NOTICE ********************************************************* NOTICE ********************************************************* This document was originally prepared in Word Perfect. If the original document contained-- * Footnotes * Boldface & Italics --this information is missing in this version The document format (spacing, margins, tabs, etc.) is changed too. If you need the complete document, download the Word Perfect version. For information about downloading documents (FTP) see file how2ftp. File how2ftp (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** 1. DA 95-1411 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of Applications for A and B Block Broadband PCS Licenses ) ) ) ) ) ) File Nos. 00001-CW-L-95 through 00099-CW-L-95; Call Signs KNLF 204 through KNLF 302 ORDER Adopted: June 23, 1995 Released: June 23, 1995 By the Chief, Wireless Telecommunications Bureau: I. INTRODUCTION 1. In a Petition to Deny and Request for Stay, filed on May 12, 1995, the National Association of Black Owned Broadcasters ("NABOB"), Percy E. Sutton ("Sutton"), and the Washington Bureau of the National Association for the Advancement of Colored People ("NAACP") (collectively, "Petitioners") jointly request that the Commission deny the applications of all the winners of the Commission's auction of 99 broadband PCS licenses for the A and B block MTA frequencies. In the alternative, Petitioners seek to stay licensing of the A and B block winning bidders until the Commission is ready to license the eventual winning bidders of the PCS C block auction. Petitioners also have filed an Application for Review and Request for Stay of the April 12, 1995 Order by the Chief, Wireless Telecommunications Bureau, denying a previously filed motion by Communications One, Inc. to defer A and B block licensing. 2. In this Order, we deal exclusively with the Petition to Deny filed by Petitioners against the A and B block auction winners. We conclude that the Petition should be denied and order that the applications be granted. In a separate order adopted today, we deny Petitioners' Application for Review and Request for Stay, as well as a similar petition for reconsideration and stay of A and B block licensing filed jointly by Communications One, Inc. and GO Communications Corporation. II. CONTENTIONS OF THE PARTIES 3. NABOB states that it is a national trade organization "representing the interests of current FCC licensees . . . and prospective minority applicants in the PCS auctions," and contends that it is a party in interest to the A and B block applications on this basis. Sutton claims to be a potential bidder in the C block auction. NAACP claims to represent both the interests of minority entrepreneurs who plan to bid in the C block auction and the interests of the public, which NAACP claims will be harmed "if the PCS industry does not develop into an open competitive industry." 4. In support of their petition, Petitioners contend that the Commission violated Section 309(j) of the Communications Act by failing to provide adequate opportunities for minorities to acquire PCS licenses in the A and B blocks. Petitioners further assert that this failure to provide incentives has allowed a few dominant carriers to divide A and B block PCS licenses in an unlawful territorial allocation in violation of the antitrust laws. Petitioners contend that the distribution of licenses in the top markets indicates a pattern of collusion by these carriers to "dominate the wireless telephone industry, both PCS and cellular." Petitioners further note that "several of the companies engaged in these partnerships are not new to U.S. Justice Department antitrust inquiry." 5. Virtually all of the winning A and B block bidders have filed oppositions to the Petition to Deny. Opponents present three main arguments: (1) petitioners are not parties in interest and therefore lack standing to file the Petition; (2) the Petition is an untimely attempt to seek further reconsideration of the Commission's PCS auction rules; (3) Petitioners' allegations of collusion among the major A and B block auction winners are vague, unsupported by any factual showing, and do not even purport to apply to most of the auction winners. 6. In their reply to the oppositions, Petitioners argue that they have demonstrated the existence of sufficient circumstantial evidence of anticompetitive conduct by A and B block auction winners to warrant an investigation of the winners' conduct by the Commission before licenses are granted. Petitioners state that they cannot be expected to produce a "smoking gun" without compulsory process. Petitioners' reply does not address opponents' arguments that Petitioners lack standing or that their allegations of territorial allocation do not pertain to all of the winning bidders. III. DISCUSSION 7. After review of Petitioners' contentions and the other pleadings in this matter, we dismiss the Petition to Deny. First, we conclude that Petitioners have failed to demonstrate standing to challenge all