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Applicants ` p>"(# 4  Xn4XX` ` 2. Application ` p>"(# 7  XW4XB.` ` Legal Standards p>"(# 8  X)!4III. COMPETITIVE ANALYSIS UNDER PUBLIC INTEREST STANDARDp>"(# 9  X"4XA. ` ` Analytical Framework p"(#9  X"4XB.` ` Market Definition p!(# 11 XX` ` 1. Relevant Product Markets ` p"(# 12  X$4XX` ` 2. Relevant Product Markets"Access Dimensions ` p"(# 14  X%4XX` ` 3. Relevant Geographic Markets"Principles ` p"(# 15  X&4` ` 4. Relevant Product and Geographic Markets"Analysisp"(# 16"&,N(N(ZZ$"Ԍ X4ԙXC.` ` Market Participants, Competition and Entry p"(# 24  X4XX` ` 1.  Markets for Nationwide Long Distance Communications Services ` p"(# 24  X4` ` 2.  Markets for Interconnected Mobile Voice Telephone Servicesp"(# 27  X4` ` 3. Markets for Local Exchange and Exchange Access Servicesp"(# 30  X4D.` ` Competitive Effects of Mergerp"(# 34  X4` ` 1.  Markets for Nationwide Long Distance Communications Services(#` p"(# 35  Xv4` ` 2.  Markets for Interconnected Mobile Voice Telephone Servicesp"(# 37  X_4` ` 3. Markets for Local Exchange and Exchange Access Servicesp"(# 38  XH4E. ` ` ProCompetitive and Efficiency Benefits p`"(#39 ` ` x`  X 4IV. CONCLUSION Sp`"(#42  X 4V. ORDERING CLAUSESp"(# 43  X 4  I. INTRODUCTION AND EXECUTIVE SUMMARY ׃  Xy41.` ` We have before us an application filed by 360 Communications Company  Xb4("360"), pursuant to section 310(d) of the Communications Act of 1934, as amended ( the  XK4Communications Act).}XKG yO'Ѝ47 U.S.C.  310(d). Section 310(d) of the Communications Act requires that, before control over any radio construction permit, station license, or any rights thereunder may be transferred, the Commission must determine whether the public interest, convenience, and necessity will be served by the transfer of control. } 360 seeks our consent to transfer ultimate control over certain  X44Federal Communication Commission (FCC) cellular authorizations held by 360 and its  X4affiliates to ALLTEL Corporation ("ALLTEL"), in connection with the merger of 360 into  X4ALLTEL. Under the terms of their transfer agreement, 360 would become a whollyowned  X4subsidiary of ALLTEL. 360 would continue to hold the licenses at issue here. As announced in a Public Notice issued on June 22, 1998, we find that this merger serves the public interest, convenience, and necessity and hereby approve the transfer of control of the  X4subject authorizations from 360 to ALLTEL.&G {OC' xV ԍPublic Notice, Wireless Telecommunications Bureau Approves Transfer of Control of Wireless Interests  yO 'from 360 Communications Company to ALLTEL Corporation, Report No. LB9850 (rel. June 22, 1998).& This Memorandum Opinion and Order explains our decision.  Xe42.` ` Both 360 and ALLTEL currently provide interconnected mobile telephone services, long distance services, and paging/messaging services. Both companies also are actual or potential competitors in the business of providing local exchange and exchange  X 4access services. ALLTEL and 360 both currently offer nationwide long distance services to some of the same customers. Neither company, however, competes directly in any geographic market for paging/messaging services. Notwithstanding the fact that these companies are actual or potential competitors in certain markets, we find that this merger will not confer upon ALLTEL the ability to behave anticompetitively in any of these markets. " B,N(N(ZZo"Ԍ  X43.` ` Further, we also find that this merger will considerably expand ALLTEL's wireless footprint along the Atlantic seaboard and broaden the range of communications services that ALLTEL is able to offer to a considerable portion of its wireline customers. Finally, while we may not view savings in overhead and administrative expenses as cognizable efficiency benefits, we agree that significant cost savings may be achieved from  Xv4the use by 360's mobile phone customers of the fiber optic network that ALLTEL is currently deploying.  X1'\f II. BACKGROUND Đc  X ' A.  Application   X 4` ` 1. Applicants  X 4  4.` ` ALLTEL is a diversified telecommunications and information services company. Its subsidiaries offer an array of communications services including commercial radio services (paging, cellular, and personal communications services (PCS)), local wireline services (including competitive local exchange (CLEC)), long distance resale, data and Internet access, and cable television services.  X45.` ` ALLTEL companies serve approximately 1.8 million wireline customers in fourteen states. ALLTEL recently has begun offering CLEC services in Little Rock, Arkansas and has announced plans to offer CLEC services in Charlotte, North Carolina. By the end of 1997, ALLTEL served approximately 941,000 wireless subscribers. The majority of ALLTEL's cellular subscribers reside in Alabama, Arkansas, Florida, Georgia, Missouri,  X4North Carolina, and South Carolina.  In addition to its cellular and paging licenses, ALLTEL recently was awarded 10 MHz PCS licenses for 73 markets in twelve states, and has recently  X|4commenced service in the first of these markets.  XN46.` `  360  is primarily a provider of cellular communications services. 360  operates cellular systems in more than 100 MSAs and RSAs in fifteen states, and provides service to  X 4approximately 2.6 million customers. In addition to its cellular services, 360  also provides oneway paging services on a facilities and resale basis and is also a reseller of long distance  X4services. 360  also provides limited cellular digital packet data (CDPD) service.  X 4` ` 2. Application  X"47. ` ` On March 16, 1998, ALLTEL and 360 entered into an Agreement and Plan of  X#4Merger whereby ALLTEL agreed to acquire all of the common stock of 360, thereby making  Xh$4360 a whollyowned subsidiary of ALLTEL.sh$G yO&'ԍApplication of 360 (filed Mar.26, 1998), Exhibit 2 at 5.s On March 26, 1998, 360  filed a FCC Form"h$X,N(N(ZZ"" 490 application to transfer control of licenses covering broadband cellular, paging, and  X4common carrier pointtopoint microwave services to ALLTEL.$G yOb' x ԍ360 also notes that it is concurrently filing applications seeking Commission approval for the transfer of  yO*'control of paging and microwave authorizations. Application of 360, Exhibit 2 at 1.$ On April 23, 1998, the Commercial Wireless Division of the Wireless Telecommunications Bureau issued a Public Notice listing the authorizations at issue here, indicating acceptance of this transfer  X4application for filing.l G {Ou' x ԍSee Public Notice, 360#XP\  P6Q~XXP#!#C\  P6QNP# Communications Company and ALLTEL Corporation Seek FCC Consent for  yO? 'Transfer of Control, Report No. 83022 (rel. April 23, 1998).#XP\  P6Q~XXP#l On May 29, 1998, the time for filing oppositions to the application  X4expired, and no oppositions were filed.   X_' B.Legal Standards  X148.` ` Our examination of a proposed transfer of control under the public interest, convenience, and necessity standard of section 310(d) of the Communications Act requires the  X 4Commission consider the effects of the transfer on competition. zG {O.'#C\  P6QNP#эUnited States v. FCC, 652 F.2d 72, 82 (D.C. Cir. 1980) (en banc).