit the resale affiliate. 39. The DPUC also looked at the wholesale carriers' rates of return, market shares, and price levels. As to rates of return and overall service rates of the wholesale cellular providers, Connecticut states that while the record in the state proceeding shows that the cellular carriers have offered several promotions since 1987, there is no indication that these promotions have had any impact on the Connecticut market and its cellular end-users. The DPUC states that it has determined that the greatest benefit from these promotions has been to the underlying carriers' own retail affiliates, because of the volume discount structure of the wholesale tariff. 40. The DPUC's findings of fact in the state proceeding do not include any conclusions on the allegations of anti-competitive and discriminatory practices. The DPUC also stated as a finding of fact that the record of Docket No. 94-03-27 is inconclusive regarding the reasonableness of cellular carriers' rates of return and their financial performance since 1987. In its reply comments, however, the DPUC states that: the level of competition in Connecticut is not effective and that the DPUC should continue to regulate the wholesale cellular providers until they can satisfactorily demonstrate that other CMRS are effectively operating in their service territories and true competition is present in the marketplace. 41. The DPUC states that it intends to initiate a separate proceeding to examine this situation further. The purpose of the DPUC's contemplated further review is to ensure that there is a proper mix of management between the cellular carriers' wholesale and retail affiliates, and a proper relationship between the wholesaler and independent resellers. In addition, the DPUC states that it intends to fully investigate the rates of return and rate structures of the wholesale providers and to investigate the relationship between the cellular carriers' costs and their service rates to ensure that customers receive fair, equitable and just rates. 42. The DPUC acknowledges that new service providers (PCS, SMRs, and wide area SMRs) will provide acceptable alternatives to cellular service in the future, but it believes that these are not practical substitutes for cellular services at this time. Connecticut also states that it appears that the highly concentrated nature of the Connecticut CMRS marketplace will not change significantly before the year 2003. C. Regulation for Which Continued Authority Is Sought 43. At present, Connecticut regulates its wholesale cellular providers under Section 16-250b of the Connecticut General Statutes. Under this regulatory scheme, the DPUC requires that all wholesale cellular tariff filings be cost-justified. The DPUC monitors market conditions by requiring each carrier to keep complete records concerning carrier's rates and charges, services, and the conduct of operations. The DPUC also requires each carrier to file quarterly financial reports. These rules have been in effect since January 29, 1986. These regulations provide the DPUC with the standards and procedures for regulation of the wholesale cellular carriers' rates and charges, services, accounting practices, and safety and conduct of their operations. In addition, the DPUC has adopted a shortened, five-day notice provision for tariff revisions affecting banded rates. Connecticut seeks to retain regulatory control of the rates of wholesale cellular providers until it concludes a further review of conditions in the Connecticut wholesale cellular market. After the review, which is projected to conclude July 1, 1996, if the DPUC determines that the market is not truly competitive, Connecticut seeks to retain jurisdiction for an additional year, until October 1, 1997. D. Description of the Connecticut State Market 44. The subject wholesale cellular providers are Springwich Cellular Limited Partnership (Springwich), Bell Atlantic Metro Mobile Companies (Bell Atlantic), and Litchfield County Cellular, Inc. (Litchfield). Springwich and Bell Atlantic provide wholesale cellular service in Connecticut's four New England County Metropolitan Areas (Hartford, New Haven, Fairfield, and New London) and the Windham Rural Service Area (RSA). Springwich and Litchfield provide wholesale cellular service in the Litchfield RSA. Springwich currently has 15 reseller subscribers, while Bell Atlantic has 11 reseller subscribers. Litchfield has no reseller subscribers. V. CASE ON THE MERITS A. General Positions of the Parties 45. NCRA, Nextel, CTCS, the Connecticut Office of Consumer Counsel, and the Attorney General of Connecticut strongly support the Connecticut DPUC's Petition to retain regulatory control of the rates of wholesale cellular carriers. AMTA, MTel, Pagemart, E.F. Johnson, PageNet, and PCIA 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. 