In a speech to the Federal Communications Bar Association in October, the Chairman asked me to create a team "to streamline and accelerate the merger review process." That goal is really just an aspect of the implementation of the Chairman's strategic plan, which is designed to produce a faster, flatter, more functional agency. The Chairman's direction was particularly timely, however, since the three mergers that I mentioned last were each announced after the Chairman directed me to put a transactions team together, and according to the New York Times those are the three largest mergers ever. "The goal of the team," the Chairman explained in October, "will be to expedite the review process so that the issues arising in even the most complex transactions may be resolved within definite time periods." The Chairman concluded: "The new team will work to make the merger review process predictable and transparent, so that applicants know what is expected of them, what will happen when, and the current status of their applications."
In response to the Chairman's direction, I asked each FCC bureau to designate a senior professional to serve as a liaison, and some of the bureau liaisons are seated here today. In addition, I was able to persuade Jim Bird to leave private practice and work with the bureau liaisons to develop and implement a plan to ensure that the license transfers accompanying even the most complex transactions may be handled within 180 days. We started meeting regularly internally very shortly after the Chairman's speech in October to develop a plan to achieve that goal. We then discussed the problem informally with the Executive Committee of the FCBA's Competition Committee and with representatives of the public interest community. On January 21, we had a brown bag lunch with about 70 FCBA and ABA members; we heard a lot of interesting comments at that meeting, and we received a number of follow-up e-mails. We have used those comments to devise a plan to process the license transfer applications accompanying mergers expeditiously. We're here this morning to describe that plan and to obtain your reactions to it.
You have in front of you our draft timeline for making sure that license transfer decisions are made within 180 days. You also have a memo discussing some of the issues we have considered in putting our plan together. The timeline is a draft timeline: the primary purpose of this meeting is to obtain more input so that we can further refine it. But I hope you'll agree that we are far along in advancing the Chairman's directive that we "make the merger review process predictable and transparent, so that applicants know what is expected of them, what will happen when, and the current status of their applications." Jim and some of the other members of the team will discuss the timeline and the memo in some detail. I'd like to provide some background.
Although we're here today to concentrate on process rather than substance, it is always important to review at the threshold of any discussion the statutory basis for the Commission's action. With respect to mergers, that basis lies primarily in sections 214(a) and 310(d) of the Communications Act, which require the Commission to approve all transfers of telecommunications lines and spectrum licenses. Both statutory provisions direct the Commission to approve those transfers only if it finds that transfer is in the public interest. Section 214(a) states that "[n]o carrier . shall acquire or operate any line . unless and until there shall first have been obtained from the Commission a certificate that the present or future public convenience and necessity require or will require the construction, or operation, . of such . line." Section 310(d) similarly states that "[n]o construction permit or station license . shall be transferred . 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."
The Commission has explained, most recently in the SBC/Ameritech Order, that it applies a four-part test to determine whether a license transfer is in the public interest. We ask, first, whether the transfer would violate the statute. For example, section 271 prohibits Bell Operating Companies from providing long distance service until they open their local markets to competition, so interstate lines may not be transferred to a BOC that has not obtained approval under section 271. Second, we ask whether the transfer would violate a regulation. For example, we have spectrum cap rules that prevent wireless companies from having more than 45 MHz in any market, so a wireless license cannot be transferred to a company that would then have more than 45 MHz without a waiver. Third, we ask whether the transfer would frustrate the purposes of the Act or a regulation. The Supreme Court held in 1953 in the RCA case that competition issues are relevant in applying the public interest standard, and there is no question after 1996 that fostering competition is an important national goal in all communications markets. Accordingly, we ask whether the transfer would frustrate the goal of creating and maintaining competitive communications markets. And fourth, we ask whether the transfer is likely to provide affirmative public benefits. That inquiry is plainly required under the statute, since the applicable statutory provisions direct the Commission to determine whether a transfer would serve the public interest.