& The Commission also has  X 4independent authority under sections 7 and 11 of Clayton Act to disapprove the acquisition of common carriers engaged in wire or radio communications or radio transmissions of energy in any line of commerce in any section of the country where the effects of such an acquisition  X 4may substantially lessen competition, or tend to create a monopoly. G yOd'#C\  P6QNP#э15 U.S.C.  18, 21(a). The Wireless Telecommunications Bureau (Bureau), acting pursuant to delegated authority, 47 C.F.R.  0.331, chooses not to exercise its statutory authority under the Clayton Act in this case because the Commission's jurisdiction under the Communications Act is sufficient to address all questions regarding the competitive effects of the proposed transfer, including the issue of whether the transfer  {O'may substantially lessen competition or tend to create a monopoly.  See, e.g., Craig O. McCaw and American Telephone and Telegraph Company, For Consent to the Transfer of Control of McCaw Cellular Communications,  {O'Inc. and its Subsidiaries, Memorandum Opinion and Order, 9 FCC Rcd. 5836 (1994), reconsideration denied on  {O'other grounds, Memorandum Opinion and Order on Reconsideration, 10 FCC Rcd. 11786 (1995); aff'd sub nom.  {O'SBC Communications, Inc. v. FCC, 56 F.3d 1484 (D.C. Cir. 1995) (hereinafter "McCaw").  ",N(N(ZZl"  X' III. COMPETITIVE ANALYSIS UNDER PUBLIC INTEREST STANDARD  X4c  X' A. Analytical Framework   X49.` ` In conducting our public interest analysis of competitive conditions in markets affected by the proposed merger, we follow an approach consistent with that taken by the Commission in its decisions granting consent to the mergers of Bell Atlantic and NYNEX ("BANYNEX"), British Telecommunications and MCI Communications Corp. ("BTMCI"),  XH4and WorldCom, Inc. and MCI Communications Corp. ("WorldComMCI").HG {O 'ЍApplications of NYNEX Corporation and Bell Atlantic Corporation, Memorandum Opinion and Order,  {O '12 FCC Rcd. 19985, 2000001, 20007  29, 36 (1997) ( BANYNEX Order); Acquisition of MCI  {OU 'Communications Corporation and British Telecommunications PLC, Memorandum Opinion and Order, 12 FCC  {O 'Rcd. 15351, 15367,  33 (1997) ( BTMCI Order);  Application of WorldCom, Inc. and MCI Communications  {O 'Corporation, Memorandum Opinion and Order, 13 FCC Rcd. 18025, 1803539,  1522 (1998) ( WorldCom {O 'MCI Order); see also Applications of PacifiCorp Holdings, Inc. and Century Telephone Enterprises, Inc.,  {O}'Memorandum Opinion and Order, 13 FCC Rcd. 8891, 8898,  12 (WTB 1997) ( CenturyPacific Order).  We also draw upon the determinations reached by the Bureau in its decisions to grant approval to the merger between Nextel Communications, Inc. and Pittencrieff Communications, Inc., and the  X 4acquisition by American Mobile Satellite Corporation of Motorola's Ardis division.6 ( G {O' x ԍApplications of Pittencrieff Communications, Inc. and Nextel Communications, Inc., Memorandum Opinion  {O' ! and Order, 13 FCC Rcd. 8935, 8940,  10 (WTB 1997) ("Pittencrieff Order"); Application of Motorola, Inc. and  {O^' ! American Mobile Satellite Corporation for Consent to Transfer Control of Ardis Company, Memorandum Opinion  {O('and Order, 13 FCC Rcd. 5182, 5187,  7 (WTB 1997) ("Ardis Order"). 6 All of  X 4these orders followed the approach used in the LEC InRegion Interexchange Order, &  G yO'ЍRegulatory Treatment of LEC Provision of Interexchange Services Originating in the LEC's Local  {Ok'Exchange Area and Policy and Rules Concerning the Interstate, Interexchange Marketplace, Second and Third  {O5'Reports and Order, CC Docket Nos. 960149 & 9661, 12 FCC Rcd. 15756 (1997) ( LEC InRegion  {O'Interexchange Order).   where the Commission found the Department of Justice and Federal Trade Commission 1992  X 4Horizontal Merger Guidelines  G {Oe'ЍDepartment of Justice and Federal Trade Commission 1992 Horizontal Merger Guidelines, 4 Trade  {O/'Reg. Rep. (CCH)  13,104 (1992), 57 Fed. Reg. 41552 (Sept. 10, 1992) ( Guidelines). to be a useful analytical tool for evaluating the likely competitive effects of mergers and acquisitions. As a result, the Commission's framework is designed to ensure that its assessment of the competitive effects of a merger is based on  X{4generally accepted economic principles relating to market analysis. {PG {O|"'#C\  P6QNP#эLEC InRegion Interexchange Order, 12 FCC Rcd. at 15774,  26.  XM4 10.` ` Our analysis of competitive effects under the Commission's public interest standard consists of four steps. First, we define the relevant product and geographic"6 ,N(N(ZZ"  X4markets. G {Oy'ЍSee BANYNEX Order, 12 FCC Rcd. at 20014,  49; BTMCI Order, 12 FCC Rcd. at 15368,  35. Second, we identify current and potential participants in each relevant market,  X4especially those that are likely to have a significant competitive effect.^ZG {O'ЍFor the reasons stated in the Pittencrieff Order and Ardis Order, we do not identify "precluded  {O'competitors" as "significant market participants" in this Order. See  Pittencrieff Order, 13 FCC Rcd. at 8941,   {O'14; Ardis Order, 13 FCC Rcd. at 5189,  13.  Third, we evaluate  X4the effects that the merger may have on competition in the relevant markets.rG {O 'ԍGuidelines, 57 Fed. Reg. at 41,558  2.1, 2.2.r Fourth, we consider whether the proposed transaction will result in mergerspecific efficiencies such as  X4cost reductions, productivity enhancements, or improved incentives for innovation.G {Og 'Ѝ See Horizontal Merger Guidelines Issued by the U.S. Department of Justice and the Federal Trade  {O1 'Commission (Revised, April 8, 1997) ("1997 Revised Guidelines"). In addition to our analysis of mergerspecific efficiencies, which is consistent with the approach  Xv4taken in the 1997 Revised Guidelines, we consider whether the merger is likely to produce other public interest benefits. Ultimately, we must weigh any harmful and beneficial effects to determine whether, on balance, the merger is likely to enhance competition in the relevant  X34markets.    X 'B.Market Definition   X 4 11.` ` We begin our competitive analysis by determining the relevant product and geographic markets. To do so, we identify the products (or services, in this case) offered by  X 4ALLTEL and 360, and evaluate the extent to which services offered by other communications companies compete for the business conducted by the merging parties.  X{4   Xd4` ` 1. Relevant Product Markets   X64 12.` ` ALLTEL is recognized primarily as a provider of local exchange and exchange access services. In addition, ALLTEL provides data communication services, internet access, cable television services, and a range of mobile communications services through its cellular,  X4PCS, and paging licenses.^n G yO 'ԍApplication of 360, Exhibit 2 at 4.^ ALLTEL also offers interexchange services on a resale basis.b G yO!'ԍApplication of 360, Exhibit 2 at 3, 7. b In recent years, the company has expanded into providing business and financial information  X4services.K G yO%'ԍALLTEL Form 10K at 1113.K 360  , on the other hand, operates cellular systems that provide mobile voice, one",N(N(ZZX"ԫ X4way paging and messaging, and twoway mobile data services.^G yOy'ԍApplication of 360, Exhibit 2 at 4.^ 360 also offers  X4interexchange and paging services as a reseller to selected customers.aXG yO'ԍApplication of 360, Exhibit 2 at 4, 7.a  X4 13.` ` Applicants contend that both companies compete in only three relevant product markets: (1) interconnected mobile telephone services; (2) oneway mobile data and  X4messaging services; and (3) long distance communications services.^G yO& 'ԍApplication of 360, Exhibit 2 at 8.^ We concur with parties in their assessments that each of these three distinct services constitutes a relevant product market. However, we determine that local exchange and exchange access services, whether provided via wireline or wireless networks, also constitute a relevant product market. While  X14360 does not operate a wireline network capable of offering local access and exchange services, evidence is mounting that carriers using wireless technologies may soon, if they do not do so already, compete with wirelinebased carriers for customers and business in local  X 4exchange and exchange access markets.