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File how2ftp (.txt & .wp) is in directory /pub/Bureaus/Miscellaneous/Public_Notices/ ***************************************************************** ******** $//Order, Applications of Western and MTEL Cellular//$ $/ 22.903, Conditions applicable to former Bell operating companies/$ $/ 22.913, Effective radiated power limits/$ DA 96-710 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In re Applications of ) ) WESTERN CALIFORNIA CELLULAR ) File No. 10184-CL-P-709-A-88 PARTNERS ) ) and ) ) MTEL CELLULAR, INC. ) File No. 10349-CL-P-709-A-88 ) for Authorization to Construct ) and Operate a New Domestic Public ) Cellular Radio Telecommunications ) Service on Frequency Block A to ) serve Market No. 709 ) Wisconsin RSA No. 2 - Bayfield ) ORDER Adopted: May 8, 1996 Released: May 8, 1996 By the Chief, Commercial Wireless Division, Wireless Telecommunications Bureau: I. INTRODUCTION AND BACKGROUND 1. In this order, we address a Joint Motion for Approval of Settlement Agreement (Joint Motion) filed by Western California Cellular Partners (Western) and MTEL Cellular, Inc. (MTEL) on September 8, 1995. The parties request that the Commission approve their settlement agreement, the withdrawal of their respective Petitions to Deny (Petitions) the other party's application and the dismissal of MTEL's application and their request for waiver of the partial settlement and anti-alienation rules. For the reasons discussed below, we approve the Joint Motion, and grant the withdrawal of their respective Petitions, the dismissal of MTEL's application and the waiver request of our partial settlement and anti-alienation rules. 2. The parties' applications for Market 709A, Wisconsin RSA No. 2 - Bayfield ("Wisconsin 2") were filed in September of 1988. The Commission selected Western's application in a lottery held on March 15, 1989 for Wisconsin 2. The Common Carrier Bureau, Mobile Services Division dismissed the application on May 5, 1989, because Western failed to submit a proper map of its proposed Cellular Geographic Service Area pursuant to 47 C.F.R.  22.903(a)(1) and 22.913(a)(2). In reconsidering that decision, the Common Carrier Bureau did not rely upon the defects in Western's map, but affirmed the dismissal because Western failed to demonstrate that it had a firm financial commitment for funds upon which it could rely to construct and operate its proposed cellular system for one year as required by Section 22.917(c) of the Commission's rules. The Commission reinstated Western's application on December 8, 1992 concluding that the requirement in Section 22.917(c) that applicants for initial cellular facilities must demonstrate that they have a firm financial commitment was unenforceable against this application because the Commission violated the Paperwork Reduction Act of 1980 when the rule was adopted. 3. Before the reinstatement of Western's application, the Commission conducted a second lottery of Wisconsin 2 on July 31, 1990. The Commission's selection of another lottery winner as the tentative selectee was conditioned upon the outcome of Western's Petition for Reconsideration of the dismissal of its application. The Commission subsequently announced MTEL as the tentative selectee on September 21, 1990. Because of the reinstatement of Western's application in 1992, the Commission announced Western as the tentative selectee on February 21, 1995. MTEL and Western each filed cross petitions against the other party's application. 4. In an effort to end the litigation involving the license for Wisconsin 2, the parties have submitted the Joint Motion to the Commission for approval of their settlement. The parties have agreed to withdraw their respective petitions and to merge their interests to form a general partnership, Wisconsin II Venture. As part of the settlement, MTEL will dismiss its application while Western amends its application to substitute Wisconsin II Venture as the applicant. Finally, the parties seek a waiver of the Commission's partial settlement and anti-alienation rules in order to implement the settlement. II. DISCUS SION 5. Since the filing of the parties' applications, the Commission has re-written Part 22 of the Commission's rules in the Part 22 Rewrite proceeding. The parties argue that although the Commission must apply the rules in effect when the applications were filed, they shall voluntarily comply with the current, more rigorous requirements of Section 22.129 as revised by the Part 22 Rewrite Order. We also recognize that in Section 22.959 of the Part 22 Rewrite Order, the Commission specifically provides that an application for an initial cellular system shall be processed under the rules governing the processing of cellular applications that were in effect when the application was filed unless the Commission determines otherwise. Since these applications for an initial cellular system were filed in 1988, we must process these applications under the rules that were in effect in 1988 unless we determine otherwise. The purpose of Section 22.129 is to discourage the filing of speculative applications and litigious pleadings designed solely to extract money from sincere applicants, while still providing some incentive for legitimate petitioners and applicants to withdraw from proceedings and thus expedite service to the public. We see no reason to apply our current rules to these applications. Nothing in the history of this proceeding indicates that either party applied for Wisconsin 2 as part of a speculative venture. Accordingly, we will apply Section 22.29 of the Commission's rules which were in effect in 1988. 