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FCC Approves GCI-ACS Transaction

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Released: July 16, 2013

Federal Communications Commission

FCC 13-96

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Applications of GCI Communication Corp.,
)
WT Docket No. 12-187
ACS Wireless License Sub, Inc., ACS of
)
WC Docket No. 09-197
Anchorage License Sub, Inc., and Unicom, Inc.
)
For Consent To Assign Licenses to The Alaska )
Wireless Network, LLC
)

MEMORANDUM OPINION AND ORDER AND DECLARATORY RULING

Adopted:

July 12, 2013

Released:

July 16, 2013
By the Commission: Acting Chairwoman Clyburn and Commissioner Pai issuing statements.

TABLE OF CONTENTS

Heading
Paragraph #
I. INTRODUCTION.................................................................................................................................. 1
II. BACKGROUND.................................................................................................................................... 5
A. Description of the Applicants .......................................................................................................... 5
1. GCI ............................................................................................................................................ 5
2. ACS Wireless ............................................................................................................................ 7
B. Description of the Transaction......................................................................................................... 9
C. Transaction Review Process .......................................................................................................... 20
III. STANDARD OF REVIEW AND PUBLIC INTEREST FRAMEWORK .......................................... 23
IV. QUALIFICATIONS OF THE APPLICANTS..................................................................................... 28
V. COMPETITIVE ANALYSIS............................................................................................................... 31
A. Background.................................................................................................................................... 31
B. Market Definition........................................................................................................................... 34
1. Product Market........................................................................................................................ 35
2. Geographic Market.................................................................................................................. 36
3. Input Market for Spectrum...................................................................................................... 38
4. Market Participants.................................................................................................................. 40
B. Competitive Effects of the Proposed Transaction.......................................................................... 42
1. Initial Screen............................................................................................................................ 42
2. Unilateral Effects..................................................................................................................... 44
3. Coordinated Effects................................................................................................................. 65
a. Coordination in the Mobile Broadband/Telephony Market in Alaska................................ 67
b. Exchanges of Competitively Sensitive Information........................................................... 70
4. Roaming .................................................................................................................................. 78
5. Lansman Petition..................................................................................................................... 82
VI. POTENTIAL PUBLIC INTEREST BENEFITS AND EFFICIENCIES............................................. 85
A. Analytical Framework ................................................................................................................... 86
B. Asserted Benefits ........................................................................................................................... 89
1. Network Efficiencies and Coverage........................................................................................ 90
2. Expanded Coverage and Improved Service to Current Subscribers........................................ 94

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3. Increased Competitiveness ...................................................................................................... 95
C. Discussion...................................................................................................................................... 98
D. Balancing ..................................................................................................................................... 102
VII. THE APPLICANTS' UNIVERSAL SERVICE SUPPORT ............................................................. 106
A. Background.................................................................................................................................. 106
B. Declaratory Ruling....................................................................................................................... 112
1. Own Facilities Under Section 214(e)(1)(A) .......................................................................... 115
2. Spectrum Access ................................................................................................................... 121
C. Conditions Regarding Universal Service Support ....................................................................... 129
VIII. CONCLUSION................................................................................................................................ 139
IX. ORDERING CLAUSES................................................................................................................... 140

I.

INTRODUCTION

1.
In this Order, we consider applications by GCI and ACS Wireless, the two major
Alaskan-based mobile wireless providers, to transfer substantially all of their spectrum licenses to a
jointly owned subsidiary as part of a transaction in which the subsidiary also would receive substantially
all of the two companies' respective wireless infrastructures across the state of Alaska.1 The subsidiary
would use these assets to provide wholesale wireless services to GCI and ACS Wireless, each of which
would continue to provide retail services to Alaskan consumers. GCI and ACS Wireless assert that this
transaction would enable each of them to compete more effectively against the remaining major mobile
provider currently providing service in Alaska, AT&T Mobility, as well as against Verizon Wireless,
which recently has launched an LTE network in Alaska. We also consider here the subsidiary's related
application for authority to provide global international resale services,2 as well as the Applicants' request
for a declaratory ruling that after the transaction, both GCI and ACS Wireless would continue to meet two
specific eligibility requirements for receipt of certain types of high-cost support as "eligible
telecommunications carriers."3
2.
On their face, these applications raise significant competitive and universal service issues
that warrant close scrutiny. GCI and ACS Wireless are the only two major Alaskan-based mobile
wireless providers, and AT&T has been the sole remaining major provider of mobile services to Alaskan
consumers. The specific contractual provisions governing the relationships of GCI, ACS Wireless, and
their subsidiary are key in our evaluation of the public interest of the applications and of the declaratory
ruling request before us. As a result, to conduct our analysis, we have obtained significant information
and documents not only from GCI and ACS Wireless regarding their arrangements and plans, but also
from Verizon Wireless regarding the scope and timing of its entry into the state of Alaska.
3.
In considering these Applications, we can evaluate the likely public interest impacts,
particularly the competitive impacts, only with regard to the specific market conditions prevailing in
Alaska. Isolated from the contiguous lower 48 states, Alaska has a statewide population of only about
710,000, is by far the largest state by area in the nation, has the lowest population density, and presents
particular operating challenges for mobile networks, especially in its remote areas. As we have done in

1 Applications of GCI Communication Corp., ACS Wireless License Sub, Inc., ACS of Anchorage License Sub,
Inc., and Unicom, Inc. for Consent to Assign Licenses to the Alaska Wireless Network, LLC, ULS File Nos.
0005257725, 0005257737, 0005259928, and 0005260034 (filed June 18, 2012; amended Aug. 10, 2012, Nov. 16,
2012) ("Applications"). We refer to the parties to the Applications jointly as "Applicants" herein.
2 See File No. ITC-214-20120618-00162 (filed June 18, 2012); 47 U.S.C. 214(a).
3 See Applications, ACS-GCI Petition for Declaratory Ruling (revised) ("Petition for Declaratory Ruling"); 47
U.S.C. 214(e).
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other transactions, we consider these specific and unique conditions in Alaska as an integral part of our
competitive analysis.4 Considered together, these market conditions inform our assessment of the
competitive issues, as well as the universal service issues, presented by these applications and requests.5
4.
As discussed in detail below, we find that, to the extent that the proposed transaction may
result in potential competitive harms in Alaska, these potential competitive harms--when subject to
specific safeguard conditions--are outweighed by public interest benefits likely to result in Alaska from
the proposed transaction. Such benefits include network efficiencies from infrastructure consolidation,
expanded coverage and improved service throughout Alaska, and increased competitiveness from a
timely transition to LTE. We therefore conclude that, on balance, the assignment applications, as
conditioned, would serve the public interest, and, accordingly, grant those applications. We also grant the
related application for authority to provide global international resale services, as well as the request for a
declaratory ruling that after this transaction, GCI and ACS Wireless each would continue to provide
services over their "own facilities," as required by section 214(e) of the Communications Act, as
amended, and our rules, as well as to have "access to spectrum" for purposes of section 54.1003(b) of our
rules--which are both prerequisites to receiving certain kinds of high-cost universal service support.

II.

BACKGROUND

A.

Description of the Applicants

1.

GCI

5.
General Communication, Inc., which wholly owns GCI Communication Corp. ("GCI")
through various subsidiaries, is a publicly-traded corporation incorporated under the laws of the state of
Alaska and headquartered in Anchorage.6 GCI is a wireless provider serving approximately 140,000
wireless subscribers throughout Alaska with facilities-based voice and data services, including second
generation ("2G"), third generation ("3G"), and more advanced mobile broadband services using Evolved
High-Speed Packet Access ("HSPA+") and long-term evolution ("LTE").7 GCI holds licenses in the
cellular and Personal Communications Service ("PCS") bands.8
6.
GCI is a designated wireless competitive eligible telecommunications carrier ("CETC")
in certain portions of Alaska, and also provides services, either directly or through wholly-owned
subsidiaries, as a competitive local exchange carrier ("CLEC"), rural incumbent local exchange carrier
("ILEC"), and long distance telecommunications service provider throughout Alaska.9 GCI also is the
largest cable television operator in Alaska, passing 90 percent of the households in Alaska with 64

4 See, e.g., Applications of AT&T Inc. and Centennial Communications Corp. For Consent to Transfer Control of
Licenses, Authorizations, and Spectrum Leasing Arrangements, WT Docket No. 08-246, Memorandum Opinion and
Order,
24 FCC Rcd 13915, 13934 41-42 (2009) ("AT&T-Centennial Order") (considering the unique
characteristics of Puerto Rico and the U.S. Virgin Islands in part because of their limited geographic scope and
isolated nature).
5 See, e.g., Connect America Fund et al., WC Docket No. 10-90 et al., Report and Order and Further Notice of
Proposed Rulemaking
, 26 FCC Rcd 17663, 17773 507 (2011) ("USF/ICC Transformation Order"), pets. for
review pending sub nom. In re: FCC 11-161
, No. 11-9900 (10th Cir. filed Dec. 18, 2011) ("We appreciate and
recognize that Alaska faces uniquely challenging operating conditions....").
6 GCI 2012 Annual Report on Form 10-K at 1 (filed Mar. 8, 2013) ("GCI 10-K").
7 GCI 10-K at 5; see Applications, Ex. 1, Description of the Proposed Transaction & Public Interest Statement
(revised) ("Public Interest Statement") at 6, App. C.
8 Public Interest Statement at 7.
9 GCI 10-K at 5; Public Interest Statement at 7.
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percent penetration.10 GCI offers facilities-based local telephone service in 22 cities in Alaska and has a
35 percent market share in the state.11 GCI also has ownership interests in submarine cables used for
wholesale transport of communications to the lower 48 States.12
2.

ACS Wireless

7.
Alaska Communications Systems Group, Inc., which wholly owns ACS Wireless, Inc.
("ACS Wireless") through a subsidiary, Alaska Communications Systems Holdings, Inc. ("ACS
Holdings"), is a publicly-traded corporation incorporated under the laws of the state of Delaware and
headquartered in Anchorage.13 ACS Wireless is a wireless provider serving approximately 118,000
subscribers in various locations in Alaska over its Code Division Multiple Access ("CDMA") and 3G
Evolution-Data Optimized ("EVDO") network facilities.14 Through its wholly-owned subsidiary, ACS
Wireless holds licenses in the cellular band, the PCS band, and the Advanced Wireless Service ("AWS-
1") band.15
8.
ACS Wireless is a CETC in some parts of Alaska.16 ACS Holdings, which also wholly
owns applicants ACS Wireless License Sub, Inc. and ACS of Anchorage License Sub, Inc., operates four
ILECs in Alaska. In addition, ACS Holdings operates a long distance telecommunications subsidiary, an
Internet subsidiary, and a fiber optic cable subsidiary, all used to provide service within Alaska and
between Alaska and the lower 48 States.17

B.

Description of the Transaction

9.
Under the proposed transaction, GCI and ACS Wireless would transfer substantially all
of their spectrum licenses to The Alaska Wireless Network, LLC ("AWN"), a jointly owned subsidiary.
GCI would hold a 66 2/3 percent equity interest in the new AWN venture through a wholly-owned
subsidiary, GCI Wireless Holdings, LLC. ACS Wireless would hold the remaining 33 1/3 percent
interest.18 As part of the transaction, AWN also would receive substantially all of the two companies'
respective wireless infrastructures across the state of Alaska. AWN would use these assets to develop and
sell wholesale wireless service plans to GCI and ACS Wireless, each of which would continue to provide
retail services to Alaskan consumers.19 GCI and ACS Wireless assert that this transaction would enable
each of them to compete more effectively against national providers AT&T Mobility and Verizon
Wireless in the provision of mobile service in Alaska.20 In seeking approval of the proposed transaction,

10 GCI 10-K at 5, 10; Public Interest Statement at 7; About GCI, available at http://www.gci.com/about (last visited
June 14, 2013).
11 About GCI, available at http://www.gci.com/about (last visited June 14, 2013).
12 GCI 10-K at 5, 11.
13 Alaska Communications Systems Group, Inc. 2012 Annual Report on Form 10-K at 4 (filed Mar. 1, 2013). ACS
Wireless, ACS Wireless License Sub, Inc. and ACS of Anchorage License Sub, Inc. all are wholly-owned
subsidiaries of Alaska Communications Systems Holdings, Inc. See Public Interest Statement at 5.
14 Id.
15 Id.
16 Id. at 5 n.7. ACS Wireless plans to seek further CETC designation in other parts of Alaska after the close of the
proposed transaction. Id.
17 Id. at 6.
18 See id. at 12, App. C.
19 See id. at 11.
20 See id. at 17-23.
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the Applicants ask that the Commission consider the particularly challenging factors associated with
deploying, maintaining, and operating mobile wireless networks in Alaska. These factors include its
extremely large geographic area, its low population density outside of the three largest communities, its
isolated and highly dispersed small communities, its short construction season and extreme weather
conditions, and the high costs of constructing and maintaining infrastructure.21
10.
More specifically, the Applicants' proposed transaction would be effectuated by a series
of agreements, which together they style as a joint venture.22 Under the Asset Purchase Agreement, GCI
would purchase a portion of ACS Wireless's assets, including potentially some of its FCC wireless
authorizations, for $100 million.23 GCI then would contribute those assets, in addition to its own wireless
assets and a working capital loan, to AWN.24 ACS Wireless would contribute its remaining wireless
assets, including any FCC wireless authorizations not previously purchased by GCI, to AWN.25 The
Applicants propose to assign to AWN one AWS-1 license, 21 cellular licenses, eight PCS licenses, and a
number of microwave and industrial radio licenses that together cover portions of Alaska's four Cellular
Market Areas ("CMAs").26
11.
In addition to contributing all of their respective wireless assets to AWN, the Asset
Purchase Agreement would require both GCI and ACS Wireless to contribute all of their respective
CETC cash flow received in Alaska to AWN.27 The Applicants also are required to take all commercially
reasonable steps to ensure continued receipt of CETC cash flow and to work together to obtain a
Declaratory Ruling from the Commission that (i) AWN's assets constitute the "own facilities" of GCI and
ACS Wireless for purposes of the Act and Commission rules; (ii) GCI and ACS Wireless may remit all
CETC cash flow to AWN so that it can be used to support the facilities and services for which the support
is intended; and (iii) GCI's and ACS Wireless's access to AWN's facilities and services constitutes
"access to spectrum" under the Act and Commission rules.28
12.
Pursuant to the First Amended and Restated Operating Agreement of AWN ("Joint
Operating Agreement"),29 AWN would be the sole facilities-based operator of the combined network and
would sell wholesale wireless services plans to GCI and ACS Wireless on a non-discriminatory basis

21 See id. at 27-31.
22 In connection with the transaction, the Applicants executed a number of agreements that they describe as
standalone and "not contingent upon the consummation of the network sharing arrangements" or requiring
Commission approval. Id. at 13 & n.19. These agreements are listed as Pre-Closing Agreements in the Asset
Purchase Agreement. Asset Purchase Agreement 1.1 at 10. To the extent such agreements affect our analysis of
the proposed assignment applications, however, they are relevant to our public interest determination under section
310(d) of the Act and are discussed herein. See Applications of Cellco Partnership d/b/a Verizon Wireless and
SpectrumCo LLC and Cox TMI, LLC For Consent To Assign AWS-1 Licenses, WT Docket No. 12-4, Memorandum
Opinion and Order and Declaratory Ruling
, 27 FCC Rcd 10698, 10750, 10752 139, 143 (2012) ("Verizon
Wireless-SpectrumCo Order
").
23 Asset Purchase Agreement at 2.1; see also Public Interest Statement at 8.
24 Asset Purchase Agreement at 2.3, 2.8; Public Interest Statement at 8-9.
25 Asset Purchase Agreement 2.2; Public Interest Statement at 8-9.
26 See Public Interest Statement, App. A & B.
27 Asset Purchase Agreement 2.2-2.3.
28 Id. 5.1(b)(11), 6.1(e), 6.15. See infra Section VII for a discussion of the Applicants' Petition for Declaratory
Ruling.
29 The Joint Operating Agreement remains in effect as long as AWN continues to exist. Procedures regarding the
dissolution of AWN and liquidation of its assets are outlined in Articles 12 and 13 of the Joint Operating
Agreement. See also Joint Operating Agreement 1.8.
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using the contributed spectrum and infrastructure.30 GCI would hold a 66 2/3 percent equity interest in
AWN through a wholly-owned subsidiary, GCI Wireless Holdings, LLC, and ACS Wireless would hold
the remaining 33 1/3 percent interest.31 The initial Chief Executive Officer ("CEO") of AWN would be
Wilson Hughes, currently Executive Vice President, Wireless, at GCI.32 AWN would be governed by a
three member Executive Board consisting of the current CEO of GCI, the CEO of ACS Wireless, and the
CEO of AWN.33
13.
The Joint Operating Agreement recognizes that the structure of the proposed transaction
creates the possibility that GCI and ACS Wireless could engage in improper sharing of non-public,
commercially sensitive information with anticompetitive effect.34 To guard against this possibility, the
Joint Operating Agreement provides that certain reports by AWN to AWN's Executive Board, and
thereby to GCI and ACS Wireless, would be aggregated and presented by geographic area.35 In addition,
all employees of GCI or ACS Wireless who are assigned to work at AWN would be required to adhere to
confidentiality requirements designed to prevent anticompetitive information from flowing between GCI
and ACS Wireless.36
14.
The Applicants maintain that notwithstanding ACS Wireless's minority ownership
interest in AWN, ACS Wireless has significant management control over AWN because a substantial
number of actions require unanimous board approval.37 The Joint Operating Agreement provides for
numerous actions or decisions of AWN that require unanimous approval of its three-member board,38
including (i) changes to AWN's lines of business; (ii) changes to GCI's or ACS Wireless's equity
interests in AWN; (iii) the sale of any assets of AWN if such sale would impair GCI's or ACS Wireless's
ability to comply with the regulatory obligations applicable to local exchange carriers; (iv) the
appointment of a successor CEO;39 (v) AWN entering into any agreements with GCI or ACS Wireless
other than those set forth in the agreements; (vi) decisions regarding technology upgrade plans for AWN;
and (vii) entering into, waiving, modifying, or terminating any contract or agreement between AWN and
another party that is inconsistent with existing plans for the joint venture. The Joint Operating Agreement
also requires unanimous board approval for AWN's budgets and plans under certain circumstances.40
15.
The Joint Operating Agreement provides that during the first four years of the proposed
transaction, ACS Wireless would receive preferential cash distributions from AWN's net income, and

30 See Public Interest Statement at 11-12; Joint Operating Agreement 2.1.
31 See Joint Operating Agreement 1.4; Public Interest Statement at 12, App. C.
32 Joint Operating Agreement 6.2; Public Interest Statement at 12 n.17.
33 Joint Operating Agreement 6.3(a).
34 See Joint Operating Agreement 16.20 & Exh. L ("Commercially Sensitive Information Policies and
Procedures"). See also infra 70-71.
35 Joint Operating Agreement, Exh. L 2.
36 Id. Exh. L 3. See also GCI Services Agreement 4, Exh. A, Exh. A-1; ACS Services Agreement 1.4, Exh. D;
4.
37 Public Interest Statement at 12 & n.18 ("There are more than twenty events and activities that require the approval
of both ACS Wireless and GCI, giving ACS Wireless significant minority investor protections to ensure that its
interests in the network, the services and the licenses cannot be materially impaired.").
38 Joint Operating Agreement 6.4.
39 ACS Wireless agrees to approve one individual as successor CEO from a list of three or more qualified
individuals provided by GCI, all of whom may be GCI employees. Id. 6.4(k).
40 Id. 7.4.
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GCI would receive the remainder. If ACS Wireless fails to maintain certain levels of subscribership,
however, the preferential cash distribution would be reduced on a per subscriber basis.41 After the first
four years of the proposed transaction, each of GCI and ACS Wireless would receive from AWN's net
income (or loss) in proportion to its respective share of equity in AWN.42 In addition, AWN would pay
GCI a quarterly senior management consulting fee based on a percentage of free cash flow.43
16.
Pursuant to the proposed transaction, GCI and ACS Wireless and their affiliates would
exclusively use AWN to provide wireless service in Alaska and they would be given non-discriminatory
and equal access to AWN services and network.44 GCI and ACS Wireless would pay AWN for its
services at wholesale rates that AWN would set at approximately 30 percent below prevailing market
rates.45 GCI and ACS Wireless propose that they would continue to market and sell standalone wireless
retail services, separately branding and pricing their individual wireless offerings, and they state that no
retail customers would be transferred to AWN. The Applicants' contractual arrangements require them to
maintain their existing service plans at their current retail rates for a two-year period from the execution
date of the Facilities and Network Use Agreement.46
17.
AWN will engineer and operate competitive wireless networks in Alaska and will design
and implement competitive wireless service plans to allow GCI and ACS Wireless to compete with other
wireless providers.47 Under the Facilities and Network Use Agreement, AWN agrees [BEGIN HIGHLY
CONFIDENTIAL INFORMATION]
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-------------------------------------------------------------------------.48 --------------------------------------------------
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--------------------------------------------------------------------------------.49 --------------------------------------------
------------------------------------------------------------------------------.50 ---------------------------------------------
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[END HIGHLY CONFIDENTIAL INFORMATION]51

41 Id. 5.1, 9.4.
42 Id. 4.1, 5.1.
43 Id. 6.1(c) (providing that AWN will pay GCI a quarterly consulting fee of four percent of the free cash flow of
the joint venture for the first two years of the venture, six percent for years three and four, and eight percent
thereafter).
44 Public Interest Statement at 11; Facilities and Network Use Agreement 2.
45 Facilities and Network Use Agreement 5(b). The 30 percent discount is intended to cover GCI's and ACS
Wireless's sales and marketing expenses. Public Interest Statement at 11; Petition for Declaratory Ruling at 4-5.
[BEGIN HIGHLY CONFIDENTIAL INFORMATION] -------------------------------------------------------------------
-------------------------------------------------------------------------------
.[END HIGHLY CONFIDENTIAL
INFORMATION]
Facilities and Network Use Agreement 5(g).
46 See Facilities and Network Use Agreement 3(f); Public Interest Statement at 8, 11-12.
47 Joint Operating Agreement 2.1(a).
48 Facilities and Network Use Agreement 3(b), 4(j), (k).
49 Id. 3(b).
50 Id.
51 Id. 4.
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18.
The Facilities and Network Use Agreement also provides that each of GCI and ACS
Wireless [BEGIN HIGHLY CONFIDENTIAL INFORMATION] -------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
.52
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------.53 ----------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------.[END HIGHLY CONFIDENTIAL INFORMATION]54 GCI
and ACS Wireless agree to pay to AWN all high-cost universal service support each receives using AWN
facilities and services.55
19.
Each of GCI and ACS Wireless executed Service Agreements with AWN, which
generally provide for the continued provision of technical support and services on AWN's network and
dedicated employees to the joint venture, as well as payment for those services.56 The GCI Services
Agreement provides that GCI [BEGIN HIGHLY CONFIDENTIAL INFORMATION] ------------------
-------------------------------------------------------------------------------------------------------------------------------
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------------------------------.57 ---------------------------------------------------------------------------------------------
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-------------------.58 --------------------------------------------------------------------------------------------------------
-------------------------------------.59 --------------------------------------------------------------------------------------
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---------------------------------------------------------- [HIGHLY CONFIDENTIAL INFORMATION]60

C.