^ xG {O' x ԍSee Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993 Annual Report  {O' !* and Analysis of Competitive Market Conditions With Respect to Commercial Mobile Services, FCC 9891, Third  {O'Report and Order,  2627 (rel. June 11, 1998) ("Third Annual CMRS Competition Report"). Hence, #footnote reference##XP\  P6Q~XXP#for purposes of our examination of this transaction, we also identify local exchange and exchange access services as a relevant  X 4product market.)[footnote reference)#footnote reference##XP\  P6Q~XXP# These relevant markets include not only the local exchange and exchange  X 4access markets where ALLTEL's wireline territory overlaps with 360's wireless service areas,  X4but also thirdparty wireline territories where ALLTEL and 360 both hold wireless properties.  Xy4    Xb4` ` 2. Relevant Product Markets"Access Dimensions  X44 14.` ` In this proceeding, we examine several distinct communications services"local exchange access, interexchange access, paging/messaging, and mobile phone services"that meet different consumer needs, and present us with distinct relevant product markets. Generally, we define communications products so as to accord with consumers' likely requirements for accessing services involving collected points of origination and termination. Some consumers demanding communications services may adequately be served by a carrier with a localized footprint, while other users will require regional or perhaps nationwide service coverage. The number of competing providers to which any individual user can turn for service thus depends on the particular nature of their communication requirements. For example, if a user's need for mobile communications involves the capability to communicate regularly between distant points throughout a region of the country, only some of the industry's providers compete effectively to offer the desired coverage. As a result, we may further define relevant product markets based on coverage areas that accord with consumers' demands for access. In turn, we recognize that communications firms, driven by competitive" ,N(N(ZZ" pressures, will seek to extend access to the services they provide beyond the direct reach of  X4their own facilities.G yOb' xR ԍSome facilitiesbased providers resell the services of other facilitiesbased providers through roaming agreements or joint ventures. To the extent that these "roaming" services are competitively priced, we determine whether a firm participates in local, regional, national, or international markets for the service, notwithstanding any limits suggested solely by its facilitiesbased footprint.  X4. ` `  X4` ` 3. Relevant Geographic Markets"Principles  X_415.` ` A properly defined geographic market aggregates consumers that face similar  XH4choices regarding vendors of a particular product or service.}H G {O 'ԍSee, e.g., Tampa Elec. Co. v. Nashville Co., 365 U.S. 320, 327 (1961).} For communications services, we define the relevant geographic market by considering the territories over which a  X 4particular relevant product is or could readily be marketed. For many communications products, and for mobile communications products in particular, we find services are not always marketed wherever access to a service is available. For example, ALLTEL offers its customers nationwide access to long distance services, but markets these services only to potential customers it can serve directly through its own facilities. Thus, for purposes of defining relevant markets and conducting our competitive analysis, we limit our focus in any particular product market to those geographic areas where both firms are readily capable of marketing a facilitiesbased service to the same group of potential customers.  XK4` ` 4. Relevant Product and Geographic Markets"Analysis  X416.` ` Applicants describe their participation in markets for nationwide long distance or interexchange services, mobile telephony services, and paging/messaging services without identifying or distinguishing service areas and marketing territories. Accordingly, for each of these services, we examine where access to these services is furnished in the context of our product market analysis, and to whom these services are sold as contemplated in our geographic market analysis.  X|4` `  a.,Mobile Telephone Services  XN417.` ` ALLTEL holds 10 MHz PCS licenses, and both firms hold cellular licenses  X74that may be used to provide mobile telephone services. Both ALLTEL and 360 are capable of furnishing services to their customers when traveling throughout the nation through roaming arrangements with other carriers. However, the higher rates charged for roaming services when users travel out of their own carrier's service areas tend to limit the appeal of  X4these services.G {O>&'ԍApplication of 360, Exhibit 2 at 10.  See also Ardis Order, 13 FCC Rcd. at 519899,  30. Although both companies might have become direct competitors in a regional market for mobile phone services if this merger had not taken place, ALLTEL does" D,N(N(ZZ" not presently compete effectively in this regional market because it does not yet offer service to large portions of the region or to certain key urban centers. It would likely take ALLTEL a considerable amount of time to establish an effective presence throughout this region.  X418.` ` Presently, ALLTEL and 360 do not compete directly for customers in any locality. To the extent that both firms are involved in providing cellular phone service to the  Xv4same consumers, they do so as jointventure partners,xvG yO' x ԍALLTEL and 360 also both hold partial equity interests in fourteen cellular franchises in Florida, Missouri,  yO' ! North Carolina, and Texas. See Application of 360, Exhibit 2, Attachment B. ALLTEL already manages one of  yO ' !D these franchises, and with the merger, its ownership share would increase. In eight other cases, 360 currently is  yOG ' ! the managing partner. Under the proposed merger, effective control over these operations would shift from 360 to  ! ALLTEL. In the five remaining cases, ALLTEL's stake in cellular partnerships managed by third parties would  ! increase, but not to levels exceeding 49 percent. In any event, the merger would not result in further concentration among carriers in any of these markets. and not as independent competitors.  X_4ALLTEL also holds numerous PCS licenses where 360 presently operates cellular franchises. Applicants' wireless holdings overlap in various markets comprising 89 counties in North  X14Carolina, South Carolina, and Florida.1G yO' x ԍApplication of 360, Exhibit 2, Attachment C. These include large urban centers such as Greensboro, RaleighDurham, Charleston, Greenville, and Wilmington. ALLTEL has not commenced service in any of these  X 4markets, and has not announced plans to do so. Previously, we determined that individual MSAs and RSAs are likely to constitute the relevant geographic markets over which we must  X 4assess competition in mobile phone markets.u ` G {O'ԍPittencrieff Order, 13 FCC Rcd. at 8945, 8952 nn.48, 78.u However, it is only on a countybycounty basis that we can be entirely certain that consumers encounter similar choices when  X 4considering from whom to purchase interconnected mobile phone services.