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 pŽQюўўўўўўўџўџџџџџџ џџџџџџџџџџџџџџџџџџџџћџ22Ѕ№T› №”žџџRџџPC"‚џџџџ5џџ…џџеџџџџџџ№џџџџџџ^2BoddШЇ7BBdr2B27ddddddddddBBrrrdК‘†‘‘†{œœMdœ†Н‘œ{œ‘o†‘‘Ш‘‘†B7BtdBdoYoYBdo7Bo7ЇodooYMBod‘ddYO,OhБ2BBBBPBdo‘d‘d‘d‘d‘dШ‘‘Y†Y†Y†Y†YM7M7M7M7‘oœdœdœdœd‘o‘o‘o‘o‘d‘d‘oœdœd‘d‘d{o‘d‘d‘d‘Y‘Y†Y†Y†YœdœdœdœoœoPoMoMBModœdШ‘oMNF2ldBdddddd––d<˜˜d–<BBoodВBBddФВBoШBd–––d{{{{{{В†{{{{BBBB‘†‘‘‘‘‘‡‘‘‘‘‘o{ddddddd†YYYYY7777dddddddndddddYd"‚џџџџ5џџ…џџеџџџџџџ№џџџџџџ^(1< К;Шwд ~JІЖ' "Ы дСŠСУУSee, e.g.,ФФ УУUniversal Service OrderФФ; FederalЉJoint Board on Universal Service, CC Docket No. 96Љ45, УУReport д ~Jnœ' ЌxŽ дto Congress, ФФ13 FCC Rcd 11501 (1998). УУSee alsoФФ Western Wireless Corporation Comments on Model Platform д Ќx— дDevelopment, CC Docket 96Љ45, filed Aug. 28, 1998 (expressing interest in providing universal service, and д ~Jўœ'дdiscussing Western's sponsorship of a wireless cost model being УУФФdeveloped by HAI Associates).>ж Finally, we wish to ensure that our regulation д Ќxдpromotes, rather than impedes, the introduction of innovative services and technological advances. Commenters are requested to explain how the proposals they make relate to these principles. д —R.Љ4 e ПбдУУФФСŠСи‚6.иС` ` ЙСConsistent with our goals of removing unnecessary regulations and ensuring that д Ќxїдremaining regulations serve the public interest, this proceeding will reЉevaluate the need for д Ќx_дspectrum aggregation limits. The CMRS spectrum cap was first established four years ago. д ЌxЧдSince that time, CMRS markets and the wireless telecommunications industry in general have д —RЂа4 ЌxОдchanged considerably.ж’XЂ#Шwд ~Jv"Ж' "p дСŠСУУФФImplementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993; Annual Report and д ~J>#œ' ЌxŸ дAnalysis of Competitive Market Conditions with respect to Commercial Mobile Services, УУThird Report, ФФFCC 98Љ81 д ~J$œ'д(rel. June 11,1998) УУ(Third Annual CMRS Competition Report).ФФ’ж We seek to determine here if those changes have affected the need for д Ќxдthe CMRS spectrum cap, and what, if any, type of spectrum aggregation limits are appropriate at this time. д —R Ж4дСрЗьСУ УII. EXECUTIVE SUMMARYФ Фƒ д"ѓ Cˆ,C)C)UUu н"дŒд —RЉ4 e П`дСŠСи‚7.иС` ` ЙСIn this Notice of Proposed Rulemaking, we solicit comment on whether we should д Ќx_дrepeal, modify, or retain the CMRS spectrum cap. We also seek comment on the petition to д Ќx@дforbear from enforcement of the CMRS spectrum cap filed by CTIA on September 30, 1998. We д Ќxсдfocus our discussion of whether to repeal, modify, or retain the spectrum cap by looking at the д ЌxRдcompetitive changes in the CMRS market, reexamining the goals that the spectrum cap was д Ќxџдinitially designed to achieve, and seeking comment on whether there are less restrictive measures, д Ќxїдor additional public interest goals we should consider in determining whether to eliminate or д Ќxyдmodify the spectrum aggregation limits. Additionally, we seek comment on how our analysis д ЌxŠдmay differ in the context of markets with many wireless competitors, as opposed to markets, for д Ќxcдexample, in rural or highЉcost areas, where few or no PCS providers may have initiated service, and whether we should consider the rule on a marketЉbyЉmarket basis. д —R\ Љ4 e ПдСŠСи‚8.иС` ` ЙСWe identify and discuss several different options for addressing CMRS spectrum д Ќxдaggregation issues. Specific options raised for comment, in addition to retaining the current CMRS spectrum cap, include: д —Rа Љ4 "ядoТXŠТExpanding the allowable amount of geographic overlap between a licensee's various broadband CMRS holdings; Ц(#Ц д —RgЉ4дoТXŠТIncreasing the amount of spectrum that a single entity may hold beyond 45 MHz; Ц(#Ц д —R!Љ4дoТXŠТAltering the ownership attribution rules associated with the spectrum cap;Ц(#Ц д —RлЉ4 "ШдoТXŠТForbearing from enforcing the CMRS spectrum cap pursuant to our authority under section 10 of the Act;Ц(#Ц д —RrЉ4дoТXŠТEstablishing a sunset for the CMRS spectrum cap; and, Ц(#Ц д —R,Љ4 "дoТXŠТEliminating the CMRS spectrum cap and relying on a caseЉbyЉcase analysis pursuant to д "бдsections 308(b) and 310(d) of the Communications Act in assessing the potential д "дcompetitive effects of a proposed spectrum holding by a particular entity within a geographic area. Ц(#Ц д —R}Љ4 "дСŠСи‚9.