Transaction Review Process

20.
On June 18, 2012, the Applicants filed several applications seeking Commission approval
of the proposed assignment to AWN of certain spectrum licenses and related authorizations. AWN also
filed an application pursuant to section 214 of the Act for authority to provide global international resale
services.61 On July 3, 2012, the Bureau took steps to protect confidential information filed in this
docket,62 and on August 22, 2012, the Commission released a public notice announcing acceptance of the

52 Id. 2(vii).
53 Id.
54 Id. 3(b).
55 Asset Purchase Agreement 6.15; Facilities and Network Use Agreement 5(d); see also infra 133.
56 The term of the ACS Services Agreement [BEGIN HIGHLY CONFIDENTIAL INFORMATION] --------------
--------------------------------------------------------------------------------------------
.[END HIGHLY CONFIDENTIAL
INFORMATION]
ACS Services Agreement 3.2. The term of the GCI Services Agreement [BEGIN HIGHLY
CONFIDENTIAL INFORMATION] -----------------------------------------------------------
.[END HIGHLY
CONFIDENTIAL INFORMATION]
GCI Services Agreement 3.1.
57 Id. 1.1, Exh. A. 1.
58 Id. Exh. A 2-3; see also id. Exh. A-1 (Form of Personnel Secondment Letter).
59 ACS Services Agreement, 1.4, 4.2, Exh. D.
60 Id. 1.1; GCI Services Agreement 1.2, Exh. B.
61 File No. ITC-214-20120618-00162.
62 Applications of GCI Communication Corp., ACS Wireless License Sub, Inc., ACS of Anchorage License Sub,
Inc., and Unicom, Inc. For Consent To Assign Licenses to The Alaska Wireless Network, LLC, WT Docket No. 12-
187, Protective Order, 27 FCC Rcd 7493 (WTB 2012); Applications of GCI Communication Corp., ACS Wireless
(continued....)
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Applications and seeking comment on the proposed transaction.63 The Comment Public Notice
established a pleading cycle for the applications, with petitions to deny due September 21, 2012,
oppositions due October 1, 2012, and replies due October 12, 2012.64 No party timely filed a petition
against the proposed transaction. Fireweed Communications, LLC and Jeremy Lansman submitted a late-
filed petition to deny on February 19, 2013.65
21.
On October 11, 2012, the Bureau requested additional information and documents from
the Applicants relating to aspects of the proposed transaction.66 On November 7, 2012, the Bureau
suspended the 180-day time clock for review of transactions to permit the Applicants to complete their
document production.67 On November 30, 2012, the Bureau released a public notice announcing that
Numbering Resource Utilization and Forecast ("NRUF") reports and local number portability ("LNP")
data for all wireless telecommunications providers as of December 31, 2008, June 30, 2009, December
31, 2009, June 30, 2010, December 31, 2010, June 30, 2011, December 31, 2011, and June 30, 2012
(when available) would be placed into the record, and the Bureau adopted a protective order pursuant to
which the Applicants and third parties would be allowed to review the specific NRUF reports and LNP
data placed into the record.68 The Bureau received no requests for review of the NRUF and LNP data that
is in the record.
22.
On December 21, 2012, with the Applicants asserting substantial compliance with the
document production, the Bureau restarted the 180-day time clock.69 Throughout the Commission's
review of the proposed transaction, the Applicants have submitted documents, some of which were
provided pursuant to the Protective Orders.

III.

STANDARD OF REVIEW AND PUBLIC INTEREST FRAMEWORK

23.
Pursuant to section 310(d) of the Communications Act, we must determine whether
applicants have demonstrated that their proposed assignment of licenses will serve the public interest,
(Continued from previous page)
License Sub, Inc., ACS of Anchorage License Sub, Inc., and Unicom, Inc. For Consent To Assign Licenses to The
Alaska Wireless Network, LLC, WT Docket No. 12-187, Second Protective Order, 27 FCC Rcd 7484 (WTB 2012)
(together, the "Protective Orders").
63 GCI Communication Corp., ACS Wireless License Sub, Inc., ACS of Anchorage License Sub, Inc., and Unicom,
Inc. Seek FCC Consent to the Assignment of Licenses to The Alaska Wireless Network, LLC, WT Docket No. 12-
187, Public Notice, 27 FCC Rcd 8898 (2012) ("Comment Public Notice").
64 See id.
65 Petition To Deny Pending Applications of General Communication Inc. for Transfer of Control of Licenses by
and for Fireweed Communications, LLC and Jeremy Lansman (filed Feb. 19, 2013) ("Lansman Petition").
66 47 U.S.C. 308(b); see Letter from Ruth Milkman, Chief, WTB, FCC, to Cindy Lynch, GCI Communication
Corp., et al, WT Docket No. 12-187, Oct. 11, 2012; Letter from Ruth Milkman, Chief, WTB, FCC, to Lisa Phillips,
ACS Wireless, WT Docket No. 12-187, Oct. 11, 2012.
67 See Letter from Ruth Milkman, Chief, WTB, FCC, to Karen Brinkmann and John Nakahata, WT Docket No. 12-
187, Nov. 7, 2012.
68 Applications of GCI Communication Corp., ACS Wireless License Sub, Inc., ACS of Anchorage License Sub,
Inc., and Unicom, Inc. for Consent to Assign Licenses to the Alaska Wireless Network, LLC Numbering Resource
Utilization and Forecast Reports and Local Number Portability Reports to be Placed into the Record, Subject to
Protective Order, WT Docket No. 12-187, CC Docket No. 99-200, Public Notice, DA 12-1932 (WTB rel. Nov. 30,
2012); Applications of GCI Communication Corp., ACS Wireless License Sub, Inc., ACS of Anchorage License
Sub, Inc., and Unicom, Inc. for Consent To Assign Licenses to the Alaska Wireless Network, LLC, WT Docket No.
12-187, NRUF/LNP Protective Order, DA 12-1933 (WTB rel. Nov. 30, 2012) ("NRUF Protective Order").
69 See Letter from Ruth Milkman, Chief, WTB, FCC, to Karen Brinkmann and John Nakahata, WT Docket No. 12-
187, Dec. 21, 2012.
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convenience, and necessity.70 In making this assessment, we first assess whether the proposed transaction
complies with the specific provisions of the Communications Act,71 other applicable statutes, and the
Commission's rules.72 If the transaction does not violate a statute or rule, we next consider whether the
transaction could result in public interest harms by substantially frustrating or impairing the objectives or
implementation of the Communications Act or related statutes.73 We then employ a balancing test,
weighing any potential public interest harms of the proposed transaction against any potential public
interest benefits.74 The applicants bear the burden of proving, by a preponderance of the evidence, that
the proposed transaction, on balance, will serve the public interest.75
24.
Our public interest evaluation necessarily encompasses the "broad aims of the
Communications Act," which include, among other things, a deeply rooted preference for preserving and
enhancing competition in relevant markets, accelerating private sector deployment of advanced services,
and generally managing the spectrum in the public interest.76 Our public interest analysis also can entail
assessing whether the proposed transaction will affect the quality of communications services or result in
the provision of new or additional services to consumers.77 In conducting this analysis, we may consider

70 47 U.S.C. 310(d).
71 Section 310(d) requires that we consider the application as if the proposed assignee was applying for the licenses
directly under Section 308 of the Act, 47 U.S.C. 308. See, e.g., Verizon Wireless-SpectrumCo Order, 27 FCC Rcd
at 10710 28.
72 See, e.g., Applications of AT&T Mobility Spectrum LLC, New Cingular Wireless PCS, LLC, Comcast
Corporation, Horizon Wi-Com, LLC, NextWave Wireless, Inc., and San Diego Gas & Electric Company For
Consent To Assign And Transfer Licenses, WT Docket No. 12-240, Memorandum Opinion and Order, 27 FCC Rcd
16459, 16463-64 10 (2012) ("AT&T-WCS Order"); Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10710
28; Application of AT&T Inc. and Qualcomm Incorporated For Consent to Assign Licenses and Authorizations,
WT Docket No. 11-18, Order, 26 FCC Rcd 17589, 17598 23 (2011) ("AT&T-Qualcomm Order"); Applications of
AT&T Inc. and Cellco Partnership d/b/a/ Verizon Wireless, WT Docket No. 09-104, Memorandum Opinion and
Order
, 25 FCC Rcd 8704, 8716 22 (2010) ("AT&T/Verizon Wireless-ALLTEL Order").
73 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16463-64 10; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10710 28; AT&T-Qualcomm Order, 26 FCC Rcd at 17598-99 23.
74 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16463-64 10; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10710 28; AT&T-Qualcomm Order, 26 FCC Rcd at 17599 23.
75 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16463-64 10; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10710 28; AT&T-Qualcomm Order, 26 FCC Rcd at 17599 23.
76 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16464 11; AT&T-Qualcomm Order, 26 FCC Rcd at 17599 24;
AT&T/Verizon Wireless-ALLTEL Order, 25 FCC Rcd at 8716 23; AT&T-Centennial Order, 24 FCC Rcd at 13928
28; Applications of Cellco Partnership d/b/a Verizon Wireless and Atlantis Holdings LLC For Consent to Transfer
Control of Licenses, Authorizations, and Spectrum Manager and De Facto Transfer Leasing Arrangements and
Petition for Declaratory Ruling that the Transaction is Consistent with Section 310(b)(4) of the Communications
Act, WT Docket No. 08-95, Memorandum Opinion and Order and Declaratory Ruling, 23 FCC Rcd 17444, 17461
27 (2008) ("Verizon Wireless-ALLTEL Order"); Sprint Nextel Corporation and Clearwire Corporation
Applications for Consent to Transfer Control of Licenses, Leases, and Authorizations, WT Docket No. 08-94,
Memorandum Opinion and Order, 23 FCC Rcd 17570, 17580 20 (2008) ("Sprint Nextel-Clearwire Order").
77 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16464 11; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10752 143; AT&T-Qualcomm Order, 26 FCC Rcd at 17599 24; AT&T/Verizon Wireless-ALLTEL Order, 25 FCC
Rcd at 8716 23; AT&T-Centennial Order, 24 FCC Rcd at 13928 28; Verizon Wireless-ALLTEL Order, 23 FCC
Rcd at 17461 27.
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technological and market changes, and the nature, complexity, and speed of change of, as well as trends
within, the communications industry.78
25.
Our competitive analysis, which forms an important part of the public interest evaluation,
is informed by, but not limited to, traditional antitrust principles.79 The Commission and the Department
of Justice ("DOJ") each have independent authority to examine the competitive impacts of proposed
communications mergers and transactions involving transfers of Commission licenses, but the standards
governing the Commission's competitive review differ somewhat from those applied by the DOJ.80 Like
the DOJ, the Commission considers how a transaction will affect competition by defining a relevant
market, looking at the market power of incumbent competitors, and analyzing barriers to entry, potential
competition and the efficiencies, if any, that may result from the transaction.81 The DOJ, however,
reviews telecommunications mergers pursuant to Section 7 of the Clayton Act, and if it files a complaint
to block a merger, it must demonstrate to a court that the merger may substantially lessen competition or
tend to create a monopoly.82 Under the Commission's review, the Applicants must show that the
transaction will serve the public interest; otherwise the application is set for hearing. The DOJ's review
also is limited solely to an examination of the competitive effects of the acquisition, without reference to
diversity, localism, or other public interest considerations.83 The Commission's competitive analysis
under the public interest standard is somewhat broader--for example, considering whether a transaction
will enhance, rather than merely preserve, existing competition--and takes a more extensive view of
potential and future competition and its impact on the relevant market.84
26.
Our analysis recognizes that a proposed transaction may lead to both beneficial and
harmful consequences.85 For instance, combining assets may allow a firm to reduce transaction costs and
offer new products, but it may also create market power, create or enhance barriers to entry by potential
competitors, and create opportunities to disadvantage rivals in anticompetitive ways.86 Our public interest
authority enables us, where appropriate, to impose and enforce narrowly tailored, transaction-specific
conditions that ensure that the public interest is served by the transaction.87 Section 303(r) of the

78 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16464 11; AT&T/Verizon Wireless-ALLTEL Order, 25 FCC Rcd at
8716 23; AT&T-Qualcomm Order, 26 FCC Rcd at 17599 24; AT&T-Centennial Order, 24 FCC Rcd at 13928
28; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17461 27.
79 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16464-65 12; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10710 29; AT&T-Qualcomm Order, 26 FCC Rcd at 17599 25; AT&T/Verizon Wireless-ALLTEL Order, 25 FCC
Rcd at 8717 24.
80 See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17599-17600 25; AT&T/Verizon Wireless-ALLTEL Order, 25
FCC Rcd at 8717 24.
81 See, e.g., AT&T-Centennial Order, 24 FCC Rcd at 13928 29; Sprint Nextel-Clearwire Order, 23 FCC Rcd at
17581 21.
82 15 U.S.C. 18.
83 See, e.g., AT&T-Centennial Order, 24 FCC Rcd at 13928 29; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at
17462 28; Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17581 21.
84 See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17599-17600 25; AT&T-Centennial Order, 24 FCC Rcd at
13928 29; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17462 28.
85 See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17600 26; AT&T-Centennial Order, 24 FCC Rcd at 13929
30; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17462 29. See also Verizon Wireless-SpectrumCo Order,
27 FCC Rcd at 10711 30.
86 See, e.g., AT&T-Centennial Order, 24 FCC Rcd at 13929 30; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at
17462 29; Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17581 22.
87 See, e.g., AT&T-Centennial Order, 24 FCC Rcd at 13929 30; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at
17462 29; Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17581 22.
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Communications Act authorizes the Commission to prescribe restrictions or conditions not inconsistent
with law that may be necessary to carry out the provisions of the Act.88 Similarly, section 214(c) of the
Act authorizes the Commission to attach to the certificate "such terms and conditions as in its judgment
the public convenience and necessity may require."89 Indeed, unlike the role of antitrust enforcement
agencies, our public interest authority enables us to rely upon our extensive regulatory and enforcement
experience to impose and enforce conditions to ensure that the transaction will yield overall public
interest benefits.90 In using this broad authority, the Commission generally has imposed conditions to
remedy specific harms likely to arise from the transaction or to help ensure the realization of potential
benefits promised for the transaction.91 We generally will not impose conditions to remedy pre-existing
harms or harms that are unrelated to the transaction.92
27.
If the Commission is unable to find that the proposed transaction serves the public
interest for any reason or if the record presents a substantial and material question of fact, we must
designate the application(s) for hearing.93

IV.

QUALIFICATIONS OF THE APPLICANTS

28.
As noted previously, when evaluating applications for consent to assign or transfer
control of licenses and authorizations, section 310(d) of the Communications Act requires the
Commission to determine whether the proposed transaction will serve "the public interest, convenience
and necessity."94 Among the factors the Commission considers in its public interest review is whether the
applicant for a license has the requisite "citizenship, character, financial, technical, and other
qualifications."95 Therefore, as a threshold matter, the Commission must determine whether the
applicants to the proposed transaction meet the requisite qualifications requirements to hold and transfer

88 47 U.S.C. 303(r). See also, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17600 26; AT&T-Centennial Order,
24 FCC Rcd at 13929 30; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17463 29.
89 47 U.S.C. 214(c). See also, e.g., AT&T-Centennial Order, 24 FCC Rcd at 13929 30; Verizon Wireless-
ALLTEL Order
, 23 FCC Rcd at 17463 29; Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17581 22.
90 See, e.g., AT&T-Centennial Order, 24 FCC Rcd at 13929 30; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at
17463 29; Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17581-82 22.
91 47 U.S.C. 303(r); see, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17600 26; AT&T/Verizon Wireless-
ALLTEL Order
, 25 FCC Rcd at 8718 25; AT&T-Centennial Order, 24 FCC Rcd at 13929 30. We consider only
those harms and benefits that are related to the Commission's responsibilities under the Communications Act and
related statutes.
92 See, e.g., AT&T-Centennial Order, 24 FCC Rcd at 13929 30; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at
17463 29; Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17582 22.
93 47 U.S.C. 309(e); see also News Corp. and DIRECTV Group, Inc., Transferors, and Liberty Media Corp.
Transferee, for Authority to Transfer Control, MB Docket No. 07-18, Memorandum Opinion and Order, 23 FCC
Rcd 3265, 3277 22 (2008); Application of EchoStar Communications Corp., General Motors Corp., and Hughes
Electronics Corp. (Transferors) and EchoStar Communications Corp. (Transferee), CS Docket No. 01-348, Hearing
Designation Order
, 17 FCC Rcd 20559, 20574 25 (2002).
94 47 U.S.C. 310(d).
95 Id. 308, 310(d); see also, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17600 27; AT&T/Verizon Wireless-
ALLTEL Order
, 25 FCC Rcd at 8718 26.
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licenses under section 310(d) and the Commission's rules.96 Section 310(d) also obligates the
Commission to consider whether the proposed assignee is qualified to hold Commission licenses.97
29.
As an initial matter, we note that no parties have raised issues with respect to the basic
qualifications of GCI or ACS Wireless. The Commission generally does not reevaluate the qualifications
of assignors unless issues related to basic qualifications have been sufficiently raised in petitions to
warrant designation for hearing.98 We find that there is no reason to reevaluate the requisite citizenship,
character, financial, technical, or other basic qualifications under the Communications Act and our rules,
regulations, and policies, of GCI or ACS Wireless.
30.
In addition, no issues have been raised with respect to the basic qualifications of the
proposed assignee, AWN. Moreover, AWN would be owned exclusively by GCI and ACS Wireless, and,
as noted above, their qualifications to hold Commission licenses have not been questioned. We
accordingly find that AWN is qualified to hold Commission licenses.

V.

COMPETITIVE ANALYSIS

A.

Background

31.
As described above, under the proposed transaction GCI would acquire certain ACS
Wireless infrastructure assets and would contribute them along with GCI's own wireless infrastructure
assets to AWN. ACS Wireless would contribute its remaining wireless assets to AWN. Through the
establishment of AWN and related contracts, GCI and ACS Wireless would effectively combine their
wireless assets and network operations in Alaska.99
32.
The Applicants argue that a joint venture between the parties is necessary for the
Applicants to meet Alaska's unique challenges and competition from nationwide wireless providers,
including AT&T Mobility, which already has a significant presence in Alaska, and Verizon Wireless,
which recently has entered the Alaska market. In seeking approval of the proposed transaction, the
Applicants contend that the Commission should consider the particularly challenging factors associated
with deploying, maintaining, and operating mobile wireless networks in Alaska.100 The Applicants argue
that the instant transaction is fundamentally different from a merger or corporate acquisition and assert
that there are no competitive harms resulting from the transaction.101 With this transaction contemplating
a complete integration at the facilities and operations level while maintaining some level of competition
between GCI and ACS Wireless at the retail level, we examine the competitive effects of combining the
Applicants' wireless network facilities into AWN, including the effects on the ability of GCI and ACS

96 See 47 U.S.C. 214(a), 310(d); 47 C.F.R. 1.948; see also, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at
17600-01 27; AT&T/Verizon Wireless-ALLTEL Order, 25 FCC Rcd at 8718 26.
97 See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17601 28; AT&T/Verizon Wireless-ALLTEL Order, 25 FCC
Rcd at 8720 29.
98 See Applications for the Assignment of License from Denali PCS, L.L.C. to Alaska DigiTel, L.L.C. and the
Transfer of Control of Interests in Alaska DigiTel, L.L.C. to General Communication, Inc., WT Docket No. 06-114,
Memorandum Opinion and Order, 21 FCC Rcd 14863, 14872-73 16 (2006).
99 See supra 9-19. See also Public Interest Statement at 1-2. The Applicants assert that the infrastructure sharing
arrangement allows both GCI and ACS Wireless to continue operating as retail competitors with the same Alaska
customer bases they have prior to closing. See Petition for Declaratory Ruling at 3. The Applicants also assert that
no retail customers will be transferred to the joint venture, nor will any service be discontinued. Id.
100 Public Interest Statement at 27-31.
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Wireless to compete as retail providers of AWN mobile telephony/broadband wireless services
throughout the state of Alaska.102
33.
We begin our competitive analysis by determining the appropriate market definitions for
this transaction, including a determination of the product/service markets, geographic markets, market
participants, and the input market for spectrum available for the provision of mobile telephony/broadband
services.103 Next, we determine the likelihood of competitive harm by assessing, first, whether there is a
significant increase in horizontal market concentration or spectrum holdings as a result of the proposed
transaction, and second, whether these increases would indeed be expected to provide AWN with the
ability to act anticompetitively, either unilaterally or in concert with other service providers.104 The
Commission undertakes a case-by-case review of the competitive effects on the marketplace, including an
analysis of spectrum aggregation and market concentration.105 In previous transactions, the Commission
has used a two-part initial screen to help identify those local markets that provide particular reason for
further competitive analysis.106 The first part of the screen considers changes in market concentration for
each relevant market as a result of the proposed transaction, and is based on the size of the post-
(Continued from previous page)
101 Id. at 15, 25-26.
102 As a result of the vertical arrangement this transaction imposes among newly formed AWN, GCI, and ACS
Wireless, we incorporate into our analysis the Antitrust Guidelines for Collaboration Among Competitors, issued by
the U.S. Department of Justice and the Federal Trade Commission ("DOJ/FTC Competitor Collaboration
Guidelines
"), in addition to the 2010 DOJ/FTC Horizontal Merger Guidelines. Under the 2010 DOJ/FTC
Horizontal Merger Guidelines
, we analyze the change, if any, in the ability and incentive of AWN, GCI, and ACS
Wireless to raise retail prices through the wholesale rates paid by GCI and ACS Wireless or otherwise behave
anticompetitively. See, e.g., Applications of Deutsche Telekom AG, T-Mobile USA, Inc., and MetroPCS
Communications, Inc., WT Docket No. 12-301, Memorandum Opinion and Order and Declaratory Ruling, 28 FCC
Rcd 2322, 2341 55 (WTB, IB 2013) ("T-Mobile-MetroPCS Order"). Under the DOJ/FTC Competitor
Collaboration Guidelines
, we also analyze whether the transaction changes the ability or incentive of each Applicant
to compete independently at the retail level and whether their formation of a production joint venture and other
arrangements are reasonably necessary to achieve the asserted procompetitive benefits. See, e.g., DOJ/FTC
Competitor Collaboration Guidelines
4.
103 We note that defining the relevant product and geographic markets as well as the input market for spectrum for
our competitive analysis is the same under either a merger or competitor collaboration analysis. See DOJ/FTC
Competitor Collaboration Guidelines
3.3; 2010 DOJ/FTC Horizontal Merger Guidelines 4 (stating that the
Agencies typically define relevant markets and calculate market shares and concentration as an initial step in
assessing whether the agreement may create or increase market power or facilitate its exercise and thus poses risks
to competition).
104 In the context of a merger, the 2010 DOJ/FTC Horizontal Merger Guidelines state that, "In any given case,
either or both types of effects [unilateral and coordinated] may be present, and the distinction between them may be
blurred." See 2010 DOJ/FTC Horizontal Merger Guidelines at 2. For a joint venture, as is the case here, the
interplay of these two effects may be even more complex. The labeling of specific effects in this order as unilateral
or coordinated is not meant to definitively determine the nature of those effects, as the results here do not turn on the
label applied.
105 See AT&T-WCS Order, 27 FCC Rcd at 16467 21; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10716
48; AT&T-Qualcomm Order, 26 FCC Rcd at 17602 31; AT&T-Centennial Order, 24 FCC Rcd at 13938 50;
2000 Biennial Regulatory Review Spectrum Aggregation Limits for Commercial Mobile Radio Services, WT Docket
No. 01-14, Report and Order, 16 FCC Rcd 22668, 22693-94 50 (2001).
106 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16467 21; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10719 59; AT&T-Qualcomm Order, 26 FCC Rcd at 17602 31; AT&T/Verizon Wireless-ALLTEL Order, 25 FCC
Rcd at 8720-21 32; Applications of AT&T Wireless Services, Inc. and Cingular Wireless Corporation, WT Docket
No. 04-70, Memorandum Opinion and Order, 19 FCC Rcd 21522, 21552 58 (2004) ("Cingular-AT&T Wireless
Order
").
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transaction Herfindahl-Hirschman Index ("HHI") market concentration and the change in the HHI.107
The second part examines the input market for spectrum available on a market-by-market basis for the
relevant markets. However, the Commission is not limited in its consideration of potential competitive
harms solely to markets identified by its initial screen.108

B.