< G yOa' x ԍSome RSAs straddle multiple BTA license areas, such that residents in one part of an RSA face vendor  !Q options distinct from their neighbors in adjoining counties within the same RSA. However, it is conceivable that  !H collections of counties, including MSAs, RSAs, and even BTAs in some cases, may be relevant geographic markets  !k if all consumers within a larger region encounter essentially the same set of competitive alternatives for the given service.< Consequently, we determine that for present purposes, the relevant markets for mobile phone services are  X4confined to the individual counties where both ALLTEL and 360 are licensed to provide  Xy4these services.    XK4 ` `  b.,Long Distance or Interexchange Services  X419.` ` Both companies currently provide nationwide access to long distance services  X4on a resale basis.XG yOY%' x ԍApplication of 360, Exhibit 2 at 7. Consumers may subscribe to Applicants' long distance services by pre yO!&' !I selecting ALLTEL or 360 as their primary long distance carrier for their home or officebased telephones. Subscribers can access these services by using calling cards when they are not using their own telephones. Applicants acknowledge some geographic overlap involving the provision" ,N(N(ZZ"  X4of long distance services, but contend that this overlap is insignificant.^ G yOy'ԍApplication of 360, Exhibit 2 at 9.^ ALLTEL offers resold long distance services to both residential and business customers in the territories  X4where it provides mobile telephone services and in some areas where it also provides local  X4exchange services.!XXG yO' xc ԍApplication of 360, Exhibit 2 at 7. ALLTEL reports that it offers "longdistance service in all of the states  ! in which [it] provides local exchange service. In addition, [ALLTEL offers longdistance service outside of its] franchised, local exchange service areas." ALLTEL Form 10K at 8.  360 resells long distance services to its cellular customers.^"xG yO 'ԍApplication of 360, Exhibit 2 at 7.^ Hence, for present purposes, the relevant geographic market consists of the territories in which both  X4ALLTEL and 360 presently market their respective long distance services. These markets include localities where both Applicants offer mobile phone services, and where ALLTEL  X_4offers local exchange access services and 360 markets its cellular services. Overlaps  XH4involving mobile phone networks are confined to instances where both ALLTEL and 360 are  X14partners in the same cellular franchise.k#1G yO'ԍSee Application of 360, Exhibit 2, Attachment B.k Otherwise, the two firms compete for long distance  X 4customers only where ALLTEL offers local exchange access services and 360 markets its  X 4cellular services.k$ G yOL'ԍSee Application of 360, Exhibit 2, Attachment A.k Accordingly, the relevant markets are the LATA's where ALLTEL operates wireline networks, provided that these local access transport areas (LATAs) lie  X 4entirely within 360's cellular service areas (MSAs or RSAs). In the alternative, relevant markets would be the largest areas of commonality involving these respective territories.  X4` `  c.,Local Access and Exchange Access Services  Xb420.` ` Applicants acknowledge that there is considerable overlap between ALLTEL's  XK4wireline local exchange areas and the service territories of 360's cellular operations.k%K( G yO$'ԍSee Application of 360, Exhibit 2, Attachment A.k Such overlaps exist in portions of Ohio, Pennsylvania, North Carolina, South Carolina, Florida and Texas. Applicants also identify overlaps between the parties involving strictly wireless  X4licenses in 89 counties in North Carolina, South Carolina, and Florida.J& G {Oo!'ԍSee infra para. 18.J  X421.` ` LATAs constitute the appropriate relevant geographic market for purposes of  X4assessing competition in the provision of local access and exchange access services, provided that all consumers within a LATA have access to the same set of service providers, product" J &,N(N(ZZ\"  X4offerings, and prices.'G {Oy' x8 ԍBANYNEX Order, 12 FCC Rcd. at 2001617,  5455; CenturyPacific Order, 13 FCC Rcd. at 890506,  26. To the extent that these conditions are not met within a LATA, the appropriate geographic market would be the largest area within each LATA meeting these  X4criteria.n("G {O'ԍCenturyPacific Order, 13 FCC Rcd. at 890506,  26.n Accordingly, we define these relevant markets to include areas where ALLTEL  X4operates wireline networks and 360 offers cellular services. These areas will be LATAs,  X4provided that they lie entirely within 360's cellular service areas (i.e., MSAs or RSAs). In the alternative, relevant markets would be the largest area of commonality involving an  Xx4ALLTEL LATA and 360's MSAs and/or RSAs.  XJ422.` ` We also consider the cases where this merger directly affects competition in the local access and exchange access market through Applicants' overlapping wireless holdings. In these cases, the relevant markets are LATAs, provided that they lie entirely  X 4within 360's cellular service areas (i.e., MSAs or RSAs) and ALLTEL's PCS service areas (BTAs). In the alternative, each relevant market would be the largest area of commonality  X 4involving each LATA, 360's MSAs and/or RSAs, and ALLTEL's BTA.  X 4` `  d.,Oneway Paging/Messaging  X}423.` ` We determine that there are no relevant markets involving paging/messaging services where this merger poses any prospect for concern from the standpoint of its competitive impact. ALLTEL holds paging licenses covering portions of Arkansas and  X84Florida.a)8G yO'ԍApplication of 360, Exhibit 2 at 4, 7.a Both firms offer paging services via resale, but confine their marketing of resold  X!4services to their respective cellular territories.b*!DG yO'ԍApplication of 360, Exhibit 2 at 7, 12.b Both companies also offer paging services over their respective cellular networks in conjunction with the delivery of mobile phone  X4services._+G yOx'ԍApplication of 360, Exhibit 2 at 12._ Applicants contend that ALLTEL and 360 do not compete with each other in any  X4geographic area for the delivery of oneway mobile data and messaging services.^,d G yO 'ԍApplication of 360, Exhibit 2 at 9.^ First,  X4aside from cases where both ALLTEL and 360 have partial interests in the same cellular  X4franchises,I- G {OS$'ԍSee supra note 27.I we note that their cellular territories do not otherwise overlap.b. G yO%'ԍApplication of 360, Exhibit 2 at 9, 12.b In the case of the joint ventures, paging services (and cellular services, for that matter) are offered solely" .,N(N(ZZ`" under the brand name of the managing partner. Furthermore, ALLTEL's facilitiesbased  X4paging services are not available in any market where 360 offers cellular service./zG yOb' x} ԍALLTEL holds paging licenses in Arkansas and Florida, including licenses to service Live Oak, Lake City,  !7 Gainesville, and Ocala. These service areas essentially coincide with large portions of ALLTEL's cellular service  yO' !g areas in north central Florida. As noted above, ALLTEL's cellular holdings do not overlap with 360's cellular  {O' ! holdings. See supra 18. ALLTEL may be able to provide paging coverage from its station at Live Oak that  yO' ! overlaps with the coverage 360 provides to portions of the panhandle east of Tallahassee, but these services are not  ! marketed to the same consumers. Moreover, consumers likely perceive significant differences between cellular services and pagingonly services. Hence, we concur that there is no competitive overlap involving paging services. Finally, we have recognized elsewhere that paging features included by digital mobile phone service providers are not generally regarded by consumers as interchangeable with standalone paging/messaging services because of significant differences in handset and service prices, batterylife, and for some, the relative ease with which users can receive pages when traveling  Xv4outofregion.o0v G {O1'ԍSee Third Annual CMRS Competition Report,  48.o  X_'   XH'C.Market  Participants , Competition and Entry  X 4  ` ` 1.  