46. BAMM, CTIA, GTE, McCaw, Springwich, and RCA oppose the Petition. PageNet and Pagemart oppose the Petition only with respect to paging services, arguing that the DPUC failed to sustain its burden of proof with respect to those services. 47. In support of the DPUC's petition, the Attorney General argues that the Connecticut duopoly cellular market is not competitive. Other commenters in support include NCRA and Nextel. They argue that facilities-based cellular providers have a ``transmission bottleneck'' that enables them to limit competition and ``exact supracompetitive profits from the public.'' 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 not competitive. Nextel also argues that the duopolist character of the cellular industry compels us to grant Connecticut's Petition. 48. On the issue of substitutability and consequent competition from other types of commercial mobile services, Nextel contends that presently there are no ``voice- grade'' mobile services offering viable competition to cellular service. Nextel asserts that ``[u]ntil effective competition develops, continued rate regulation may be necessary in some states to restrain the dominant market power of cellular duopolists.'' 49. Those opposing the DPUC Petition point to various factors showing that the cellular market in Connecticut is sufficiently competitive to protect consumers adequately from unreasonable rates. BAMM states that evidence obtained in Docket No. 94-03-27 showed declining prices, high rates of subscriber growth, expanding service coverage, introduction of numerous new services, and intense competition between BAMM and Springwich over the past five years. With respect to the Federal reports Connecticut relied on, BAMM particularly contends that NCRA's reliance upon the DOJ's reports is misplaced because ``[n]one of the reports bear any relationship to whether CMRS rate regulation is necessary to protect consumers in Connecticut.'' 50. Springwich states that subscribership in Connecticut for all commercial mobile services and for cellular services is predicted to continue to expand with the proliferation of new retail rate plans, the continued decline in wholesale prices, and the entry of new CMRS providers. Springwich's year-end estimates for 1993 indicate 86,052 active cellular numbers, while BAMM reported 101,139 active cellular numbers for the same period. Springwich adds that: The wholesale cellular carriers in Connecticut have made substantial network investment in response to...competition. Each of the carriers has made significant investments to expand network coverage through deployment of additional cell sites. Since it received a cellular license in 1985, Springwich has invested in its cellular network by expanding network coverage and facilities and thereby providing additional service value to be passed on by all cellular resellers to their cellular end users. 51. Other commenters, opposing the Petition, also point to the growth rate for cellular as indicative of a competitive market. CTIA alleges that cellular subscribership 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. CTIA contends that this growth potential, in combination with high intra-industry and inter-industry ``churn'' rates and rapid technological development, evidences a dynamic and highly competitive cellular market. Several commenters remark that this already-competitive market will become more competitive with the advent of PCS, SMRs, and wide area SMRs, and assert that these impending changes affect today's market and must be taken into account when evaluating its present capacity to protect consumers. B. Elements of the DPUC Case 1. Anticompetitive and Discriminatory Practices a. Bulk Volume Discounts and Upside-Down Pricing 52. The Connecticut DPUC, as well as the State Attorney General and the Office of Consumer Counsel, allege that carriers' volume discounts favor their retail affiliates in two respects. First, their lowest wholesale price offerings require such a high volume that they exclude all but their affiliates from the best bulk rates. The lowest discount rate offered is for activating over 20,000 cellular numbers, and only the carrier's own retail affiliates meet this requirement. 