Market Definition

34.
Determining the relevant market within which to analyze this transaction requires us to
define the relevant product market for each level of competition affected by the transaction, as well as the
relevant geographic markets.109 Accordingly, we consider the impact of the transaction on the input
market for spectrum suitable and available for the provision of mobile wireless services and the market
participants. We consider arguments made in relation to this transaction in establishing the appropriate
definitions, and apply these market definitions to the proposed transaction.
1.

Product Market

35.
Consistent with recent telecommunications transactions, we evaluate this proposed
transaction using a combined "mobile telephony/broadband services" product market110 that is comprised
of mobile voice and data services, including mobile voice and data services provided over advanced
broadband wireless networks (mobile broadband services).111 The Applicants do not challenge the mobile
telephony/broadband product market definition, and we find that the Applicants provide services in the
combined mobile telephony/broadband services product market. Thus, we will apply this definition to
our competitive analysis.
2.

Geographic Market

36.
The Commission has found that the relevant geographic markets for certain wireless
transactions are "local"112 and also has evaluated a transaction's competitive effects at the national level

107 See, e.g., AT&T/Verizon Wireless-ALLTEL Order, 25 FCC Rcd at 8725 42; see also 2010 DOJ/FTC Horizontal
Merger Guidelines
5.3.
108 See AT&T-WCS Order, 27 FCC Rcd at 16467 21; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10716
48; see also, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17609-10 49-50.
109 See, e.g., 2010 DOJ/FTC Horizontal Merger Guidelines 4.
110 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16468 24; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10717 53; AT&T-Qualcomm Order, 26 FCC Rcd at 17603 33; AT&T-Verizon Wireless Order, 25 FCC Rcd at
8721 35; AT&T-Centennial Order, 24 FCC Rcd at 13932 37. The Commission has previously determined that
there are separate relevant product markets for interconnected mobile voice and data services, and also for
residential and enterprise services, but found it reasonable to analyze all of these services under a combined mobile
telephony/broadband services product market. See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17603 33;
AT&T/Verizon Wireless-ALLTEL Order, 25 FCC Rcd at 8721 35; AT&T-Centennial Order, 24 FCC Rcd at 13932
37.
111 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16468 24; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10717 53; AT&T-Qualcomm Order, 26 FCC Rcd at 17602-03 32-33; AT&T/Verizon Wireless-ALLTEL Order,
25 FCC Rcd at 8721 35; AT&T-Centennial Order, 24 FCC Rcd at 13932 37.
112 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16468 25; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10718 54; AT&T-Qualcomm Order, 26 FCC Rcd at 17604 34. In addition, in the AT&T-Centennial Order, we
concluded that with respect to the continental United States, the most appropriate geographic level for market
analysis was the local level. However, we also found that Puerto Rico and the U.S. Virgin Islands were each a
separate relevant geographic market because of their unique characteristics, including their limited geographic scope
and isolated nature. See AT&T-Centennial Order, 24 FCC Rcd at 13934 41-42.
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where a transaction exhibits certain national characteristics that provide cause for concern.113 The
Applicants state that neither GCI nor ACS Wireless provides facilities-based wireless service outside of
Alaska.114 The Applicants argue that whether the Commission considers the proposed transaction as
affecting Alaska alone, or considers it in the context of the national geographic market for wireless
services, there is no harm to competition because the transaction does not increase market
concentration.115
37.
Because most consumers use their mobile telephony/broadband services at or close to
where they live, work, and shop, they purchase mobile telephony/broadband services from providers that
offer and market services where they live, work, and shop.116 Service sold in distant locations is generally
not a good substitute for service near a consumer's home or work.117 In addition, service providers
compete at the local level in terms of coverage and service quality.118 Consistent with past transactions,
we will primarily use CMAs as the local geographic markets in which we analyze the potential
competitive harms arising from spectrum aggregation as a result of the proposed transaction.119 Further,
because of Alaska's isolated geographic location separated from the contiguous markets in the lower 48
states, the potential competitive harms of the proposed transaction are likely to be realized across Alaska
and our analysis will also consider the effects of the transaction on a statewide basis.120 The Commission
evaluates a transaction's competitive effects at the national level only in cases where the transaction
exhibits national characteristics, which we do not find here.121
3.

Input Market for Spectrum

38.
When assessing spectrum aggregation in its review of wireless transactions, the
Commission evaluates the current spectrum holdings of the acquiring firm that are "suitable" and

113 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16468 25; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10718 54; AT&T-Qualcomm Order, 26 FCC Rcd at 17604-05 34-37.
114 Public Interest Statement at 14 n.20.
115 Id. at 25-26.
116 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16469 26; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10718 56; AT&T-Centennial Order, 24 FCC Rcd at 13934 41; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at
17472 52; see also Implementation of Section 6002(B) of the Omnibus Budget Reconciliation Act of 1993, Annual
Report and Analysis of Competitive Market Conditions with Respect to Mobile Wireless, Including Commercial
Mobile Services
, WT Docket No. 10-133, Fifteenth Report, 26 FCC Rcd 9664, 9693 23-24 (2011).
117 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16469 26; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10718 56; AT&T-Centennial Order, 24 FCC Rcd at 13934 41; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at
17472 52.
118 See, e.g., T-Mobile-MetroPCS Order, 28 FCC Rcd at 2333 31; AT&T-WCS Order, 27 FCC Rcd at 16469 26;
Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10718 56.
119 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16469 26; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10718 56; AT&T-Qualcomm Order, 26 FCC Rcd at 17604 34.
120 This treatment is consistent with the Commission's treatment of Puerto Rico and the U.S. Virgin Islands, which
were each considered a separate relevant geographic market because of their unique characteristics, including their
limited geographic scope and isolated nature. See AT&T-Centennial Order, 24 FCC Rcd at 13934 41-42.
121 See AT&T-WCS Order, 27 FCC Rcd at 16469 28; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10719
58; AT&T-Qualcomm Order, 26 FCC Rcd at 17604-05 34-37.
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"available" in the near term for the provision of mobile telephony/broadband services.122 The
Commission previously has determined that cellular, PCS, Specialized Mobile Radio ("SMR"), and 700
MHz band spectrum, as well as AWS-1 and Broadband Radio Service ("BRS") spectrum,123 and most
recently, WCS spectrum, meet this definition.124 The Commission traditionally has applied an initial
screen to help identify local markets where a proposed transaction might raise particular concerns with
respect to spectrum holdings.125 The current screen identifies local markets where an entity would
acquire more than approximately one-third of the total spectrum suitable and available for the provision
of mobile telephony/broadband services.126 No party in this proceeding has challenged the Commission's
current evaluation of what spectrum meets the definition of suitability and availability, and we find no
need to revisit that determination here.
39.
The Commission recently initiated a review of its policies toward mobile spectrum
holdings. In the Mobile Spectrum Holdings NPRM, we noted, though, that during the pendency of the
rulemaking proceeding, we would continue to apply our current case-by-case approach to evaluate mobile
spectrum holdings in secondary market transactions and initial spectrum licensing after auctions.127 Our
analysis of the proposed transaction therefore employs the recently modified spectrum screen, as fully
described in the AT&T-WCS Order.128
4.

Market Participants

40.
With respect to relevant market participants, the Applicants do not argue that the
Commission should alter its competitive analysis to consider Mobile Virtual Network Operators
("MVNOs") or resellers as market participants for purposes of our competitive analysis of this
transaction. Rather, the Applicants argue that retail markets will remain competitive despite the
combination of facilities used to provide mobile telephony/broadband services through the AWN joint
venture.129
41.
Accordingly, as in previous transactions we will consider only facilities-based entities
providing mobile telephony/broadband services using cellular, broadband PCS, SMR, 700 MHz, AWS-1,

122 See AT&T-WCS Order, 27 FCC Rcd at 16469-70 29; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10719 59; AT&T-Qualcomm Order, 26 FCC Rcd at 17605-06 38; AT&T-Verizon Wireless Order, 25 FCC Rcd at
8722 37; AT&T-Centennial Order, 24 FCC Rcd at 13933 39.
123 See, e.g., Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17591-92 53.
124 See AT&T-WCS Order, 27 FCC Rcd at 16470-71 31. In the AT&T-WCS Order, we found that 20 megahertz of
WCS spectrum comprised of the paired A and B Blocks are suitable and available for the provision of mobile
telephony/broadband services.
125 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16469-70 29; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd
at 10719 59; AT&T-Qualcomm Order, 26 FCC Rcd at 17602 31.
126 See AT&T-WCS Order, 27 FCC Rcd at 16470 30; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10719
59; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17473 54.
127 See Policies Regarding Mobile Spectrum Holdings, WT Docket No. 12-269, Notice of Proposed Rulemaking, 27
FCC Rcd 11710, 11718 16 n.59 (2012) ("Mobile Spectrum Holdings NPRM"). See also AT&T-WCS Order, 27
FCC Rcd at 16470 30.
128 See generally AT&T-WCS Order, 27 FCC Rcd at 16459.
129 Public Interest Statement at 14-15.
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BRS and WCS spectrum to be market participants, but continue to assess the effect of MVNOs and
resellers in our competitive evaluation.130

C.

Competitive Effects of the Proposed Transaction

1.

Initial Screen

42.
As discussed above, we initially apply a two-part screen to help identify local markets
where competitive concerns are more likely.131 The first part of the screen is based on the size of the
post-transaction HHI, a measure of market concentration, and the change in the HHI.132 The second part
of the screen identifies local markets where an entity would acquire more than approximately one-third of
the total spectrum suitable and available for the provision of mobile telephony/broadband services.133 For
purposes of determining HHIs in this transaction, we use our June 2012 NRUF database, which tracks
phone number usage by all telecommunications service providers.134 Consistent with our discussion of
the local geographic markets above, in calculating market shares and market concentration, we analyze
wireless provider data at the CMA level. Our initial HHI screen identifies Alaska overall as well as each
of the four CMAs in Alaska.135

130 See e.g., T-Mobile-MetroPCS Order, 28 FCC Rcd at 2334-35 37; AT&T-WCS Order, 27 FCC Rcd at 16472
33; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10722 65; AT&T/Verizon Wireless-ALLTEL Order, 25
FCC Rcd at 8724 41; AT&T-Centennial Order, 24 FCC Rcd at 13936 45; Verizon Wireless-ALLTEL Order, 23
FCC Rcd at 17481 74; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21563 92.
131 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16467 21; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10719 59; AT&T/Verizon Wireless-ALLTEL Order, 25 FCC Rcd at 8720-21 32; AT&T-Centennial Order, 24
FCC Rcd at 13935 43.
132 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16467 21; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10719 59; AT&T/Verizon Wireless-ALLTEL Order, 25 FCC Rcd at 8720-21 32; AT&T-Centennial Order, 24
FCC Rcd at 13935 43; see also 2010 DOJ/FTC Horizontal Merger Guidelines 5.3.
133 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16467 21; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10719 59; AT&T-Qualcomm Order, 26 FCC Rcd at 17602 31; AT&T/Verizon Wireless-ALLTEL Order, 25 FCC
Rcd at 8720-21872021 32.; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21552 58.
134 These data indicate the number of assigned phone numbers that a wireless carrier has in a particular wireline rate
center. Rate centers are geographic areas used by local exchange carriers for a variety of reasons, including the
determination of toll rates. See HARRY NEWTON, NEWTON'S TELECOM DICTIONARY: 19TH EXPANDED & UPDATED
EDITION 660 (July 2003). All mobile wireless providers must report to the FCC the quantity of their phone numbers
that have been assigned to end users, thereby permitting the Commission to calculate the total number of mobile
subscribers. For purposes of geographical analysis, the rate center data can be associated with a geographic point,
and all of those points that fall within a county boundary can be aggregated together and associated with much larger
geographic areas based on counties.
135 Our initial HHI screen criteria identify, for particular case-by-case market analysis, those markets in which, post-
transaction: (1) the HHI would be greater than 2800 and the change in HHI would be 100 or greater; or (2) the
change in HHI would be 250 or greater, regardless of the level of the HHI. See, e.g., AT&T/Verizon Wireless-
ALLTEL Order
, 25 FCC Rcd at 8724-25 42. For the state of Alaska, the pre-transaction HHI is [BEGIN
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Verizon Wireless recently entered Alaska, but its market shares are not included in the calculation on the HHI initial
screen.
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43.
For the spectrum screen, we consider the aggregation of spectrum into a single facilities-
based provider, AWN.136 We apply our spectrum screen on a county-by-county basis to help identify
markets in which we should further analyze the competitive impacts of mobile spectrum holdings.
Application of the initial spectrum screen results in one market being triggered.137 The Applicants do not
challenge the application of the spectrum screen in the instant transaction, but rather argue that the
demographics of the state, the low population density, and unused spectrum in many areas are ample
justification for the Commission to give greater weight to factors other than spectrum.138 The Applicants
urge the Commission to examine the presence of other variables, such as the capacity and presence of
rival providers in individual markets, as part of the competitive analysis.139
2.

Unilateral Effects

44.
Background. Unilateral effects usually arise when a merged firm finds it profitable to
alter its behavior following a merger by "elevating price and suppressing output" due to the fact that it no
longer will lose sales to the other merging party.140 In the case of mobile telephony/broadband services,
this might take the form of delaying improvements in service quality or adversely adjusting plan features
with or without changing the plan price.141 Similar to mergers and acquisitions, joint production ventures
and other collaboration agreements may produce unilateral price increases.142
45.
Under our unilateral effects analysis we consider whether, as a result of this joint venture,
there is an increased incentive and ability for AWN to increase the wholesale rates it charges GCI and
ACS Wireless (which in turn could increase the rates charged by GCI or ACS Wireless to retail
consumers) without considering potential responses from other mobile telephony/broadband providers in
Alaska. In assessing whether the transaction creates an increased incentive and ability to unilaterally raise
prices, we analyze various provisions of the agreements as well as whether the Applicants' services and
products are close substitutes and if there are other providers in the CMA or Alaska markets that are close
substitutes to the Applicants' services and products. Further, we consider whether other current and
potential competitors in Alaska have sufficient coverage and capacity to counter an increase in price,
taking into consideration the specific challenges associated with providing mobile telephony/broadband

136 Through the Applicants' Asset Purchase Agreement, GCI and ACS Wireless plan to transfer their spectrum
licenses to AWN. Public Interest Statement, App. A, B; Asset Purchase Agreement 2.2, 2.3. For purposes of the
Declaratory Ruling addressing certain statutory and regulatory provisions related to universal service support, we
find for reasons discussed below that both GCI and ACS Wireless have access to spectrum and are both facilities-
based providers. See infra 112-128.
137 The Yukon-Koyukuk borough in CMA 315 (Alaska 1-Wade Hampton) is triggered by the initial spectrum screen
(post-transaction, AWN would hold 160 megahertz of total spectrum in this borough). The Applicants' analysis
states that the spectrum screen is triggered in four boroughs. See Public Interest Statement at 28-29. Their analysis,
however, pre-dates the Commission's AT&T-WCS Order released in December 2012, which modified the screen by
adding in 20 megahertz of WCS spectrum. See AT&T-WCS Order, 27 FCC Rcd at 16471-72 33 n.94.
138 Public Interest Statement at 27-28.
139 Id. at 29-30.
140 See, e.g., 2010 DOJ/FTC Horizontal Merger Guidelines 6, p. 20; see, e.g., T-Mobile-MetroPCS Order, 28 FCC
Rcd at 2336 42; AT&T-Centennial Order, 24 FCC Rcd at 13939-40 54; Verizon Wireless-ALLTEL Order, 23
FCC Rcd at 17485 84.
141 See, e.g., T-Mobile-MetroPCS Order, 28 FCC Rcd at 2336 42.
142 2010 DOJ/FTC Horizontal Merger Guidelines 6.1, p. 20 (stating that a merger between firms selling
differentiated products may diminish competition by enabling the merged firm to profit by unilaterally raising the
price of one or both products above the pre-merger level); DOJ/FTC Competitor Collaboration Guidelines 3.31(a)
(stating that such agreements can create or increase market power or facilitate its exercise).
19

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services in Alaska. In particular, we take into consideration in our analysis of current and potential
competition in Alaska that the state is isolated from the contiguous lower 48 states, has a statewide
population of only about 710,000, is by far the largest state by area in the nation, has the lowest
population density, and presents particular operating challenges for mobile networks, especially in its
remote areas.
46.
As in prior transactions, we find that the market for mobile telephony/broadband services
in the United States is differentiated.143 Service providers compete vigorously not only on the basis of
price but also on other variables such as plan features, network quality, geographic coverage, and
customer service.144 While service providers can change some of these attributes relatively quickly,
others--particularly the non-price attributes--require investments in spectrum or infrastructure and are
not easily modified.145
47.
The Applicants contend that the proposed transaction presents no issues of unilateral
effects, arguing that the initial spectrum screen is only slightly exceeded in a few areas, and in those areas
spectrum cannot be said to be constrained.146 The Applicants argue that there would be no change in the
number of retail wireless service providers in these or any other locations as a result of this transaction.147
They argue that both GCI and ACS Wireless would continue to offer competitive wireless services
everywhere they do today.148 The Applicants contend that competition for wireless services in Alaska is
strong, with AT&T Mobility as the dominant provider, Verizon Wireless a recent entrant, and several
other Alaska-based competitors serving rural areas.149 Specifically, the Applicants argue that it is
unlikely that GCI or ACS Wireless could raise prices or reduce output because there simply is too much
competition from rivals in the state, and spectrum is available for additional competitive use.150 The
Applicants argue that the instant transaction would allow them to compete more effectively in Alaska
against larger and better financed nationwide wireless competitors.151
48.
We find that as a result of this transaction, GCI's and ACS Wireless's ability to compete
against each other at the retail level in each of the affected areas may be reduced through AWN's

143 See T-Mobile-MetroPCS Order, 28 FCC Rcd at 2336 41; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at
17485 85; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21569 116.
144 See T-Mobile-MetroPCS Order, 28 FCC Rcd at 2336 41; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at
17485 85; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21569 116.
145 See e.g., Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17485 85; Cingular-AT&T Wireless Order, 19 FCC
Rcd at 21569 116.
146 Public Interest Statement at 29-30.
147 Id. at 30.
148 Id. at 30.
149 Id.
150 Id. at 30-31.
151 Id. at 15. Internal documents of the Applicants indicate that [

