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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************************* Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Application of Pacific Telesis Mobile ) File No. 00002-CW-L-95 Services for a License to Provide ) Call Sign KNLF 205 Broadband PCS Service on Block B in the ) Los Angeles - San Diego Major Trading ) Area (M002) ) ORDER Adopted: July 29, 1996 Released: August 13, 1996 By the Commission: I. INTRODUCTION 1. On March 13, 1995, the Commission announced Pacific Telesis Mobile Services ("PacTel") as the auction winner for a broadband Personal Communications Services ("PCS") Block B license for the Los Angeles-San Diego Major Trading Area ("MTA"). On April 12, 1995, we accepted PacTel's FCC Form 600 (long-form application). On May 12, 1995, Cox Enterprises, Inc. ("Cox") filed a Petition to Deny or Condition License Grant of PacTel's PCS license. In June 1995, the Wireless Telecommunications Bureau ("Bureau") denied Cox's Petition to Deny or Condition License Grant ("Petition to Deny"). Cox filed an Application for Review of the Bureau's denial of the Petition to Deny. Based on the lack of evidence presented and for the reasons discussed below, we affirm the Bureau's earlier decision and deny Cox's Application for Review. II. PLEADINGS 2. In its Petition to Deny, Cox argued that the Commission's existing non-structural safeguards, which are designed to prevent cross-subsidization between the regulated activities of a Local Exchange Carrier ("LEC") and its non-regulated competitive services, are insufficient to prevent Pacific Bell from cross-subsidizing PacTel's PCS services to the disadvantage of its wireline ratepayers and PacTel's PCS competitors. Cox also contended that the Commission had never specified that its Part 64 cost allocation and affiliate transaction rules and Part 32 Uniform System of Accounts rules apply to a LEC's landline/PCS joint allocation of operating costs. Cox therefore urged the Commission to impose conditions on PacTel's PCS license grant, or, in the alternative, to clarify that the Commission's accounting safeguards adopted in the Joint Cost proceeding apply to PacTel's provision of PCS, and to monitor PacTel's PCS cost accounting to ensure that its PCS provision was not improperly cross-subsidized. 3. In its opposition, PacTel responded that its provision of PCS is subject to the Part 64 and Part 32 cost allocation rules, because the Commission made clear that services like PCS, which never have been subject to rate regulation, are considered non-regulated services for federal accounting safeguard purposes. Thus, PacTel committed to complying with all applicable accounting safeguards. PacTel also argued that the issues raised by Cox were cost accounting issues that should be considered in a rule making proceeding, not in a petition to deny a license grant. 4. On June 23, 1995, the Bureau, acting pursuant to delegated authority, dismissed Cox's Petition in the PacTel Order. The Bureau stated that the issues raised by Cox were essentially requests for clarification of the Commission's cost accounting rules. The Bureau held that such issues were being considered in the reconsideration of the CMRS Second Report and Order, which was the proper forum for them, and that Cox's pleadings would be considered as ex parte filings in that proceeding. The Bureau also held that Cox's allegations that Pacific Bell had engaged in, or would engage in, improper cross-subsidization were not supported by evidence, and that therefore no reason existed to deny or condition PacTel's PCS license. 5. On July 24, 1995, Cox filed an Application for Review of the PacTel Order. Cox argues that the Bureau erred in denying its request to clarify the Commission's cost- accounting rules or to impose specific accounting requirements on PacTel. On August 7, 1995, PacTel filed an Opposition to Cox's Application for Review, in which PacTel argues that the Bureau previously considered and rejected Cox's attempt to change or clarify the Commission's cost accounting rules, and that the Commission should do the same again. PacTel also argues that Cox failed to show how the Bureau erred in not imposing the Commission's cost-accounting rules on PacTel. 6. On August 22, 1995, Cox filed a Reply to PacTel's Opposition. Cox states that the Bureau failed to consider the opportunities for discrimination in interconnection presented by the implementation of PacTel's integrated PCS system. To support such allegations of actual and potential cross-subsidization, Cox attaches an audit published in July of 1994 by the National Association of Regulatory Utility Commissioners ("NARUC"). Cox alleges that the NARUC audit proves that Pacific Bell has engaged in extensive cross-subsidization between its landline operations and its affiliated PacTel companies. 