[Federal Register Volume 61, Number 86 (Thursday, May 2, 1996)]
[Notices]
[Pages 19622-19625]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10614]
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[[Page 19623]]
FEDERAL COMMUNICATIONS COMMISSION
[PP Docket No. 93-253; ET Docket No. 92-100; FCC 96-139]
Deferral of Licensing of MTA Commercial Broadband PCS
AGENCY: Federal Communications Commission.
ACTION: Determination on application for review.
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SUMMARY: The Commission released this Memorandum Opinion and Order
(MO&O) to address an Application for Review filed by the National
Association of Black Owned Broadcasters, Percy E. Sutton, and the
National Association for the Advancement of Colored People. This MO&O
denies the application. The MO&O is necessary to answer the issues
addressed in the application. The intended affect of this action is to
resolve the issues set forth in the application.
EFFECTIVE DATE: July 1, 1996.
FOR FURTHER INFORMATION CONTACT: John Greenspan, (202) 418-0620,
Wireless Telecommunications Bureau, Commercial Wireless Division.
SUPPLEMENTARY INFORMATION: This is the text of the MO&O, adopted March
28, 1996, released April 1, 1996. This order is available for
inspection and copying during normal business hours at the Commercial
Wireless Division Legal Branch, Room 7130, 2025 M Street, N.W.,
Washington, D.C., and also may be purchased from the Commission's copy
contractor, International Transcription Service, at (202) 857-3800,
2100 M Street, N.W., Suite 140, Washington, D.C. 20037.
Memorandum Opinion and Order
I. Introduction
1. The Commission has before it an Application for Review filed on
July 21, 1995 by the National Association of Black Owned Broadcasters,
Percy E. Sutton, and the National Association for the Advancement of
Colored People (collectively ``Petitioners''). Petitioners seek review
of a June 23, 1995 Order by the Chief, Wireless Telecommunications
Bureau (``the Bureau'') denying two previous requests, one filed by
Petitioners, to delay the licensing of all MTA license winners in the
Commission's PCS A and B block auction until the future C block auction
winners were ready to be licensed.
II. Background
2. On April 12, 1995, the Wireless Telecommunications Bureau issued
an Order denying the ``Emergency Motion to Defer MTA PCS Licensing''
filed by Communications One., Inc. (``CommOne''), which sought to delay
issuance of the 99 A and B block licenses in the 2 GHz Personal
Communications Service (``broadband PCS''). Two pleadings sought review
of the CommOne Order and a stay of some or all grants of A and B block
licenses until the conclusion of the broadband PCS C block auction.
First, on May 12, 1995, CommOne, joined by GO Communications
Corporation (``GO''), filed a petition for reconsideration of the
CommOne Order and requested a stay of licensing of the three largest A
and B block auction winners: AT&T Wireless PCS, Inc. (``AT&T
Wireless''), PCS Primeco, L.P. (``PCS Primeco''), and WirelessCo, L.P.
(``WirelessCo''). Second, on May 12, 1995, Petitioners filed an
application for review of the CommOne Order and a stay of all A and B
block licensing. The Bureau denied both requests for relief.
Petitioners have also filed an Application for Review of the A and B
Block Order. We are dismissing the Application for Review of the A and
B Block Order in a separate Order adopted today. Although both parties
sought Commission review, the Bureau determined that because CommOne/GO
presented arguments not previously considered by the Bureau, Commission
review would be inappropriate. In addition, the Bureau felt that it
should reevaluate the arguments of all parties in light of the decision
by the United States Supreme Court in Adarand Constructors, Inc. v.
Pena, 115 S. Ct. 2097 (1995).
3. In the Stay Denial Order, the Bureau rejected Petitioners' claim
that the decision to hold the C Block auction after the A and B block
auction, combined with the absence of specific provisions for women and
minorities in the A and B block auction, violated 47 U.S.C.
Sec. 309(j). The Bureau deemed Petitioners' stay request an untimely
attempt to seek reconsideration of the Commission's rules adopted in PP
Docket No. 93-253 with respect to the structure and sequencing of the
PCS auctions. The Bureau noted that these rules were adopted in the
Fifth Report and Order, 59 FR 37566 (July 22, 1994), and reviewed on
reconsideration in the Fourth Memorandum Opinion and Order, 59 FR 53364
(October 24, 1994), in that docket, and that the deadline for
reconsideration had long since passed. Finally, in addressing the stay
request, the Bureau held that Petitioners and CommOne/Go failed to
satisfy the Holiday Tours test for determining whether a stay is
appropriate. The test includes four elements: (1) likelihood of success
on the merits; (2) the probability of irreparable harm in the absence
of relief; (3) the probability of harm to third parties if a stay is
granted; and (4) whether a stay would serve or disserve the public
interest. Washington Metropolitan Transit Commission v. Holiday Tours,
Inc., 559 F.2d 841 (D.C. Cir. 1977)).