и We also seek comment on whether we should retain, modify, or repeal the cellular д —RZа4 ЌxКдcrossЉownership rule.жGШZШwд ~JгЖ'дСŠС47 C.F.R. РР 22.942.Gж That rule was adopted when cellular licensees were the predominant д Ќxhдprovider of mobile voice services. We seek comment on whether the introduction of new competitors in wireless telecommunications markets changes the need for this rule. д"Ю Xˆ,C)C)UUѕ н"д д —RЖ'даад9=дУ УIII. BACKGROUNDФ Ф д —RнЉ4ддˆьдаад\АдУ УФ Ф д —RКЖ'дУ УФ ФУ УA.СŠСHistory of the CMRS Spectrum CapФ Ф д —Rtа4 e П#дСŠСи‚ 10.иС` ` ЙСAs discussed УУsupra,ФФжKШtШwд ~JэЖ'дСŠСУУSee supraФФ section I.Kж the CMRS spectrum cap was established in the УУCMRS Third д —RQЉ4 Ќx3дReport and OrderФФ as part of the implementation of the deregulated CMRS regime enacted by the д —R.а4 ЌxидOmnibus Budget Reconciliation Act of 1993.ж.XШwд ~J7 Ж' "Ч дСŠСУУCMRS Third Report and OrderФФ, 9 FCC Rcd at 7992 (УУcitingФФ Omnibus Budget Reconciliation Act of 1993, д ~Jџ œ'дPub. L. No. 103Љ66, Title VI РР 6002(b), 107 Stat. 312 (1993)).УУФФж Prior to the adoption of the CMRS spectrum cap, д Ќxhдthe Commission had imposed service specific limitations on licensees' ability to aggregate д —Rша4 Ќxидbroadband PCS spectrum.жJАшАШwд ~JI Ж' "} дСŠСAmendment of the Commission's Rules to Establish New Personal Communications Services, GEN Docket д ~Jœ' ЌxЕ дNo. 90Љ314, УУSecond Report and OrderФФ, 8 FCC Rcd. 7700, 7728 РР 61 (1993) (УУBroadband PCS Second Report and д ~Jйœ' ЌxК дOrderФФ) (limited broadband PCS licensees to 40 MHz of the total spectrum allocated to broadband PCS); д ~JЁœ' Ќx’ дУУФФУУФФAmendment of the Commission's Rules to Establish New Personal Communications Services, GEN Docket No. 90Њд ~Jiœ' Ќxщ д314, УУMemorandum Opinion and OrderФФ, 9 FCC Rcd 4957, 4984 РР 67 (1994) (revised the latter rule to allow cellular licensees to increase their holding of PCS spectrum from 10 MHz to 15 MHz after January 1, 2000).Jж In replacing discrete PCS/cellular ownership rules, tУУФФhe Commission д Ќxђдexplained that an overall spectrum cap for CMRS would add certainty to the marketplace without д —RЂа4 Ќxѓдsacrificing the benefits of proЉcompetitive and efficiencyЉenhancing aggregation.жtШЂ( Шwд ~J{Ж'дСŠСУУCMRS Third Report and OrderФФ, 9 FCC Rcd. at 8100Љ8107. УУФФtж The д ЌxдCommission found that if licensees were to aggregate sufficient amounts of spectrum, it would д Ќx­дbe possible for them, unilaterally or in combination, to exclude efficient competitors, to reduce д ЌxIдthe quantity or quality of services provided, or to increase prices to the detriment of consumers. д ЌxVдThe Commission concluded that the imposition of a cap on the amount of spectrum that a single д Ќxќдentity can control in any one geographic area would limit its ability to increase prices д —Rа а4дartificially.жLШа И Шwд ~J9Ж'дСŠСУУId.ФФ at 8104 РР 248.Lж д —RŠЉ4 e ПFдСŠСи‚ 11.иС` ` ЙСTo perform a spectrum cap analysis, a threshold determination must first be made д Ќxхдregarding whether the CMRS offerings under consideration are serving markets that substantially д Ќxдoverlap. The Commission adopted a simple formula for this assessment: a determination of д Ќxpдwhether the overlap between geographic service areas or licensed contours contains 10 percent д —Rўа4дor more of the market's population.жАўH Шwд ~Jї!Ж' "  дСŠС47 C.F.R РР 20.6(c). Whereas broadband PCS is licensed in major trading areas (MTAs) or basic trading д Ќx’ дareas (BTAs), cellular service is defined by the cellular geographic service area (CGSA). SMRs can be licensed in д Ќxм дeconomic areas (EAs), MTAs or by contour. The Commission also decided that because SMR spectrum is not д ЌxЦ дaltogether available in a contiguous block, and the largest possible block of contiguous SMR spectrum is 10 MHz, д ~J%œ' ЌxЌ дthe maximum attributable SMR spectrum for purposes of the CMRS spectrum cap would be 10 MHz. УУ CMRS Third д ~Jп%œ'дReport and Order, ФФ9 FCC Rcd at 8113Љ14 РР 275.