Markets for Nationwide Long Distance Communications Services  X 4` `  a.,Significant Market Participants     X 424.` ` ALLTEL reports that it had more than 281,000 longdistance customers as of  X 4yearend 1997.G1 G yO'ԍALLTEL Form 10K at 8.G This compares with a customer base of 1,789,000 subscriber lines  X4throughout its wireline service territory and 941,000 mobile telephony customers._2, G yOm'ԍALLTEL Form 10K at 5; ALLTEL Form 10K at 10._ ALLTEL states that it provides longdistance service in all of the states in which it provides  Xb4local exchange service, as well as to some customers outside of these service areas.H3b G yO'ԍALLTEL Form 10K at 8. H This information indicates that ALLTEL's share of the relevant long distance markets may be as  X44high as 16 percent.U4X4L G yO1!' xp ԍThe estimated 16 percent market share assumes that the size of the market is limited to the size of the local  ! exchange market. This estimate does not account for ALLTEL's customers that do not purchase its local exchange  yO"'services. U " l4,N(N(ZZ "Ԍ X425.` ` We estimate that 360 currently provides long distance services to  X4approximately 69,000 customers.5G yOb' xI ԍThis figure was derived by subtracting ALLTEL's customer base of 281,000 as reported for yearend 1997 in its Form 10K from the postmerger total of 350,000 subscribers furnished in the Application.  As of yearend 1997, 360 was directly serving  X4approximately 2.6 million customers.N6 G yO'ԍ360 Form 10K at 1.N However, 360 has a majority interest in wireless licenses covering 24.2 million people, and a substantial minority interest exceeding 20 percent  X4in other cellular operations covering an additional 5.9 million people.P7G yO 'ԍ360 Form 10K at 67.P These figures reveal  X4that 360 may serve, on average, about 0.2 percent of the long distance customers in those  Xv4cellular territories where it holds a significant financial interest.s8v@G yOg ' xV ԍ360 does not indicate whether its marketing of long distance services extends to areas where its financial  yO/' ! interest in cellular franchises is limited. We recognize that our measurement of 360's share of the long distance  ! market in cellular territories is understated by roughly onehalf because we compare its subscriber lines to population  ! rather than total subscriber lines. Applicants were unable to furnish a more suitable measure of the size of this relevant market. s  XH4` `  b.,Market Entry Prospects  X 426.` ` Competition in retail markets for long distance services has been growing. On  X 4a nationwide basis, market concentration among carriers declined steadily through 1997.9 G yO' x  ԍFederal Communications Commission, Common Carrier Bureau, Industry Analysis Division, "Long Distance Market Shares"First Quarter 1998," (June 5, 1998) at 16. Evidence on the number of long distance companies in operation throughout the country and in individual states also suggests that entry barriers may be quite low, although it appears that  X 4it is more difficult for individual firms to achieve significant market penetration.|:X H G yO' x ԍFederal Communications Commission, Common Carrier Bureau, Industry Analysis Division, "Telephone  ! Trends" (February 1998) at 40 (Table 10.2). In most states, and all of those affected by this transaction, at least 50 different longdistance carriers were reported as serving each state as of 1996. | Barriers to entry into resale markets appear to be especially low. In many markets, competition will increase further if and when regional Bell Operating Companies are permitted to enter these  Xy4markets.;yhG yO!'ԍALLTEL is not a Bell Operating Company, and is not restricted from competing in these markets. Moreover, considerable new fiber capacity is being deployed that may further  Xb4accelerate the development of competition in these markets.<bG {O $' x ԍSee, e.g., Communications Daily, "Sprint Challenges Rivals with New Network, Seeks New Regulatory Treatment" (June 3, 1998). "4 R<,N(N(ZZ|"Ԍ X4` ` 2.  Markets for Interconnected Mobile Voice Telephone Services  X4` `  a.,Significant Market Participants ` `  X427. ` ` For purposes of this inquiry, we examine competitive conditions for mobile voice telephone services in the 89 counties where Applicants hold overlapping cellular and PCS licenses. Competition in these markets is generally limited to the two incumbent cellular carriers, except in larger urban centers and their immediate surroundings where recent entry by PCS operators or a digital SMR company may have expanded consumer options. In  X14most of the major urban markets at issue, GTE and 360 are the incumbent cellular  X 4operators.n=\ G {O ' xV ԍSee Donaldson, Lufkin & Jenrette, "The Wireless Communications Industry" (Sept. 1997) at 125127, 145 ! 148. Bell Atlantic holds cellular licenses in Charlotte, North Carolina and Columbia, South Carolina and Greenville,  {O% 'South Carolina. Id. at 109111. n In Greensboro, Nextel, BellSouth and AT&T have each entered the market.> G {O' x ԍSee "PCS Week's Active PCS Systems List," PCS Week (December 9, 1998); Scott Andron, "Hightech  {O'Shopping," Greensboro News & Record at E1 (Dec. 14, 1997).  Competition in RaleighDurham now also includes BellSouth, AT&T and Nextel.  X 4Additionally, Sprint is reportedly expected to begin offering services by yearend 1998.@? HG {O' xc ԍCatherine Traugot, "Area's Wireless Market Wake from Slumber," Triangle Business Journal, at 31 (June  {O'12, 1998); Dan Kane, "The Battle to Get More for Wireless," Raleigh News & Observer at D1 (April 7, 1998).@ BellSouth and Nextel have entered the market for mobile phone services in Charleston and  X 4Greenville, South Carolina.@^ G {O' x} ԍSee "Digital Customers Account for More than Threequarters of Nextel Base," Land Mobile Radio News  {O' ! (April 17, 1998);  "PCS Week's Active PCS Systems List," PCS Week (December 9, 1998); "Telephony,"  {O'Communications Daily  (May 5, 1997). BellSouth appears to be the only market entrant in Wilmington, North Carolina to date. We also recognize that Nextel competes by offering mobile phone  X4services primarily to business customers in these markets.|A G {O 'ԍPittencrieff Order, 13 FCC Rcd. at 8955, 896566,  46, 6971.| Thus, we find that business users of mobile phone services in the very largest markets will soon have as many as six competitors from which to choose. In many other cities, however, and particularly for nonbusiness users, competition is more limited, and service generally is available from no more than three providers. In smaller cities and rural areas, service may be available only from the two incumbent cellular operators.  