6. Under former Section 22.29, parties who under a settlement agreement apply to the Commission for ownership changes or for the amendment or dismissal of either pleadings or applications shall, at the time of filing the amendment or dismissal, notify the Commission that such filing is the result of an agreement or understanding. The parties have complied with the notification requirement and are not required to submit the agreement or affidavits certified by responsible parties as is required by Section 22.129 of the Part 22 Rewrite Order. 7. The parties have requested a waiver of our partial settlement and anti-alienation rules. As previously stated, throughout this Order, we shall apply the rules in effect when the parties filed their applications. In 1988, the Commission prohibited nonwireline partial settlements of RSAs as well as the alienation of any interest in an RSA application before the grant of a construction authorization. 8. The Commission adopted the partial settlement prohibition rule because partial settlements "slowed down [the] processing of applications and delayed the institution of service, . . . extended the headstart enjoyed by the wirelines in many markets. . ." and attracted speculators who did not intend to construct and operate a cellular facility. The Commission sought to "promote a regulatory environment in which applications filed reflect[ed] a genuine intention to construct and operate the cellular facilities as proposed." Both rules were intended to deter speculative applications, and to eliminate processing problems and service delays. 9. The Commission imposes a strict burden on any party seeking to waive its rules. A party must show "[t]hat the underlying purpose of the rule will not be served, or would be frustrated by its application in a particular case," or "[t]hat the unique facts and circumstances of a particular case render the rule inequitable, unduly burdensome or otherwise contrary to the public interest." The Joint Motion notes that both parties are lottery winners and that applying the rules will not deter speculative applications since no such applications remain to be filed for this market. We agree. As discussed below, a denial of the waiver request is not in the public interest because a denial will actually prolong litigation in this matter, delay service to the public and have no effect on deterring the filing of speculative applications. In sum, the underlying purpose of the rules will not be served by applying them to the facts of this particular case. 10. In Amendment of Section 22.922 to Permit Limited Transfers and Assignments of Applications in RSAs, we noted that, although Section 22.922 had been an effective deterrent to the filing of speculative applications, we were at the virtual end of the licensing process for the RSAs. Moreover, as is the case with the partial settlement rule, granting a waiver in this instance would conserve our resources and those of the parties by ending litigation that has already gone on for six years. Such litigation between these two parties who are determined to provide cellular service through a permanent authorization to Wisconsin 2 should not be encouraged. Given the prior history of this proceeding, nothing in the record suggests that any speculation was involved. We find that application of the partial settlement rule and the anti- alienation rule under these unique facts and circumstances is contrary to the public interest and would not serve the underlying purpose of the Commission's rules. 11. In light of our determination that a waiver of the partial settlement rule and the anti-alienation rule is in the public interest, we must determine whether the Commission should approve the Joint Motion and related documents. After a thorough review of the Joint Motion, we conclude that the documentation meets the requirements of Section 22.29, which was applicable in 1988. Accordingly, we approve the settlement. 12. Finally, the parties assert that the "substitution of the settlement partnership as the cellular applicant is a minor amendment which requires no exemption from the cut-off rule" in Section 22.31. We agree and find that the parties have met the requirements of Sections 22.23 and 22.918. These sections provide the Commission's rules for processing amendments for cellular applications. Section 22.23(c) classifies all amendments as minor except for certain specified exceptions listed in Section 22.23(c)(1) - (4). Of all the exceptions listed in Section 22.23(c) only the change in ownership or control exception under Section 22.23(c)(4) is applicable to this situation. The change in ownership or control exception provides that any amendment which specifies a substantial change in beneficial ownership or control of an applicant shall be deemed a major amendment subject to the provisions of Sections 22.27 and 22.31. 