ж д —RлЖ'дУ У д —RИЉ4 e ПодФ ФСŠСи‚ 12.иС` ` ЙСAssuming a 10 percent population overlap, the rule next requires a determination д Ќxсдof whether there is common attributable ownership. For purposes of the spectrum cap, equityд"•Рˆ,C)C)UUн"д д —Rа4 ЌxБдownership of 20 percent or more was deemed attributable.ж’XШwд ~JyЖ' "< дСŠСУУФФThe Commission decided to use a 40 percent attribution for small businesses, rural telephone companies, д ~JAœ' Ќx! дand businesses owned by minorities and/or women, as it had done in the PCS/cellular crossЉownership rule. УУ CMRS д ~J œ'дThird Report and OrderФФ, УУФФ9 FCC Rcd at 8114Љ5 РР 276Љ8.’ж The Commission also stated that in д Ќx'дdetermining when cellular, broadband PCS and SMR licenses are held indirectly through д ЌxRдintervening corporate entities, a multiplier would be used to determine attributable ownership д —R—а4дlevels, consistent with application of the broadcast attribution rules.жOШ—шШwд ~J0Ж'дСŠСУУId.ФФ at 8114Љ15 РР 277.Oж д —RQЉ4 e ПІдСŠСи‚ 13.иС` ` ЙСThe Commission found that by creating a cap on broadband PCS, SMR, and д Ќxддcellular licenses, the result accomplished would "prevent licensees from artificially withholding д —R а4 Ќxдcapacity from the market."жLШ xШwд ~J4 Ж'дСŠСУУId. ФФat 8108 РР 258.Lж The Commission found that a 45 MHz cap provided a "minimally д Ќx—дintrusive means" for ensuring that the mobile communications marketplace remained competitive д —RХа4дand preserved incentives for efficiency and innovation.ж]ШХШwд ~J~Ж'дСŠСУУФФУУФФУУId. ФФat 7988 РР 16УУФФ.]жУ УФ Ф д —R Љ4 e ПvдСŠСи‚ 14.иС` ` ЙСIn the УУCMRS Fourth Report and OrderФФ, the Commission further clarified that д Ќxћдcertain business relationships could give rise to attributable ownership interests for purposes of д Ќx дthe CMRS spectrum cap. First, the Commission held that resale agreements will not be д ЌxОдconsidered attributable interests because resellers can neither exercise control over the spectrum д —Rѓ а4 Ќx/дon which they provide service nor reduce the amount of service provided over that spectrum.ж ѓ ˜Шwд ~J<Ж' " дСŠСImplementation of Sections 3(n) and 332 of the Communications Act, GN Docket No. 93Љ252,,УУ Fourth д ~Jœ'дReport and OrderФФ, 9 FCC Rcd. 7123, 7124 РР 10 (1994) (УУCMRS Fourth Report and OrderФФ). УУФФж д ЌxОдSecond, the Commission found that management agreements that authorize managers of cellular, д Ќx&дbroadband PCS or SMR systems to engage in practices or activities that determine or significantly д Ќxдinfluence the nature and types of services offered, the terms on which services are offered, or the д —Rgа4 Ќx“дprices charged for such services, give the managers an attributable interest in that licensee.жK!Шg№ Шwд ~JЖ'дСŠСУУId.ФФ at 7128 РР 25.Kж д ЌxlдFinally, the Commission also concluded that joint marketing agreements that affect pricing or д —R!а4дservice offerings will be attributable.жN"Ш!€ Шwд ~JR Ж'дСŠСУУId.ФФ at 7129Љ30 РР 30.Nж д"л"ˆ,C)C)UUьн"д д —RЉ4 e ПiдСŠСи‚15.иС` ` ЙСУУФФThe Commission reaffirmed the basic tenets of the CMRS spectrum cap in the д —Rна4 Ќx@дУУCMRS Spectrum Cap Report and OrderФФ and provided additional economic rationale for its use.жј#АнШwд ~JVЖ' "V дСŠСAmendment of Parts 20 and 24 of the Commission's Rules ЉЉ Broadband PCS Competitive Bidding and the д Ќx’ дCommercial Mobile Radio Service Spectrum Cap; Amendment of the Commission's Cellular/PCS CrossЉOwnership д ~Jцœ' ЌxЧ дRule, WT Docket 96Љ59, GN Docket 90Љ314,УУФФУУ Report and OrderФФ, 11 FCC Rcd. 7824, 7864Љ87 (1996) (УУCMRS д ~JЎœ' Ќxњ дSpectrum Cap Report and OrderФФ)УУ appeal pending sub nom. Cincinnati Bell Tel Co. v. FCCФФ, No. 96Љ3756 (6th Cir), д ~Jvœ' Ќx* дУУrecon.ФФ 12 FCC Rcd 14031 (1997) (УУBellSouth MO&OФФ) УУappeal pending sub nom. BellSouth Corporation v. FCCФФ, No. 97Љ1630 (D.C. Cir).јж д Ќx=дThat proceeding was initiated, in part, in response to the Sixth Circuit's remand of the д —R—а4 ЌxcдCommission's PCS/cellular crossЉownership rule.