4. First, the Bureau determined that the parties were unlikely to
prevail on the merits. It rejected the contention that licensing of the
A and B Block winners should be delayed until the C Block winners were
ready to be licensed. The Bureau concluded that the statute did not
require the Commission ``to promote diversity at the cost of delaying
much needed service that could otherwise be provided to the public.''
The Bureau also rejected an economic analysis submitted by CommOne/GO
purporting to show excessive concentration of PCS licenses. The Bureau
determined that the study was flawed because, inter alia, it improperly
assumed that the relevant product market was PCS, thus excluding the
potential competitive impact of cellular and other wireless services
from the model. The Bureau also found that the analysis ignored the
fact that licensing of the A and B blocks would substantially increase
competition while staying the license grants would perpetuate a more
highly concentrated market. Second, the Bureau disagreed with
Petitioners' claim of irreparable harm resulting from a headstart given
to the A and B block winners. It noted that the Commission's decision
to license the A and B blocks before the C block was not contingent
upon any particular timetable or date for the C block auction. It also
noted that the C block bidders could adjust their bids to account for
any impact on the value of the C block licenses as a result of prior
licensing of the A and B blocks. Third, the Bureau concluded that a
stay would significantly harm the A and B block winners. The Bureau
noted that at the time of the Stay Denial Order, the A and B block
winners had already paid $1.4 billion to the United States Treasury as
a downpayment (they paid the balance of approximately $5.6 billion on
June 30, 1995) and did not earn interest on their deposits. The Bureau
further found that the winners had already invested significant funds
in start-up costs. Finally, the Bureau concluded that the public
interest would best be served by not delaying a new service to the
public. It found that ``rapidly providing new competitive sources of
wireless services outweighs any possible competitive harm that might
result from the A and B block winners being licensed ahead of auction
winners in other PCS blocks.''
[[Page 19624]]
Accordingly, it refused to stay the licensing of the A and B block
winners.
5. Petitioners filed the instant Application for Review on July 21,
1995. On August 24, 1995, Petitioners filed an Erratum to their
application. On August 3, 1995, Petitioners filed an Emergency Motion
for Stay with the United States Court of Appeals for the District of
Columbia Circuit asking the court to stay issuance of the A and B block
licenses (which had, in fact, been issued six weeks earlier) until the
Commission was ready to license the winners in the C block auction as
well. The Court denied the stay request on August 10, 1995.
III. Contentions of the Parties
6. In their Application for Review, Petitioners repeat the same
arguments rejected by the Bureau in the Stay Denial Order. They claim
that the Commission failed to comply with its statutory mandate under
47 U.S.C. Sec. 309(j) to provide adequate opportunities for minorities.
The failure to provide specific incentives for minorities in the A and
B blocks, according to Petitioners, has resulted in an unlawful
territorial allocation. Petitioners also assert that they have met all
of the requirements for obtaining a stay. They allege irreparable harm
in the absence of a stay, including loss of access to capital, loss of
base station cell sites, loss of access to distributors and retailers,
and loss of market share. They also allege that the A and B block
auction winners would not be harmed by issuance of a stay. Initially,
Petitioners based this argument on the erroneous assumption that the A
and B block winners had not received their licenses, and therefore
would not be required to pay the 80% balance of their bids while a stay
was in effect. In their Erratum Petitioners acknowledge that the
Commission granted licenses to the A and B block winners on June 23,
1995 and that all of the auction winners timely paid their balances on
June 30, 1995. Nevertheless, Petitioners continue to assert that this
does not constitute irreparable harm to the A and B block winners.
Petitioners also allege that all of the A and B block winners were on
notice that the legality of their licenses was subject to challenge.
Petitioners further assert that they are likely to prevail on the
merits of their claim that the Commission violated its statutory
mandate to disseminate licenses to and promote economic opportunity for
minorities. Finally, Petitioners assert that a stay would serve the
public interest by furthering the statutory obligation of the FCC to
promote participation in PCS by minorities and other designated
entities.