53. Second, petitioners state that the record in the Connecticut proceeding (Docket No. 94-03-27) indicates that the retail affiliates currently offer rate plans for end users that are priced below the best rate at which the Resellers can purchase bulk service, given the volume discount structure. CTCS contends that the wholesale carriers' pricing strategy is determined on a consolidated revenue method such that an effective rate is determined based on the overall economic effect of retail and wholesale rates offered in the market. Consequently, the wholesale entity is pricing against the independent buyers. CTCS states that what the carriers ``sparingly'' give in wholesale rate reductions, they take away at retail by below-wholesale pricing, because the per-subscriber cost for the independent Resellers would increase if they offered service at below-wholesale cost. In addition, the Resellers' overall margin would be reduced. 54. The carriers contend that the discounts are contained in the wholesale carriers' tariffs which the DPUC approved. Moreover, they attribute the fact that only retail affiliates currently receive the greatest discounts to the affiliates' better marketing strategies. Bell Atlantic also contends that the allegations of ``upside-down pricing'' by the affiliated resellers were not accepted by the DPUC. The Office of Consumer Counsel and the State Attorney General reply that the carriers' tariffs were approved under different circumstances, and that the DPUC has the power and the responsibility to adjust its regulatory supervision to meet changing circumstances. b. Sharing Confidential Marketing Information 55. The DPUC, Attorney General, and Office of Consumer Counsel also allege that the wholesale carriers require independent resellers to divulge confidential information including their retail rates and competitive pricing strategies, which the wholesale carriers then share with their retail affiliates. The state contends employees of SNET Cellular (Springwich's retail affiliate) have met with cellular service resellers to discuss retail rates and the impact independent resellers' rates would have on the Springwich retail affiliate. Evidence also was offered that after Escotel, a reseller, discussed its marketing strategies with SNET Cellular employees, employees with access to such information were transferred to Springwich's affiliated retail operations. 56. The wholesale carriers assert that such information is not required, and when it is volunteered, it is protected. Springwich adds that where there is any overlap in management responsibilities between Springwich and SNET Cellular, the companies have taken steps to ensure that wholesale and retail information is closely guarded and not shared. c. Relationship Between Wholesale Carriers and Their Retail Affiliates 57. Connecticut alleges that the close relationship between the wholesale providers and their retail affiliates puts the independent resellers at a distinct disadvantage. The DPUC considers the wholesale carriers' relationships with their retail affiliates to be anticompetitive, and asserts that this anticompetitive ``atmosphere'' requires continued DPUC oversight. The DPUC also suggests that Springwich's retail affiliate has received an unfair competitive advantage because it has the most prominent advertising in every SNET Company Yellow Pages directory section. Connecticut also alleges that this integral relationship has resulted in the ability of Springwich's retail affiliate to activate cellular numbers at times when other resellers were unable to do so, such as weekends and holidays. 58. The carriers respond that their corporate structure is entirely consistent with the requirements of the FCC and state regulation. Further, the carriers argue that the absence of corporate and managerial separation between wholesale and retail operations of the cellular carriers is not per se anti-competitive or discriminatory practice. Springwich adds that, although it is not required to, it maintains strict cost separation between these operations to ensure the accurate allocation of costs. Springwich also points out that the DPUC has not formally regulated wholesale carriers' corporate structures and has recognized such structures without requiring changes to them. In addition, both Springwich and BAMM acknowledge that, on one occasion over the past ten years, they each provided information concerning a new wholesale plan to their retail affiliate before notifying other resellers. Both carriers state that these were isolated instances, which were promptly corrected. d. Equal Access and Billing 59. Connecticut contends that Springwich's requirement that long distance calls be carried by its long distance affiliate is anti-competitive and ``contradicts'' the policy of the Connecticut General Assembly to promote telecommunications competition. Springwich counters by arguing that: (1) providing equal access to long distance carriers for interstate calls outside the Springwich cellular network does not justify continued state rate regulation; (2) this practice is common among non-BOC cellular carriers; and, (3) since Connecticut is a single LATA state, equal access is, by definition, solely an interstate issue. BAMM is required to provide equal access under the Modification of Final Judgment. 