[Federal Register Volume 59, Number 149 (Thursday, August 4, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18942]
[[Page Unknown]]
[Federal Register: August 4, 1994]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 24
[GEN Docket No. 90-314, FCC 94-195]
New Personal Communications Services in the 2 GHz Band
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this Further Order on Reconsideration, the Commission
adopts a multiplier for use to determine whether interests in cellular
and broadband PCS licensees held indirectly through intervening
corporate entities should be attributed for purposes of the
Commission's broadband PCS/cellular cross-ownership rule and broadband
PCS spectrum cap rule. This action is taken so that these rules can be
more effectively enforced consistent with their intent, which is to
ensure that broadband PCS licensees lack any incentive to impede the
development of full competition with the cellular licensees or with
other broadband PCS licensees in the same geographic area.
EFFECTIVE DATES: September 6, 1994.
FOR FURTHER INFORMATION CONTACT:
Jonathan Cohen, Office of Plans and Policy, (202) 418-2030.
SUPPLEMENTARY INFORMATION: This Further Order on Reconsideration is
available for inspection and copying during normal business hours in
the FCC Dockets Branch, Room 230, 1919 M Street N.W., Washington, D.C.
The complete text may be purchased from the Commission's copy
contractor, International Transcription Service, Inc., 2100 M Street,
NW., Suite 140, Washington, DC. 20037, telephone (202) 857-3800.
Further Order On Reconsideration
In the matter of: Amendment of the Commission's Rules to
Establish New Personal Communications Services in the 2 GHz Band.
Adopted: July 22, 1994.
Released: July 22, 1994.
By the Commission:
1. In the Commission's Memorandum Opinion and Order in this
proceeding, FCC 94-144, 59 FR 32830 (June 24, 1994) (``Memorandum
Opinion and Order''), we reaffirmed our bright-line cross-ownership
attribution standards, which apply to common ownership of licenses in
the Domestic Public Cellular Radio Telecommunications Service
(``cellular'') and the Personal Communications Services in the 2 GHz
band (``broadband PCS''). We also ruled that no entity would be
permitted to hold broadband PCS licenses comprising more than 40 MHz of
spectrum in a particular PCS service area. The purpose of both the
broadband PCS/cellular cross-ownership rule and the broadband PCS
spectrum cap rule is to ensure that broadband PCS licensees lack any
incentive to impede the development of full competition with the
cellular licensees or with other broadband PCS licensees in the same
geographic area.
2. We determined that an interest of 20 percent or more in a
cellular license will be attributable,\1\ and that an interest of 5
percent or more in a broadband PCS license will be attributable. See
Memorandum Opinion and Order at 109-110. Under the broadband PCS/
cellular cross-ownership rule, entities with attributable ownership of
a cellular license covering 10 percent or more of the population of a
broadband PCS service area are limited to holding one 10 MHz broadband
PCS license in that broadband PCS service area until January 1, 2000.
See 47 CFR 24.204. Under the broadband PCS spectrum cap rule, parties
are not permitted to hold attributable interests in licenses covering
more than 40 MHz in the same PCS service area. See 47 CFR 24.229(c). In
determining how to calculate a party's interest in a cellular licensee
when it is held through multiple tiers of entities, we stated that the
interest of a subsidiary is attributed in full to the parent. See
Memorandum Opinion and Order at 116. The same rule would apply to
interests held in broadband PCS licenses through multiple tiers of
entities.
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\1\Certain entities are permitted to hold up to a 40 percent
interest in a cellular license without attribution. See 47 CFR
24.204(d)(2)(ii).
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3. Herein we reconsider, on our own motion, the issue of whether to
use a ``multiplier'' to determine how interests in cellular and
broadband PCS licensees held indirectly through intervening corporate
entities should be attributed. A multiplier is currently used by the
Commission in our attribution rules in the broadcast context. See 47
CFR 73.3555, note 2(d). To determine the ``true'' ownership interest of
a party whose interest in a broadcast licensee is held through
intervening entities, each non-majority, non-controlling interest is
multiplied together. For example, a party that owns a 25 percent non-
controlling interest in a corporation that has a 10 percent non-
controlling interest in a licensee would be deemed to have a 2.5
percent interest in the licensee. As we concluded in adopting a
multiplier for broadcast attribution, use of a multiplier allows the
Commission to accurately take account of a party's ``actual involvement
with the ultimate licensee'' as well as its ability to exert control
over the actions of the licensee. See Reexamination of the Commission's
Rules and Policies Regarding the Attribution of Ownership Interests in
Broadcast, Cable Television and Newspaper Entities, 97 FCC 2d 997, 1018
(1984), recon., 58 RR 2d 604 (1985), further recon., 1 FCC Red 802
(1986), 52 FR 1630 (Jan. 15, 1987). We concluded that ``use of a
multiplier would more realistically reflect a party's attenuated
interest in a licensee where there are intervening corporations, than
does the present practice of fully attributing any interest above the
benchmark through each intervening corporation. Id.