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wholesale price setting behavior. Post-transaction, GCI and ACS Wireless would be required to purchase
on a wholesale basis relevant services exclusively from AWN.152 GCI and ACS Wireless would pay
AWN for its services at wholesale rates that AWN would set at approximately 30 percent below
prevailing market rates.153 Although the transaction agreements provide that GCI and ACS Wireless are
free to compete on prices at the retail level, the uniform wholesale rates they would pay AWN provides
some limitation on their ability to compete on retail price. For example, if AWN raises the wholesale
price paid by GCI and ACS Wireless, then that would likely be passed onto consumers through GCI's and
ACS Wireless's retail rates.154 However, the Applicants claim that for existing 2G and 3G services,
current prices and service offerings would be maintained for at least two years post-closing, and therefore
there would be no increase in prices for these services during this period.155 LTE services are not subject
to this hold, and to the extent that the Applicants are successful in transferring their existing 2G and 3G
customers to the these services, the price ceiling on 2G and 3G plans may only have a limited impact on
prices. Thus it may be possible for the Applicants to maintain higher post-transaction retail rates.
49.
The transaction also limits GCI's and ACS Wireless's ability to compete at the retail
level on non-price factors. AWN would establish the plan characteristics and device selection for the
mobile wireless services available to GCI and ACS Wireless.156 Therefore, competition on differentiated
plans and devices likely would be reduced, since both GCI and ACS Wireless could only sell AWN
services and devices approved by AWN. Also, since both GCI's and ACS Wireless's services would be
provided on the same network, competition on coverage and network quality would be eliminated.
However, GCI and ACS Wireless would be able at the retail level to repackage the AWN plans with their
separate wireline services and to provide promotional and loyalty programs to create new products to
compete in the retail market throughout Alaska.157
50.
We also find that certain provisions in the various agreements that make up this
transaction may reduce ACS Wireless's incentive to compete at the retail level in each of the relevant
markets triggered by our initial screen. As discussed above, the Joint Operating Agreement provides that
ACS Wireless would receive a fixed preferential distribution in the first four years of the transaction,
subject to certain adjustments.158 This may reduce ACS Wireless's incentive to compete for customers
either on price or on new products and services, as the fixed payment shields it against some of the more
serious consequences of diminished profits on sales to customers.159 We note, however, that the Joint
Operating Agreement also includes a subscriber maintenance clause requiring ACS Wireless to maintain
a target level of subscribers based on current subscriber levels or pay a penalty proportional to the target

152 See Public Interest Statement at 11.
153 See id.
154 When the wholesale price is raised above marginal cost, the optimal retail price that GCI and ACS Wireless
would want to charge rises. Even taking into account the fact that AWN's profits will be returned to them, GCI and
ACS Wireless still pay more for their inputs and so would prefer to buy less, and consequently prices faced by
consumers are higher. See Chen, Z. and Ross, T.W., 2003, "Cooperating Upstream While Competing Downstream:
A Theory of Input Joint Ventures." International Journal of Industrial Organization, 21, p. 389.
155 See Public Interest Statement at 8 & n.12; see infra 63.
156 See Joint Operating Agreement 2.1(a), 9.2; Public Interest Statement at 8.
157 See Public Interest Statement at 8, 11-12; see also Facilities and Network Use Agreement 3(c), (d).
158 See supra 15.
159 Unlike GCI, which would be the residual claimant for AWN net income, in the first four years, ACS would not
have an additional incentive to lower retail prices in order to earn incremental profits from the difference between
the wholesale price and AWN's marginal cost. See id.
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shortfall.160 Under certain conditions, these provisions may off-set one another such that the transaction
would have a neutral impact on ACS Wireless's incentive to compete for retail customers post-
transaction.
51.
Presence and Capacity of AT&T Mobility. In a market characterized by product
differentiation, a firm's ability to raise prices is constrained in part by the threat that its customers will
shift their purchases to products that are close substitutes. Therefore, where there are rivals in the market
who offer close substitutes for the products offered by the merging firms and who have sufficient capacity
to respond to pricing pressures, their presence may deter or counteract anticompetitive unilateral
behavior. This is also the case for a joint venture such as this.161
52.
AT&T Mobility provides mobile telephony/broadband services in almost all of the areas
where GCI's and ACS Wireless's networks overlap in each of the four CMAs.162 AT&T offers mobile
telephony/broadband services on its 2G and 3G networks and has launched its LTE network in Anchorage
and Juneau.163 AT&T Mobility offers nationwide pricing plans and the same line of devices as it does in
the lower 48 states.164 Further AT&T Mobility has a significant subscriber market share and coverage in
each of the relevant markets and holds spectrum throughout the entire state of Alaska.165
53.
To assess whether AT&T Mobility is a close substitute for mobile telephony/broadband
services offered by GCI and ACS Wireless, we analyzed LNP data.166 The LNP data indicate that AT&T
Mobility service offerings are fairly close substitutes for GCI's and ACS Wireless's mobile
telephony/broadband services.167 Indeed, more than [BEGIN HIGHLY CONFIDENTIAL

160 See Joint Operating Agreement 9.4.
161 See DOJ/FTC Competitor Collaboration Guidelines 3.3.
162 Post-transaction, AT&T Mobility's coverage would overlap approximately 96 percent of AWN's population
coverage in Alaska.
163 See http://www.att.com/network/.
164 http://www.att.com/shop/wireless/plans-new.html#fbid=P9NixL4hioM. See also GCI-0094146 at 2 [BEGIN
HIGHLY CONFIDENTIAL INFORMATION] -----------------------------------------------------------------------------
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-----------------------------------------------
).[END HIGHLY CONFIDENTIAL INFORMATION]
165 AT&T Mobility's market share ranges from approximately [BEGIN HIGHLY CONFIDENTIAL
INFORMATION] --- ------------------- [END HIGHLY CONFIDENTIAL INFORMATION]
percent. AT&T
Mobility covers approximately 85 to 99.8 percent of the population in each of the four CMAs. On a borough-by-
borough basis AT&T Mobility holds between 86 and 160 megahertz of spectrum.
166 LNP data include each instance of a customer porting a phone number from one mobile provider to another and
indicates both the origin and destination provider. The LNP data are provided to the Commission by NeuStar, Inc.
See Applications of Nextel Communications, Inc. and Sprint Corporation For Consent to Transfer Control of
Licenses and Authorizations, WT Docket No. 05-63, Memorandum Opinion and Order, 20 FCC Rcd 13967, 14003-
04 100 n.216 (2005). There are some limitations in using LNP data to analyze substitutability. First, LNP data
involve all switches, not just those that are a response to a price increase. Second, because customers often delay
switching until their contracts have expired, the act of switching may substantially lag the decision to switch. Third,
there are two measures of switching, customers that are porting in and those that are porting out, and there may be
substantial differences between the two. Fourth, LNP data do not identify customers that either decrease wireless
usage or drop wireless services. Fifth, LNP data represent a small sample of the population of subscribers. It is not
clear whether this sample of the population would be representative of the population as a whole. See id. at 14004-
05 102 n.219.
167 LNP Data, June 2012. See also GCI-0094146, p. 2 [BEGIN HIGHLY CONFIDENTIAL INFORMATION] -
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(continued....)
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INFORMATION]

--- [END HIGHLY CONFIDENTIAL INFORMATION] percent of customers
leaving either GCI or ACS Wireless port to AT&T Mobility, compared to approximately [BEGIN
HIGHLY CONFIDENTIAL INFORMATION]
-------- [END HIGHLY CONFIDENTIAL
INFORMATION]
percent of subscribers porting between GCI and ACS Wireless.168
54.
Entry by Verizon Wireless. In addition to AT&T Mobility's significant presence in each
of the affected CMAs, Verizon Wireless recently has entered Alaska as a facilities-based mobile
broadband services provider.169 Verizon Wireless began offering service in Anchorage and other large
population centers throughout Alaska in June 2013.170 In response to our request for information on its
entry into Alaska, Verizon Wireless submitted to the Commission internal documents and interrogatory
responses discussing the company's plans to offer LTE wireless data service.171 Verizon Wireless states
that its initial entry will be limited to mobile wireless data services using its LTE network for tablets, air
cards, mobile hotspot devices, and machine-to-machine devices. Verizon Wireless states that when Voice
over LTE (VoLTE) becomes available, it will begin offering smartphones. The company estimates that
VoLTE will be available in the first half of 2014. Verizon Wireless states that the company plans to open
and operate a number of retail stores where customers may purchase service and equipment.172 In each of
the overlap areas in the four CMAs, we find that Verizon Wireless has entered with sufficient planned
coverage.173 Further, in each of the CMAs, Verizon Wireless's documents indicate plans to obtain
significant market share, growth and coverage post-entry.174
(Continued from previous page)
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168 LNP Data June 2012.
169 Molly Dischner, Verizon Turns on Alaska 4G LTE Network, ALASKA JOURNAL OF COMMERCE, June 6, 2013,
available at http://www.alaskajournal.com/Alaska-Journal-of-Commerce/June-Issue-2-2013/Verizon-turns-on-
Alaska-4G-LTE-network/ (last visited July 1, 2013).
170 Verizon Wireless launched its LTE network in Anchorage, Fairbanks, North Pole, Juneau, and Matanuska-
Susitna Borough. Id.
171 Letter from John T. Scott to Marlene H. Dortch, Secretary, Federal Communications Commission, WT Docket
No. 12-187 (Jan. 18, 2013).
172 Ben Anderson, After long wait, Verizon rolls out data service in Alaska, ALASKA DISPATCH, June 3, 2013,
available at http://www.alaskadispatch.com/article/20130603/after-long-wait-verizon-rolls-out-data-service-alaska
(last visited July 1, 2013); Letter from John T. Scott to Marlene H. Dortch, Secretary, Federal Communications
Commission, Docket No. 12-187, at 2-3 (Jan. 18, 2013). See also VZW.001.001205, VZW.001.002510,
VZW.001.002511, VZW.001.002512, VZW.001.002514, VZW.001.002516, VZW.001.002518.
173 See VZW-001.003139, tab 1 for CMAs 187 and 316; VZW-001.003139, tab 2 for CMA 315; VZW-001.003139,
tab 3 and VZW-001.002205 at 30-32 for CMA 317. Documents submitted by Verizon Wireless indicate it expects
to cover [BEGIN HIGHLY CONFIDENTIAL INFORMATION] --------------------------------------------------------
------------------------------------------------------------------ [END HIGHLY CONFIDENTIAL INFORMATION]
of
the population. See VZW-001.001051, VZW-001.003139, tab 1 (CMA 187, 316), VZW-001.002205 at 34, 44
(CMA 187, CMA 317), at 28-29 (CMA 315). See also Molly Dischner, Verizon Turns on Alaska 4G LTE Network,
ALASKA JOURNAL OF COMMERCE, June 6, 2013, available at http://www.alaskajournal.com/Alaska-Journal-of-
Commerce/June-Issue-2-2013/Verizon-turns-on-Alaska-4G-LTE-network/ (last visited July 1, 2013).
174 Documents submitted by Verizon Wireless indicate that the company has well developed plans to enter these
markets with the intention of [BEGIN HIGHLY CONFIDENTIAL INFORMATION] --------------------------------
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55.
Based on our review of the documents and interrogatory responses, we conclude that
Verizon Wireless's recent entry and planned expansion in Alaska likely would increase competition and
provide a second nationwide LTE provider in addition to AT&T Mobility in each of these local markets
in the areas where GCI and ACS Wireless overlap. Moreover, given the evidence in the record,175 even if
Verizon Wireless achieves only modest market share, the current market shares for GCI and ACS
Wireless likely overstate the potential for anticompetitive harm.176
56.
Market by Market Analysis. Below we evaluate in more detail the four CMAs triggered
by our initial screen and the Alaska market to assess if market conditions exist that likely would counter
the effects of any potential reduction in competition as a result of the transaction. In our analysis, we
consider numerous variables that are important for predicting the incentive and ability to unilaterally
elevate prices or suppress output as a result of the joint venture.177 The factors we consider in each
identified market include, for example, the total number of competitors in the market, their market shares,
network coverage, and spectrum holdings as compared to the combined entity's post-transaction market
share, network coverage, and spectrum holdings, and the degree of substitutability between providers in
the market.178 As part of our analysis, we take into account the specific market conditions in Alaska,
which is geographically isolated from the contiguous lower 48 states, faces unique challenges for a
variety of reasons associated with the immense geographic size of the state, its comparatively low
statewide population of about 710,000, the lowest population density in the nation (particularly outside of
(Continued from previous page)
.[END HIGHLY CONFIDENTIAL INFORMATION] See VZW-001.003139, tab 1 for CMA 187; VZW-
001.003139, tab 2 for CMA 315; VZW-001.003139, tab 3 and VZW-001.002205 at 30-32 for CMA 317.
175 See, e.g., GCI-0004857 at 4-6 [BEGIN HIGHLY CONFIDENTIAL INFORMATION] --------------------------
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; id. at 3-4 [BEGIN HIGHLY CONFIDENTIAL INFORMATION] ------
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-----------------------------------------------------------------------------.[END HIGHLY CONFIDENTIAL
INFORMATION]
176 See DOJ/FTC Competitor Collaboration Guidelines 3.35. In finding that Verizon Wireless recently has
entered the market and that AT&T Mobility is a significant provider that has already deployed LTE in some areas of
Alaska, we also note the market transition to LTE may competitively disadvantage (at least in the short run) GCI
and ACS Wireless as a result of the challenges each company faces to separately transition to LTE. This may be
another factor supporting a finding that the Applicants' current market shares overstate the potential for competitive
harm. See, e.g., U.S. v. General Dynamics Corp., 415 U.S. 486, 497-98 (1974) (noting that one of the party's
market power was "diminishing" given its capacity and finding that certain market conditions make current or
historical market share a poor indicator of a firm's future competitive significance); General Electric Company, GE
Subsidiary, Inc. 21, and MCI Communications Corporation, Memorandum Opinion and Order, 3 FCC Rcd 2803,
2808 37-40 (CCB 1998) (following General Dynamics' approach to finding post-merger HHIs overstated,
notwithstanding that technical failing firm defense requirements had not been met, given declining revenues,
converging service markets and likely entry/expansion) ("The transaction will, "strengthen MCI[`s]...ability to
compete both in the United States and abroad against companies like AT&T, GTE..."); Western Union Corp., ITT
Communications Service, Inc. and Brooke Partners, L.P., Memorandum Opinion and Order, 2 FCC Rcd 6063, 6065
21 (1987).
177 See, e.g., T-Mobile-MetroPCS Order, 28 FCC Rcd at 2338 47; AT&T/Verizon Wireless-ALLTEL Order, 25
FCC Rcd at 8732-8736 63-72; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17487-88 91-92; Sprint
Nextel-Clearwire Order
, 23 FCC Rcd at 17602-3 79-80; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21593-
99 184-200.
178 The market share information appearing herein is derived from our analysis of June 2012 NRUF and LNP data.
Population data reflects the 2010 Census. Coverage information is derived from Mosaik data and 2010 Census data.
Analysis on substitutability is derived from June 2010 LNP data.
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its major population centers), its difficult operating conditions, and its market structure. After performing
our market-by-market analysis, we find that certain factors may limit generally the ability of GCI or ACS
Wireless to unilaterally raise prices or decrease output in these markets.
57.
In all four CMAs, there are three providers, GCI, ACS Wireless, and AT&T Mobility,
with significant market share.179 There are additional providers in CMAs 187, 315, and 316, but they
serve limited areas in each CMA.180 Together, the three largest providers cover over 70 percent of the
population in every CMA and as much as 99 percent in CMA 187. Also, the LNP data indicate that more
than [BEGIN HIGHLY CONFIDENTIAL INFORMATION]--- [END HIGHLY CONFIDENTIAL
INFORMATION]
percent of GCI and ACS Wireless customers port to AT&T Mobility in each of the
four CMAs.181 A significantly smaller portion of customers port between GCI and ACS Wireless, making
them weaker substitutes compared to AT&T Mobility.182 Below we provide additional market-specific
analysis for each of the four CMAs.
58.
CMA 187 Anchorage. CMA 187 is comprised of a single borough--Anchorage. It is the
largest population center in Alaska with a population of 291,826, approximately 41 percent of the entire
state population, and the highest population density in the state, approximately 171 POPs per square mile.
GCI and ACS Wireless have significant overlap in this CMA, with approximately 99 percent of the
population covered by both providers. Post-transaction, AWN's and AT&T Mobility's coverage also
would overlap approximately 99 percent of the population of the CMA. AT&T Mobility, ACS Wireless,

179 GCI's market share ranges from [BEGIN HIGHLY CONFIDENTIAL INFORMATION] -----------------------
---------------------------------
.[END HIGHLY CONFIDENTIAL INFORMATION] ACS Wireless's market share
ranges from [BEGIN HIGHLY CONFIDENTIAL INFORMATION] ---------------------------------------------------
-------------[END HIGHLY CONFIDENTIAL INFORMATION]
AT&T Mobility's market share ranges from
[BEGIN HIGHLY CONFIDENTIAL INFORMATION] ---------------------------------------------------------------
.[END HIGHLY CONFIDENTIAL INFORMATION] Verizon Wireless only recently entered the Alaska market,
in June 2013.
180 MTA Wireless covers seven and 44 percent of the CMA populations in CMAs 187 and 316, respectively, and has
[BEGIN HIGHLY CONFIDENTIAL INFORMATION] -------- [END HIGHLY CONFIDENTIAL
INFORMATION]
percent market share in CMAs 187 and 316, respectively. TelAlaska covers four and three
percent of the CMA populations in CMAs 315 and 316, respectively, and has [BEGIN HIGHLY
CONFIDENTIAL INFORMATION] -------------------- [END HIGHLY CONFIDENTIAL INFORMATION]
percent market share in both CMAs. Additionally, in CMA 315, Arctic Slope Telephone and OTZ Telephone each
cover five percent of the CMA populations. Both of these carriers have approximately [BEGIN HIGHLY
CONFIDENTIAL INFORMATION] ---- [END HIGHLY CONFIDENTIAL INFORMATION]
percent market
share in CMA 315. In CMA 316, Copper Valley Wireless has a [BEGIN HIGHLY CONFIDENTIAL
INFORMATION]
[END HIGHLY CONFIDENTIAL INFORMATION] percent market share and covers
approximately four percent of the population. Cordova Wireless covers approximately one percent of the population
and has a [BEGIN HIGHLY CONFIDENTIAL INFORMATION] [END HIGHLY CONFIDENTIAL
INFORMATION]
percent market share in CMA 316.
181 [BEGIN HIGHLY CONFIDENTIAL INFORMATION] ---------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------
.[END HIGHLY CONFIDENTIAL
INFORMATION]
182 Customers porting from GCI to ACS Wireless range from [BEGIN HIGHLY CONFIDENTIAL
INFORMATION] ------------------------------------------------------------
,[

END HIGHLY CONFIDENTIAL
INFORMATION]

while customers porting from ACS Wireless to GCI range from [BEGIN HIGHLY
CONFIDENTIAL INFORMATION]
---------------------------------------------------------------------------- [END
HIGHLY CONFIDENTIAL INFORMATION]

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and Verizon Wireless have launched LTE networks in this CMA.183 Therefore, post-transaction, there
would be three LTE networks deployed in this CMA. In this CMA, AT&T Mobility and Verizon
Wireless have access to sufficient spectrum to expand capacity in the event either GCI or ACS Wireless
was to raise price unilaterally.184 Further, there is over 100 megahertz of spectrum in this CMA that has
not been deployed that is available to near-term and potential entrants.
59.
CMA 315 Alaska 1--Wade Hampton. CMA 315 consists of eight boroughs, including
Fairbanks, with a population of 145,928, and the lowest population density of all the Alaska CMAs--0.41
POPs per square mile. GCI and ACS Wireless overlap primarily in the Fairbanks and North Slope
boroughs, and the total overlap reflects approximately 65 percent of the CMA population. Post-
transaction, AT&T Mobility's coverage would overlap close to 90 percent of AWN's population coverage
in CMA 315. ACS Wireless has launched an LTE network only in Fairbanks in this CMA.185 AT&T
Mobility has not launched an LTE network in this CMA. Verizon Wireless has launched in Fairbanks
and North Pole.186
60.
This CMA was also triggered by the spectrum screen in one borough--Yukon-Koyukuk.
We find that AWN's holding of 160 megahertz of spectrum post-transaction in the Yukon-Koyukuk
borough is unlikely to result in competitive harm, even though this exceeds the current spectrum screen of
151 megahertz. This borough has an extremely low population density--0.04 POPs per square mile--
and the population of the borough reflects approximately 3.8 percent of the population of CMA 315. No
provider has significant coverage in this borough,187 and there is more than 100 megahertz of spectrum in
this CMA that has not been deployed that is available to near term and potential entrants.188 In addition,
we note that AT&T Mobility and Verizon Wireless have access to sufficient spectrum to expand capacity
in the event either GCI or ACS Wireless was to raise price unilaterally.
61.
CMA 316 Alaska 2--Bethel. CMA 316 consists of 10 boroughs, with a population of
200,813 and a population density of 1.12 POPs per square mile. GCI and ACS Wireless overlap
primarily in the Kenai Peninsula, Kodiak, and Matanuska-Susitna boroughs, and the total overlap reflects
approximately 69 percent of the CMA population. Post-transaction, AT&T Mobility's coverage would
overlap close to 98 percent of AWN's population coverage in CMA 316. Also, MTA Wireless holds a

183 See http://www.att.com/Common/about_us/pdf/4g_evolution_infographic.pdf (last visited Mar. 15, 2013);
http://www.alaskacommunications.com/~/media/Files/releases/2012/10_10_2012_4G%20LTE%20Press%20Releas
e.ashx (last visited Mar. 15, 2013); Molly Dischner, Verizon Turns on Alaska 4G LTE Network, ALASKA JOURNAL
OF COMMERCE, June 6, 2013, available at http://www.alaskajournal.com/Alaska-Journal-of-Commerce/June-Issue-
2-2013/Verizon-turns-on-Alaska-4G-LTE-network/ (last visited July 1, 2013).
184 In this CMA, AWN would hold 125 megahertz of spectrum whereas AT&T Mobility holds 135 megahertz.
Verizon Wireless holds 22 megahertz in this CMA and other paired spectrum licensees holding spectrum throughout
the CMA are Sprint (91.875 megahertz), T-Mobile (10 megahertz), MTA Wireless (40 megahertz) and Triad 700
(12 megahertz).
185 See http://www.alaskacommunications.com/~/media/Files/releases/2012/10_10_2012_4G%20LTE%
20Press%20Release.ashx (last visited Mar. 15, 2013).
186 See Molly Dischner, Verizon Turns on Alaska 4G LTE Network, ALASKA JOURNAL OF COMMERCE, June 6, 2013,
available at http://www.alaskajournal.com/Alaska-Journal-of-Commerce/June-Issue-2-2013/Verizon-turns-on-
Alaska-4G-LTE-network/ (last visited July 1, 2013).
187 GCI covers approximately 39 percent of the population of Yukon-Koyukuk and no other service provider covers
more than 20 percent of the population.
188 In terms of spectrum holdings throughout the CMA, AWN would hold 125 to 160 megahertz, AT&T Mobility 86
to 111 megahertz and Verizon Wireless 22 megahertz. Other paired spectrum licensees holding spectrum
throughout the CMA include Sprint Nextel (91.975 megahertz), T-Mobile (10 megahertz), Alas Connect (12
megahertz), MTA Wireless (20 megahertz), Space Data (20 megahertz), and Triad 700 (12 megahertz).
26

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[BEGIN HIGHLY CONFIDENTIAL INFORMATION] --- [END HIGHLY CONFIDENTIAL
INFORMATION]
percent share in this CMA, and covers approximately 44 percent of the population.189
ACS Wireless has deployed an LTE network in Homer, Kenai, Palmer, Seward, Soldotna, Wasilla, and
Whittier in this CMA.190 AT&T Mobility has not launched LTE in this CMA. Verizon Wireless has
launched in the Matanuska-Susitna borough and also may see LTE deployment through their LTE in
Rural America Program.191 In this CMA, AT&T Mobility and Verizon Wireless have access to sufficient
spectrum to expand capacity in the event either GCI or ACS Wireless was to raise price unilaterally.192
Further, there is over 100 megahertz of spectrum in this CMA that has not been deployed that is available
to near term and potential entrants.
62.
CMA 317 Alaska 3--Haines. CMA 317 consists of ten boroughs, with a population of
71,664 and a population density of 1.87 POPs per square mile. This CMA includes Alaska's capital city
Juneau.193 GCI and ACS Wireless coverage overlap reflects approximately 75 percent of the CMA
population. Post-transaction, AT&T Mobility's coverage would overlap close to 90 percent of AWN's
population coverage in CMA 317. ACS Wireless, AT&T Mobility, and Verizon Wireless have launched
LTE networks only in Juneau in this CMA.194 Verizon Wireless has indicated that [BEGIN HIGHLY
CONFIDENTIAL INFORMATION] ---------------------------------------------------------------------- [END
HIGHLY CONFIDENTIAL INFORMATION]
.195 In this CMA, AT&T Mobility and Verizon
Wireless have access to sufficient spectrum to expand capacity in the event either GCI or ACS Wireless
was to raise price unilaterally.196 Further, there is over 100 megahertz of spectrum in this CMA that has
not been deployed that is available to near term and potential entrants.