7. In a Supplement filed on August 4, 1995, Petitioners note that
on July 27, 1995, the United States Court of Appeals for the District
of Columbia Circuit stayed the C block auction. Omnipoint Corporation
v. FCC, No. 95-1374 (D.C. Cir., July 27, 1995). Omnipoint Corporation
objected to the Commission's extension of the 50.1% equity option to
all applicants rather than to just women and minority applicants. This
meant that the applicant's control group must hold at least 50.1% of
the applicant's equity, and a single investor could hold the remaining
49.9% equity. Omnipoint argued that despite the facial neutrality of
the rule, it violated the equal protection guarantee because business
not owned by women or minorities did not have adequate time to take
advantage of the rule change prior to the filing deadline for C block
bidders. Petitioners cite a statement by Chairman Hundt that this delay
could push back the start of the C block auction for at least six
months. Petitioners allege that ``[T]he longer the time period between
the date of the A and B block licenses are issued and the date the C
block licenses are issued, the greater and more profound this
irreparable injury will become.'' The court dissolved the stay on
September 28, 1995, and the C block auction began on December 18, 1995.
Omnipoint Corp. v. FCC, No. 95-1374 (D.C. Cir., September 28, 1995).
8. All of the parties filing oppositions allege that Petitioners
have not satisfied the four prong test for a stay as set forth in
Holiday Tours. Western PCS Corporation (``Western'') asserts that
Petitioners would not succeed on the merits because they ``misread the
Congressional directives of 309(j).'' PCS PRIMECO, L.P. (``Primeco'')
disputes Petitioners' claim of excessive harm. It contends that the
granting of a stay of the A and B block licensing would not remove the
uncertainty concerning the timing of the C block auction nor would it
remedy the problem of losing base station cell sites if indeed such a
problem did exist. Primeco argues that it is unclear how the A and B
block licensees could preclude the eventual C block licensees from
entering into distribution, resale, or other agreements and that
Petitioners' claim of loss of market share was ``purely speculative and
unsupported by the facts.'' WirelessCo, L.P. and PhillieCo, L.P.
(``WirelessCo'') dispute Petitioners' claim that a stay would not harm
other parties. WirelessCo submits that it already paid over $2.1
billion and PhillieCo paid $85 million to the United States Treasury.
WirelessCo indicates that it has taken significant steps toward
providing PCS service, including entering into negotiations with
equipment manufacturers for subscriber equipment, network equipment,
switching equipment and cell sites. It also submits that it has hired
employees in more than 20 cities and is presently negotiating facility
leases in multiple locations. Finally, WirelessCo argues that a stay
would harm the public interest by delaying the realization by potential
customers of the benefits of a new and innovative technology that would
provide needed competition to incumbent cellular providers. Western
raises the additional argument that Petitioners failed to comply with
Section 1.115(b)(2) of the Commission's rules, 47 CFR Sec. 1.115(b)(2),
pertaining to the requirements for filing applications for review by
not stating the grounds upon which review should be granted and then
citing the appropriate section.
IV. Discussion
9. We agree with Western that Petitioners' Application for Review
is procedurally defective and must be dismissed. Section 1.115(b)(2) of
the Commission's rules, 47 CFR Sec. 1.115(b)(2), requires applications
for review to:
specify with particularity, from among the following, the factors
which warrant Commission consideration of the questions presented:
(1) The action taken pursuant to delegated authority is in
conflict with statute, regulation, case precedent, or established
Commission policy.
(ii) The action involves a question of law or policy which has
not previously been resolved by the Commission.
(iii) The action involves application of precedent or policy
which should be overturned or revised.
(iv) An erroneous finding as to important or material question
of fact.
(v) Prejudicial or procedural error.
As we indicate in the companion order we are adopting today,
Petitioners' pleading is defective because it fails to ``specify with
particularity'' any of the above subsections as grounds for granting
its Application for Review. See Chapman S. Root Revocable Trust, 59 FR
44340 (August 29, 1994), where we held that procedurally defective
applications for review will be dismissed. Petitioners' statement of
general disagreement with the Bureau's Stay Denial Order will not
suffice. Accordingly, we will dismiss petitioners' Application for
Review. Although we are dismissing Petitioners' pleading, we also
conclude on the merits that the Bureau correctly determined that
Petitioners failed to
[[Page 19625]]
meet the strict standards for obtaining a stay as requested here.
A. Likelihood of Success on the Merits
10. Petitioners' assertion that they will ultimately prevail on the
merits is based upon their erroneous contention that the Commission has
failed to comply with its statutory mandate. That mandate includes,
according to Petitioners, the obligation to disseminate licenses to a
wide variety of applicants, including businesses owned by minorities.