X4` `  b.,Market Entry Prospects  X428. ` ` Within the relatively near term,cB\ G {O%'ԍGuidelines, 57 Fed. Reg. at 41,558  3.2.c only broadband PCS providers and Nextel constitute potential new entrants into the relevant mobile phone markets we have identified. "B,N(N(ZZ5" Ultimately, based on our spectrum allocations to date, the potential exists for competition among providers of mobile telephone services to include the two incumbent cellular operators,  X4up to six PCS licensees, and a digital SMR licensee.zCG {OK' x ԍIn some rural areas, analog SMR operators also provide interconnected mobile phone service. Pittencrieff  {O' ! Order, 13 FCC Rcd. at 8956,  48. See Implementation of Section 6002(b) of the Omnibus Budget Reconciliation  !D Act of 1993; Annual Report and Analysis of Competitive Market Conditions with Respect to Commercial Mobile  {O' ! Services, FCC 9775, Second Report, 12 FCC Rcd. 11266, 1130708 (1977) ("Second Annual CMRS Competition  {Oq'Report").z In the more immediate term, however, entry into mobile phone markets will likely be focused primarily on larger urban centers and their immediate surroundings. The most likely entrants are Sprint, with licenses in Greensboro, Raleigh, Charleston, Greenville, and many other smaller cities, and AT&T, which  Xv4holds the Ablock PCS license for the extensive Charlotte major trading area.   XH4  29. ` ` Although prospects for entry into these markets within the short run is limited to existing licensees, the federal regulatory environment for mobile service providers has changed markedly in recent years, such that prospects for entry into wireless communications  X 4over the longer term have been considerably enhanced.D G {O4'ԍSee Second Annual CMRS Competition Report, 12 FCC Rcd. at 1127274. In particular, the manner and terms on which the Commission now licenses wireless spectrum have been revised. Spectrum is  X 4being licensed in more suitably sized geographic parcels,EJ G {O'ЍSee, e.g., Revision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development  {Ob'of Paging Systems, WT Doc. No. 9618, Second Report and Order and Further Notice of Proposed Rulemaking,  {O,'12 FCC Rcd. 2732, 2744 (1997) (finding that geographic area licensing provides flexibility for licensees); see  {O'also Amendment of Part 90 of the Commission's Rules to Facilitate Future Development of SMR Systems in the  {O'800 MHz Frequency Band, PR Doc. No. 93144, Second Report and Order, 12 FCC Rcd. 19079, 19087 (1997) (finding that geographic licensing will increase flexibility afforded licensees to manage their spectrum and will reduce administrative burdens and operating costs by allowing licensees to modify, move, or add to their facilities within specified geographic areas without need for prior Commission approval). auctions have accelerated the pace  X 4of licensing,F $G {O'ЍSee FCC Report to Congress on Spectrum Auctions, FCC 97353, Report, 13 FCC Rcd. 9601, 962324  {O]'(WTB 1997) ("Auctions Report"). and new policies afford license holders increasingly greater flexibility to use  X 4this spectrum in a manner that best meets society's needs.aG^ G {O'ЍSee, e.g., Amendment of the Commission's Rules to Permit Flexible Service Offerings in the  {O 'Commercial Mobile Radio Services, WT Docket No. 966, First Report and Order and Further Notice of  {Ol!'Proposed Rule Making, 11 FCC Rcd. 8965 (1996).a Small businesses also have been offered special opportunities to acquire spectrum through the Commission's competitive  Xy4bidding benefits, such as bidding credits.`HyG {O$'ԍSee Auctions Report, 13 FCC Rcd. at 9629.` "K8H,N(N(ZZQ"Ԍ X4` ` 3.  Markets for Local Exchange and Exchange Access Services  X4` `  a.,Significant Market Participants  X430.` ` In 1996, the Commission found that incumbent local exchange carriers have  X4approximately 99.5 percent of local exchange and exchange access services nationwide.6IZG yO' xz ԍImplementation of the Telecommunications Act of 1996, Accounting Safeguards Under the  {O' ! Telecommunications Act of 1996, FCC 96309, Notice of Proposed Rulemaking, 11 FCC Rcd. 9054, 9058,  6 (1996).6 ALLTEL is an actual participant in some of the markets for local exchange and exchange access services previously identified as relevant to this proceeding, namely those where it is  XH4the incumbent wireline carrier and 360 is one of the cellular providers.JJHG {O 'ԍSee supra para. 20.J  X 431.` ` In the other relevant local access and exchange access markets,JK |G {OG'ԍSee supra para. 22.J services are currently provided by other LECs such as BellSouth, Sprint, GTE, and in rural areas, by rural  X 4telephone companies.L" G yO' xV ԍ"BellSouth, GTE and Sprint cover about threequarters of North Carolina, including all major metropolitan  ! areas. A spattering of small, independent telephone companies cover the remainder of the state, mostly in rural areas.  ! . . . BellSouth is the incumbent carrier in the state's largest cities . . . ." David Strow, "BellSouth Loads for Durham  {O'Assault," Triangle Business Journal, at 1 (Dec. 12, 1997). In these cases, both ALLTEL and 360 hold licenses that allow them to provide access to the public switched telephone network via radiotelephone technologies.  X 4As wireless providers, ALLTEL and 360 are precluded competitorsMZ G {Og' x ԍIn the BANYNEX Order, the Commission explained that "precluded competitors" were firms that were most  ! likely to have entered the relevant markets, but, until recently, had been prevented or deterred from market  yO'participation by barriers that the 1996 Act seeks to lower. 12 FCC Rcd. at 20020,  60.  in these relevant local  X 4exchange and exchange access markets. However, in the BANYNEX Order, the Commission found that commercial mobile telephone companies were not among the most significant  X{4participants in the markets relevant to that proceeding.wN{G {OF'ԍBANYNEX Order,12 FCC Rcd. at 2002425, 2035,  70, 94. w The Commission also regarded interexchange carriers, nonadjacent, outofregion Bell Companies, cable providers, and competitive access providers as likely participants in markets for local exchange and exchange  X64access services.WO6G {O#'ԍId. at 2002935,  8094.W However, beyond the incumbent firm, NYNEX, only large interexchange carriers (AT&T, MCI, Sprint) and an adjacent Bell Company (Bell Atlantic) were found to be  X4significant participants in the relevant markets.  X4  ` `  ,">O,N(N(ZZ"Ԍ X4` `  b.,Market Entry Prospects  X432.` ` The Telecommunications Act of 1996 (1996 Act) fundamentally changed telecommunications regulation by requiring local telephone companies to open their networks to competition. Specifically, the 1996 Act requires incumbent LECs to provide requesting carriers nondiscriminatory access to network elements on an unbundled basis at any technically feasible point on rates, terms, and conditions that are just, reasonable, and non X_4discriminatory.JP_G yO'ԍ47 U.S.C.  251(c)(3).J In addition, the 1996 Act facilitates the development of local competition by requiring incumbent LECs to provide physical collocation of equipment necessary for  X14interconnection or access to unbundled network elements at the incumbent LEC's premises.JQ1XG yO: 'ԍ47 U.S.C.  251(c)(6).J The rates for interconnection and unbundled network elements must be costbased (including  X 4a reasonable profit) and nondiscriminatory.JR G yO'ԍ47 U.S.C.  252(d)(1).J The 1996 Act also requires all incumbent LECs to offer for resale any telecommunications service that the carrier provides at retail to  X 4subscribers who are not telecommunications carriers.JS xG yO'ԍ47 U.S.C.  251(c)(4).J Although growth in local competition has been slower than many had hoped since the Commission's implementation of these  X 4requirements in the Local Competition Order,&T G yO`' x ԍImplementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket  {O('No. 9698, First Report and Order, 11 FCC Rcd. 15499, 15787 (1996) ("Local Competition Order").& it continues to grow and the potential exists for the eventual emergence of fullfledged, facilitiesbased local competition.  Xd4 33.