of the A and B block applicants. Second, even assuming Petitioners have standing, we conclude that they have failed to demonstrate that grant of the A and B block licenses would be inconsistent with the public interest. A. Standing 8. To establish standing to file a petition to deny, the petitioner must allege sufficient facts to demonstrate that a grant of the subject application would cause the petitioner to suffer a direct injury. The petition must further demonstrate a causal link between the claimed injury and the challenged action by establishing that (1) the injury "fairly can be traced" to the challenged action, and (2) the injury would be prevented or redressed by the relief requested. Petitioner Sutton claims standing to petition against the A and B block applicants based on his status as a potential C block bidder. Petitioners NABOB and NAACP claim to represent the interests of members who are potential PCS bidders as well as the interests of the public. 9. We conclude that Petitioners have failed to allege facts sufficient to establish standing to challenge all of the A and B block applicants on a blanket basis, as they seek to do here. The premise of Petitioners' standing argument is that the award of licenses to the A and B block applicants threatens Petitioners' interests (or those of their members) as potential C block licensees as well as the interests of the public. We find these allegations to be too contingent and speculative to support the required finding of a direct injury causally linked to the challenged action. First, there is no certainty that Petitioners or any of their members will in fact participate in the C block auction, or that they will win licenses if they do bid, both of which must occur in order for the claimed injury even to be possible. The Commission has previously found that the mere fact that a petitioner has applied to be a competing licensee of the applicant does not confer standing. In this instance, Petitioners have not yet even applied for licenses, much less obtained them. We also find Petitioners' claims to represent the "public" to be far too vague and conclusory to establish standing. 10. Even if we assume that possible competition between the Petitioners and A and B block applicants would be sufficient to establish standing, Petitioners have not provided specific factual allegations to establish a causal link between their prospective injuries and the grant of each A and B block application. In order to challenge the A and B block auction winners in every MTA, Petitioners must at the very least allege facts showing how each and every grant would result in some demonstrable injury to them. The broad and conclusory affidavits provided by Petitioners fail to meet this standard: petitioner Sutton states only that he intends to bid in the C block auction, without specifying any market, while petitioners NABOB and NAACP fail to identify or provide affidavits from even a single member of their organizations who intends to bid. Thus, Petitioners have alleged no causal link between any prospective C block bidder and granting the application of any particular A or B block auction winner. For these reasons, we conclude that Petitioners have not established standing to file the Petition against all A and B block licensees. We will, however, consider the Petition as an informal objection to the applications. B. Public Interest Analysis 11. Aside from the issue of standing, we conclude that Petitioners have failed to demonstrate that grant of the A and B block applications would be inconsistent with the public interest. Under Section 309(d)(1) of the Communications Act, parties filing a petition to deny must make specific allegations of fact sufficient to show that a grant of the application would be prima facie inconsistent with the public interest, convenience, and necessity. Except where official notice may be taken, such allegations must be supported by affidavits of persons with personal knowledge of the facts alleged. Section 309(d)(2) states that if the pleadings and affidavits fail to raise substantial and material questions of fact and the Commission concludes that grant of the application would be in the public interest, the Commission shall deny the petition. Based on the pleadings and supporting materials before us, we find that Petitioners have failed to raise substantial and material questions of fact under this standard. 