ࡱ> FHE5@ ?bjbj22 $XXX7 8, 8L.$R66K P7y4a0 66 ******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect or Word to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In re Applications of) ) BCP CommNet, L.P.) Transferor,) )DA 99-1876 AND)File Nos. 0000018208, et al. ) VODAFONE AIRTOUCH, PLC.) WTB Rpt. No. 346 Transferee,)File Nos. 0000033522, et al. ) For Consent to Transfer of Control of) Licenses) MEMORANDUM OPINION AND ORDER Adopted: December 23, 1999 Released: December 27, 1999 By the Chief, Wireless Telecommunications Bureau: I. INTRODUCTION and Summary 1. On August 16, 1999, Vodafone AirTouch Plc ("Vodafone") and BCP CommNet, L.P ("Blackstone") (collectively "Applicants") filed applications seeking Commission consent to transfer control of all of CommNet Cellular Inc.'s ("CommNet") interests in Part 22 cellular and Part 101 common carrier microwave licenses and authorizations from Blackstone to Vodafone. CommNet, which holds interests in 53 cellular and 88 common carrier microwave licenses, is controlled by Blackstone. On October 13, 1999, Applicants filed three additional applications seeking consent to transfer control to Vodafone of certain CommNet cellular interests that had not originally been part of the acquisition plan. Upon completion of this transaction, all of CommNet's current interest in these licenses will be controlled by Vodafone. As discussed more fully below, we grant the applications. 1. On September 14, 1999, the Wireless Telecommunications Bureau ("Bureau"), by delegated authority, issued a Public Notice announcing that the applications had been accepted for filing and establishing a pleading cycle to permit interested parties an opportunity to comment on the proposed transaction. One Petition to Deny was filed jointly on October 14, 1999, by Platte River Cellular Limited Partnership, Saguache Limited Partnership, San Isabel Cellular of Colorado Limited Partnership, and Wyoming 1 Park Limited Partnership (collectively, "Joint Petitioners"). As described below, the Joint Petitioners fail to satisfy both the procedural and substantive statutory requirements for a petition to deny, as set forth in section 309(d) of the Communication Act. Accordingly, we deny the Petition to Deny. II. Discussion A. Statutory Authority 1. Section 310(d) of the Communications Act of 1934, as amended ("the Act"), provides in pertinent part that "[n]o construction permit, or station license, or any rights thereunder, shall be transferred, assigned, or disposed of in any matter, voluntarily or involuntarily, directly or indirectly, or by transfer of control of any corporation holding such permit or license, to any person except upon application to the Commission and upon finding by the Commission that the public interest, convenience, and necessity will be served thereby." Section 310(d) also requires the Commission to consider the license transfer or assignment application as if it were filed pursuant to Section 308 of the Act, which governs applications for new facilities and for renewal of existing licenses. A. Qualifications 1. As a regular part of our public interest analysis, we determine whether the proposed licensee is qualified to hold a Commission license and whether grant of the application would violate any Commission rules. Vodafone is a corporation chartered in the United Kingdom. The Bureau has previously found Vodafone qualified as a licensee and authorized Vodafone to hold similar licenses. The acquisition of CommNet raises no new issues that warrant further foreign ownership analysis at this time. Accordingly, consistent with the prior finding, we find that Vodafone is qualified as a transferee. 1. We reject arguments by the Joint Petitioners that Blackstone has not met its burden to establish its qualifications as a transferor. The Joint Petitioners are limited partnerships that hold interests in four of the cellular and three of the microwave licenses that are the subject of these Applications. Joint Petitioners base their argument against Blackstone on the contention that CommNet does not have either de jure or de facto control of the licensees in question and, therefore, should not have filed these applications as substantial transfers of control. Further, Joint Petitioners claim that processing these applications as substantial transfers of control prejudices their rights in the licenses and licensees. 2. The Applicants respond that CommNet holds both general and limited partnership interests in each of the relevant licensees, and that the parties were required to request authority for a substantial transfer of control to transfer these interests. We are satisfied that Blackstone, as transferor, has provided adequate information to the Commission to analyze these applications, and we agree with the Applicants that CommNet's interests are considered controlling under Commission precedent. CommNet's interest in each of the relevant licensees involves a general partnership interest, which the Commission considers to be a controlling interest. The transfer of those interests, therefore, involves the transfer of a substantial ownership interest, which generally requires processing as a substantial transfer of control that provides for public comment prior to grant. Further, we reject the argument of Joint Petitioners that, by considering CommNet's interests to be controlling, we are determining who ultimately is in control of the licenses involved or somehow affecting the rights of Joint Petitioners in the licensees and licenses. 