` ` There also exists a significant potential for incumbent LECs to face competition from the wireless industry. According to at least one independent assessment, "the wireless industry appears to be Congress' best nearterm hope of bringing facilitiesbased competition to residential end users. After all, other potential competitors that the 1996 Telecommunications Act envisioned have either stayed within their traditional markets or  X4focused on lucrative business customers."Ub G {O ' x  ԍSee Pat Blake, "Fixed or Mobile? How About Both? PCS Carriers Are Opting for a New Breed of  {O 'Networks That Covers a Blend of Wireline and Wireless Applications," Telephony (June 1, 1998). In response to competitive pressures arising through PCS entry, wireless carriers are increasing the minutes of use included at each price tier, which spurs the migration of minutes from wireline networks. One analyst regards this  X4as the "primary way of initially deploying wireless local loop . . . ."~V G {O%'ԍId., quoting Crispin Vicars, program manager of The Yankee Group.~ Wireless local loop, as traditionally conceived, is based on use of a neighborhood tower and transceivers attached to the customers' premises. These networks accommodate fixed and low/local mobility services. "~P V,N(N(ZZ=" Hybrid approaches include the use of intelligent networks that direct calls seamlessly to the user at a single phone number, over wireline or wireless networks as needed. Some of the impetus for these offerings can be attributed to meeting the needs of consumers who demand enhanced connectivity. In other cases, falling wireless pricing has reduced the premium over  X4wireline telephone services.W\G {O' x ԍThird Annual CMRS Competition Report, at 27. In Jacksonville, where ALLTEL recently launched, digital  {O' ! prices for mobile phone services declined by 36 to 41 percent between August 1997 and May 1998. See Merrill Lynch & Co., "TelecommunicationsCellular: What's Going on in Jacksonville, FL?" (May 5, 1998).  Some highly mobile users, such as college or graduate students, are prepared to pay this premium to avoid other costs associated with the use of wireline  Xv4services.XvG {O ' x ԍ"Industry Sees Students and Retirees Dropping Wired Phone for Wireless," Communications Daily (Sept. 15, 1997). Hence, we conclude that prospects for consumers substituting for wireline services by using mobile telephone carriers appear to be improving.  XH'    X1'D. Competitive Effects of Merger  X 4!34.` ` Having established above the conditions of existing and potential competition in the various relevant markets, we now turn our focus to the likely effects of the merger  X 4between ALLTEL and 360  on competition in these markets. Under our analytical framework, we evaluate the prospects for anticompetitive harms arising either through unilateral action by the merged entity, or through coordinated behavior by the participants in each relevant market. Under the unilateral effects analysis, we consider whether the acquisition would give the merging parties an increased ability to price strategically to inhibit  Xb4competition and thereby adversely affect market performance.pYbFG {OY'ԍ See BANYNEX Order, 12 FCC Rcd. at 20044,  114.p Under the coordinated effects analysis, we consider whether a merger affects market performance by increasing the potential for coordinated interaction by firms remaining in the postmerger market. Coordinated interaction is defined as "actions by a group of firms that are profitable for each of them only  X4as a result of the accommodating reactions of the others."iZG {O'ԍGuidelines, 57 Fed. Reg. at 41558, 2.1.i  X4` ` 1.  Markets for Nationwide Long Distance Communications Services  X4"35.` ` In general, markets for nationwide long distance services remain highly concentrated, whether we examine data for the nation as a whole or any of the individual  X|4states where both ALLTEL and 360 operate. On a nationwide basis, the HerfindahlHirschman index calculated using long distance service revenues was estimated at 2508 for"ej Z,N(N(ZZ"  X41997.[ G yOy' x ԍFederal Communications Commission, Common Carrier Bureau, Industry Analysis Division, "Trends in  !@ Telephone Service" at 50, Table 11.5 (February 1998); Federal Communications Commission, Common Carrier  !^ Bureau, Industry Analysis Division, "Long Distance Market Shares"First Quarter 1998" at 16, Table 3.2 (June 5, 1998).  For each individual state affected by this merger, the five largest IXCs accounted for  X4at least eightyfive percent of all presubscribed telephone lines, as of yearend 1996.\G yOJ' x  ԍFederal Communications Commission, Common Carrier Bureau, Industry Analysis Division, "Long Distance  ! Market Shares"Fourth Quarter 1997" at 20, Table 4.1 (March, 1998). More recent data, focusing solely on  ! residential service for 1997, indicate that the three largest IXCs serve at least eighty percent of all residential access  ! lines in relevant states. Federal Communication Commission, Common Carrier Bureau, Industry Analysis Division, "Long Distance Market Shares"First Quarter 1998" at 22, Table 4.1 (June 5, 1998). Thus, we must examine whether this merger has the potential to raise concentration significantly in markets that are already highly concentrated. Based on our best estimates for the market shares of the merging parties, this merger will raise concentration in long distance markets, on  X4average, by no more than about seven points.]` G yO' x" ԍChanges in market concentration as measured by HHIs may be estimated by doubling the product of the market shares of the merging parties. Hence, 2 x 15.7 x 0.23 = 7.2. This increase is well below the fiftypoint  Xv4threshold set out in the Guidelines for highly concentrated markets, and suggests that this merger will not significantly reduce competition or create or enhance unilateral market power.  X34#36.` ` Moreover, despite the currently high level of concentration in these markets, we find that concentration is steadily declining. We note that the merger will not affect the  X 4control of longdistance capacity or its market supply, since both ALLTEL and 360 presently provide these services as resellers. Indeed, the overall supply of capacity needed to offer these services is growing rapidly. Barriers to entry into the business of providing long distance services also appear to be quite low, as indicated by the large number of authorized  X 4carriers.^ G yO' x ԍFederal Communications Commission, Common Carrier Bureau, Industry Analysis Division, "Trends in Telephone Service" at 40, Table 10.2 (Feb. 1998). Thus, we conclude that postmerger, ALLTEL would not be able to exercise unilateral market power or materially increase prospects for anticompetitive conduct through coordinated behavior among the larger IXCs that collectively dominate these markets at this time.  X64` ` 2.  Markets for Interconnected Mobile Voice Telephone Services  X4$37.` ` ALLTEL and 360 do not now compete directly in any market for mobile phone services because ALLTEL has not yet introduced services to any of the localities  X4where 360 has ongoing cellular operations. Thus, this merger will not eliminate actual competition in these markets. We expect that absent the merger, however, ALLTEL would"^,N(N(ZZ1"  X4likely have followed up its recent launch of PCS services in JacksonvilleJ_\G {Oy' x ԍSee Elizabeth Jensen, "Yakking It up: For Wireless Services, Talk Gets Far Cheaper as Competition Rages;  {OC' !* "In Jacksonville, Fla., Rivals Are Multiplying Faster Than New Customers," Wall Street Journal at A1 (April 27, 1998).J by constructing networks and commencing service to Greensboro, RaleighDurham, Charleston, Greenville,  X4and Wilmington. In each of these markets, 360 is an incumbent cellular operator. Instead, this merger will unify the ownership and control over these 25MHz cellular and 10MHz  X4PCS licenses.