60. Connecticut also disapproves of wholesale carriers' rounding practice in billing their airtime charges. Springwich bills on a per-minute basis and BAMM bills on a thirty-second basis; however, both companies apparently have the technical capability to bill at one-tenth second intervals. 2. Rate of Return, Price Levels, Market Share 61. Connecticut alleges that the cellular carriers have been earning what appear to be excessive rates of return for 1988-93. The DPUC also recites OCC's assertion that wholesale cellular carriers' profit levels are evidence of the lack of effective competition. OCC and the resellers contend that 15 percent is a reasonable rate of return for wholesale carriers. The wholesale carriers suggest that a rate of return of 20.7 percent is reasonable. 62. The Attorney General states that BAMM and Springwich admitted on cross-examination before the DPUC that, with competition, rates could be 25 percent to 35 percent lower. According to the Resellers, proper interpretation of the cellular carriers' financial information indicates excessive wholesale prices, which is consistent with the anticipated 25 percent rate reduction that will occur following new competitors' market entry. The wholesale carriers maintain they are earning competitive rates of return. 63. The Attorney General states that application of the HHI (Herfindahl- Hirschman Index) test indicates the ``obvious'' fact that the cellular carriers are duopolists. The Attorney General argues that declining wholesale cellular rates do not prove competition in Connecticut, and alleges that the two major reductions in the past seven years occurred only because the carriers were petitioning for deregulation at those times. The Attorney General also contends that once DPUC oversight is removed, there will be nothing to prevent BAMM and Springwich from raising their prices. 64. Springwich (SNET) and BAMM (Bell Atlantic) provide wholesale cellular service in four MSAs, and Litchfield and Springwich provide wholesale service in one RSA. Springwich has 15 resale subscribers, BAMM has 11 resale subscribers, and Litchfield has none. As of the end of 1993, BAMM and Springwich possessed 54 percent and 46 percent shares of the bulk wholesale cellular market, respectively. The non-wireline carrier, BAMM, has been able to erode the wireline carrier's 100 percent market share to 46 percent in nine years. 65. Springwich and BAMM contend that the characteristics of the cellular marketplace in Connecticut, including the measure of market concentration produced by the HHI test, are a product of the duopoly structure adopted by the Commission for cellular services. Springwich argues ``the fact that such measures indicate that a two-carrier market is highly concentrated simply proves the obvious-- they do not, however, demonstrate that the concentrated market is not functioning in a competitive fashion.'' Springwich states that competition in the wholesale cellular market intensified in 1992 when BAMM purchased the Band A non-wireline carrier in Connecticut. Since BAMM now serves the larger share of the wholesale market, Springwich argues that this is incontrovertible evidence that vigorous competition exists. Springwich states that since the introduction of cellular service, the carriers have regularly lowered wholesale rates, introduced service and rate promotions, and introduced other new improvements. Springwich asserts that between 1990 and 1994, its monthly wholesale rates for cellular numbers decreased more than 11 percent before adjustment for inflation. Springwich also asserts that rates for usage have declined significantly. Springwich adds that these price reductions have come at the same time that network investment has increased and the carriers have incurred the significant cost of converting their networks to digital technology. Over the past five years, the growth percentage in cellular subscribers in Connecticut has averaged in the double digits. Springwich's year-end estimates for 1993 indicate 86,052 active cellular numbers, and BAMM reported 101,138 active cellular numbers for the same period. 