7. In a letter to the Commission dated September 18, 1995, PacTel objects to the inclusion of the NARUC audit in Cox's Reply of August 22, 1995. PacTel argues that Cox improperly presented its alleged proof of cross-subsidization. PacTel states that attempting to introduce such proof is procedurally incorrect, as no new evidence may be introduced in an application for review if the designated authority has not yet had an opportunity to review it. PacTel also argues that even if such document had been introduced properly, the NARUC report contains only abstract allegations of possible cross-subsidization, and thus presents no reason to deny its PCS license. III. DISCUSSION 8. Under Section 1.115(a) of our rules, a person aggrieved by an action taken pursuant to delegated authority may file an application requesting review of that action. Such application shall concisely and plainly state the question presented for review, from among the following: (i) The action taken pursuant to delegated authority is in conflict with statute, regulation, case precedent, or established Commission policy. (ii) The action involves a question of law or policy which has not previously been resolved by the Commission. (iii) The action involves application of a precedent or policy which should be overturned or revised. (iv) An erroneous finding as to an important or material question of fact. (v) Prejudicial procedural error. 47 C.F.R.  115(b)(2)(i)-(v). Additionally, the application for review must "state with particularity the respects in which the action taken by the designated authority should be changed," and the form of relief sought. No application for review will be granted if it relies on questions of fact or law upon which the designated authority has been afforded no opportunity to pass. 9. In this case, Cox argues that the Bureau erred when it dismissed its Petition to Deny. Cox also argues that the Bureau erred when it determined that Cox's allegations of improper cross-subsidization were not supported by evidence, and that therefore no reason existed to deny or condition PacTel's PCS license. However, Cox failed to substantiate its claims "with particularity," as required under our rules. Cox attempted to support its allegations at the reply stage of its Application for Review through the introduction of the NARUC audit. However, Commission rules clearly state that "no application for review will be granted if it relies on questions of fact or law upon which the designated authority has been afforded no opportunity to pass." This evidence was presented for the first time with the final pleading in an Application for Review, and was not presented to the Bureau for review, despite the fact that it was released in July of 1994, prior to the filing of the Petition to Deny. As this evidence was not considered by the Bureau, we will not consider it here. 10. We also agree with the Bureau's determination that the issues raised by Cox do not support Cox's petition here. First, PacTel has submitted a safeguards plan pursuant to our Broadband PCS Order, which calls for LECs to "implement an acceptable plan for non- structural safeguards against discrimination and cross-subsidization" prior to commencing PCS service. We note that the Bureau recently approved the PacTel plan. Second, we intend to initiate a proceeding to review existing competitive safeguard policies and rules for LEC provision of Commercial Mobile Radio Services. We believe that Cox's general concerns regarding proper safeguards to prevent LEC discrimination and cross-subsidization are relevant to the issues under consideration in that proceeding, and we will consider Cox's pleadings as ex parte comments to it. Also, PacTel will be required to modify its operations and amend its safeguards plan in conformance with any new or amended rules pursuant to this rule making, if applicable, as well as any new rules resulting from the 1996 Telecommunications Act, if applicable. IV. CONCLUSION 11. Cox does not properly present any evidence that the Bureau erred in its decision in the PacTel Order. Therefore, as no evidence exist to support this allegation, we deny Cox's Application for Review under Section 309(d)(2) of the Act. 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 12. Accordingly, IT IS ORDERED that, pursuant to Section 309(d)(2) of the Act, the "Application for Review" filed by Cox Enterprises, Inc., IS HEREBY DENIED. 13. IT IS FURTHER ORDERED that all pleadings filed by Cox Enterprises, Inc., in response to the application of Pacific Telesis Mobile Services for a Broadband Personal Communications Services license for the Los Angeles-San Diego MTA (File No. 00002-CW- L-95, Call Sign KNLF 205) ARE HEREBY INCORPORATED into the record of the rule making being initiated concerning accounting safeguards and will be considered ex parte filings to it, to the extent that they address the question of accounting safeguards. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary APPENDIX A Parties, Commenters, and Short-Form Citations Used June 23, 1995 In the Matter of Application of Pacific Telesis Mobile Services for a License to Provide Broadband PCS Service on Block B in the Los Angeles-San Diego Major Trading Area (M002), Order, DA 95-1413, 10 FCC Rcd 13238, rel. June 23, 1995 ("PacTel Order"). July 24, 1995 Cox Enterprises, Inc. Application for Review ("Application for Review"). August 7, 1995 Opposition of Pacific Telesis Mobile Services to the Application for Review of Cox Enterprises, Inc., filed by Pacific Telesis Mobile Services ("PacTel Opposition"). August 22, 1995 Reply to Opposition of Pacific Telesis Mobile Services to the Application for Review of Cox Enterprises, Inc. filed by Cox Enterprises, Inc. ("Reply to Opposition"). September 18, 1995 Letter from Pacific Bell to William Caton, Office of the Secretary, Federal Communications Commission ("PacTel Ex Parte Letter").