жы$—@Шwд ~Jˆ Ж' "У дСŠСУУCMRS Spectrum Cap Report and OrderФФ, 11 FCC Rcd at 7825 РР 1УУ (citing Cincinnati Bell Telephone д ~JP œ'дCompany v. FCCФФ, 69 F.3d 752 (6th Cir. 1995)). ыж In УУCincinnati Bell,ФФ the court found that the д Ќx дCommission had not provided adequate economic justification for limiting cellular providers to д —RQа4 Ќxџдonly 10 MHz of PCS spectrum.жl%ШQ˜Шwд ~JšЖ'дСŠСУУCincinnati Bell Telephone Co. v. FCCФФ, 69 F.3d at 764.lж In light of the court's ruling in УУCincinnati BellФФ, the Commission д ЌxЄдsought comment on whether it should eliminate the PCS/cellular crossЉownership rule and the 40 д —R а4дMHz PCS spectrum cap in favor of the single 45 MHz CMRS spectrum cap.ж“&А ( Шwд ~JфЖ' "V дСŠСAmendment of Parts 20 and 24 ofС88џџСС88џџСС88џџС the Commission's Rules ЉЉ Broadband PCSСёёџџССёёџџС Competitive Bidding and the д Ќx… дCommercial Mobile Radio Service Spectrum CapСђђџџССђђџџССђђџџС; Implementation of Sections 3(n) andС""џџСС""џџСС""џџС 332 of the Communications д ~Jtœ' Ќxk дAct, WT Docket No. 96Љ59, GN Docket No. 93Љ252, УУNotice of Proposed RulemakingФФ, 11 FCC Rcd 15052, 15080Љ81, д ~J<œ' Ќxр дРР 66. In addition to the PCS/cellular crossЉownership restriction, in the УУBroadband PCS Second Report and OrderФФ д ~Jœ' Ќx дwe also limited PCS licensees to acquiring 40 MHz of spectrum allocated to broadband PCS.УУ Broadband PCS д ~JЬœ'дSecond Report and OrderФФ, 8 FCC Rcd. 7700, 7728, РР 61. УУФФ “ж д —RХЉ4 e П#дСŠСи‚16.иС` ` ЙСУУФФIn the УУCMRS Spectrum Cap Report and OrderФФ, the Commission found that the use д ЌxБдof the single 45 MHz CMRS spectrum cap had advantages over maintaining three separate caps д —R а4 Ќx<дbecause it would give providers more flexibility to respond to changing marketplace demands.жw'Ш  Шwд ~JаЖ'дСŠСУУCMRS Spectrum Cap Report and OrderФФ, 11 FCC Rcd at 7875 РР 105.wж д ЌxEдThe Commission also provided additional economic analysis supporting the CMRS spectrum д —R9 а4 ЌxIдcap.ж\(Ш9 0Шwд ~JЖ'дСŠСУУФФУУId.ФФ at 7869Љ73 РРРР 94Љ100.\ж Specifically, the Commission provided an analysis of the potential market concentrations д Ќxъдusing the HerfindahlЉHirschman Index (HHI), and found that a 45 MHz spectrum cap was д —Rѓ а4 Ќxддnecessary to prevent CMRS markets from becoming highly concentrated.жV)Шѓ РШwд ~Jd!Ж'дСŠСУУId. ФФat 7869Љ73 РРРР 96Љ100.Vж The Commission д ЌxVдfound that such a spectrum cap was needed to ensure competition, and that it would adequately д —R­а4 ЌxIдaddress concerns about anticompetitive behavior in the CMRS market.жL*Ш­PШwд ~JЎ$Ж'дСŠСУУId. ФФat 7875 РР 104.Lж The Commission also д ЌxЄдstated that it would continue to evaluate the need for the CMRS spectrum cap under the biennial д —Rgа4дreview provisions of the Act.жv+ШgрШwд ~Jј'Ж'дСŠСУУId. ФФat 7875Љ76 РР 106, УУcitingФФ 47 U.S.C. РР 161(a)(2).vжд"g p+ˆ,C)C)UUŸ"дŒд —RЉ4 e Пд™СŠСи‚17.иС` ` ЙСIn addition to reviewing the general structure of the CMRS spectrum cap in the д —RнЉ4 ЌxБдУУCMRS Spectrum Cap Report and OrderФФ, the Commission also reconsidered the ownership and д —RКЉ4 Ќx+дgeographic attribution provisions of section 20.6. In УУCincinnati BellФФ, the court found the 20 д ЌxIдpercent attribution standard used in the PCS/cellular crossЉownership rule to be arbitrary on the д Ќx"дgrounds that it did not bear a reasonable relationship to whether a party with a minority interest д —RQа4 Ќxъдin a cellular licensee actually has the ability to control that licensee.жo,ШQШwд ~JЪЖ'дСŠСУУCincinnati Bell Telephone Co. v. FCCФФ, 69 F.3d at 759Љ61.oж In light of the court's д —R.Љ4 ЌxОдdetermination, in the УУCMRS Spectrum Cap Report and OrderФФ the Commission revisited the use д —R а4 Ќxџдof a 20 percent attribution standard and found it appropriate for use in the CMRS spectrum cap.ж-Ш XШwд ~J Ж'дСŠСУУCMRS Spectrum Cap Report and OrderФФ, 11 FCC Rcd at 7879Љ86 РРРР 117Љ30.ж д —RшЉ4 ЌxџдAlthough the Commission did not alter the 20 percent ownership attribution standard in the УУCMRS д —RХЉ4 ЌxЧдSpectrum Cap Report and OrderФФ, it did adopt a fourЉprong test under which it would review д —RЂа4 ЌxОдrequests for waiver of the attribution standard.