Petitioners state that only way under Section 309(j)(3)(B) of the Act
to implement this goal in a meaningful way is to delay licensing the A
and B block auction winners until the Commission is ready to license
the eventual C block auction winners. Otherwise, according to
Petitioners, the value of the C block licenses will decrease as a
result of the headstart granted to the A and B block licensees. Nothing
in the statute or legislative history requires such a result. In
directing the Commission to establish bidding rules for PCS, Congress
enumerated three other objectives in Section 309(j)(3) besides the one
Petitioners cite: (1) development and rapid deployment of services with
a minimum of administrative and judicial delay; (2) recovery for the
public of a portion of the value of the spectrum; and (3) promoting
efficient and intensive use of the spectrum. In its auction rules, the
Commission has properly balanced these objectives with the Section
309(j)(3)(B) goal of diversity of ownership by establishing PCS
frequency blocks of varying sizes and service areas, reserving certain
of these blocks for entrepreneurs, and creating special provisions for
designated entities to bid for licenses in those blocks. We do not
believe the statute further requires the Commission to promote
diversity at the cost of delaying much needed service that could
otherwise be provided to the public. A stay would serve the
individualized interest of Petitioners rather than the broader public
interest. The Commission is not at liberty to subordinate the public
interest to the interest of ``equalizing competition.'' SBC
Communications, Inc. v. FCC, 56 F.3d 1484, 1491 (D.C. Cir. 1995)
quoting Hawaiian Telephone v. FCC , 498 F.2d 771, 776 (D.C. Cir. 1974).
The Bureau correctly rejected Petitioners' argument that minorities
will be unable to enter the PCS market because of illegal and unfair
``territorial allocations'' in violation of the antitrust laws by the A
and B block bidders. In our companion order, we find that the Bureau
correctly concluded that these allegations were too vague to meet the
requirements of a petition to deny. We conclude here that Petitioners
have not shown any likelihood of success on the merits.
B. Irreparable Harm
11. We agree with the Bureau that Petitioners' allegations of
irreparable harm are speculative, and that Petitioners have overstated
the ``headstart'' advantage of the A and B block winners over
prospective C block winners. First, the A and B block winners
themselves will have to compete with well-entrenched cellular
companies, who enjoy a ten-year headstart over all broadband PCS in
terms of business arrangements, market share, and investment in
infrastructure. Furthermore, Petitioners' alleged injuries from loss of
cell sites, loss of access to distributors, and difficulty in obtaining
market share do not constitute ``irreparable'' harm of the type that
would warrant grant of a stay. Nothing prevents Petitioners and other
prospective C block bidders from entering into agreements that are
contingent upon their winning the auction. As the Bureau noted, to the
extent that late entry in fact disadvantages C block winners, that
disadvantage will translate into lower prices at auction as bids are
adjusted downward to compensate for any such detriment. Finally, C
block entrants may actually benefit from late entry because they will
be able to evaluate the business strategies and performances of the A
and B block winners.
C. Harm to Others
12. The third prong of the Holiday Tours test is the potential harm
a stay would cause to others. Petitioners acknowledge that the A and B
block winners have paid over $7 billion to the United States Treasury
for their PCS licenses. Since winning the licenses, A and B block
winners have also invested significant funds to cover start-up and
development costs which they cannot begin to recoup until they are able
to use their licenses to provide service. In light of these
considerations, we believe that a stay would cause significant harm to
other parties.
D. Public Interest
13. Finally, we conclude that a stay of A and B block licensing
would not be in the public interest. The Bureau correctly found that
besides imposing a financial burden on the A and B block winners
themselves, a stay would delay the introduction of new competition and
new services to the public. Conversely, granting the licenses will
further the Congressional directive to promote the development and
rapid deployment of PCS for the benefit of the public with a minimum of
administrative or judicial delay. 47 U.S.C. Sec. 309(j)(3)(A) We
continue to believe that the public interest in rapidly providing new
competitive sources of wireless services outweighs any possible
competitive harm that might result from the A and B block licensees
being licensed ahead of auction winners in other PCS blocks.
V. Conclusion
14. For the reasons discussed above, we are dismissing Petitioners'
Application for Review for failure to comply with Section 1.115(b)(2)
of our rules. Although our action renders further discussion
unnecessary, we agree with the Bureau's disposition of the issues
Petitioners raised in their original stay request.
VI. Order Clauses
15. Accordingly, it is ordered that, pursuant to Section 4 (i) of
the Communications Act of 1934, as amended, 47 U.S.C. Sec. 154(i) and
47 CFR Sec. 1.115(c)(2), the Application for Review filed by
Petitioners on July 21, 1995, is denied
16. It is further ordered that pursuant to Section 4 (i) of the
Communications Act of 1934, as amended, 47 U.S.C. Sec. 154(i) the
Motion for Leave to File Supplement to Application for Review filed by
Petitioners on August 4, 1995, is granted.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-10614 Filed 5-01-96; 8:45 am]
BILLING CODE 6712-01-P
