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File how2ftp (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** $// Order, Pacific Telesis Mobile (SF), DA 95-1414//$ $/ 309(d)(2) Action Upon Applications/$ RECORD ONLY DA 95-1414 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) Application of ) File No. 00006-CW-L-95 Pacific Telesis Mobile Services ) Call Sign KNLF 209 for a License to Provide Broadband PCS ) Service on Block B in the San Francisco- ) Oakland-San Jose Major Trading Area (M005) ) ORDER Adopted: June 23, 1995 Released: June 23, 1995 By the Chief, Wireless Telecommunications Bureau: I. INTRODUCTION 1. On March 13, 1995, the Commission announced Pacific Telesis Mobile Services ("PTMS") as the auction winner for a broadband Personal Communications Services ("PCS") Block B license for the San Francisco-Oakland-San Jose Major Trading Area ("MTA"). On April 12, 1995, the FCC Form 600 (long-form application) of PTMS was accepted for filing. On May 12, 1995, WirelessCo, L.P. ("WirelessCo") filed a petition to deny or condition PTMS's PCS license. On May 25, 1995, PTMS filed an opposition, and WirelessCo replied on June 7, 1995. WirelessCo has established standing under Section 309(d) of the Communications Act of 1934, as amended ("the Act"), by virtue of its position as the applicant for the competing 30 MHz broadband PCS license in the San Francisco- Oakland-San Jose MTA. II. CONTENTIONS OF THE PARTIES 2. WirelessCo argues that, in a petition for clarification or reconsideration of the Second Report and Order in GN Docket 93-252 ("Second CMRS Report and Order"), Pacific Telesis ("PacTel"), the local exchange carrier ("LEC") affiliate of PTMS, has requested a clarification that the Part 64 cost allocation and affiliate transaction rules do not apply to LEC provision of PCS, because PCS is a "regulated" commercial mobile radio service ("CMRS"). WirelessCo suggests that PacTel is attempting to avoid non-structural safeguards in transactions between PacTel and PTMS. WirelessCo urges the Commission to clarify that the Part 64 rules apply to PacTel and PTMS because cross-subsidization of PTMS will cause harm to the CMRS marketplace, as well as to Petitioner. WirelessCo also expresses concern that PacTel may be able to establish its own "cost basis" for providing interconnection services to other CMRS competitors, based on unique services it provides to PTMS, which arguably would comply with the affiliate transaction rules of Part 32, but be much higher than the needs of its PCS competitors. Thus, WirelessCo requests that the Commission either deny PTMS's PCS application, or impose conditions on the license that would require PacTel and PTMS to comply with all affiliate transaction rules and cost allocation rules that otherwise govern LEC/affiliate transactions. WirelessCo also requests that the Commission specifically prohibit PacTel from providing any interconnection or network advantages to PTMS that would be discriminatory to its competitors. 3. PTMS opposes the petition, stating that, since PacTel filed the petition for reconsideration or clarification in GN Docket No. 93-252, PacTel now believes it is subject to the Part 64 accounting safeguards, and will comply fully with all cost accounting rules in transactions between PacTel and PTMS. PTMS also argues that WirelessCo's concerns are more appropriately raised in the proceeding that is the subject of accounting safeguards. PTMS also suggests that WirelessCo should raise its objections in response to PacTel's "Plan of Non-Structural Safeguards" that PacTel must file with the Commission before offering PCS service. 4. In reply, WirelessCo contends that its concerns that PacTel would engage in discriminatory interconnection practices stem from the provision by PacTel of "advanced and robust network services" and that those services, coupled with preferential pricing options, offer PacTel and PTMS significant room for anti-competitive behavior. For example, WirelessCo contends, PTMS can take advantage of preferential pricing by PacTel that is priced as a "special assembly," which may comply with the cost accounting rules, but which is not directly comparable to the network services provided to any other user. Thus, WirelessCo urges the Commission to impose conditions on PTMS's PCS license that: 1) require reporting by outside auditors specifically on compliance by PacTel in its relationship with PTMS; 2) require PacTel to disaggregate any bundled services it provides to PTMS so that PTMS's competitors may purchase certain service components on non-discriminatory terms and conditions; and 3) declare that PacTel's pricing plan cannot reward volume purchasing (e.g., by