13. The Commission's general Part 22 amendment processing rules must be construed in conjunction with our specific cellular rules for the amendment of applications. Section 22.918(c)(1) allows the filing of amendments in connection with partial settlements resulting in a merger of interests between two or more mutually exclusive parties. Additionally, Section 22.918(b) prohibits the filing of amendments before the conduct of the lottery for markets below the top-90. In this situation, the substitution of Wisconsin II Venture, a general partnership between Western and MTEL, does not constitute a substantial change in beneficial ownership or control of the applicant and shall not be deemed a major amendment subject to the provisions of Sections 22.27 and 22.31. The settlement agreement provides that Western will retain 77.5% of the ownership interests while MTEL will have 22.5% of ownership interests in the partnership. Generally, the test for whether the interest to be transferred is "controlling" or "substantial" is whether 50 percent or more of the stock is being transferred; and whether as a result of the transaction 50 percent or more of the outstanding stock will be held by persons whose qualifications to be Commission licensees have not previously been approved of or "passed upon". Clearly, Western did not transfer 50 percent or more of its interests. Pursuant to Section 22.918 the parties filed a post lottery amendment in connection with a partial settlement resulting in a merger of their interests. Accordingly, the amendment is minor and is not subject to Sections 22.27 and 22.31. III. CONCLUS IONS 14. We find that the Joint Motion satisfies the requirements of Section 22.29. Accordingly, we shall approve the Joint Motion. We further find that a waiver of the partial settlement and anti-alienation rules is in the public interest pursuant to Section 22.19. Additionally, we find that substitution of Wisconsin II Venture as the applicant in Western's application is a minor amendment under Sections 22.23 and 22.918 that is not subject to cut-off and public notice rules. 15. Furthermore, we find Wisconsin II Venture to be legally, technically and otherwise qualified to construct and operate the proposed cellular system and that granting the instant application would serve the public interest, convenience and necessity. 16. In light of our findings, we shall approve the application of Wisconsin II Venture, grant the withdrawal request of the Petitions filed by Western and MTEL and dismiss all remaining mutually exclusive applications. IV. ORDERING CLAUSES 17. Accordingly, IT IS ORDERED that pursuant to Sections 4(i), 303(r) and 309(a) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 303(r) and 309(a) and Section 0.331 of the Commission's rules, 47 C.F.R. 0.331 that the application (File No. 10184- CL-P-709-A-88) of Wisconsin II Venture IS GRANTED. This authorization does not include the right to any interference protection in any areas outside the Wisconsin 2 RSA and is also conditioned upon coordinating with the current and future co-channel licensee(s) in the areas outside the RSA. The licensee herein is put on notice that in the event current or future MSA/RSA licensees encounter interference from any extensions, the licensee herein will have to change frequencies in those cells or pull back its contours to eliminate any interference due to an extension. 18. IT IS FURTHER ORDERED that pursuant to Sections 4(i), and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i),and 303(r) and Section 0.331 of the Commission's rules, 47 C.F.R.  0.331 that the Joint Motion for Approval of Settlement Agreement filed by Western California Cellular Partners and MTEL Cellular, Inc. on September 8, 1995 IS GRANTED. 19. IT IS FURTHER ORDERED that pursuant to Sections 4(i), and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), and 303(r) and Section 0.331 of the Commission's rules, 47 C.F.R.  0.331 that the waiver request of the partial settlement rule under Section 22.33 and the anti-alienation rule under Section 22.922, 47 C.F.R.  22.922 by Western California Cellular Partners and MTEL Cellular, Inc. on September 8, 1995 IS GRANTED. 20. IT IS FURTHER ORDERED that pursuant to Sections 4(i), and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), and 303(r) and Section 0.331 of the Commission's rules, 47 C.F.R.  0.331 that the minor amendment by Western California Cellular Partners substituting Wisconsin II Venture as the applicant for Market No. 709, Wisconsin RSA No. 2 - Bayfield in its application IS GRANTED. 21. IT IS FURTHER ORDERED that pursuant to Sections 4(i), and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), and 303(r) and Section 0.331 of the Commission's rules, 47 C.F.R.  0.331 that all non-wireline cellular applications in the Wisconsin RSA No. 2 - Bayfield, other than the application of Wisconsin II Venture ARE HEREBY DISMISSED. 22. IT IS FURTHER ORDERED that pursuant to Sections 4(i) and 309(d) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i) and 309(d) and Section 0.331 of the Commission's rules, 47 C.F.R.  0.331 that the Request to Withdraw the Petition to Dismiss or Hold in Abeyance filed by Western California Cellular Partners on November 7, 1990 and the Petition to Dismiss or Deny filed by MTEL Cellular Inc. on April 5, 1995 IS GRANTED. COMMERCIAL WIRELESS DIVISION David L. Furth Chief, Commercial Wireless Division Wireless Telecommunications Bureau APPENDIX 47 C.F.R.  22.29 (1988) (a) Applicability. This section applies to applicants and all other parties interested in pending applications who wish to resolve contested matters among themselves with a formal or an informal agreement or understanding. This section applies only when the agreement or understanding will result in: (1) A major change in the ownership of an applicant to which  22.23 and 22.23(g) apply, or (2) The individual or mutual withdrawal, amendment or dismissal of any pending application, amendment, petitioner or other pleading. (b) Policy. Parties to contested proceedings are encouraged to settle their disputes among themselves. Parties which, under a settlement agreement, apply to the Commission for ownership changes or for the amendment or dismissal of either pleadings or applications, shall at the time of filing notify the Commission that such filing is the result of an agreement or understanding.