ж>.€ ЂшШwд ~J;Ж' "Є дСŠСУУФФ The Commission stated that it would "consider requests for waivers of the CMRS spectrum cap that make д Ќx дan affirmative showing that an otherwise attributable ownership interest should not be attributed to its holder because: д "V дСŠС"РР The interest holder has less than a 50 percent voting interest and there is an unaffiliated single holder of a 50 percent or greater voting interest; СŠС"РР The interest holder is not likely to affect the local market in an anticompetitive manner; д "с дСŠС"РР The interest holder is not involved in the operations of the licensee and does not have the ability to influence the licensee on a regular basis; and д "Ы дСŠС"РР Grant of a waiver is in the public interest because the benefits of such common ownership to the public outweigh any potential anticompetitive harm to the market." д ~Jѓœ'дУУCMRS Spectrum Cap Report and OrderФФ, 11 FCC Rcd at 7887 РР 131. >ж The Commission also eliminated the 40 percent д Ќx/дattribution threshold for ownership interests held by minorities and women, but maintained it for д —R\ а4 Ќx_дsmall businesses and rural telephone companies.жY/Ш\ 0Шwд ~J=Ж'дСŠСУУId.ФФ at 7828 РР 4, 7880 РР 117.Yж In considering changes to the geographic д Ќxдattribution standard, the Commission declined to alter the 10 percent overlap definition because д Ќx_дit found "that an overlap of 10 percent of the population is sufficiently small that the potential д —Rѓ а4 Ќxцдfor exercise of undue market power by the cellular operator is slight."жL0Шѓ РШwд ~Jd!Ж'дСŠСУУIdФФ. at 7876 РР 107.Lж In addition, the д ЌxдCommission expanded the divestiture provisions by allowing parties with nonЉcontrolling, д Ќxюдattributable interests in CMRS licenses to have an attributable or controlling interest in another д Ќx“дCMRS application that would exceed the 45 MHz spectrum cap so long as they followed our д —Rgа4дpostЉlicensing divestiture procedures.жž1ШgPШwд ~Jh&Ж'дСŠСУУId.ФФ at 7886 РР 130. The postЉlicensing divestiture procedures are found at 47 C.F.R. РР 24.204(f).žж У УФ Ф д"! р1ˆ,C)C)UU н"д д —RЉ4 e ПбдСŠСи‚18.иС` ` ЙСSubsequently, УУФФthe Commission held, in the context of a request to waive the cap, д Ќx дthat the CMRS spectrum cap is not limited to real time, twoЉway switched phone service, but д —RКа4 Ќx<дcovers a variety of services within the definition of CMRS.жc2ШКШwд ~J3Ж'дСŠСУУBellSouth MO&OФФ, 12 FCC Rcd at 14039 РР 12.cж BellSouth had filed a request for д Ќx—дwaiver of section 20.6, arguing that certain of its SMR interests should not be attributed because д Ќxpдthose networks did not compete with twoЉway switched voice service, but instead provided only д —RQа4 Ќxхдmobile data service.жi3XQXШwд ~JZЖ' "Š дСŠСУУSeeФФ BellSouth Wireless Inc., Request for Waiver of the CMRS Spectrum Aggregation Limit in Section 20.6 д Ќx/ дof the Commission's Rules (filed July 30, 1996). BellSouth filed its waiver request as part of its short form application to participate in the D, E, and F block auction.iж It also filed a separate petition for reconsideration of the УУCMRS Spectrum д —R.Љ4 Ќx/дCap Report and Order,ФФ asking that the Commission reconsider its decision to include all SMR д Ќxндservices within the CMRS spectrum cap, and arguing that dataЉonly services should not be д —Rша4 ЌxЄдincluded since they do not compete with broadband PCS or cellular services.жГ4шxШwд ~JЖ' "ћ дСŠСBellSouth Corporation Petition For Reconsideration of УУReport and OrderФФ in WT Docket 96Љ59 (filed July 30, 1996).Гж У УФ Ф In the УУBellSouth д —RХЉ4 ЌxОдMO&OФФ, the Commission denied both BellSouth's waiver request and petition for reconsideration, д ЌxЧдconcluding that SMR technology holds the potential to permit SMR licensees to offer services д ЌxУдthat are nearly identical to those offered by broadband PCS and cellular, and thus all SMR д Ќxlдservices regulated as CMRS should be included in the CMRS spectrum cap to guard against д —R9 а4дexcessive spectrum aggregation, which could confer excessive market power.