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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).
FCC LARGELY RETAINS SPECTRUM CAP, ENSURING THAT CONSUMERS CONTINUE TO SEE BENEFITS OF COMPETITION; RELAXES SPECTRUM CAP IN RURAL AREAS
Washington, D.C. --- The Federal Communications Commission (FCC) today
largely retained the current 45 MHz spectrum cap in order to promote competition and protect
consumers. The recent and rapid growth of competition in the United States' wireless
marketplace has been a great success. For example, according to one analyst's estimate, the
average price per minute for mobile phone use dropped from 51 cents in 1994 to 28 cents in
1999. According to industry estimates subscribership has rapidly increased from 24 million
subscribers at the end of 1994 to over 78 million subscribers today. The FCC found at this time
that eliminating the spectrum cap would jeopardize the continued realization of these benefits. |
However, the FCC provided carriers some relief by raising the spectrum cap to 55 MHz in rural areas to spur deployment of services in those areas. The agency also relaxed ownership attribution benchmarks to help increase the availability of capital to all wireless carriers. Also, to help ensure the continued development of broadband wireless services, the FCC noted its continuing efforts to provide additional spectrum for those services and its intent to consider waivers in specific circumstances where enforcement of the cap can be demonstrated to have significant adverse effects on the provision of such services.
Specifics of Today's Action:
The Commercial Mobile Radio Service (CMRS) spectrum cap governs the amount of CMRS spectrum that can be licensed to a single entity within a particular geographic area. Under the current cap, a single entity may acquire attributable interests in the licenses of broadband Personal Communications Service (PCS), cellular, and Specialized Mobile Radio (SMR) services that cumulatively do not exceed 45 MHz of spectrum within the same geographic area. Although there has been a substantial increase in competition in CMRS markets since the adoption of the cap in 1994, the FCC found that it can not rely solely on case-by-case review of transfers of control and assignments to ensure that competition continues to develop in CMRS markets. The FCC concluded that, as a general matter, the spectrum cap should be maintained at 45 MHz at this time. The Commission, found, however, that the economics of serving rural areas is such that the spectrum cap can be raised to 55 MHz in Rural Service Areas without significant risk to competition in those areas. This change will facilitate the deployment of service, particularly PCS, in rural areas.
The FCC established a separate, higher attribution benchmark for passive institutional investors of 40 percent, instead of the current 20 percent, in order to help increase the availability of capital to all CMRS carriers. The FCC also changed the spectrum cap rule to attribute ownership interests held in a trust to the grantor, the beneficiary, and the trustee of the trust, although the Commission will continue to allow trusts to be used as part of an approved short-term divestiture plan to come into compliance with FCC rules. In addition, the FCC amended the rule to clarify which SMR spectrum comes under the cap and to clarify the divestiture provisions of the rule.
The cellular cross-interest rule limits the ability of a party to have ownership interests in both cellular carriers in overlapping cellular geographic service areas (CGSAs). Although the two cellular carriers are no longer the only providers of mobile voice service in most areas, they still have the predominant share of subscribers in all markets. Based on the cellular carriers' continuing disproportionate market presence, the cellular cross-interest rule is still necessary to protect and promote competition. However, the FCC believes the attribution benchmarks used in the cellular cross-interest rule may be relaxed without significant risk to competition. Therefore, the FCC amended the cellular cross-interest rule to allow a party with a controlling interest or otherwise attributable interest in a cellular licensee to have a non-controlling or otherwise non-attributable direct or indirect ownership interest of up to 5 percent in another cellular licensee in overlapping CGSAs. Also, under the revised rule a party may have a non-controlling or otherwise non- attributable direct or indirect ownership interest of up to 20 percent in both cellular licensees in overlapping CGSAs.
In an effort to spur the provision of third-generation (3G) and other new broadband services, the FCC announced that it expects to make available additional spectrum for the provision of 3G and other advanced mobile wireless services in the near future. The FCC stated that it is more appropriate to address spectrum requirements for 3G and other advanced mobile services in the context of spectrum related proceedings than in this proceeding on the CMRS spectrum cap. In the allocation proceeding, the FCC will consider whether any newly allocated spectrum should be included in the cap, and, if so, will adjust the spectrum cap accordingly. However, to the extent that a carrier can credibly demonstrate that in a particular geographic area the spectrum cap is currently having a significant adverse affect on its ability to provide 3G or other advanced mobile services, the FCC stated it will consider granting a waiver of the cap for that geographic area. In seeking such a waiver, carriers are required to clearly identify what additional services they would provide if the spectrum cap were waived, why such services can not be provided without exceeding the cap, and any potential adverse effects of such a waiver, such as on competition in the relevant geographic market.
As part of this proceeding, the Commission also reviewed a petition to forbear from enforcement of the CMRS spectrum cap filed by the Cellular Telecommunications Industry Association. The FCC finds that the spectrum cap serves the public interest, helps protect consumers, and is necessary to ensure that the charges, practices, classifications, and regulations of CMRS carriers are just and reasonable and are not unjustly or unreasonably discriminatory. Consequently, the FCC denied the CTIA petition.
CMRS markets are rapidly changing, PCS is becoming available in more and more areas, PCS and digital SMR are attracting more and more subscribers, and market share differences between cellular and these new competitors are narrowing. The FCC will continue to track these changes and report on the evolving level of competition in CMRS markets as part of its annual reports on the state of CMRS competition and continue to review the need for the spectrum cap and cellular cross-interest rules as part of its year 2000 biennial regulatory review, pursuant to section 11 of the Communications Act.
Action by the Commission September 15, 1999, by Report and Order (FCC 99-244). Chairman Kennard, Commissioners Ness, Powell and Tristani with Commissioner Furchtgott-Roth concurring in part and dissenting in part, Commissioners Furchtgott-Roth and Powell issuing separate statements.
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WT Report No. 99-26