3. With respect to Blackstone's obligation to establish its qualifications, we therefore disagree with Joint Petitioners that Applicants have not established their qualifications. Furthermore, in evaluating assignment and transfer applications under section 310(d) of the Act, we do not re-evaluate the qualifications of the assignor or transferor unless issues related to their basic qualifications have been designated for hearing by the Commission. D. Public Interest Analysis 1. In addition to ensuring that transferor and transferee are duly qualified and comply with our rules, we also consider the effects on competition of a proposed transfer of control as part of our examination under the "public interest, convenience, and necessity" standard of section 310(d) of the Communications Act. At a minimum, this requires that a merger not interfere with the objectives of the Communications Act and must include, among other things, consideration of the possible competitive effects of the transfer. Under Commission precedent, our public interest analysis is not limited to traditional antitrust principles, but also encompasses the broad aims of the Communications Act, including evaluating whether any public interest benefits may result from the merger. Applicants bear the burden of proving that the proposed transaction serves the public interest, and we must determine whether they have met this burden. 1. Competitive Framework 1. Where the transfer or assignment of licenses involves telecommunications service providers, the Commission's public interest determination is guided primarily by the Communications Act, as amended. Our analysis of competitive effects under the Commission's public interest standard generally consists of four steps. First, we define the relevant product and geographic markets. Second, we identify current and potential participants in each relevant market, especially those that are likely to have a significant competitive effect. Third, we evaluate the effects that the proposed transaction may have on competition in the relevant markets. Fourth, we consider whether the proposed transaction will result in transaction-specific efficiencies, such as cost reductions, productivity enhancements, or improved incentives for innovation. Ultimately, we weigh any harmful and beneficial effects to determine whether, on balance, the transaction is likely to enhance competition in the relevant markets. 1. Analysis of Potential Adverse Effects 1. To determine the relevant product and geographic markets, we identify the products offered by Vodafone and CommNet, and evaluate the extent to which services offered by other communications companies compete for the business conducted by the Applicants. Vodafone and CommNet provide CMRS service in various geographic markets. According to Applicants, the proposed transfers of control would have no adverse effect on existing competition in CMRS markets because Vodafone and CommNet do not compete directly in any geographic market, and the acquisition of CommNet by Vodafone will not eliminate a competitor in any U.S. market. No party has raised any arguments to the contrary. We therefore agree that the acquisition is not likely to have an adverse effect on CMRS competition. 1. Further, we find that the proposed transaction will not result in violation of any Commission rules, such as the CMRS spectrum aggregation limit or the cellular cross-interest rule. Applicants have eliminated the one potential competitive issue, which involved overlapping cellular interests in the Wichita, Kansas MSA. 1. Public Interest Benefits 1. Applicants contend that the public interest will be served by grant of this application. As a result of this transaction, Vodafone will move closer to a nationwide footprint. Further, Applicants say that operations in CommNet's service areas will be able to obtain significant discounts for purchases of cellular handsets, cellular infrastructure, and other assets, and will have more resources available to them to enhance service in many of the rural areas where CommNet currently provides service. Applicants add that this transaction also will enable Vodafone to amortize development costs over a modestly broader subscriber base; that Vodafone will also be able to offer more seamless service to the public and, thereby, better meet the demands of the competitive wireless marketplace; and that operations in CommNet's service areas will benefit through the implementation of global "best practices" generated by Vodafone. 1. We determine that at least some of these claimed benefits are likely to materialize, though we are unable to gauge the magnitude of these benefits based on the information in this record. Largely because of the absence of any risk of public interest harms, we conclude that Applicants have furnished sufficient information regarding prospects for public interest benefits. 1. Conclusion 1. Based upon our review under Section 310(d), we determine that this transaction is unlikely to result in the erosion of competition in any relevant market. We also determine that some tangible public interest benefits are likely to be forthcoming. We therefore conclude that, on balance, Applicants have demonstrated that these transfers serve the public interest. A. Additional Issue Raised by Joint Petitioners 1. Finally, we reject the argument of Joint Petitioners that this proceeding was improperly assigned permit-but-disclose ex parte status. The Commission has broad discretion with respect to assigning ex parte status and routinely assigns permit-but-disclose status to applications involving mergers and acquisitions. II. CONCLUSION 1. For all the foregoing reasons, we conclude that Applicants have met their burden of showing that the proposed transaction will serve the public interest, convenience, and necessity. We, therefore, grant the Applications. II. ordering clauses 1. Accordingly, having reviewed the applications and the record in this matter, IT IS ORDERED, pursuant to sections 4(i) and (j), 214(a) and (c), 309, and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 154(j), 214(a), 214(c), 309, 310(d), that the applications filed by Vodafone-AirTouch PLC and BCP-CommNet L.L.P, Inc. in the above-captioned proceeding ARE GRANTED. 1. IT IS FURTHER ORDERED that the Petition to Deny the Applications of Vodafone- AirTouch PLC and BCP-CommNet L.L.P. filed by Platte River Cellular Limited Partnership, Colorado 7 Saguache Limited Partnership, San Isabel Cellular of Colorado Limited Partnership, and Wyoming 1 Park Limited Partnership for transfer of control is DENIED for the reasons stated herein. FEDERAL COMMUNICATIONS COMMISSION Thomas J. 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