189 MTA Wireless is a Verizon Wireless Rural LTE Partner. See http://www.fiercewireless.com/story/verizon-
expects-6-rural-lte-carrier-partners-launch-year-end/2012-09-18 (last visited Mar. 15, 2013).
190 See http://www.alaskacommunications.com/~/media/Files/releases/2012/10_10_2012_4G%20LTE%20Press%20
Release.ashx (last visited Mar. 15, 2013).
191 Molly Dischner, Verizon Turns on Alaska 4G LTE Network, ALASKA JOURNAL OF COMMERCE, June 6, 2013,
available at http://www.alaskajournal.com/Alaska-Journal-of-Commerce/June-Issue-2-2013/Verizon-turns-on-
Alaska-4G-LTE-network/ (last visited July 1, 2013). Verizon Wireless and MTA Communications submitted a
long-term spectrum manager lease application in which MTA would lease 22 megahertz of Upper 700 MHz C-
Block spectrum covering Matanuska-Susitna borough in CMA 316 (as well as Denali borough in CMA 315). This
would allow MTA to participate in Verizon's "LTE in Rural America" program. See ULS File No. 0005181322.
Additionally, Verizon Wireless and Copper Valley Wireless have submitted a similar lease covering the Valdez-
Cordova Census Area in CMA 316 (see ULS File No. 0005483796), and Verizon Wireless and KPU
Telecommunications ("KPU") have announced plans for KPU to participate in the LTE in Rural American Program
in the Ketchikan area (see Bernie Arnason, Verizon Rural LTE Program Adds KPU Telecommunications,
TELECOMPETITOR, Apr. 23, 2013, available at http://www.telecompetitor.com/verizon-rural-lte-program-adds-kpu-
telecommunications/ (last visited July 1, 2013).
192 In terms of spectrum holdings throughout the CMA, AWN would hold 100 to 150 megahertz, AT&T Mobility
110-160 megahertz and Verizon Wireless 22 megahertz. Other licensees of paired spectrum throughout the CMA
include Sprint Nextel (91.975 megahertz), T-Mobile (10 megahertz), MTA Wireless (40-65 megahertz), and Triad
700 (12 megahertz).
193 Juneau is the third largest city in the state. See http://www.alaska-demographics.com/juneau-demographics.
194 See http://www.alaskacommunications.com/~/media/Files/releases/2012/10_10_2012_4G%20LTE%20Press%20
Release.ashx (last visited Mar. 15, 2013).
195 See VZW-001.002205 at 30-32 for CMA 317.
196 In terms of spectrum holdings throughout the CMA, AWN would hold 135 megahertz, AT&T Mobility 113
megahertz and Verizon Wireless 22 megahertz. Other licensees of paired spectrum include Sprint Nextel (90.375-
91.975 megahertz), T-Mobile (10 megahertz), Ketchikan Public Utilities (32 megahertz), MTA Wireless (20
megahertz), and Triad 700 (12 megahertz).
27

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63.
Alaska-Only Plans. Both GCI and ACS Wireless offer state-wide Alaska-only plans,
while AT&T Mobility and Verizon Wireless only offer nationwide plans in Alaska.197 GCI's and ACS
Wireless's Alaska-only plans cost less than their nationwide plans. On average, the price differential
between nationwide and Alaska-only voice plans for GCI and ACS Wireless are in the $15 to $20 range.
ACS Wireless's LTE plans are about $10 less expensive than its nationwide plans. As a result, these
Alaska-only plans are also less expensive than the nationwide plans offered by AT&T. For example,
ACS Wireless offers low cost monthly individual calling plans starting at $24.99 for 400 Alaska-only
minutes, while GCI offers a 150 minute plan for $19.99 and an 800 minute plan for $29.99. The lowest
cost plan offered by AT&T is 450 nationwide minutes for $39.99, which is approximately 42 percent
more expensive (per minute) than the ACS Wireless basic plan.198 We note that given the Alaska-only
plans appear to be held by a much smaller segment of the parties' overall subscribers,199 any likely harm
would not be as significant. However, we are concerned that the proposed transaction may create
incentives for GCI and ACS Wireless to raise prices. We recognize that this transaction may lower the
incentive of GCI and ACS Wireless to compete on the Alaska-only plans. The parties' agreements
require GCI and ACS Wireless to maintain legacy price plans, including Alaska-only plans, for their
existing 2G and 3G subscribers for a two-year period, and this provision may mitigate some of the
immediate harm. To further mitigate this potential harm, we condition our approval of this transaction on
the parties' agreement to make their existing Alaska-only plans available to new customers for a one-year
period following the closing date of the transaction.200
64.
Finally, we note that as an additional method to assess the potential for unilateral
competitive effects, Commission staff also conducted certain analyses consistent with the 2010 DOJ/FTC
Horizontal Merger Guidelines
,201 which yielded results in line with our other analyses. Based on our
market-by-market analyses, we find that the possible increased risks of anticompetitive unilateral effects
posed by this transaction with respect to each Alaskan market and across Alaska are mitigated in various
degrees. We also consider them below when balancing the potential competitive harms and the potential
public interest benefits posed by this transaction.
3.

Coordinated Effects

65.
In markets where only a few firms account for most of the sales of a product, those firms
may be able to exercise market power by either explicitly or tacitly coordinating their actions.202 Mergers

197 See e.g., GCI-0009146, March 13, 2012 p. 7 [BEGIN HIGHLY CONFIDENTIAL INFORMATION] [END
HIGHLY CONFIDENTIAL INFORMATION]
198 All plan data is obtained from the carriers' websites. See http://www.att.com/shop/wireless/plans-
new.html#fbid=P2-zxA_cwkM ; http://www.alaskacommunications.com/Shop/Plan-Finder/Individual.aspx ;
http://www.gci.com/wireless/plans/talk-text.
199 Based on several ACS documents [BEGIN HIGHLY CONFIDENTIAL INFORMATION] ----------------------
----------------------------------------------------
.[END HIGHLY CONFIDENTIAL INFORMATION] See
ACS000214327, ACS000214328.
200 See Letter from Carl Northrop, John Nakahata, counsel for GCI, Karen Brinkmann, counsel for ACS Wireless,
and Bonnie Paskvan, General Counsel, AWN, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-187, July
2, 2013.
201 See 2010 DOJ/FTC Horizontal Merger Guidelines 6.1, p. 21.
202 See, e.g., T-Mobile-MetroPCS Order, 28 FCC Rcd at 2336-37 43; AT&T/Verizon Wireless-ALLTEL Order, 25
FCC Rcd at 8731 59; AT&T-Centennial Order, 24 FCC Rcd at 13942 59. Tacit coordination has many forms
and includes conscious efforts by one firm to parallel its pricing to the rates of other firms. See 2010 DOJ/FTC
Horizontal Merger Guidelines
7 ("Coordinated interaction alternatively can involve parallel accommodating
conduct not pursuant to a prior understanding...[and] includes situations in which each rival's response to
competitive moves made by others is individually rational, and not motivated by retaliation or deterrence nor
(continued....)
28

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and other combinations that reduce the number of firms in the market may also increase concentration
sufficiently to make coordination more likely, successful or complete.203 In addition to an increase in
post-merger concentration levels, the ability to successfully coordinate will depend on the strength and
predictability of rivals' responses to a price increase or other anticompetitive action. 204 Three areas to
consider in determining whether a transaction would make coordinated conduct more likely and
successful are whether there is a significant increase in concentration, whether the market shows signs of
vulnerability to coordination, and whether the transaction would enhance any vulnerability present in the
market.205 The ability to coordinate often is affected by the availability of information about market
conditions, the extent of firm and product homogeneity, and the presence of maverick providers in the
market.206
66.
Accordingly, we look at the coordinated effects of the transaction between the Applicants
and other service providers such as AT&T Mobility and Verizon Wireless, as well as the effect of the
transaction on an increased likelihood that the transaction facilitates information exchanges between GCI
and ACS. We recognize that certain aspects of the parties' agreements have the potential to serve as a
vehicle for coordination by altering post transaction incentives to compete.
a.

Coordination in the Mobile Broadband/Telephony Market in Alaska

67.
The Applicants argue that it is unlikely that GCI or ACS Wireless could raise prices or
reduce output because of the high level of competition from rivals in the state and the fact that spectrum is
available for additional competitive use.207 Instead, the Applicants argue that the transaction would allow
them to compete more effectively in Alaska against larger and better financed nationwide wireless
competitors.208 Additionally, the Applicants claim that GCI and ACS Wireless would be able to
repackage the plans with their wireline services and provide promotional and loyalty programs to create
new products to compete in the retail market across Alaska.209
68.
Currently, there are three providers in Alaska with significant market share and
coverage--GCI, ACS Wireless, and AT&T Mobility. Each has its own network, sets prices, and offers a
variety of devices. As a result of this transaction, GCI's and ACS Wireless's services would be
significantly more homogenous. GCI and ACS Wireless would both purchase services from AWN on an
equal and non-discriminatory basis.210 There would be no differentiation in terms of coverage and quality
since they will be using the same network. Therefore, post-transaction the mobile telephony/broadband
market in Alaska may be characterized as more homogeneous, and given the market structure in Alaska,
(Continued from previous page)
intended to sustain an agreed-upon market outcome... Coordinated interaction includes conduct not otherwise
condemned by the antitrust laws.").
203 2010 DOJ/FTC Horizontal Merger Guidelines 7. See also, e.g., T-Mobile-MetroPCS Order, 28 FCC Rcd at
2336-37 43; AT&T/Verizon Wireless-ALLTEL Order, 25 FCC Rcd at 8731 59; AT&T-Centennial Order, 24 FCC
Rcd at 13942 59.
204 2010 DOJ/FTC Horizontal Merger Guidelines 7.
205 2010 DOJ/FTC Horizontal Merger Guidelines 7.1.
206 See, e.g., T-Mobile-MetroPCS Order, 28 FCC Rcd at 2340-41 54 n.130; AT&T/Verizon Wireless-ALLTEL
Order
, 25 FCC Rcd at 8732 62; AT&T-Centennial Order, 24 FCC Rcd at 13942 61.
207 Public Interest Statement at 30-31.
208 Id. at 15.
209 Id. at 8, 11-12; see also Facilities and Network Use Agreement 3(c), (d).
210 Public Interest Statement at 11; see also Facilities and Network Use Agreement 2.
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may be more susceptible to coordinated interaction. However, as discussed earlier, other provisions in the
agreements may dampen the incentives for such coordination.211
69.
Additionally, certain Alaska market factors may also mitigate the potential for and impact
of any coordinated interaction. First, we take into account the specific market conditions in Alaska
described above, including its relatively small population and high costs. Second, we note that AT&T
Mobility offers service in Alaska only at its nationwide prices, and there is no evidence that AT&T
Mobility is likely to change its pricing strategy. Third, Verizon Wireless entered the market in June 2013
and projects [BEGIN HIGHLY CONFIDENTIAL INFORMATION] -----------------------------------
[

END HIGHLY CONFIDENTIAL INFORMATION]

212 Further, there is no evidence that either
AT&T Mobility or Verizon Wireless would be capacity constrained, and therefore they would be able to
undercut any collusive price to gain market share.213 Thus, while the proposed transaction could make
coordination between GCI, ACS Wireless, and other competitors in the mobile telephony/broadband
market in Alaska easier, other factors appear to mitigate those risks.
b.

Exchanges of Competitively Sensitive Information

70.
Because the contemplated transaction is not a full merger at all levels of competition, and
GCI and ACS Wireless intend to remain competitors at the retail level in mobile telephony/broadband
services and would continue to compete as providers of wireline services (primarily broadband) in
Alaska, this transaction creates an additional risk of increasing the ability and/or opportunities for these
joint venture partners to collude to the extent they facilitate the exchange of competitively sensitive
information to which competitors otherwise might not have access.214 Although as discussed above, GCI
and ACS Wireless would no longer compete on many price and non-price factors, there are still areas
such as bundling, loyalty programs, and advertising that each can use to differentiate its product and
compete across Alaska. The Agreements may provide an increased risk of GCI and ACS Wireless
coordinating on these non-price factors. Moreover, this increased risk of exchanging competitively
sensitive information facilitated by the structure of AWN and the Applicants' contemporaneous
agreements is not limited to activities of the joint venture but also may extend to their respective fixed
broadband and wireline products and service offerings.215
71.
As discussed above,216 the parties' Joint Operating Agreement contains provisions
designed to minimize the risks of improper exchange of information resulting from the structure of the
underlying transaction.217 The Applicants have agreed to a set of policies and procedures to protect
against the disclosure of either party's non-public, commercially sensitive information.218 In addition, the

211 See supra 50.
212 Letter from John T. Scott to Marlene H. Dortch, Secretary, Federal Communications Commission, WT Docket
No. 12-187 (Jan. 18, 2013).
213 See supra 58-62.
214 See DOJ/FTC Competitor Collaboration Guidelines 3.31(b).
215 Id. 2.2, 3.32.
216 See supra 13.
217 Joint Operating Agreement, Exh. L, Commercially Sensitive Information Policies and Procedures ("CSI").
218 See Public Interest Statement at 12 n.16; see also Letter from Carl Northrop, John Nakahata, counsel for GCI,
Karen Brinkmann, counsel for ACS Wireless, and Bonnie Paskvan, General Counsel, AWN, to Marlene H. Dortch,
Secretary, FCC, WT Docket No. 12-187, July 2, 2013.
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GCI Services Agreement and the ACS Services Agreements address the obligations applicable to each of
GCI's and ACS Wireless's employees assigned to work at AWN.219
72.
Discussion. As previously explained, post-transaction both GCI and ACS Wireless will
be customers of AWN and their respective vertical relationships provide each of them with
procompetitive business justifications for access to certain AWN information that otherwise would not be
permissible.220 We must consider, therefore, the adequacy of the Applicants' information exchange
protections within this context. In addition, the payment and compensation mechanisms in the Joint
Operating Agreement provide GCI and ACS Wireless with the opportunity to review certain AWN
financial information for settlement and adjustment purposes,221 which we also find may have a valid
business justification given each Applicant's ownership interest in AWN and the compensation revenues
they are to receive under their respective service agreements with AWN.222 In addition, we find a
reasonable business justification for the requirement in the Asset Purchase Agreement that GCI and ACS
Wireless each give AWN audit and inspection access to their respective financial records relating to
assets and businesses contributed to AWN as part of the contemplated transaction.223 Accordingly, we
will review these information exchange requirements under a rule of reason analysis.224
73.
We recognize that the Applicants have taken steps to prevent anticompetitive results that
may be facilitated by the sharing of relevant information for procompetitive purposes in the Alaska
markets. For example, we note that section 1(C) of the CSI recognizes the potential for disclosure of
commercially sensitive GCI or ACS Wireless information to the other party.225 In addition, the parties'
agreements contemplate that AWN will not compete at retail against GCI or ACS Wireless (since it may
provide only wholesale services) and that AWN will provide access to its wholesale services to GCI and
ACS Wireless on an equal and nondiscriminatory basis.226 As such, there is less risk that AWN
information made available to GCI or ACS Wireless will have an anticompetitive effect.227 The
Dedicated Employment and Secondment Agreements also provide protections from anticompetitive
exchanges of information, imposing a fiduciary duty and loyalty obligation to AWN on seconded GCI or
ACS Wireless employees and requiring them to execute secondment agreements that contain non-
disclosure requirements applicable to AWN confidential information that continues to apply after the
secondment expires and the employee returns to either GCI or ACS Wireless.228 For the reasons
explained below, however, we find that certain of these provisions do not adequately protect
anticompetitive exchanges of competitively sensitive information.

219 GCI Services Agreement 4, Exh. A ("Dedicated Employees"), Exh. A-1 ("Form of Personnel Secondment
Letter"); see also supra 19.
220 See DOJ/FTC Competitor Collaboration Guidelines 2.2.
221 See Joint Operating Agreement 9.4.
222 Id. 4, 5 and 9.
223 See Asset Purchase Agreement 6.8.
224 DOJ/FTC Competitor Collaboration Guidelines 1.2.
225 See CSI 1(C); see also Letter from Carl Northrop, John Nakahata, counsel for GCI, Karen Brinkmann, counsel
for ACS Wireless, and Bonnie Paskvan, General Counsel, AWN, to Marlene H. Dortch, Secretary, FCC, WT
Docket No. 12-187, July 2, 2013.
226 See Public Interest Statement at 11. See also supra 9-12.
227 See DOJ/FTC Competitor Collaboration Guidelines 3.31.
228 See CSI 3(A); see also generally GCI Services Agreement, Exhs. A, A-1; Public Interest Statement at 10-11.
31

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74.
CSI 2. Section 2 of the CSI requires that AWN personnel use "aggregated"
"information involving subscribers, churn, and commonly used subscriber industry metrics" when
reporting such information to the AWN Board.229 The aggregation of competitively sensitive information
for only two competitors when each competitor can easily back out its own information provides little
cover in ascertaining the other competitor's competitively sensitive information.230 Indeed the
requirement to aggregate data from only two providers falls well outside of the antitrust enforcement
agencies safety zones,231 and makes it necessary to impose additional protections, including a requirement
that any competitively sensitive data provided to the AWN Board shall exclude GCI or ACS Wireless
retail rates and information identifying GCI or ACS Wireless subscribers, a requirement limiting the
sharing of wireline and backhaul information between GCI and ACS Wireless, and a requirement to limit
sharing of competitively sensitive information when calculating the attrition adjustments between the
parties pursuant to the Joint Operating Agreement.232
75.
CSI 3. Section 3(D) of the CSI provides a restriction against using AWN to "facilitate
or effect the coordination of decision-making with respect to competitive services between ACS and GCI
with respect to assets that they own independent of [AWN]."233 Given that GCI and ACS Wireless are to
compete against one another using AWN wholesale services, the prohibition in section 3(D) should not be
limited to assets that GCI or ACS Wireless own independent of AWN, but instead should extend to AWN
assets, such that using AWN to facilitate coordination of the retail sales of AWN services is expressly
prohibited.234 Other changes in section 3 of the CSI provide additional protections against the sharing of
competitively sensitive information by and among GCI and ACS Wireless employees, as well as
employees that are seconded to AWN.235
76.
CSI 4. Section 4 of the CSI is designed to ensure compliance with the information
sharing restrictions in the parties' agreement by providing certain responsibilities for AWN's counsel.236
However, notwithstanding the fiduciary, business dedication and loyalty and non-disclosure requirements
imposed on the Company's counsel, we remain concerned about the inherent conflict of interest when an
employee of a competitor company is making decisions that impact the interests of the joint venture, such
that the joint venture structure joins together "independent centers of decisionmaking."237 Thus, revisions
to section 4 of the CSI provide for the additional protections of an independent outside counsel under

229 CSI 2(A).
230 DOJ/FTC Competitor Collaboration Guidelines 3.31; FTC/DOJ 1996 Health Care Statements ("Health Care
Statements"), Statement 6.A.
231 Id. (establishing a "safety zone" for the exchange of competitively sensitive information that requires among
other things that the information be aggregated from at least five providers).
232 See Letter from Carl Northrop, John Nakahata, counsel for GCI, Karen Brinkmann, counsel for ACS Wireless,
and Bonnie Paskvan, General Counsel, AWN, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-187, July
2, 2013.
233 CSI 3(D).
234 See, e.g., DOJ/FTC Competitor Collaboration Guidelines 3.32.
235 See Letter from Carl Northrop, John Nakahata, counsel for GCI, Karen Brinkmann, counsel for ACS Wireless,
and Bonnie Paskvan, General Counsel, AWN, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-187, July
2, 2013.
236 CSI 4.
237 See American Needle, Inc. v. NFL. 130 S. Ct. 2201, 2212 (2010) (finding differing economic interests among
decision makers in a joint venture to constitute collusion in violation of Section 1 of the Sherman Act); Rothery
Storage & Van Co. v. Atlas Van Lines
, 792 F.2d 210, 214-15 (D.C. Cir. 1986) (finding that where the members of a
joint venture are actual or potential competitors, they have been found to be capable of conspiring under Section 1).
32

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certain circumstances, as well as additional certification and reporting requirements in the event the
provisions of the CSI are not followed.238
77.
As a result of the foregoing concerns and consistent with prior transactions that we found
to pose concerns about the exchange of competitively sensitive information between competitors, we
condition our approval of this transaction on compliance with the protections in the Applicants' amended
CSI to ensure that the firewall between GCI and ACS Wireless is adequate to preserve competition
between them across Alaska.239
4.