66. The DPUC counters the carriers' arguments by asserting that the wholesale cellular market is closed to entry, that the service offered therein is homogenous, and that neither carrier can alter significantly the quality or characteristics of the service it provides, relative to its competitor. Since part of the homogeneity is that of costs, the DPUC claims, this makes for implicit price collusion because each carrier knows the other carrier has the same general cost profile. C. Discussion 1. Introduction 67. In order to continue regulation of intrastate cellular rates, Connecticut must prove that ``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.'' Connecticut has not satisfied the statutory requirement. 68. Our decision is based in part on the fact that the DPUC, upon completion of its own investigation of cellular market conditions less than one year ago, did not conclude that market conditions fail to protect consumers. While the DPUC found that ``the record...is inconclusive relative to the cellular carriers' rate of return and their financial performance since 1987[,]'' it did not find that these data demonstrated unjust or unreasonable, or unjustly or unreasonably discriminatory rates. The DPUC's findings concerning overall pricing behavior also were inconclusive. Moreover, the record does not indicate that the state has initiated any subsequent proceeding directed specifically at reductions or structural changes in carrier rates. Although its investigation revealed sufficient evidence of cellular market imperfections to cause the DPUC concern, and it has decided to continue monitoring market activities, the investigation apparently did not yield sufficient evidence to support a finding -- by the DPUC itself -- that market conditions fail to protect consumers. No additional information has been filed in the record of this proceeding that would cause us to question the DPUC's own judgment in this regard. 69. There are other bases for our decision. First, unrebutted evidence shows that cellular rates in Connecticut are declining. Second, the DPUC Petition 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. Third, Connecticut presents no evidence of systematically collusive or other anticompetitive practices concerning the provision of any CMRS. Fourth, Connecticut 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. Fifth, Connecticut fails to present any analysis regarding the critical issue of investment by cellular licensees (or by any other CMRS providers). 70. Another weakness of the DPUC's Petition is that it views any evidence of market imperfection as proof of a need for continued rate regulation, while all countervailing evidence is attributed to its regulatory oversight. Even assuming such an argument is reasonable in theory, the DPUC has not established its factual predicate. The DPUC does not appear to have prescribed any particular pricing or rate development formula, and with minor exceptions, all currently effective and previously effective cellular rates in Connecticut appear to have been carrier-initiated. On this record, we are not persuaded by the DPUC's implicit argument that, absent continuation of its rate regulation authority, even for a limited period of time, cellular rates will quickly fall outside the zone of reasonableness. Thus, we conclude that the DPUC's demonstration is unpersuasive when viewed as a whole. As discussed below, none of the specific allegations presented by the DPUC cause us to alter this conclusion. 2. Anti-Competitive and Discriminatory Practices a. Bulk Volume Discounts and Upside-Down Pricing 71. As noted previously, Connecticut asserts that the facility-based carriers' tariffed rates unreasonably favor their retail affiliates because only those affiliates qualify for the largest bulk discounts. We believe it is of decisional significance that these rates were subject to DPUC review before they took effect, and that they have been reviewed since then by the DPUC without any action by that agency to modify them. Moreover, there is no suggestion in this record that facility-based cellular carriers are charging different rates for the same service, based on a customer's identity. Nor has Connecticut shown that the volume discounts lack an adequate economic justification. Under these circumstances, the DPUC's evidence on this point is unpersuasive. b. Sharing of Confidential Marketing Information 72. Connecticut asserts that Springwich requires independent resellers who compete with its retail arm to divulge competitively sensitive marketing and/or planning information, as a condition of receiving wholesale service, and offers two examples of this alleged practice. Connecticut states that it believes that these examples ``[require] further review and regulation by the [DPUC].'' Springwich contends that such information is not required of independent resellers, and when it is volunteered it is protected. Springwich also contends that