Our team has not been charged with developing substantive legislative proposals or with rethinking the Commission's standards, but with examining our processes to ensure expeditious review. So let me get back to process. The Administrative Procedure Act generally, and sections 214 and 309 of the Communications Act specifically, are relevant here. Those provisions provide procedural rights to parties that want to challenge a license transfer application. It is important to keep that fact in mind. We desire very much to streamline our review and we want mergers that have affirmative public benefits not to be delayed. But the statutes give rights to challengers too. Any decision the Commission makes regarding a license transfer must be made in compliance with the requirements of the Communications Act and the APA and ultimately is subject to judicial review. From the standpoint of a merging party, the worst thing the Commission could do is give short shrift to those requirements and rubber stamp a license transfer, because that would provide challengers with a strong legal challenge.
This is not the appropriate time to go through all of the relevant statutory provisions. But it is useful to examine section 309, which illustrates some of the procedural issues and, as the most specific statutory provision, has especially guided our analysis. Section 309(d)(1) provides that anyone may file a petition to deny a license transfer application, and section 309(b) provides that no license transfer application may be granted without giving parties "thirty days following issuance of public notice by the Commission of the acceptance for filing of such application or of any substantial amendment thereof." Let me repeat these requirements because, of course, these statutory provisions control our efforts to expedite review and our plan is designed with the procedural requirements of the statute very much in mind. The statute speaks of "issuance of a public notice by the Commission of the acceptance for filing" of a license transfer application, and gives parties 30 days from the date of the issuance of a public notice to file a petition to deny. The statute also gives parties challenging a license transfer application 30 days to comment after any "substantial amendment" of an application. So if major revisions are made to an application, another round of comment is required. These requirements are specific examples of the more general procedural rights provided to challengers by the APA.
The statutes also provide procedural rights to applicants, and not all of those rights foster expedition. In particular, section 309(e) generally directs the Commission not to deny license transfer applications without issuing a hearing designation order and conducting a proceeding before an administrative law judge. Section 5(d) of the Act, in turn, directs the Commission to seek to render a final decision within six months after the conclusion of a hearing. Our aim is to go much faster. But please keep in mind that the Communications Act contemplates a lengthy process for complicated cases.
Our timeline seeks to ensure that the procedural rights of applicants and commenters are protected, while also ensuring that the Commission acts as expeditiously as possible. Let me make clear at this point that many license transfer applications - indeed, the vast majority - are uncontroversial and are routinely approved in short order. That is how it should be and the transactions team certainly does not intend to slow anything down. As the Chairman indicated, our main charge is ensuring that the license transfer applications accompanying the very large mergers - which often are controversial - are handled expeditiously as well.
In our experience, the applicants themselves often present two major impediments to considering the license applications accompanying large mergers expeditiously. First, merging parties often fail to provide us with complete information in timely fashion. Second, applicants often seek to make major revisions to their applications late in the process. We are not proposing to automatically deny the applications of parties who fail to provide timely information or who decide to make substantial changes to their applications. We will resolve their applications as expeditiously as possible. But we cannot promise to process applications within a specific number of calendar days if the merging parties do not provide us with timely information or if they present a moving target by proposing major revisions at a late date. The statutory provisions that I reviewed earlier prevent that, and reasonably so, by providing a right to challengers to comment on license transfer applications - which necessarily includes a reasonable opportunity to review relevant information supporting the license transfer application - and by specifically granting a right to comment on substantial revisions to transfer applications.
The key to our timeline is that it tells merging parties who want to have their applications processed quickly what they need to do to get that accomplished. Our plan will permit resolution within 180 days if applicants file complete applications and do not make major revisions late in the process. It is designed, as the Chairman directed, and as I will state for the third time, "to make the merger review process predictable and transparent, so that applicants know what is expected of them, what will happen when, and the current status of their applications." Again, we do not promise to reach a decision within 180 days if information is not provided in timely fashion or if the application is significantly revised at a late date. But the plan should ensure timely review for applicants who promptly give the Commission and the public a reasonable opportunity to examine their license transfer applications.
Let me turn this meeting over to Jim. After he and the other members of the team describe our proposal in more detail, we will open the floor to comment. We would ask the press to wait until after the meeting to ask questions; we plan to stay for another 15 minutes to respond to questions from the press. And, of course, it will not be appropriate to comment on any pending matters. Rather, we seek your views on how to further refine our plan to make the merger review process more transparent and predictable.