Roaming

78.
Roaming occurs when the subscriber of one mobile wireless provider travels beyond the
service area of that provider and uses the facilities of another mobile wireless provider to place an
outgoing call, to receive an incoming call, or to continue an in-progress call.240 The Commission has
adopted roaming rules for voice and data services. The Commission's voice roaming rules, adopted in
2007, provide that upon a reasonable request, CMRS carriers are obligated to provide automatic roaming
to any technologically compatible, facilities-based CMRS carrier on reasonable and not unreasonably
discriminatory terms and conditions, pursuant to sections 201 and 202 of the Communications Act.241
This obligation applies to any real-time, two-way switched voice or data service that is interconnected
with the public switched network and utilizes an in-network switching facility that enables the carrier to
re-use frequencies and accomplish seamless hand-offs of subscriber calls, as well as push-to-talk and text
messaging services offered by CMRS carriers.242 The data roaming rule, adopted in April 2011, requires
facilities-based providers of commercial mobile data services to offer data roaming arrangements to other
such providers on commercially reasonable terms and conditions, subject to certain limitations.243
79.
Both GCI and ACS Wireless have existing roaming arrangements with wireless service
providers. Subscribers of these providers, which operate in the contiguous 48 states, use GCI's or ACS
Wireless's facilities while traveling in Alaska. Conversely, GCI's and ACS Wireless's subscribers

238 See Letter from Carl Northrop, John Nakahata, counsel for GCI, Karen Brinkmann, counsel for ACS Wireless,
and Bonnie Paskvan, General Counsel, AWN, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-187, July
2, 2013. We note that the Applicants may petition the FCC to lift the breach reporting requirement contained in
section 4.E. of the CSI at any time after five years following the Closing Date of the transaction.
239 See, e.g., AT&T-Centennial Order, 24 FCC Rcd at 13980 163-64.
240 See, e.g., Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10729 81; AT&T-Qualcomm Order, 26 FCC
Rcd at 17612 52; AT&T/Verizon Wireless-ALLTEL Order, 25 FCC Rcd at 8741 87; AT&T-Centennial Order, 24
FCC Rcd at 13963 120; see also Reexamination of Roaming Obligations of Commercial Mobile Radio Service
Providers, Automatic and Manual Roaming Obligations Pertaining to Commercial Mobile Radio Services, WT
Docket Nos. 05-265, 00-193, Memorandum Opinion and Order and Notice of Proposed Rulemaking, 20 FCC Rcd
15047, 15048 2 (2005).
241 47 C.F.R. 20.12(d). See also AT&T-Qualcomm Order, 26 FCC Rcd at 17612 52; AT&T/Verizon Wireless-
ALLTEL Order
, 25 FCC Rcd at 8742 88; Reexamination of Roaming Obligations of Commercial Mobile Radio
Service Providers and Other Providers of Mobile Data Services, WT Docket No. 05-265, Order on Reconsideration
and Second Further Notice of Proposed Rulemaking
, 25 FCC Rcd 4181, 4190 18 (2010) ("Roaming Order on
Reconsideration
"); Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers, WT
Docket No. 05-265, Report and Order and Further Notice of Proposed Rulemaking, 22 FCC Rcd 15817, 15826 23
(2007).
242 47 C.F.R. 20.12(a)(2). See also Roaming Order on Reconsideration, 25 FCC Rcd at 4128 5-6.
243 47 C.F.R. 20.12(e); see also Reexamination of Roaming Obligations of Commercial Mobile Radio Service
Providers and Other Providers of Mobile Data Services, WT Docket No. 05-265, Second Report and Order, 26 FCC
Rcd 5411, 5432 43 (2011), rev. denied, Cellco P'ship v. FCC, 700 F.3d 534 (D.C. Cir. 2012).
33

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traveling in the contiguous 48 states roam on the wireless service providers' networks while traveling in
their service areas. If the transaction is approved, GCI and ACS Wireless would assign their roaming
agreements to AWN "in order to ensure continuity of service."244 Thereafter, AWN solely would have
authority to enter into roaming agreements with third parties.245
80.
No party has raised roaming as an issue in the transaction. We find no evidence
indicating that approving this transaction is likely to result in roaming-related competitive harms. The
current roaming agreements entered into by GCI or ACS Wireless and wireless providers operating
outside of Alaska would continue to remain in effect and be assumed by AWN. It is unlikely that the
transaction would provide AWN with a competitive advantage in seeking future roaming arrangements.
The service providers in the contiguous 48 states will continue to need and rely on the Applicants'
networks for roaming capabilities, and the Applicants will continue to need and rely on the service
providers' networks to provide subscribers with access to wireless voice and data service while traveling
outside of Alaska. Moreover, the proposed transaction may accelerate commercial deployment of LTE,
which the Applicants argue is a prerequisite to negotiating reasonable terms for future roaming
agreements.246
81.
In addition, we find no evidence that the transaction would result in competitive harms to
roaming arrangements between wireless service providers operating in Alaska. If anything, the proposed
transaction could help accelerate the deployment of a new LTE network, expand roaming opportunities in
Alaska, and increase third party reliance on AWN's network for roaming requirements. Accordingly,
based on the record before us, we find that the proposed transaction likely would not result in any
roaming related competitive harms.247
5.

Lansman Petition

82.
We deny the Lansman Petition as it relates to the Applications248 on two separate
grounds--timeliness and standing--although Petitioners have entwined the two grounds in its argument
for waiver of the petition deadline. In the Comment Public Notice, we set a deadline of September 21,
2012 for filing petitions to deny the Applications.249 Petitioners assert that waiver of that deadline is
justified because they did not have standing until applications were filed to assign the licenses of
KTVA(TV), KATH-LD, and KSCT-LP to GCI.250 Petitioners argue that, as broadcasters, they now have
standing because the addition of ACS Wireless's wireless infrastructure would make GCI a "more
forbidding" broadcast competitor in light of expanded mobile broadband video distribution capability and
give GCI the incentive to prefer its own broadcasts.251
83.
We find that Petitioners fail to establish party-in-interest standing or justify the waiver of
the deadline for filing petitions to deny. Section 1.939(d) of the Commission's rules requires that a

244 Public Interest Statement at 8 n.11.
245 Id. at 10, 14, 37.
246 Id. at 22.
247 We note also that AWN will be subject to our voice and data roaming rules. See, e.g., 47 U.S.C. 201, 202; 47
C.F.R. 20.3, 20.12.
248 We take no action here with respect to the Lansman Petition as it relates to the assignment of licenses of
KTVA(TV), KATH-LD, and KSCT-LP.
249 See supra 20.
250 See File Nos. BALCDT-20130125ABD, BALTVL-20130125AAK.
251 Lansman Petition at 11, 13.
34

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petition to deny contain specific allegations of fact sufficient to make a prima facie showing that the
petitioner is a party in interest and that a grant of the application would be inconsistent with the public
interest, convenience and necessity.252 To establish standing as a party in interest to a specific transaction,
a petitioner must allege facts sufficient to demonstrate that grant of the subject applications would cause it
to suffer a direct injury.253 In addition, a petitioner must demonstrate a causal link between the claimed
injury and the challenged action,254 and that any injury would be redressable by the relief requested.255
84.
Petitioners fail to meet this standard. Their assertions that AWN would make GCI a
more forbidding broadcast competitor are at best premature in this proceeding because neither the
formation of AWN nor the acquisition of the ACS Wireless licenses by GCI through its control of AWN
would modify GCI's capability to produce video programming. As a result, Petitioners have not met their
burden in establishing a prima facie theory of how this instant transaction would harm them. Having
failed to establish party-in-interest standing, Petitioners cannot justify waiving a petition deadline that
they missed by over four months. Therefore, we deny the Lansman Petition to the extent that it relates to
the Applications.

VI.

POTENTIAL PUBLIC INTEREST BENEFITS AND EFFICIENCIES

85.
In addition to assessing the potential competitive harms of this transaction, we also
consider whether the proposed assignment of the subject wireless licenses and the related application for
an international authorization is likely to generate quantifiable, verifiable, and transaction-specific public
interest benefits that outweigh any identified competitive harms.256 In doing so, we ask whether AWN or
the Applicants would be able and likely to pursue business strategies resulting in demonstrable and
verifiable benefits to consumers that would not be pursued but for the transaction.257 As discussed below,
we anticipate that the proposed transaction likely would result in certain transaction-specific public
interest benefits. In particular, we anticipate that the proposed transaction would generate savings from
avoiding network duplication, increase coverage of the existing network, and facilitate the deployment of
LTE and the provision of mobile broadband in an area of the country that faces unique service challenges.
We reach this conclusion, however, recognizing that it is difficult to quantify precisely either the
magnitude of these benefits or the time period in which these benefits can be realized.258

252 47 C.F.R. 1.939(d).
253 See Star Wireless, LLC, Memorandum Opinion and Order, 28 FCC Rcd 243, 248 14 (WTB MD 2013) ("Star
Wireless
"); AT&T Wireless PCS, Inc., Order, 15 FCC Rcd 4587, 4588 3 (WTB CWD 2000) ("AT&T Wireless")
(citing Sierra Club v. Morton, 405 U.S. 727, 73 (1972)); Lawrence N. Brandt, Memorandum Opinion and Order,
3 FCC Rcd 4082 (1988).
254 Star Wireless, 28 FCC Rcd at 248 14; AT&T Wireless, 15 FCC Rcd at 4588 3 (citing Duke Power Co. v.
Carolina Environmental Study Group, Inc
. 438 U.S. 59, 72, 78 (1978)).
255 Star Wireless, 28 FCC Rcd at 248 14; Weblink Wireless, Inc., Memorandum Opinion and Order, 17 FCC Rcd
24642, 24647 11 (2002).
256 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16474 40; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10734 95; AT&T-Qualcomm Order, 26 FCC Rcd at 17622-23 81.
257 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16474 40; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10734 95; AT&T-Qualcomm Order, 26 FCC Rcd at 17622-23 81.
258 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16474 40; AT&T-Qualcomm Order, 26 FCC Rcd at 17623 82;
AT&T/Verizon Wireless-ALLTEL Order, 25 FCC Rcd at 8736 73.
35

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A.

Analytical Framework

86.
The Commission has recognized that "[e]fficiencies 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 lower prices, improved quality of service, enhanced service or new
products."259 This same analysis applies to the formation of a joint venture that combines the network
and facilities like that contemplated by the proposed transaction before us. Under Commission precedent,
the Applicants bear the burden of demonstrating that the potential public interest benefits of the proposed
transaction outweigh the potential public interest harms.260
87.
The Commission applies several criteria in deciding whether a claimed benefit should be
considered and weighed against potential harms. First, the claimed benefit must be transaction-specific.
Second, the claimed benefit must be verifiable. Because much of the information relating to the potential
benefits of a transaction is in the sole possession of the applicants, they are required to provide sufficient
evidence supporting each claimed benefit so that the Commission can verify its likelihood and
magnitude.261 In addition, "the magnitude of benefits must be calculated net of the cost of achieving
them."262 Furthermore, as the Commission has explained, "benefits that are to occur only in the distant
future may be discounted or dismissed because, among other things, predictions about the more distant
future are inherently more speculative than predictions about events that are expected to occur closer to
the present."263 Third, the Commission has stated that it "will more likely find marginal cost reductions to
be cognizable than reductions in fixed cost."264 The Commission has justified this criterion on the ground
that, in general, reductions in marginal cost are more likely to result in lower prices for consumers.265
88.
Finally, the Commission applies a "sliding scale approach" to evaluating benefit
claims.266 Under this sliding scale approach, where potential harms appear "both substantial and likely, a
demonstration of claimed benefits also must reveal a higher degree of magnitude and likelihood than we
would otherwise demand."267 Conversely, where potential harms appear less likely and less substantial,

259 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16474-75 41; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd
at 10734 96; AT&T-Qualcomm Order, 26 FCC Rcd at 17623 83.
260 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16474-75 41; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd
at 10734 96; AT&T-Qualcomm Order, 26 FCC Rcd at 17623 83.
261 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16475 42; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10735 97; AT&T-Qualcomm Order, 26 FCC Rcd at 17623 84.
262 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16475 42; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10735 97; AT&T-Qualcomm Order, 26 FCC Rcd at 17623 84.
263 See, e.g., Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10735 97; AT&T-Qualcomm Order, 26 FCC
Rcd at 17624 84; AT&T/Verizon Wireless-ALLTEL Order, 25 FCC Rcd at 8737 75.
264 See, e.g., Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10735 97; AT&T-Qualcomm Order, 26 FCC
Rcd at 17624 84; AT&T/Verizon Wireless-ALLTEL Order, 25 FCC Rcd at 8737 75.
265 See, e.g., Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10735 97; AT&T-Qualcomm Order, 26 FCC
Rcd at 17624 84; AT&T/Verizon Wireless-ALLTEL Order, 25 FCC Rcd at 8737 75.
266 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16475 42; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10735 98; AT&T-Qualcomm Order, 26 FCC Rcd at 17624 85.
267 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16475 42; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10735 98; AT&T-Qualcomm Order, 26 FCC Rcd at 17624 85; cf. 2010 DOJ/FTC Horizontal Merger Guidelines
at 10, p. 31 ("The greater the potential adverse competitive effect of a merger . . . the greater must be cognizable
efficiencies in order for the Agency to conclude that the merger will not have an anticompetitive effect in the
relevant market. When the potential adverse competitive effect of a merger is likely to be particularly large,
extraordinarily great cognizable efficiencies would be necessary to prevent the merger from being
(continued....)
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FCC 13-96

as is the case here, we will accept a lesser showing.268 We discuss each of the Applicants' claimed
efficiencies below.

B.

Asserted Benefits

89.
The Applicants assert that the proposed transaction and the contemplated arrangements
among AWN, GCI, and ACS Wireless would generate significant public interest benefits and efficiencies
while retaining the benefits of competition between GCI and ACS Wireless local companies that will
continue to serve residents of the largely rural and unique state of Alaska.269 The Applicants claim three
primary efficiencies that would arise from this transaction: (i) network efficiencies from infrastructure
consolidation; (ii) expanded coverage and improved service; and (iii) increased competitiveness from
timely transition to LTE and handset availability.
1.

Network Efficiencies

90.
The Applicants claim that network efficiencies resulting from the proposed transaction
would come from three sources eliminating existing duplicative infrastructure, avoiding future
duplication, and consolidating the urban fiber network. We discuss each of these claims below.
91.
Eliminating Existing Duplication. The Applicants claim that combining network
infrastructure, thereby eliminating redundant CDMA network facilities, would reduce GCI's and ACS
Wireless's expenses of serving residents of Alaska by $15 million in annual capital expenditures and $15
million in annual operating expenses.270 According to the Applicants, these savings would come from
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[

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]271 In particular, they assert that they can reduce the joint number of cell sites from
about 450 to nearly 300.272 Based on a high-level site analysis, the Applicants maintain that the proposed
transaction would result in overlapping CDMA network coverage such that [BEGIN HIGHLY
CONFIDENTIAL INFORMATION] -------------------------------------
[

END HIGHLY
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] percent of the combined cell sites would be redundant and could
be decommissioned.273 GCI predicts operations and maintenance savings for such CDMA tower
decommissioning of [BEGIN HIGHLY CONFIDENTIAL INFORMATION] ----------------------------
-----------------------------------------
.[END HIGHLY CONFIDENTIAL INFORMATION]274 The
Applicants' internal documents reflect an expectation that [BEGIN HIGHLY CONFIDENTIAL
(Continued from previous page)
anticompetitive.").
268 See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16475 42; AT&T-Qualcomm Order, 26 FCC Rcd at 17624 85;
AT&T/Verizon Wireless-ALLTEL Order, 25 FCC Rcd at 8737 76.
269 Public Interest Statement at 14-15, 31-40.
270 Id. at 36.
271 GCI-0004449.
272 The Applicants say that they can reduce the number of tower sites while still expanding wireless coverage for
customers of both companies. Public Interest Statement at 37.
273 GCI-0004449, GCI-0783989.
274 See GCI-0004449, GCI-0783989. The predicted cost savings for decommissioning [

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INFORMATION] --

---------------------------------------------------------------------------------.[END
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275 The Applicants also claim that combining network
infrastructure would permit the elimination of a CDMA switch and other associated core network
elements.276 GCI estimates that there are additional cost savings of about [BEGIN HIGHLY
CONFIDENTIAL INFORMATION] -
-----------------------------------------------------------------------------
----------------------------------------------.[END HIGLY CONFIDENTIAL INFORATION]277
92.
Avoiding Future Duplication. The Applicants also expect to realize savings from
efficiently scaling back plans for new sites. Independently, by 2015, GCI and ACS Wireless had planned
[

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] -------------------------------------------------------
-----------------------------------------------------------------------------------------------. [

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The Applicants assert that the proposed transaction would allow
them to reduce their capital expenditures [

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] -----
-------------------------------------------------------------------------------------------------------------------------------
------.[

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278
93.
Urban Fiber Consolidation. The Applicants claim that consolidation of urban fiber to
cell site and urban fiber core network projects would result in additional efficiencies that flow from
network integration. GCI predicts that this efficiency would generate capital savings of [

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]$-----------------------------------------------------------------
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]279
2.

Expanded Coverage and Improved Service to Current Subscribers

94.
The Applicants claim that combining their networks would result in expanded coverage
beyond what either GCI or ACS Wireless could reach separately and permit increased network speeds
and greater redundancy than either could offer on a standalone basis.280 The Applicants state that ACS
Wireless customers would benefit from access to GCI's HSPA+ network as well as access to GCI's 2G
network in many communities not served by ACS Wireless.281 GCI's customers would benefit from
access to ACS Wireless's LTE network.282 GCI's and ACS Wireless's customers would benefit from
increased CDMA coverage from the combined network.283 The Applicants state that ACS Wireless
customers also would benefit from GCI's Wi-Fi access points, providing additional connectivity and
service options.284 According to the Applicants, a planned functional interconnection between the LTE

275 See GCI-0004449, GCI-0783989. [BEGIN HIGHLY CONFIDENTIAL INFORMATION] ----------------------
---------------------------------------------------------------[END HIGHLY CONFIDENTIAL INFORMATION]
276 Public Interest Statement at 36.
277 GCI-0004449, GCI-0783989.
278 GCI-0783989.
279 Id.
280 Public Interest Statement at 38.
281 Id.
282 Id. GCI claims that, absent this transaction, its customers' access to an LTE network would be delayed because
of certain impediments associated with GCI's deployment of LTE on its PCS spectrum. Id.
283 Id. at 38-39. The Applicants note that accelerated deployment of LTE will result in increased spectral efficiency
and spectrum recovery. Id.
284 Id. at 39.
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network and GCI's HSPA network also would effectively extend the life of the HSPA network and give
customers access to more advanced technology over a wider service area.285
3.

Increased Competitiveness

95.
The Applicants claim that by combining resources into AWN, GCI and ACS Wireless
would be stronger competitors in the Alaska wireless market, and would be better equipped to compete
against the two largest national providers, AT&T Mobility and Verizon Wireless. The Applicants
contend that AWN could deploy "a robust 4G LTE network more quickly than either ACS [Wireless] or
GCI could achieve individually"286 and would increase the Applicants' lack of scale economies that they
claim currently hinders their ability to roll out high-cost operations in Alaska such as LTE, which
consumers increasingly demand.287 In addition, the Applicants claim that broad-scale commercial
deployment of LTE in the AWS-1 spectrum band is a "necessary prerequisite for both ACS Wireless and
GCI to negotiate commercially reasonable terms for roaming agreements, network technology and
consumer devices," thus permitting them to compete more effectively.288
96.
The Applicants' internal documents suggest that [BEGIN HIGHLY CONFIDENTIAL

INFORMATION]

-------------------------------------------------------------------------------------------------------
----------------------.289 ----------------------------------------------------------------------------------------------------
---------------------.290 [END HIGHLY CONFIDENTIAL INFORMATION] The documents also
indicate, however, that ACS Wireless [

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] ---------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
------------------.[END HIGHLY CONFIDENTIAL INFORMATION]291
97.
GCI's internal documents indicate that, prior to reaching the instant agreement with ACS
Wireless, GCI executives believed that [

BEGIN HIGHLY CONFIDENTIAL INFORMATION

] -------
-----------------------------------------------------------------------------------------------.292 [END HIGHLY
CONFIDENTIAL INFORMATION
] GCI documents also indicate that prior to reaching an agreement
with ACS Wireless, [

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] ----------------------------
-------------------------------------------------------------------------------------------------------.293 -------------------
------------------------------------:294 ---------------------------------------------------------------------------------------
-----------------------------------295 -----------------------------------------------------------------------------------------

285 Id.
286 Id. at 17; see also id. at 22, 26.
287 Id. at 22.
288 Id.
289 See, e.g., ACS000511334 at 4-5. [

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][

END HIGHLY
CONFIDENTIAL INFORMATION

]. Id.
290 ACS Wireless has begun the process of upgrading to LTE network facilities, launching LTE in November 2012
in Anchorage, Fairbanks, and Juneau. See Public Interest Statement at 5; see also
http://www.phonescoop.com/articles/article.php?a=11484. [BEGIN HIGHLY CONFIDENTIAL
INFORMATION][END HIGHLY CONFIDENTIAL INFORMATION]
ACS_FCC00026768.xlsx.
291 See, e.g., ACS000369713 at 3-8.
292 See GCI-0821122 at 3-4; see also Public Interest Statement at 22, 26.
293 GCI-0093894.
294 See generally GCI-0002124, GCI-0098204, GCI-0855341, GCI-0817035-36, GCI-0093894.
295 GCI-0093894.
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-------296----------------------297 --------------------------------------------------------------------------------------------
---------------------.298 [

END HIGHLY CONFIDENTIAL INFORMATION

]

C.