where management responsibilities for Springwich and SNET Cellular overlap, the companies have taken steps to ensure that wholesale and retail information is not shared. Connecticut has not rebutted Springwich's assertions. Thus, Connecticut has not established a sufficient factual basis to accord significant weight to its concerns about carriers' marketing practices. c. Integral Relationship Between the Wholesale Carriers and Their Retail Affiliates 73. Connecticut also asserts that the close relationship between the wholesale providers and their retail affiliates puts the independent resellers at a distinct disadvantage. The principal basis of Connecticut's assertion is the lack of separation between the wholesale operations of BAMM or Springwich and their respective retail affiliates. However, no DPUC regulation (or Federal rule) requires carriers to separate their wholesale and retail operations. Thus, carriers could operate on a fully integrated basis, with all the internal coordination such operations imply. Although the DPUC has identified two instances in which a wholesale carrier appears to have favored its retail affiliate over non-affiliated resellers, such evidence does not establish a pattern of anticompetitive activity and does not support a request to continue rate regulation. For these reasons, and for the reasons expressed in para. 59, supra, the record does not provide a basis for according significant weight to the state's presentation on this issue. d. Equal Access and Billing 74. Connecticut asserts that Springwich's requirement that long distance calls be carried by its long distance affiliate is anti-competitive and ``contradicts'' the policy of the Connecticut General Assembly of promoting telecommunications competition. The DPUC also asserts that wholesale carriers' billing practices warrant a continuation of rate regulation authority. However, the DPUC examined such issues last year and did not, to our knowledge, take remedial action. Again, we note that the practices the DPUC complains of do not violate any extant state or Federal regulation. On this record, we are not persuaded the DPUC has made a case for continued rate regulation. 3. Rate of Return; Price Levels; Market Share 75. The DPUC's contentions concerning evidence of rates of return, market share and price levels are similarly unpersuasive. First, although in its Petition the DPUC asserts that wholesale carriers' returns exceed ``competitive'' earnings levels, in the DPUC's own investigation it concluded that the record is ``inconclusive'' regarding the reasonableness of those carriers' returns and financial performance. This discrepancy is not explained by the DPUC. Moreover, the record in this proceeding shows that those carriers continue to invest heavily in building out their networks, and the DPUC has not presented evidence that carriers are restricting output in order to raise prices. Thus, the DPUC's evidence falls short of the showing necessary to convince us that wholesale carriers' financial performance provides a basis for continued rate regulation. 76. Second, the evidence shows that wholesale prices in Connecticut are declining, especially since 1993. We also note that cellular subscribers have increased significantly, and that the DPUC has not adduced any evidence that subscribers are dissatisfied with the service they are receiving. This evidence of price decreases, coupled with the absence of any showing of consumer complaints concerning price levels, leads us to conclude that the DPUC has not demonstrated that cellular rate levels are unjust or unreasonable. 77. The record demonstrates that carriers' market shares have shifted significantly. In the nine years since the advent of the non-wireline operator's service, the first entrant's share has declined from 100 to 46 percent. Although the market shares of individual independent resellers apparently have declined or not grown significantly, the record does not establish a causal link between those data and anticompetitive actions by wholesale carriers. On this record, it is as likely that these market share data could be attributed to individual carrier's efficiencies and marketing practices. The evidence does not demonstrate that market conditions fail to protect subscribers adequately against unjust and unreasonable rates, or unjustly and unreasonably discriminatory rates. For this reason, and the reasons discussed previously, we deny the DPUC's petition. VI. REGULATION OF OTHER TERMS AND CONDITIONS 78. 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 DPUC is entitled to continue, despite our denial of its Petition. 79. 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.'' 80. 