its affiliate) with more favorable terms. In a supplemental filing, PTMS claims that WirelessCo's contentions that PacTel will favor PTMS in pricing are "implausible speculation." III. DISCUSSION 5. Under Section 309(d) of the Act, parties filing a petition to deny an application 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. The Commission bases its threshold determination on an evaluation of the petition and supporting affidavits. Once the Commission determines whether the petitioner has made a prima facie case under Section 309(d)(1), the Commission must determine whether the petitioner has presented a substantial and material question of fact upon which relief may be granted. If no such question is raised, the Commission will deny the petition and grant the application if it otherwise serves the public interest, convenience, and necessity. Based on the pleadings and supporting materials before us, we find that WirelessCo has not raised a substantial and material question of fact and, therefore, we will deny its petition. 6. The Commission's accounting rules require the separate accounting of costs incurred by a LEC in its regulated activities from those incurred by its non-regulated affiliates, and accounting for LEC transactions with affiliates. The Commission adopted these rules in the Joint Cost Order to help ensure that wireline ratepayers would not bear the costs of a LEC's non-regulated activities. In fashioning such rules, the Commission determined that the accounting classification would relate directly to the scope of regulation under Title II of the Act. Specifically, the Commission stated that all activities that are classified as common carrier communications for Title II purposes, whether or not they are tariffed services, are classified as regulated activities for purposes of the accounting rules and non-regulated activity cost allocation rules. WirelessCo argues that PacTel's interpretation of the Commission's statement in the Joint Cost Order is erroneous, and requests that the Commission impose conditions on PTMS's license affirming that PacTel must comply with Parts 64 and 32. 7. The issue raised by WirelessCo is in essence a request for clarification of whether Parts 64 and 32 apply to LECs whose affiliates provide PCS service. The applicability of Parts 64 and 32 to CMRS services (including PCS) is an issue that has been raised expressly in petitions for reconsideration of the Second CMRS Report and Order, which is currently under consideration by the Commission. Any decision made in that proceeding will be binding on PacTel and PTMS. We therefore conclude that that proceeding is the proper forum for resolving this issue. To the extent that WirelessCo has raised the issue here, we will consider its pleadings as ex parte filings in the CMRS reconsideration, and herewith incorporate all pleadings into the record of the CMRS reconsideration proceeding as they relate to this issue. 8. Furthermore, WirelessCo's argument that PacTel will favor PTMS in pricing to the disadvantage of its PCS competitors does not raise a substantial and material question of fact, because it is merely an unsupported allegation of potential misconduct. As such, it provides no basis for either denying PTMS's application or imposing conditions upon the license. If potential for anti-competitive conduct by PacTel or any other carrier exists, the Commission will deal with those issues in a separate rule making context,or upon complaint. Therefore, we will deny WirelessCo's petition under Section 309(d)(2). IV. CONCLUSION 9. Having reviewed the application and the pleadings filed in this matter, we conclude that grant of the subject application will serve the public interest, convenience, and necessity, and that the petitioner has not sufficiently alleged facts establishing that grant of the application would be inconsistent with the public interest, convenience, and necessity. V. ORDERING CLAUSES 10. Accordingly, IT IS ORDERED that, pursuant to Section 309(d)(2) of the Act, the "Petition of WirelessCo, L.P. to Deny or to Condition License Grant" IS HEREBY DENIED. 11. IT IS FURTHER ORDERED that all pleadings filed by WirelessCo, L.P., in response to the application of Pacific Telesis Mobile Services for a Broadband Personal Communications Services license for the San Francisco-Oakland-San Jose MTA (File No. 00006-CW-L-95, Call Sign KNLF 209) ARE HEREBY INCORPORATED into the record of the reconsideration of the CMRS Second Report and Order and will be considered ex parte filings, to the extent they address the question of accounting safeguards. FEDERAL COMMUNICATIONS COMMISSION Regina M. Keeney Chief, Wireless Telecommunications Bureau