жr5Ш9 аШwд ~JКЖ'дСŠСУУBellSouth MO&OФФ, 12 FCC Rcd at 14037 РР 10, 14040 РР 14.rж д —Rѓ Ж'дУ УB.СŠСPending Proceedings Regarding the CMRS Spectrum CapФ Ф д —R­Љ4 e Пvд СŠСи‚19.иС` ` ЙСУУФФУУФФThere are several proceedings pending before the Commission which deal with д Ќx­дdifferent aspects of the CMRS spectrum cap. Because we intend for this proceeding to be a д Ќx@дcomprehensive reЉevaluation of the CMRS spectrum cap, we plan to consolidate these outstanding д Ќxђдissues in this proceeding. We therefore incorporate into this proceeding the record of the pending proceedings on the CMRS spectrum cap set forth below. д —RлЉ4 e ПядСŠСи‚20.иС` ` ЙСУУФФУУPetitions for Reconsideration of УУCMRS Third Report and OrderФФФФ. In its petition for д —RИЉ4 Ќxхдreconsideration of the УУCMRS Third Report and OrderФФ, SMR Won argued that attributable SMR д ЌxБдspectrum for purposes of the spectrum cap should be capped at less than 10 MHz, because such д —Rrа4 Ќxдa cap would promote further monopolization of the 800 MHz SMR market.жG6 r` Шwд ~Jƒ!Ж' "ї дСŠСSMR Won, Petition for Partial Reconsideration, GN Docket No. 93Љ252, filed Dec. 1, 1994, at 17; SMR д Ќxњ дWon, Reply to Opposition to Petition for Partial Reconsideration, filed Jan. 30, 1995, at 9. SMR Won also requested д ~J#œ' Ќx! дthat the Commission reconsider certain other aspects of the УУCMRS Third Report and OrderФФ. Fourteen other parties д ~Jл#œ'дfiled petitions for reconsideration which do not address the CMRS spectrum cap. УУФФ Those petitions are pending.Gж Nextel and Motorola д Ќx"дopposed SMR Won's petition, contending that the cap is appropriate because SMR spectrum isд"O H 6ˆ,C)C)UUн"д д Ќxyдnot available in a contiguous block on an exclusive use basis like broadband PCS and cellular д —Rна4дspectrum.жѓ7нШwд ~JVЖ' "V дСŠСNextel Communications Inc, Opposition to Petitions For Reconsideration, GN Docket 93Љ252, filed Jan. 20, 1995, at 18; Motorola, Comments, GN Docket 93Љ252, filed Jan. 20, 1995, at 7.ѓж д —R—Љ4 e ПSдСŠСи‚21.иС` ` ЙСУУФФУУPetitions for Reconsideration of УУCMRS Fourth Report and OrderФФФФ. In its petition д —RtЉ4 Ќxgдfor reconsideration of the УУCMRS Fourth Report and Order,ФФ McCaw Cellular argues that the joint д ЌxБдmarkets and management attribution rules contained in section 20.6 are more properly addressed д —R.а4 Ќxœдthrough enforcement of the antitrust laws than through Commission rules.ж­8. Шwд ~Jџ Ж' "_ дСŠСMcCaw Cellular Communications Inc., Petition for Reconsideration, GN Docket No. 93Љ252, filed Jan. 3 1995, at 3.­ж According to д ЌxzдMcCaw, the use of the phrase "significantly influence" in those rules raises serious д —Rша4 ЌxŠдimplementation and interpretation questions.ж@9ШшxШwд ~JЖ'дСŠСУУId. at ФФ4.@ж No oppositions or comments were filed regarding McCaw's petition. д —R Љ4 e П”дСŠСи‚22.иС` ` ЙСУУPetitions for Reconsideration of УУCMRS Spectrum Cap Report and OrderФФФФ. Three д ЌxУдparties filed petitions for reconsideration of the Commission's actions regarding the CMRS д —R9 а4 Ќx<дspectrum cap in the УУCMRS Spectrum Cap Report and OrderФФ.жб: 9 Шwд ~JђЖ' "­ дСŠСFour other parties ЉЉ Devon Mobile Communications, Harvey Leong, the National Association of Black д Ќx. дOwned Broadcasters, Inc, and National Telecom PCS, Inc. ЉЉ filed petitions for reconsideration which only deal with д ~J‚œ' Ќxg дissues other than the CMRS spectrum cap, УУi.e.,ФФ issues concerning the DЉ, EЉ and FЉblock PCS auction. Those petitions are pending.бж As we discussed above, the д ЌxVдCommission has already acted on the petition for reconsideration filed by BellSouth. Two other petitions, filed by Omnipoint and Radiofone, are still pending. д —R­Љ4 e ПzдСŠСи‚23.иС` ` ЙСУУФФIn its petition for reconsideration of the УУCMRS Spectrum Cap Report and OrderФФ, д Ќx/дOmnipoint requests that the Commission reinstate the PCS/cellular crossЉownership restriction. д Ќx“дOmnipoint argues that the economic analysis used by the Commission to justify elimination of д ЌxEдthe PCS/cellular crossЉownership rules was flawed, that inЉregion cellular operators possess д Ќxyдenormous market advantages over startЉup providers, and, therefore, it is appropriate to treat д —Rўа4 Ќxюдcellular operators differently for purposes of broadband PCS ownership and control.