`G {OA ' x ԍNewave, op. cit. See also Dan Kane, "The Battle to Get More for Wireless," Raleigh News & Observer at D1 (April 7, 1998). However, to the extent that ALLTEL perceived incentives to enter these  X4markets prior to its decision to acquire 360, we expect that similar incentives would continue to prompt entry by other licensees. Moreover, ALLTEL or its assignee is obligated to use its 10MHz PCS licenses to provide substantial service no later than April 28, 2002, under the  XH4Commission's buildout rules.aXHFG yO?' xl ԍ47 C.F.R.  24.203(b) ("Licensees of 10 MHz blocks must serve with a signal level sufficient to provide  ! adequate service to at least onequarter of the population in the licensed area within five years of being licensed, or make a showing of substantial service in their licensed area within five years of being licensed").  X 4` ` 3.  Markets for Local Exchange and Exchange Access Services  X 4%38.` ` Each of the markets for local access and exchange access services relevant to this proceeding is presently served by a monopolist. In many cases, ALLTEL is the incumbent monopoly provider. ALLTEL has identified numerous sources of actual and potential competition in these relevant markets, including cellular communications providers  X4and PCS carriers.Gbf G yO'ԍALLTEL Form 10K at 7.G 360 is an actual competitor in some of these markets.gc G yO7'ԍApplication of 360, Exhibit 2, Attachment A.g Indeed, as one  Xy4of the two incumbent cellular companies in certain of these wireline service areas, 360 might conceivably have become a competitor at some point in the future. By this time, however, other wireless carriers are also likely to be present and thereby will compete in ALLTEL's  X44local exchange markets. We believe that a merger between ALLTEL and 360 will not impede the ability of these carriers to compete because of safeguards governing the  X4relationships between incumbent LECs and their CMRS affiliates.d" G yO="' x ԍAmendment of the Commission's Rules to Establish Competitive Service Safeguards for Local Exchange  ! Carrier Provision of Commercial Mobile Radio Services; Implementation of Section 601(d) of the  {O#' ! Telecommunications Act of 1996, WT Doc. No. 96162, Report and Order, 12 FCC Rcd. 15668, 15692708,  3768 (1997).  X'  "pd,N(N(ZZX"Ԍ X'E.ProCompetitive and Efficiency Benefits    X4&39.` ` Once we have examined the potential harms to competition of the proposed merger, we next examine the potential procompetitive benefits attributable to the transaction. These procompetitive benefits include efficiencies arising from the transaction if such efficiencies are achievable only as a result of the merger, are sufficiently likely and verifiable, and are not the result of anticompetitive reductions in output or increases in price. Efficiencies are the procompetitive benefits of a merger that improve market performance. Efficiencies generated through a merger can mitigate competitive harms if such efficiencies enhance the merged firm's ability and incentive to compete and therefore result in reductions in price, improved quality, and enhanced services or new products. Applicants bear the burden of showing both that merger specific efficiencies will occur, and that they sufficiently offset any harm to competition such that we can conclude that the transaction is pro X 4competitive and therefore in the public interest.xe G {ON'ԍSee BANYNEX Order, 12 FCC Rcd. at 20063,  158159.x  X 4'40.` ` 360 contends that several procompetitive and efficiency benefits will accrue from this transaction, namely that it will provide consumers with the benefits of using  Xy4wireless services over a larger service area at a lower cost and with higher quality._fyZG yO'ԍApplication of 360, Exhibit 2 at 14._ 360 also contends that the proposed transaction will result in significant cost savings by lowering  XK4the incremental transport costs by porting 360's communications traffic on ALLTEL's expansive fiber optic network and by eliminating of redundant costs in administration,  X4customer service, and sales.egG yO'ԍApplication of 360, Exhibit 2 at 15.e Finally, 360 contends that this transaction will allow the  X4combined company to offer a wider choice of products to a larger number of customers.ehzG yO1'ԍApplication of 360, Exhibit 2 at 16.e In  X4particular, 360 contends that the transaction will result in a seventeen percentage point increase in ALLTEL wireline access lines that also have wireless service overlay, thereby allowing the combined company to increase the number of customers to which it can offer  X4onestop shopping for local exchange, wireless and longdistance services.ei G yOe 'ԍApplication of 360, Exhibit 2 at 16.e  X|4(41.` ` We have considered the benefits that Applicants contend will accrue from this transaction. First, we recognize that this merger will considerably expand ALLTEL's wireless footprint. In particular, the merger permits the creation of a more formidable regional cellular competitor by assembling a contiguous block of cellular licenses along the Atlantic seaboard from southern Virginia into northern Florida. Moreover, we also find that this merger will expand the range of communications services that ALLTEL is able to offer to many of its" i,N(N(ZZ@" wireline customers. We concur with Applicants that, over the near term, a wireline telephone company can expand into the provision of wireless services only by acquiring spectrum rights from existing licensees. Finally, while we do not necessarily view savings in overhead and administrative expenses as cognizable benefits, we agree that significant cost savings may be achieved from the planned use of the fiber optic network that ALLTEL is currently deploying  X4to serve 360's mobile phone customers. Hence, we determine that Applicants have met their burden of demonstrating that this transfer will indeed result in significant mergerspecific efficiencies.  X14f] IV. CONCLUSIONS ă  X 4)42.` ` On balance, we find that the transfer of control of these authorizations from  X 4360 Communications Company to ALLTEL Corporation serves the public interest, convenience, and necessity. Accordingly, we grant the proposed transfer application.  X 4    X 'E5 V. ORDERING CLAUSES   Xy4c*43.` ` Accordingly, IT IS ORDERED, pursuant to section 4(i) and (j), 309, and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 154(j), 309,  XK4310(d), that the applications filed by 360 Communications Company in the abovereferenced proceeding ARE HEREBY GRANTED.  X4+44.` ` IT IS FURTHER ORDERED that the above grant shall include authority for ALLTEL to acquire control of (1) any authorization issued to the subsidiaries and affiliates of  X4360 connected to this transaction during the Commission's consideration of the transfer of control application and the period required for consummation of the transaction following approval; (2) construction permits held by the licensee involved in this transfer that mature into licenses after closing and that may have been omitted from the transfer of control  X|4application; and (3) applications that will have been filed by 360 and that are pending at the  Xe4time of consummation of the proposed transfer of control.XjeG {O'ԍMcCaw, 9 FCC Rcd. at 5909, n.300.X ` `  ,hh]FEDERAL COMMUNICATIONS COMMISSION ` `  ,hh] ` `  ,hh]Gerald P. Vaughan ` `  ,hh]Acting Chief, Wireless Telecommunications Bureau