Discussion

98.
As discussed below, we find sufficient evidence to support a finding that the proposed
transaction is likely to result in public interest benefits that outweigh the possibility of anticompetitive
harm from this transaction affecting the provision of mobile telephony/broadband services in Alaska.
99.
With regard to the Applicants' claims about network efficiencies that would result from
the proposed transaction, we conclude that the Applicants' claims of reduction in capital and operating
expenditures resulting from the elimination of redundant CDMA network facilities are reasonable given
the CDMA network coverage overlap of the Applicants. Additionally, we find that the cost savings
associated with redundant cell towers and network overlap should include costs avoided for AWN's
future site projections, as the requirements for the combined network likely would be less than the total of
the number of future sites for which GCI and ACS Wireless had projected individually. Similarly, with
respect to urban fiber consolidation, we find that cost-savings resulting from the proposed transaction are
likely given that AWN would be able to avoid the cost of extending fiber to a significant number of
decommissioned and/or redundant sites.299
100.
In evaluating these asserted benefits, we recognize that service providers in Alaska face
particular service challenges, including significant areas of low or extremely low population density and
difficult operating conditions. We find that there is sufficient evidence in the record that the combination
of GCI's and ACS Wireless's infrastructure is likely to result in tangible benefits in terms of improved
network access and the elimination of redundancy, thus facilitating a more efficient use of both
infrastructure and spectrum across the Alaska markets. As the Applicants' implicitly recognize, however,
the ability to combine networks to realize such efficiencies is not without cost to ensure that the existing
GCI's GSM/HSPA network can compatibly provide voice and data services in concert with ACS
Wireless's LTE network.300 We recognize that these integration costs must be netted against costs
avoided as a result of the integration.301 We agree with the Applicants, however, that the net effect is

296 GCI-0047767, GCI-0004857.
297 GCI-0855341, GCI-0002124. [

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298 [

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--------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------. [END HIGHLY CONFIDENTIAL
INFORMATION
] See GCI-0841803-0841805.
299 [BEGIN HIGHLY CONFIDENTIAL INFORMATION] ------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------
--------
. [END HIGHLY CONFIDENTIAL INFORMATION] See GCI-0783989.
300 Public Interest Statement at 39. [

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] -------------
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--------------------------------------------------------------------------------------. [

END HIGHLY CONFIDENTIAL
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] ACS_FCC000024836-ACS_FCC000024866.
301 To realize this claimed efficiency, the Applicants must [

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] ------------------------------------------------------------------------------------------------------------------
---------------------------------- [

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] GCI-0004449, GCI- 0783989.
See also GCI-0046148 [BEGIN HIGHLY CONFIDENTIAL INFORMATION] --------------------------------------
-------------------------
.[END HIGHLY CONFIDENTIAL INFORMATION]
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procompetitive.
101.
We find evidence in the record, including in GCI's and ACS Wireless's internal
documents, that the transaction may provide a more certain and timely path to LTE that will enhance their
abilities to compete more effectively against AT&T Mobility and Verizon Wireless in the provision of
mobile telephony/broadband services in Alaska. For instance, certain documents establish [

BEGIN
HIGHLY CONFIDENTIAL INFORMATION

] ------------------------------------------------------ [END
HIGHLY CONFIDENTIAL INFORMATION
] for ACS Wireless. Further evidence in the record
shows that, although GCI is financially stable, executives believed that the company lacked the spectrum
required to deploy LTE. In addition, while we believe the Applicants' asserted technological benefits
relating to accelerated LTE deployment may be somewhat overstated, we recognize that AWS spectrum
perhaps provides for a more certain and timely LTE path, which ultimately will benefit consumers in
Alaska.

D.

Balancing

102.
We review the proposed transaction before us with special regard to the particular market
conditions affecting the provision of mobile telephony/broadband services in Alaska. As discussed
throughout out analysis above, there are very specific market conditions affecting the provision of mobile
services in Alaska, including its isolated geographic location outside the contiguous 48 states, its
statewide population of only about 710,000, its significant areas of extremely low population density, and
its challenging operating conditions.
103.
As explained in detail in Section V above, we find that the possibility of anticompetitive
harm from unilateral effects or coordination resulting from the proposed transaction would likely be
mitigated by various factors, including not only the various Alaska-specific factors, but also the strong
mobile presence in Alaska of AT&T Mobility, the recent entry of Verizon Wireless, and certain
provisions in the agreements. Even taking into consideration these factors, however, we remain
concerned that the proposed transaction might result in competitive harms. For instance, with respect to
concerns that this transaction may facilitate the exchange of competitively sensitive information between
GCI and ACS Wireless as retail competitors, we have accepted the Applicants' voluntary commitments to
mitigate these concerns.302
104.
Given that the possible anticompetitive harms flowing from the transaction are likely to
be limited and subject to certain conditions, we can accept a lesser showing to establish that the claimed
efficiencies are transaction-specific, quantifiable, verifiable, and timely such that we should include them
in our balancing test. As discussed in Section VI above, the record before us, on balance, supports a
finding that the proposed assignment of spectrum to AWN likely would result in positive public interest
benefits. The AWN transaction likely would result in network efficiencies that would allow for a more
efficient use of spectrum to provide new and better wireless services to consumers in Alaska, which we
have acknowledged as having unique service challenges.303 We also find that these potential benefits may
include a more certain and timely path for deploying LTE, which ultimately would inure to the benefit of
GCI's and ACS Wireless's customers in Alaska.
105.
Accordingly, we find sufficient evidence in the record to support a finding that the
Applicants have met their burden in establishing public interest benefits. On balance, we find that the
conditions imposed on the exchange of competitively sensitive information combined with the
aforementioned efficiencies outweigh the likelihood of significant anticompetitive harms in the Alaska
markets, such that the proposed transaction is in the public interest.

302 See supra 70-77.
303 See supra 3 & n.5.
41

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VII.

THE APPLICANTS' UNIVERSAL SERVICE SUPPORT

A.

Background

106.
GCI and ACS Wireless, both CMRS providers in Alaska, currently are designated as
competitive Eligible Telecommunications Carriers (ETCs or CETCs) eligible to receive both high-cost
and low-income universal service support in specified service areas in Alaska.304 GCI is designated as an
ETC in all of ACS Wireless's service areas and additional service areas. Both parties previously received
high-cost support pursuant to the former identical support rule, which provided support based on the
incumbent LEC's costs of providing universal service in the relevant service area. The USF/ICC
Transformation Order
eliminated the identical support rule and converted identical support into legacy
high-cost support. Both GCI and ACS Wireless now receive legacy high-cost support. That legacy high-
cost support is subject to a phase-down process established in the USF/ICC Transformation Order.
107.
The Applicants claim that, following the close of the proposed transaction, GCI and ACS
Wireless would remain separate CETCs and each would remain responsible for providing services to its
own customers and for meeting all universal service obligations.305 The Applicants indicate that GCI and
ACS Wireless would continue to market and sell standalone voice and broadband services on a retail
basis throughout Alaska and separately brand and price their individual wireless offerings.306 The
Applicants maintain that they would remit any high-cost support received as wireless CETCs to AWN for
investment in the operation of the combined network facilities to offer the supported services.307 The
Applicants assert that the combined AWN network would, among other things, facilitate better network
coverage in Alaska, a wider on-net calling footprint, greater consumer choice of services and handsets,
greater resources for public safety and enhanced spectral efficiency.308
108.
Statutory and Regulatory Requirements. Section 254(e) of the Act provides that "only an
eligible telecommunications carrier designated under section 214(e) shall be eligible to receive specific
federal universal service support."309 Pursuant to section 214(e)(1), a common carrier designated as an
ETC must offer and advertise the services supported by the federal universal service mechanisms
throughout the designated service area "either using its own facilities or a combination of its own
facilities and resale of another carrier's services."310
109.
On November 18, 2011, the Commission released the USF/ICC Transformation Order,
which, among other things, established the Mobility Fund to provide support dedicated to mobile services
to help ensure the availability of mobile broadband across America.311 Phase I of the Mobility Fund
provides up to $300 million in one-time support to address gaps in mobile services availability by

304 Petition for Declaratory Ruling at 3.
305 Id. at 9. The Applicants state that the infrastructure arrangement will allow both GCI and ACS Wireless to
continue operating as retail competitors with the same Alaska customer bases they have prior to closing and that no
retail customers will be transferred to the joint venture. They also state that the parties have agreed that the current
retail services plans of both GCI and ACS Wireless, including Lifeline offerings, will be supported by AWN for at
least two years. See id. at 3.
306 Id. at 6.
307 Id. at 5.
308 Id. at 7.
309 47 U.S.C. 254(e).
310 Id. 214(e)(1).
311 See USF/ICC Transformation Order, 26 FCC Rcd at 17773 301.
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supporting the build-out of current- and next-generation mobile networks in areas where these networks
are unavailable.312 The support offered under Phase I of the Mobility Fund is in addition to any ongoing
support provided under existing high-cost universal service program mechanisms.
110.
The USF/ICC Transformation Order established application, performance, and other
requirements for Mobility Fund Phase I. Auction 901, which offered $300 million in Mobility Fund
Phase I support, was the first auction to award high-cost universal support through competitive bidding.
To participate in Auction 901 and receive Mobility Fund Phase I support, an applicant was required to
demonstrate for the areas on which it wishes to bid that it has been designated as an ETC and that it has
access to the spectrum necessary to satisfy the applicable performance requirements.313
111.
The USF/ICC Transformation Order adopted numerous reforms to the universal service
high-cost program and proposed additional reforms. Among other things, to rationalize support for
mobility, the Commission established a budget for Mobility Fund Phase II to provide $500 million in
annual ongoing support for mobile voice and broadband services, including up to $100 million dedicated
to Tribal lands.314 The Commission eliminated the pre-reform identical support rule under which CETCs,
primarily providers of mobile services, formerly received the same per-line amount of ongoing high-cost
universal service support as the ILEC serving the same area.315 Rather than immediately terminate this
ongoing support, the Commission phased-down the legacy support provided to CETCs based on the
former identical support rule over five years. With respect to remote areas of Alaska, the Commission
delayed the beginning of the transition period for two years to preserve newly initiated services and
facilitate additional investment in still unserved and underserved areas.316 The Commission also proposed
rules for distributing Mobility Fund Phase II support, based largely on the rules adopted for Mobility
Fund Phase I.

B.

Declaratory Ruling

112.
Concurrent with the applications for assignment of licenses, the Applicants filed a
petition for declaratory ruling seeking confirmation that, following their contribution of network facilities
and spectrum licenses to AWN: 1) GCI and ACS Wireless would continue to provide services over their
own facilities for purposes of section 214(e) of the Act and the Commission's rules, and 2) both GCI and
ACS Wireless would continue to have access to spectrum for the purposes of section 54.1003(b) of the
Commission's rules and any similar provisions with respect to Mobility Fund Phase II or future high-cost
support mechanisms for wireless services that the Commission may establish.317
113.
Based on the unique facts presented in this proceeding and subject to the conditions of
the transaction described herein, we grant in part the Applicants' petition for declaratory ruling. We find

312 Id. at 17773 299. As part of Phase I, the Commission also designated an additional $50 million for one-time
support targeted exclusively for advanced mobile services on Tribal lands, which it expects will be awarded by
auction in 2013. Id. at 17819-20 481.
313 Id. at 17798-17801 388-99; see also 47 C.F.R. 54.1003. A Tribal entity may participate provided it has
applied for designation as an ETC for the relevant area and that application is still pending. Any such entity must
still receive designation prior to support being awarded. USF/ICC Transformation Order, 26 FCC Rcd at 17823
491; 47 C.F.R. 54.1004(a). The requirement that parties have access to spectrum applies equally to all parties,
including Tribal entities.
314 USF/ICC Transformation Order, 26 FCC Rcd at 17824 493-94.
315 Id. at 17825 498.
316 Id. at 17830, 17835 512, 529.
317 Petition for Declaratory Ruling at 1.
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that the contribution of network facilities and spectrum licenses to the newly-formed AWN as proposed
will not by itself render GCI and ACS Wireless ineligible for universal service support under the high-
cost program. Consistent with the Commission's prior interpretation of "own facilities" in section
214(e)(1)(A) of the Act and based on the facts presented in this particular transaction, we find that both
GCI and ACS Wireless will continue to provide services over their "own" facilities for the purposes of
section 214(e) once they have contributed network facilities and spectrum licenses to AWN. We also find
that based on the particular circumstances of this transaction, both GCI and ACS Wireless will continue
to have "spectrum access" for the purposes of Mobility Phase I support and section 54.1003 of the
Commission's rules following the contribution of their respective network facilities and spectrum licenses
to AWN.
114.
We issue this approval of the underlying transaction subject to several conditions related
to universal service support, including that GCI and ACS Wireless must remit their universal service
high-cost support to AWN and that such support may only be used for the provision, maintenance and
upgrading of facilities and services for which the support is intended. Given the nature of the relationship
that GCI, ACS Wireless, and AWN have created among themselves and the continuing reform of
universal service high-cost support, we further require the parties' consent to additional specified
conditions with respect to the consequences of receiving any future form of high-cost support.318 These
conditions on the transaction form part of the factual basis for our declaratory ruling below.
1.

Own Facilities Under Section 214(e)(1)(A)

115.
In the Universal Service First Report and Order, the Commission interpreted the terms
"facilities" and "own facilities" for purposes of section 214(e) of the Act. The Commission stated, "we
interpret the term `facilities,' for purposes of section 214(e), to mean any physical components of the
telecommunications network that are used in the transmission or routing of the services designated for
support under section 254(c)(1)."319 Addressing "own facilities," the Commission noted that "[t]he courts
have recognized many times the word `own' as well as its numerous derivation is a `generic term' that
`varies in its significance according to its use' and `designate[s] a great variety of interest in property.'"320
The Commission noted that the word "owner" is broad and flexible, "applying not only to legal title
holders, but to others enjoying the beneficial use of property."321 The Commission stated "property may
have more than one `owner' at the same time, and such `ownership' does not merely involve title interest
to that property."322 The Commission noted that section 214(e)(1) used the term "own facilities" as
distinguished from facilities "owned by" a carrier when it contemplated the meaning and application of
the statutory language.323 The Commission stated "the term `own facilities' reasonably could refer to
property that a carrier considers its own... but to which the carrier does not hold absolute title."324 The
Commission also determined that such a broad interpretation of the section 214(e) "own facilities"
requirement advanced the purposes of the Act and the Commission's stated goals.
116.
We find that, under the specific factual scenario presented in this transaction, both GCI

318 See infra 131-138.
319 See Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order, 12 FCC Rcd 8776,
8861 151 (1997) (subsequent history omitted) ("Universal Service First Report and Order").
320 Universal Service First Report and Order, 12 FCC Rcd at 8865 158.
321 Id.
322 Id.
323 Id. at 8866 159.
324 Id.
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and ACS Wireless will continue to provide service over their "own facilities" for the purpose of section
214(e). As an initial matter, we note that GCI and ACS Wireless each have already been individually
designated by the Alaska Public Utilities Commission as CETCs, and both currently provide the services
supported by the Universal Service Fund over their own network facilities, consistent with the
requirements of the Act.325 Specifically, ACS Wireless provides service over its own CDMA and 3G
EVDO network facilities and GCI provides service over CDMA and GSM/EDGE/HSPA+ network
facilities.326
117.
Under the transaction here, GCI and ACS Wireless will own AWN, and AWN will be
contractually obligated to provide service to both GCI and ACS Wireless.327 Pursuant to the terms of the
agreements between the parties, AWN will own or have a right of use for all the cell sites and tower
infrastructure currently used by either GCI or ACS Wireless to provide wireless services in Alaska, and
both GCI and ACS Wireless would have "equal and non-discriminatory" access to the entire AWN
network of combined facilities.328 Although neither GCI nor ACS Wireless would hold absolute title to
the facilities assigned to AWN, both will own AWN, and both ETCs, consistent with the Commission's
prior interpretation of section 214(e), could reasonably consider the facilities assigned to AWN to be their
own facilities.
118.
Additionally, the ownership interests held in AWN by GCI and ACS Wireless, as
presented in the facts of this transaction, are significant in our determination that both companies will
provide the supported service over their "own facilities" for the purposes of section 214(e).329 In
designating Virgin Mobile an ETC in several states, for example, the Wireline Competition Bureau found
that Sprint's ownership of Virgin Mobile changed the usual "wholesaler-reseller relationship . . . such that
Virgin Mobile now enjoy[ed] `beneficial use of Sprint's wireless facilities' without arm's length
transactions or purchase of service" and thus that Virgin Mobile had its "own facilities" for purposes of
section 214(e).330 So too here; GCI's and ACS Wireless's ownership of, and their specific relationship
with, AWN (and hence its "facilities") distinguishes this arrangement from the usual wholesaler-reseller
relationship. And though AWN will not directly receive universal service support, GCI's and ACS
Wireless's universal service support will pass through to AWN.331 Thus, the support will be used to
subsidize the costs of providing service.
119.
Therefore, as the Commission has done in the past, here, we construe the statutory
requirement of "own facilities" under section 214(e) in a flexible way to meet the goals of universal
service and the Commission's stated goal of helping to ensure the availability of mobile broadband across
America. We find compelling the Applicants' assertion that the combined network operated by AWN
would, among other things, facilitate better network coverage in Alaska, greater consumer choice of
services, and greater resources for public safety.332 Consistent with the Commission's goals of promoting

325 Petition for Declaratory Ruling at 3.
326 Public Interest Statement at 5, 6.
327 Petition for Declaratory Ruling at 4, 6.
328 Id. at 4.
329 In the future, if the Commission is asked to consider a similar transaction, the Commission will consider the
specific facts and issues and make a decision on a case-by-case basis.
330 See Telecommunications Carriers Eligible for Universal Service Support; Virgin Mobile USA L.P. Petition for
Designation as an Eligible Telecommunications Carrier in the State of Alabama, et al., WC Docket No. 09-197,
Order, 25 FCC Rcd 17797, 17803 15 (WCB 2010).
331 See infra 133.
332 Petition for Declaratory Ruling at 7.
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fiscal responsibility and maximizing scarce universal service funds, the combined network will enable the
parties to serve their customers more efficiently, thereby making it possible to expand network
coverage.333 We therefore conclude that the contribution of network facilities to AWN, as proposed in the
instant transaction, will not, by itself, prevent GCI and ACS Wireless from continuing to provide services
over their "own facilities" for the purposes of section 214(e) of the Act and the Commission's rules.
120.
Our findings here are based on the specific facts presented in this transaction and are
applicable to the Applicants' ability to receive both federal high-cost and low-income universal service
support. We caution the Applicants that any changes to the arrangements affecting the ownership
interests and/or rights of either GCI or ACS Wireless in AWN may result in non-compliance with the
Act, the Commission's rules, or this Order, and may not fall within this Declaratory Ruling.
2.

Spectrum Access

121.
As mentioned above, in the USF/ICC Transformation Order, the Commission adopted a
rule requiring that an applicant for Mobility Fund Phase I support have access to spectrum necessary to
fulfill any obligations related to support.334 The Commission required that an applicant have such access
at the time that the applicant applies to participate in an auction.335 The Commission stated that section
54.1003(b) of its rules could be met if a party holds a license authorizing use of appropriate spectrum in
the geographic area(s) for which it will seek support.336 The Commission also provided that the
requirement could be met by leasing appropriate spectrum covering the relevant geographic area(s).337
This rule requires the applicant to certify that it will retain its spectrum access for at least five years from
the date of the award of Phase I support.338
122.
Consistent with its standard procedures used in spectrum license auctions, the
Commission adopted a two-stage application process for participation in Auction 901, during which
interested applicants such as GCI and ACS Wireless were required to demonstrate their eligibility.339
Auction applicants were required to file a "short form" application, providing basic ownership and
eligibility information and certifying to their qualifications to receive support. Among such certifications,
an applicant for Auction 901 was required to describe its spectrum access and to certify that the
description was accurate.340 To satisfy the spectrum access eligibility requirement, applicants were
instructed to identify the license applicable to the spectrum to be accessed, the licensee holding the
spectrum authorization, and, if the licensee was a different party than the applicant, the relationship
between the applicant and the licensee that provided the applicant with the required access.341 After
Auction 901, during the second phase of the Commission's application process, winning bidders were
required to file "long form" applications from which the Commission conducts a more extensive review

333 USF/ICC Transformation Order, 26 FCC Rcd at 17670 11.
334 See 47 C.F.R. 54.1003.
335 See USF/ICC Transformation Order, 26 FCC Rcd at 17799-17801 393-399.
336 See id. at 17799-17800 394-396.
337 Id.
338 Id.
339 Id. at 17804 418; see also Mobility Fund Phase I Auction Scheduled for September 27, 2012; Notice and Filing
Requirements and Other Procedures for Auction 901, AU Docket No. 12-25, Public Notice, 27 FCC Rcd 4725,4751
82 (WTB/WCB 2012) ("Auction 901 Procedures Public Notice").
340 USF/ICC Transformation Order, 26 FCC Rcd at 17804 418.
341 Auction 901 Procedures Public Notice, 27 FCC Rcd at 4770 167-168.
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of an applicant's qualifications.342 Thus, among other certifications and qualification disclosures, winning
bidders in Auction 901 were required to provide the same spectrum access information in their long form
application, and to certify that the description of the spectrum access was accurate and that the applicant
would retain such access for at least five years after the date on which it is authorized to receive
support.343
123.
Both GCI and ACS Wireless filed applications to participate in Auction 901 based on
their pre-transaction ownership structures. In their short form applications, GCI and ACS Wireless each
certified to spectrum access and identified licenses authorized in its own name or in the name of a wholly-
owned subsidiary or an affiliate that was wholly owned by the applicant's corporate parent.344 At that
time, GCI held the licenses in the cellular and Broadband PCS bands directly or through its wholly-owned
subsidiary Unicom.345 ACS Wireless held licenses in the cellular, Broadband PCS, and AWS bands
indirectly through its sister subsidiaries of ACS, ACS Wireless License Sub, Inc. and ACS of Anchorage
License Sub, Inc.346 ACS Wireless did not submit any bids in Auction 901 and therefore was not required
to file a long form application.347 In contrast, GCI submitted numerous winning bids for Mobility Fund
Phase I support, and was required to submit a long-form application including certifications and
descriptions of its spectrum access to become authorized to receive support.348
124.
GCI and ACS Wireless now seek a declaratory ruling that, following the closing of the
proposed transaction, they each would still continue to have spectrum access as required under section
54.1003 of the Commission's rules for Mobility Fund Phase I support and any similar provisions with
respect to Mobility Fund Phase II or future high-cost support mechanisms for wireless services that the
Commission may establish.349 The parties explain that under their agreements, AWN would hold legal
title to all property and equipment, and with Commission approval, AWN would acquire spectrum
licenses previously authorized to GCI and ACS Wireless or their wholly owned subsidiaries or
affiliates.350 GCI and ACS Wireless jointly would own AWN, the "facility sharing subsidiary." GCI
would have a two-thirds controlling interest in AWN and GCI or GCI-affiliated executives would occupy
two of the three seats on AWN's board of directors, while ACS Wireless would have one-third control
and its current CEO would occupy the final board seat.351 Thus, the parties conclude each would have an
ownership interest in and contractually secured access to the network facilities and services of AWN.
125.
In particular, the parties propose that they would achieve spectrum access sufficient to
satisfy section 54.1003 through this joint ownership of AWN, as well as the contractual agreements each