ж-;Xў№ Шwд ~JŸЖ' "_ дСŠСOmnipoint Corporation, Petition For Reconsideration, WT Docket 96Љ59, filed July 31,1996; Omnipoint д Ќx дCorporation, Reply, WT Docket 96Љ59, filed Sept. 10, Omnipoint Corporation, Reply, WT Docket 96Љ59, filed Oct. 11, 1996.-ж AT&T д Ќx†дWireless, Bell Atlantic NYNEX Mobile, CTIA, and Radiophone oppose Omnipoint's petition. д ЌxдThey argue that Omnipoint does not document any anticompetitive harm in allowing cellular д —R•Љ4 Ќx+дoperators to have up to 20 MHz of PCS, and that in light of the УУCincinnati BellФФ remand the д —Rrа4дCommission acted properly in eliminating the PCS/cellular crossЉownership rule.ж‹<XrШwд ~J3&Ж' "p дСŠСAT&T Wireless, Opposition to Petition for Reconsideration of Omnipoint Corporation, WT Docket 96Љ59, д Ќx дfiled Aug. 28, 1996, at 4; Bell Atlantic NYNEX Mobile, Inc., Opposition to Petitions for Reconsideration, WT д ЌxZ дDocket 96Љ59, filed Aug. 28, 1996, at 5Љ6; Cellular Telecommunications Industry Association, Opposition, WTд"У';ˆ,C)C)ААг'У"д д Ќx… дDocket 96Љ59, filed Aug. 28, 1996, at 3Љ4; Radiofone, Inc., Opposition to Petition for Reconsideration of Omnipoint Corporation, WT Docket 96Љ59, filed Aug. 28, 1996, at 7.‹ж д"r <ˆ,C)C)UU5"дŒд —RЉ4 e Пzд™СŠСи‚24.иС` ` ЙСУУФФIn its petition for reconsideration of the УУCMRS Spectrum Cap Report and OrderФФ, д ЌxдRadiofone suggests applying the CMRS spectrum cap only to the wireline cellular licensee in a д —RКа4 Ќx&дgiven geographic area.ж=К Шwд ~J‹Ж' "< дСŠСRadiofone, Inc., Petition for Partial Reconsideration, WT Docket 96Љ59, filed July 31,1996. Radiofone also requested that the Commission reconsider certain rules regarding the DЉ, EЉ, and FЉblock PCS auction and licensing.ж Radiofone argues that allowing the nonЉwireline cellular licensee to have д ЌxЧдa 30 MHz PCS license (in addition to the 25 MHz cellular license), while continuing to restrict д Ќxyдthe wireline cellular licensee to a 45 MHz restriction, would act as a tradeЉoff to the inherent д —RQа4 Ќxдadvantages that the wireline carrier has over the nonЉwireline carrier.ж~>XQxШwд ~Jz Ж' "ћ дСŠСУУId.ФФ at 19; Radiofone, Inc., Reply to Opposition of Bell Atlantic NYNEX Mobile Inc.; Reply to Opposition д ~JB œ' Ќxг дof Omnipoint Corporation; Reply to Opposition УУФФof Pacific Bell Mobile Services; and Reply to Opposition of Pocket Communications, Inc., WT Docket 96Љ59, filed Sept. 11, 1996.~ж Bell Atlantic NYNEX д ЌxWдMobile, Omnipoint, Pacific Bell Mobile Services, and Pocket Communications oppose д Ќx@дRadiofone's petition. Bell Atlantic NYNEX argues that Radiofone's proposal discriminates against д ЌxџдBЉblock (wireline) cellular licensees and that the Commission has already considered and rejected д —RХа4дclaims that wireline carriers had an unfair head start in establishing cellular service.жФ?АХ˜Шwд ~JЖ' "y дСŠСBell Atlantic NYNEX Mobile, Inc, Opposition to Petitions for Reconsideration, WT Docket 96Љ59, filed д ЌxЄ дAug. 28, 1996, at 8Љ9. Other parties argue that cellular operators already have a competitive advantage, hat д Ќxм дRadiofone has not demonstrated that the 20 MHz of PCS frequencies allowed under the CMRS spectrum cap is д ~Jfœ' ЌxŸ дinsufficient for a cellular licensee to provide broadband PCS. УУSee ФФOmnipoint Corporation, Opposition, WT Docket д Ќx д96Љ59, filed Aug. 28, 1996, at 2Љ5; Pacific Bell Mobile Services, Opposition, WT Docket 96Љ59, filed Aug. 28, 1996, at 3.Фж д —R Љ4 e ПдУ УФ ФСŠСи‚25.иС` ` ЙСУ УФ ФУУWaiversФФ. As discussed above, in the УУBellSouth MO&O,ФФ the Commission denied д —R\ а4 ЌxдBellSouth's request that its SMR data service not be included in the CMRS spectrum cap.жm@Ш\ Шwд ~JЖ'дСŠСУУBellSouth MO&OФФ, 12 FCC Rcd at 14037Љ39 РРРР 10Љ12.mж Most д ЌxЫдof the other requests for permanent waiver of section 20.6 have dealt with the significant overlap д —R а4 ЌxRдprovision of the rule.