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 DPUC 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. 81. First, although the DPUC 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 Connecticut to continue to conduct proceedings on complaints concerning such matters, to the extent that state law provides for such proceedings. 82. 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 Connecticut 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 Connecticut regulatory practice at issue. VII. ORDERING CLAUSES 83. Accordingly, pursuant to Section 332 (c)(3) of the Communications Act, 47 U.S.C.  332 (c) (3), IT IS ORDERED that the Petition To Retain Regulatory Control of the Rates of Wholesale Cellular Service Providers, filed by the Connecticut Department of Public Utility Control, IS DENIED for the reasons set forth above. 84. IT IS FURTHER ORDERED that the applications for review filed by Connecticut Telephone and Communications Systems, Inc. and Connecticut Mobilecom, Inc. (Resellers) and by Bell Atlantic Metro Mobile Companies (BAMM) ARE DENIED. 85. IT IS FURTHER ORDERED that the requests for confidential treatment of return data submitted by Springwich and Bell Atlantic ARE DISMISSED AS MOOT in light of the Bureau's determinations in the Second Confidentiality Order and the Reconsideration of Second Confidentiality Order. 86. 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 PR Docket No. 94-106 (Connecticut) List of Parties Filing Comments American Mobile Telecommunications Association, Inc. (AMTA) Attorney General of the State of Connecticut (AG) Bell Atlantic Metro Mobile Companies (BAMM) Cellular Telecommunications Industry Association (CTIA) Connecticut Office of Consumer Counsel (OCC) Connecticut Telephone and Communication Systems, Inc. and Connecticut Mobilecom, Inc. (CTCS and CM, ``The Resellers'') E.F. Johnson Company (E.F. Johnson) GTE Service Corp. on behalf of GTE Mobilnet, Inc. and Contel Cellular, Inc. (GTE) McCaw Cellular Communications, Inc. (McCaw) Mobile Telecommunication Technologies Corp. (MTel) National Cellular Resellers Association (NCRA) Nextel Communications, Inc. (Nextel) Paging Network, Inc. (PageNet) Personal Communications Industry Association (PCIA) Springwich Cellular Limited Partnership (Springwich) List of Parties Filing Reply Comments PageMart, Inc. (Pagemart) Rural Cellular Association (RCA) Bell Atlantic Metro Mobile Companies (BAMM) Cellular Telecommunications Industry Association (CTIA) Connecticut Attorney General (AG) Connecticut Department of Public Utility Control (DPUC) Connecticut Office of Consumer Counsel (OCC) Connecticut Telephone and Communication Systems, Inc. and Connecticut Mobilecom, Inc. (CTCS and CM, ``Resellers'') GTE Service Corporation (GTE) McCaw Cellular Communications, Inc. (McCaw) Mobile Telecommunication Technologies Corp. (MTel) Nextel Communications, Inc. (Nextel) Springwich Cellular Limited Partnership (Springwich) List of Parties Filing Supplemental Comments Related to Confidentiality Bell Atlantic Metro Mobile Companies (BAMM) Connecticut Attorney General (AG) Connecticut Telephone and Communication Systems, Inc. and Connecticut Mobilecom, Inc. (CTCS and CM, ``The Resellers'') Springwich Cellular Limited Partnership (Springwich) APPENDIX B SCI/Springwich Partnership Wholesale Prices 1/1/87 1/1/90 1/1/93 1/1/94 6/27/94 Change 60 Minutes $42.08 $42.08 $39.08 $34.08 $34.08 19.0% 120 Minutes $59.09 $59.09 $53.09 $48.09 $48.09 18.6% 480 Minutes $161.15 $161.15 $137.15 $132.15 $132.15 18.0% Assumptions: 7500 numbers, 1,000,000 peak minutes and 250,000 off-peak minutes. (Those number are in the middle of the various available tiers.) 80% of minutes are peak. 1/1/87 and 1/1/90 60 minute prices exclude effect of 100 minute minimum per month per cellular number. 1/1/94 prices include a promotion lowering the monthly access charge by $2. That promotion was permanent by 6/27/94. 6/27/94 prices exclude effect of $0.05 promotion for weekend off-peak minutes. (Lowering all off-peak minute charges by $0.05 would reduce 60, 120, and 480 minute prices by $0.60, $1.20 and $4.80, respectively.) Price reductions prior to 1/1/93 were due to reduced per minute charges; after 1/1/93 reductions were primarily due to reductions in monthly access charges. Springwich also states that the monthly access charge fell by an average of 35% per tier. The effect of that change would be about $7 per user. Sources: Connecticut Petition, Appendix 3, Springwich Cellular Limited Partnership Tariffs For Services Furnished in the State of Connecticut, Effective Rates Pages 1 and 2, Effective June, 27, 1994; and Comments of Springwich Cellular Limited Partnership, Sept. 19, 1994, at Exh. 7.