342 USF/ICC Transformation Order, 26 FCC Rcd at 17804-17805 416-418.
343 Auction 901 Procedures Public Notice, 27 FCC Rcd at 4770 167-168.
344 Letter from John T. Nakahata, Wiltshire & Grannis, LLP, Counsel for GCI and Karen Brinkmann, KAREN
BRINKMANN PLLC, Counsel for ACS, to Marlene H. Dortch, Secretary, Federal Communications Commission,
dated November 28, 2012 at 2 ("Brinkmann Letter").
345 See Brinkmann Letter at 2.
346 Id.
347 Mobility Fund Phase I Auction Closes; Winning Bidders Announced for Auction 901, AU Docket No. 12-25,
Public Notice, 27 FCC Rcd 12031, Attachment A (2012) ("Auction 901 Closing Public Notice").
348 Id.
349 Petition for Declaratory Ruling at 2.
350 Id. at 4; Public Interest Statement at 8-11.
351 Petition for Declaratory Ruling at 6; Public Interest Statement at 12.
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has with it.352 The parties explain that pursuant to the terms of their agreements, AWN would be
obligated to provide its owners with wholesale services on their jointly owned facilities so that each of
those entities then would offer retail wireless services to their respective customers, as competitors.353
The parties further contend that their respective spectrum access has not changed because AWN would
provide these wholesale services using the same cellular, Broadband PCS and AWS licenses that it would
receive at the close of the transaction. AWN would develop wholesale wireless plans that it would sell to
GCI and ACS Wireless at a discount from prevailing market retail rates.354 AWN would not sell service
to retail customers itself.355 The parties explain that, under the agreements, AWN must endeavor to
provide functionalities and overall services to both GCI and ACS Wireless that are capable of meeting the
Commission's and/or the Regulatory Commission of Alaska's requirements for services offered by
CETCs providing mobile service.
126.
Moreover, GCI and ACS Wireless assert that after the transaction each would have
greater access to spectrum because each would have access to and the beneficial use of the additional
spectrum that the other party is contributing.356 Further, GCI and ACS Wireless explain that each party
also has agreed to provide excess capacity to AWN through their respective retained assets.357 The parties
therefore argue that given all the sharing aspects of their agreements, the Commission should find that
GCI and ACS Wireless would have access to spectrum sufficient to satisfy section 54.1003.
127.
Although neither GCI nor ACS Wireless would hold absolute title to the facilities
assigned to AWN, we have concluded above that the facilities assigned to AWN are GCI's and ACS
Wireless's "own facilities" for the purpose of section 214(e) under the facts described here.358 Similarly,
to accomplish our universal service policy goals for the award of Mobility Fund Phase I support, we
conclude that in these particular circumstances the spectrum access requirements of section 54.1003 will
be met. As a general matter, the Mobility Fund Phase I rules were designed to provide qualified
recipients with an incentive to extend advanced mobile services in an efficient and cost effective manner,
without prescribing any particular solution or limitations.359 In the USF-ICC Transformation Order, the
Commission concluded that a provider's access to spectrum must support mobile broadband services
meeting our requirements and conditions for the required timeframe, but, as described above, did not
dictate that a recipient had to demonstrate such access in any particular licensing manner.360 In providing
for such flexibility, the Commission recognized that not all applicants would use the same approach for
accessing spectrum to achieve their Mobility Fund Phase I obligations. As we have stated previously, we
acknowledge that Mobility Fund recipients will have a strong economic incentive to use existing facilities

352 Petition for Declaratory Ruling at 13-14; Brinkmann Letter at 4-5.
353 Public Interest Statement at 8.
354 Brinkmann Letter at 4; Public Interest Statement at 11. The Applicants state that GCI and ACS Wireless will
purchase all of their CMRS voice, wireless broadband, and public Wi-Fi services from AWN on a wholesale basis.
355 Public Interest Statement at 12.
356 Id. at 37-39; Brinkmann Letter at 3-4.
357 Id.
358 See supra 121.
359 Connect America Fund et al., WC Docket No. 10-90 et al., Fourth Order on Reconsideration, 27 FCC Rcd 8814,
8818 10 (2012).
360 These requirements include: (1) providing mobile supported services over a 3G or better network that has
achieved particular data rates under specified conditions, (2) providing reasonable collocation on new towers owned
or managed by Mobility Fund Phase I recipients, and (3) complying with the Commission's voice and data roaming
requirements. USF/ICC Transformation Order, 26 FCC Rcd at 1779196 35968, 37677, 37982.
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to offer services, especially given the specific build out obligations required in Mobility Fund Phase I.361
It follows that recipients may use some combination of their own and others' spectrum authorizations as
well as their own and others' facilities to achieve the level of service required by our Mobility Fund Phase
I rules, provided that doing so otherwise complies with their statutory and regulatory requirements.362
128.
Significant to this decision, and consistent with our conclusions above regarding GCI's
and ACS Wireless's statutory compliance with section 214(e), we are persuaded that the post-transaction
retained possessory ownership interests held by each in AWN are sufficient to ensure that each meet the
spectrum access requirements of section 54.1003. Our conclusion here is supported by the fact that each
party retains an ownership interest in the entity that is authorized to operate on the same spectrum
previously held directly by one or the other of the parties or their subsidiaries, and each has gained
increased access to additional spectrum through the jointly owned subsidiary of AWN. The underlying
purpose of the spectrum access requirement served to ensure that, consistent with the serious undertakings
implicit in bidding for support, winning bidders would have the spectrum necessary to be able to meet
their obligations as quickly and successfully as possible.363 Since AWN is contractually obligated
through the FNUA to provide equal non-discriminatory access to its services to both of its owners, the
FNUA coupled with the post-transaction possessory ownership interest in the entity holding the spectrum
and the facilities satisfy the purposes of section 54.1003.364 We therefore find that the contribution of
network facilities and the assignment of spectrum licenses to AWN will not by itself deprive either GCI
or ACS Wireless of "spectrum access" for the purposes of Mobility Phase I support and section 54.1003
of the Commission's rules.

C.

Conditions Regarding Universal Service Support

129.
We have determined above that the transfers of the underlying wireless network facilities
and the licenses for the spectrum that the parties utilize to provide service will not render GCI or ACS
Wireless ineligible to receive universal service high-cost support. There are, however, additional
statutory and regulatory requirements with which the parties must comply to receive support and which
necessitate imposing conditions with respect to high-cost support that the parties may receive.
130.
The transaction creates a relationship among the Applicants, and among the Applicants
and AWN, at the same time that the Commission is implementing once-in-a-generation reforms to the
universal service support mechanisms. To ensure consistency with the universal service requirements of
the Act and the Commission's reforms, we impose limited conditions on GCI, ACS Wireless and AWN
with respect to universal service support. Those reforms are based, in part, on specific forms of new
high-cost support being provided to at most one provider in any given area.365 While legacy support
currently is not so limited, the Commission has decided that a party receiving new ongoing support in
Phase II of the Mobility Fund will no longer receive any legacy support, even if generally the phase-down

361 Connect America Fund et al., WC Docket No. 10-90 et al., Fourth Order on Reconsideration, 27 FCC Rcd 8814,
8818 10 (2012).
362 See 47 U.S.C. 310(d); see e.g., Promoting Efficient Use of Spectrum Through Elimination of Barriers to the
Development of Secondary Markets, Report and Order and Further Notice of Proposed Rulemaking, 18 FCC Rcd
20604 70 (2003).
363 USF/ICC Transformation Order, 26 FCC Rcd at 17799 396.
364 As described above, the Commission has proposed to adopt similar rules for Mobility Fund Phase II. Nothing in
this ruling prejudges future Commission action in the ongoing Mobility Fund Phase II proceeding.
365 The Commission has implemented this approach in Connect America Phase I, Connect America Phase II, and
Mobility Fund Phase I, and proposes to do the same in other new forms of Connect America high-cost support. See
id.
at 17717 137 (Connect America Phase I); 17729 170 (Connect America Phase II); 17779 316 (Mobility
Fund Phase I); 18073-74 1136 (Mobility Fund Phase II); and 18086-87 1195 (Connect America Fund Phase II).
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of legacy support is still ongoing.366 Furthermore, the Commission proposed that new forms of Connect
America high-cost support would be provided only in areas where there is no unsubsidized competitor
offering the services to which Connect America is intended to provide access.367
131.
Compliance with statutory requirements. Section 254(e) of the Act requires that a carrier
be designated as an ETC pursuant to section 214(e) to receive universal service high-cost or low-income
support and that carrier to use "that support only for the provision, maintenance, and upgrading of
facilities and services for which the support was intended."368 Under the terms of the joint venture, both
GCI and ACS Wireless are required to maintain their individual CETC designations.369 To assure that
support will be used "only for the provision, maintenance, and upgrading of facilities and services for
which the support is intended," the Applicants assert that they are "contractually committed" to remit to
AWN, which will own the relevant facilities and provide the parties with the services for resale, all high-
cost support that the Applicants receive.370
132.
Consistent with sections 214(e) and 254(e), GCI and ACS Wireless may continue to
receive federal universal service fund support so long as they continue to satisfy their federal and state
ETC obligations. Under the facts described here, AWN itself, however, will not seek ETC designation in
Alaska and therefore will not be eligible to receive universal service support directly from the federal
universal service fund. Therefore, notwithstanding the Applicants' suggestion that high-cost support
could be remitted directly to AWN, universal service support payments may not be made directly to
AWN because AWN will not be designated an ETC and otherwise fails to meet the statutory requirements
to receive support.371 Nevertheless, under the Applicants' agreements, AWN will be responsible for the
operation and maintenance of the combined network facilities.
133.
We therefore require as a condition of this transaction, separate and apart from any
contractual agreement between the parties, that both GCI and ACS Wireless remit federal high-cost
support directly to AWN to be used "only for the provision, maintenance and upgrading of facilities for

366 See USF/ICC Transformation Order, 26 FCC Rcd at 17831-32 517. The Commission has sought comment on
similarly eliminating legacy high-cost support based on the receipt of other new forms of ongoing Connect America
high-cost support. See id. at 18063-65 1095-1097. The Commission has not taken this approach with respect to
Mobility Fund Phase I, which provides only one-time support and is therefore different in kind from legacy support.
367 See id. at 18070-71 1124 (Mobility Fund Phase II), and 18085-86 1191 (Connect America Fund Phase II)
(when price cap carriers decline to make a state- level commitment in Phase II, proposing to exclude from
competitive bidding areas with unsubsidized competitors). For purposes of support for fixed services under Connect
America Fund Phase II, the Commission defined an unsubsidized competitor as "a facilities-based provider of
residential fixed voice and broadband service that does not receive high-cost support." See 47 C.F.R. 54.5. The
Commission has not yet defined "unsubsidized competitor" for purposes of support for mobile services. With
regard to future awards of high cost support for mobile services as currently proposed by the Commission, we
clarify that if either GCI or ACS Wireless receives support, and both offer service in the area where one is
supported, under the transaction as proposed both would be utilizing AWN's "subsidized" network to provide that
service and the second would not be an "unsubsidized competitor." We are not prejudging any future action we may
take on questions regarding unsubsidized competitors in other contexts, including those raised in the USF/ICC
Transformation FNPRM.
368 47 U.S.C. 254(e).
369 See Petition for Declaratory Ruling at 6.
370 Id. at 12.
371 See 47 U.S.C. 254(e) (providing that only an eligible telecommunications carrier designated under section
214(e) shall be eligible to receive specific Federal universal service support); 47 U.S.C. 214(e)(1) (providing that a
common carrier designated as an ETC must offer and advertise the services supported by the federal universal
service mechanisms).
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which the support is intended."372 Lifeline support payments, which are intended to reimburse ETCs for
the discount provided to eligible households, do not need to be remitted to AWN. To implement this
condition, both GCI and ACS Wireless must maintain and be prepared to submit, upon request, records
clearly detailing the funds remitted to AWN for compliance with this condition.373 The Commission or
USAC may institute an inquiry on its own motion to examine GCI's and ACS Wireless's records and
documentation to ensure that the high-cost support they receive is being used for the purpose for which it
was intended.374 GCI and ACS Wireless are required to provide such records and documentation to the
Commission and/or USAC upon request.
134.
Compliance with regulatory reform. The USF/ICC Transformation Order generally
requires that parties receiving new ongoing Connect America high-cost support will stop receiving any
ongoing legacy high-cost support based on former pre-reform rules, and that the Commission will provide
new forms of Connect America high-cost support to no more than one provider per area.375
135.
Following the close of the proposed transaction, both GCI and ACS Wireless will be
providing service primarily over the same network. Thus, the legacy support flowing to the two parties is
effectively supporting only one network. The USF/ICC Transformation Order decided with respect to
Mobility Fund Phase II, and proposes generally with respect to other new forms of ongoing Connect
America high-cost support, that any party receiving legacy ongoing high-cost support will stop receiving
such legacy support with respect to a particular area upon the receipt of any new form of ongoing high-
cost support for that area.376 Accordingly, as an additional condition of the transaction, in the event that
either of the parties experiences the termination of or a reduction in legacy support as a consequence of
receiving Mobility Fund Phase II support consistent with the provisions of the USF/ICC Transformation
Order
, both parties will have their legacy support in the relevant area terminated or reduced on the same
terms. In addition, to the extent that the Commission adopts any similar terminations or reductions in
legacy support for the same reasons that is premised upon the receipt of support from other Connect
America high-cost funds, both parties will incur any termination or reduction if either party receives the
new form of Connect America high-cost support.
136.
We also accept the Applicants' voluntary commitments to spur broadband deployment
throughout Remote Alaska, and we incorporate these commitments as conditions on our approval of this
transaction.377 Specifically, the Applicants have agreed to, by December 31, 2014, (i) extend LTE
capability to 35,000 POPs in Remote Alaska; (ii) extend 3G to six Remote Alaska communities; (iii)
construct 2G macrosites in 12 communities in Remote Alaska; and (iv) maintain 2G service everywhere
in Remote Alaska that it is offered today.378
137.
To facilitate our ability and that of the public to monitor the Applicants' compliance with
these conditions, we impose a reporting requirement as an additional condition on our approval of this
transaction. Specifically, we require AWN to file quarterly reports with the Commission detailing its

372 47 U.S.C. 254(e).
373 47 C.F.R. 54.320(b) (ETCs must maintain records for at least ten years from the receipt of funding), 54.417
(recordkeeping requirements for recipients of Lifeline or Link Up support).
374 47 U.S.C. 220, 403.
375 See USF/ICC Transformation Order, 26 FCC Rcd at 17729 170.
376 See supra 130.
377 See Letter from Wilson Hughes, CEO, The Alaska Wireless Network, to Marlene H. Dortch, Secretary, FCC,
WT Docket No. 12-187, May 16, 2013.
378 Id.
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compliance with these commitments. The first such report shall be filed with the FCC on or before
October 15, 2013, and shall be for the period from the Closing Date of the transaction (as that term is
defined in Section 8.1 of the Asset Purchase Agreement) until September 30, 2013. Thereafter, the
reports shall be filed with the FCC on a calendar quarterly basis on or before the fifteenth day of the
month following the end of the quarter. The requirement to submit compliance reports shall continue
until such time as AWN meets each of the commitments enumerated above and reports its achievement to
the Commission.
138.
Such compliance reports shall specifically include: (i) a statement as to the status of the
Company's compliance with each of the four individual commitments; (ii) the number of POPs in Remote
Alaska that are receiving LTE services in accordance with the first commitment that were not receiving
LTE services prior to the Closing Date; (iii) the additional Remote Alaska communities (including non-
3G portions) that are receiving 3G services in accordance with the second commitment that were not
receiving 3G services prior to the Closing Date; (iv) identification of the additional 2G macrosites that
have been or are being constructed in Remote Alaska in accordance with the third commitment; (v) status
of compliance with the fourth commitment, and (vi) future plans to achieve each of the individual
commitments (which does not need to identify specific communities), including any anticipated delays or
difficulties in meeting the deadlines.

VIII.

CONCLUSION

139.
While the assignment of licenses as proposed in the Application raises some competitive
concerns, these concerns are mitigated by the efficiencies and public interest benefits of the transaction
along with the conditions we impose herein. We find that the proposed transaction, as conditioned, would
not result in competitive harm that would outweigh the public interest benefits of this transaction.
Accordingly, we conclude that approval of these transactions as conditioned will serve the public interest.

IX.

ORDERING CLAUSES

140.
Accordingly, having reviewed the applications and the record in this matter, IT IS
ORDERED that, pursuant to sections 4(i) and (j), 214, 303(r), 309, 310(d) of the Communications Act of
1934, as amended, 47 U.S.C. 154(i), (j), 214, 303(r), 309, and 310(d), the applications for the
assignment of licenses from ACS of Anchorage License Sub, Inc., ACS Wireless License Sub, Inc., GCI
Communication Corp., and Unicom, Inc. to The Alaska Wireless Network, LLC are GRANTED to the
extent specified in this Memorandum Opinion and Order and Declaratory Ruling and subject to the
conditions specified herein.
141.
IT IS FURTHER ORDERED that the above grant shall include authority for assignment
to The Alaska Wireless Network, LLC of: (a) any license or authorization related to the facilities
included in the subject transaction that are issued to ACS of Anchorage License Sub, Inc., ACS Wireless
License Sub, Inc., GCI Communication Corp., or Unicom, Inc. during the Commission's consideration of
the transfer of control applications or during the period required for consummation of the transaction
following approval; and (b) any applications related to the facilities included in the subject transaction
that are pending at the time of consummation.
142.
IT IS FURTHER ORDERED that, pursuant to sections 4(i) and (j), 309, and 310(d) of
the Communications Act of 1934, as amended, 47 U.S.C. 154(i), (j), 309, 310(d), the petition filed by
Fireweed Communications, LLC and Jeremy Lansman to deny the applications for the assignment of
wireless licenses to The Alaska Wireless Network, LLC is DENIED to the extent specified in this
Memorandum Opinion and Order and Declaratory Ruling for the reasons stated herein.
143.
IT IS FURTHER ORDERED that, pursuant to sections 4(i) and (j), and 214 of the
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), and 214, the application for
authority to provide resale international service to be held by The Alaska Wireless Network, LLC is
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FCC 13-96

GRANTED.
144.
IT IS FURTHER ORDERED that, pursuant to sections 4(i) and (j), and 214 of the
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), and 214, the petition for
declaratory ruling filed by General Communication, Inc. and Alaska Communications Systems Group,
Inc. is GRANTED to the extent specified in this Memorandum Opinion and Order and Declaratory
Ruling.
145.
IT IS FURTHER ORDERED that this Memorandum Opinion and Order and Declaratory
Ruling shall be effective upon release. Petitions for reconsideration under Section 1.106 of the
Commission's rules, 47 C.F.R. 1.106, may be filed within thirty days of the date of public notice of this
Memorandum Opinion and Order and Declaratory Ruling.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
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STATEMENT OF

ACTING CHAIRWOMAN MIGNON L. CLYBURN

Re:


Applications of GCI Communication Corp., ACS Wireless License Sub, Inc., ACS of
Anchorage License Sub, Inc., and Unicom, Inc. For Consent To Assign Licenses to The
Alaska Wireless Network, LLC
, WT Docket No. 12-187; WC Docket No 09-197.


Ensuring robust competition in all sectors of the wireless market is a priority for the Commission.
For this reason, we should continue to review carefully all transfer of control and assignment of license
applications and prioritize them for timely decision-making. The FCC has approved 95 percent of
transaction applications within the 180-day informal timeline. Careful review is, however, especially
important in a transaction like this one, which combines the facilities of two of the largest carriers that
have long served Alaska. Of course, our ability to act expeditiously depends in large part on the
responsiveness of the parties to the application. In this case, I am pleased that the Commission was able
to approve the underlying transaction within two weeks of the parties' providing final amended language
to protect against the inappropriate use of competitively sensitive information.
54

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FCC 13-96

STATEMENT OF

COMMISSIONER AJIT PAI

Re:

Applications of GCI Communications Corp., ACS Wireless License Sub, Inc. ACS of
Anchorage License Sub, Inc. and Unicom, Inc. for Consent to Assign Licenses to the Alaska
Wireless Network, LLC
, WT Docket No. 12-187; WC Docket No. 09-197.


Time is of the essence. It's true of the communications marketplace given the rapid evolution of
technology and insatiable consumer demand. And it's especially true in Alaska, where the building
season is short and winters are long. Hence, when two carriers plan on consolidating their operations in
order to reinvest in their communities, we owe it to them to move quickly.
Unfortunately, that didn't happen here. Our informal transaction shot clock is 180 days, but we
did not resolve this transaction until day 275. (To our credit, once Commissioners saw a draft order
eleven days ago, we approved it in short order.) This--along with the continued calls for FCC process
reform in last week's hearing before the House Energy and Commerce Committee's Subcommittee on
Communications and Technology--highlights the necessity of codifying the 180-day shot clock and
reexamining our procedures to make sure we meet it (perhaps using our forbearance procedural rules as a
model). Parties seeking Commission approval for their transactions deserve to know when they will get
an answer. There's nothing like a real deadline to keep us on track.
55

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