12. Petitioners' primary argument in support of denial of the A and B block licenses is that the Commission did not adopt specific provisions for minorities to bid for PCS licenses in the A and B blocks, which Petitioners contend violates Section 309(j) of the Act. Opponents argue that this argument constitutes an untimely petition for reconsideration of the Commission's broadband PCS auction rules rather than a valid basis for a petition to deny. We agree. The purpose of the petition to deny process is to assess challenges to applicants' qualifications to be Commission licensees. Petitioners' statutory argument does not address licensee qualifications, however, but challenges the structure of the A and B block auction itself. This is not grounds for a petition to deny, but is a belated attempt to revisit the Commission's auction rules for licensing of the A and B blocks. In the Fifth Report and Order in Docket 93-253, the Commission decided against making special provisions for designated entities on the A and B blocks. Instead, the Commission determined that a more meaningful way to create opportunities for designated entities was by designating the C and F blocks as "entrepreneurs' blocks." The Commission determined that this approach fully complied with Section 309(j), and affirmed this conclusion on reconsideration more than eight months ago. Petitioners' attempt to challenge the rules again through the petition to deny process is therefore untimely and procedurally improper. 13. The only other argument offered by Petitioners is that some A and B block applicants may have engaged in an illegal "territorial allocation" of licenses. In support of this claim, Petitioners note that the three winners of the largest numbers of A and B block licenses -- AT&T Wireless PCS, PCS Primeco, and WirelessCo -- are newly merged entities or joint ventures of established communications companies. Petitioners suggest that the formation of these ventures and the pattern of bidding provide "circumstantial evidence" that these entities colluded to divide up the PCS market by refraining from bidding in markets where their bidding partners had existing communications interests. Petitioners also allege that RBOC-affiliated bidders deliberately avoided bidding against one another in the auction. 14. We find that Petitioners have failed to raise a substantial or material question of fact based on these allegations. First, Petitioners offer no grounds whatsoever for denying the applications of the fifteen auction winners other than AT&T, PCS Primeco, and WirelessCo. Second, with respect to these latter three applicants, Petitioners fail to provide any factual evidence of collusion. While we agree with Petitioners that a "smoking gun" is not required to support a petition to deny, this does not excuse Petitioners from the requirement to provide some modicum of a factual showing that collusion occurred -- particularly in an auction that lasted over three months and resulted in aggregate winning bids of nearly $8 billion. In this respect, we find Petitioners' conclusory allegations to be wholly inadequate. Petitioners raise no factual issue that AT&T, PCS Primeco, WirelessCo, or any other A or B block winner has violated any of the Commission's rules, including the collusion rules or the rules regarding aggregation of PCS spectrum. Indeed, as PCS Primeco points out, much of the bidding behavior alluded to by Petitioners was required by the Commission's cellular cross-ownership rules, which prohibited bidders with cellular interests from bidding for PCS licenses in those markets. 15. Finally, we are unpersuaded by Petitioners' argument that the Petition should be granted on the ground that some of the entities who formed AT&T Wireless, PCS Primeco, and WirelessCo have been subject to past Department of Justice antitrust inquiry. Petitioners have failed to show that the creation of any of these entities is in any way illegal or contrary to the public interest. In fact, both the Department of Justice and the Commission approved the AT&T/McCaw merger, as Petitioners acknowledge. The formation of PCS Primeco and WirelessCo also complied with Commission rules, and the Department of Justice has not lodged an objection to either transaction. Because Petitioners have failed to allege, much less provide evidence of, any facts that raise an issue in this regard, we conclude that Petitioners' have failed to present a substantial or material question of fact in support of their Petition. IV. CONCLUSION 16. Having reviewed the applications and the pleadings filed in this matter, we conclude that grant of the subject applications will serve the public interest, convenience, and necessity, and that Petitioners have not sufficiently alleged facts establishing that grant of the application would be inconsistent with the public interest, convenience, and necessity. V. ORDERING CLAUSES 17. Accordingly, pursuant to Section 309(d) of the Communications Act of 1934, as amended, 47 U.S.C.  309(d), IT IS ORDERED that the Petition to Deny and Request for Stay filed by the National Association of Black Owned Broadcasters, Percy E. Sutton, and the Washington Bureau of the National Association for the Advancement of Colored People IS DENIED. 18. IT IS FURTHER ORDERED that, pursuant to Section 309(a) of the Communications Act of 1934, as amended, 47 U.S.C.  309(a), the applications for Broadband Personal Communications Services MTA Licenses listed in Appendix A are GRANTED, effective the date of this Order. FEDERAL COMMUNICATIONS COMMISSION Regina M. Keeney Chief, Wireless Telecommunications Bureau