4. In the Memorandum Opinion and Order, we favored a bright-line
test because we believed that it would result in a faster, less
burdensome licensing process. Memorandum Opinion and Order at 113. On
reconsideration, however, we have concluded that adding use of a
multiplier will allow us to more effectively enforce the broadband PCS/
cellular cross-ownership and broadband PCS spectrum cap rules
consistent with their intent. We also conclude that using a multiplier
is consistent with our policy goal of promoting full competition in
wireless markets, because it will not cause the exclusion of firms that
pose no threat to competition. Without a multiplier, parties that have
neither the ability to exert control nor a substantial financial stake
in the cellular or broadband PCS license could be unduly restricted in
acquiring interests in such license. Furthermore, absent a multiplier,
anomalous and unintended results occur. For example, if Company A holds
a 21 percent non-controlling interest in Company B, which in turn holds
a 30 percent non-controlling interest in Company X, a cellular
licensee, Company A's attributable interest in Company X would be
deemed to be 30 percent, in excess of the 20 percent threshold
applicable to broadband PCS/cellular cross-ownership. Company A would
thus be limited to acquiring a 10 MHz broadband PCS license in Company
X's cellular service area, even though it has neither the ability to
exert control or significant influence over the operations of Company
X's cellular system nor a financial stake in Company X so substantial
as to give rise to an incentive to engage in anticompetitive conduct.
In comparison, by using a multiplier, Company A's attributable interest
in Company X would be 6.3 percent (0.21 x 0.3), under the 20 percent
attribution threshold, and Company A would not be restricted to 10 MHz
broadband PCS licenses in Company X's cellular service area.
5. Considerations of ``actual involvement'' with, true economic
interest in, and ability to control a licensee are crucial in
determining whether a particular indirect ownership interest should be
attributed to the holder for purposes of our cross-ownership and
multiple ownership rules. These considerations apply with equal force
in the broadcast, broadband PCS and cellular contexts; thus, we
conclude that a multiplier similar to that used in applying our
attribution rules in the broadcast area should be adopted for purposes
of determining attributable interests in cellular and broadband PCS
licensees. We therefore will amend Sec. 24.204 of our Rules to include
use of a multiplier to determine whether an entity holding indirect
non-controlling interests in a cellular licensee or a broadband PCS
applicant or licensee has an attributable interest for purposes of our
broadband PCS/cellular cross-ownership rule and our broadband PCS
spectrum cap rule. For purposes of applying the multiplier, where an
entity's ownership interest in any particular link in the ownership
chain is greater than 50 percent or is controlling, the interest will
be treated as if it were 100 percent.
6. Accordingly, It Is Ordered That Part 24 of the Commission's
Rules is amended as set forth below.
7. It Is Further Ordered That the rules changes made herein Will
Become Effective 30 days after their publication in the Federal
Register. This action is taken pursuant to Sections 4(i), 303(r) and
309(j) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i),
303(r) and 309(j).
List of Subjects in 47 CFR Part 24
Personal communications services, Radio.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Final Rules
Part 24 of Chapter I of Title 47 of the Code of Federal Regulations
is amended as follows:
PART 24--PERSONAL COMMUNICATIONS SERVICES
1. The authority citation of Part 24 continues to read as follows:
Authority: Secs. 4, 301, 302, 303, 309 and 332, 48 Stat. 1066,
1082, as amended; 47 U.S.C. 154, 301, 302, 303, 309 and 332, unless
otherwise noted.
2. Section 24.204 of the Commission's Rules is amended by adding
paragraph (d)(2)(viii):
Sec. 24.204 Cellular eligibility.
* * * * *
(d) * * *
(2) * * *
(viii) Ownership interests in a cellular licensee or a broadband
PCS applicant or licensee that are held indirectly by any party through
one or more intervening corporations will be determined by successive
multiplication of the ownership percentages for each link in the
vertical ownership chain and application of the relevant attribution
benchmark to the resulting product, except that if the ownership
percentage for an interest in any link in the chain exceeds 50 percent
or represents actual control, it shall be treated as if it were a 100
percent interest. [For example, if A owns 10 percent of Company X,
which owns 35 percent of, and controls, Company Y, which owns 25
percent of Licensee, then Company X's attributable interest in Licensee
would be 25 percent, and A's attributable interest in Licensee would be
2.5 percent (0.1 x 0.25).]
* * * * *
[FR Doc. 94-18942 Field 8-3-94; 8:45 am]
BILLING CODE 6712-01-M