жRAШ  Шwд ~JgЖ'дСŠСУУSeeФФ 47 C.F.R. РР 20.6(c).Rж Poka Lambro PCS, Inc. (Poka Lambro) filed two separate requests, д Ќxъдarguing that waiver of the spectrum cap was appropriate because its overlap only "slightly" д —Rа а4 Ќx<дexceeded the Commission's 10 percent threshold.жaBXа 0Шwд ~JБ Ж' "“ дСŠСУУSeeФФ Federal Communications Commission Long Form 600 application filed by Poka Lambro on May 22, д Ќx^ д1996 in the C block auction, and Federal Communications Commission Short Form application, Ex. E filed by Poka Lambro on July 30, 1996 in the D, E, and F block auction. aж The Wireless Telecommunications Bureau д ЌxMдdenied both of Poka Lambro's requests, reasoning that there was no evidence to suggest that Poka д ЌxхдLambro would be unable to suppress competition for CMRS service if a waiver was granted, and д —Rgа4дthat Poka Lambro's situation was specifically contemplated by the rules.жЩCgPШwд ~Jh&Ж' "“ дСŠСУУФФLetter to Mickey Sims, President, Poka Lambro PCS, Inc. from David Furth, Chief, Commercial Wireless Division, dated March 14, 1997. Щж д"D ЈCˆ,C)C)UUUн"дŒд —RЉ4 e П,дСŠСи‚26.иС` ` ЙСУ УФ ФУУФФWestern Wireless Corporation (Western) has filed two separate requests seeking д Ќxдa permanent waiver of the ten percent significant overlap threshold requirement set forth in д ЌxКдsection 20.6(c). One of Western's requests concerns an approximately 19 percent population д Ќxћдoverlap of its BЉblock broadband PCS license for the Denver Major Trading Area (MTA) and д —Rtа4 Ќx<дvarious cellular markets in the Denver MTA.ж&D@tШwд ~JэЖ' "  дСŠСRequest of Western PCS II Licensee Corporation for Waiver of Section 20.6 of the Commission's Rules д ~JЕœ' Ќx@ д(filed July 11, 1997, amended Sept. 8, 1998) (УУDenver RequestФФ). The Wireless Telecommunications Bureau has д Ќx3 дextended the deadline for Western to come into compliance with section 20.6 pending the release of an order д ~JEœ' Ќxг дresolving Western's request for a permanent waiver in the Denver MTA. УУSeeФФ Western PCS II License Corporation; д Ќxc дPCS Station KNLF244 Denver Colorado MTA (Market No. 22B) Request for Waiver of Section 20.6 of the д ~Jе œ' Ќxщ дCommission's Rules, File No. CWD 96Љ14, УУOrderФФ, 12 FCC Rcd 11665 (CWD/WTB 1997); Letter to Louis Gurman, д Ќxг дcounsel for Western Wireless, from Steven E. Weingarten, Chief, Commercial Wireless Division, dated Oct. 5, 1998 (enlarged extension to include cellular license added in amendment to waiver request).&ж The other concerns an approximate 12 percent д Ќxђдpopulation overlap of Western's holdings in the AЉblock broadband PCS license for the Oklahoma д —R.а4 ЌxхдCity MTA and its AЉblock cellular licenses for Oklahoma Rural Service Areas (RSAs) 7 and 8.жЫEш.аШwд ~JЏЖ' "О дб#єXє\  PŽ6G;m8єP#бСŠСУУФФRequest of Western PCS I Licensee Corporation for Waiver of Section 20.6 of the Commission's rules (filed д ~Jwœ' ЌxM дJan. 29, 1998) (УУOklahoma RequestФФ). The Wireless Telecommunications Bureau has extended the deadline for д Ќxэ дWestern to come into compliance with section 20.6 pending the release of an order resolving Western's request for д ~Jœ' Ќx^ дa permanent waiver in the Oklahoma City MTA. УУ SeeФФ Letter to Louis Gurman, counsel for Western Wireless, from Steven E. Weingarten, Chief, Commercial Wireless Division, dated July 17, 1998.Ыж д —R Љ4 Ќx дУУФФWestern contends that divestiture of its licenses (or portions thereof) could impair its д Ќxдcompetitiveness relative to its larger regional rivals, and thereby thwart its efforts to provide better д —RХа4 ЌxОдservice at lower rates.ж‘FШХ€ Шwд ~JіЖ'дб#єXє\  PŽ6G;m8єP#бСŠСУУDenver RequestФФ at 15; УУOklahoma RequestФФ at 12.‘ж Western also argues that waiving section 20.6 will promote the purpose д Ќxъдof the underlying rules and advance the public interest by facilitating prompt introduction of д Ќxpдbroadband PCS service throughout the MTA and allowing continued public access to Western's д Ќxћдexisting cellular infrastructure and expertise without compromising the spectrum cap's purpose д —R9 а4дof deterring anticompetitive practices.ж—GШ9 Шwд ~JњЖ'дб#єXє\  PŽ6G;m8єP#бУУСŠСФФУУDenver RequestФФ at 15; УУOklahoma RequestФФ at 12.—ж д —Rѓ Љ4 e ПодСŠСи‚27.иС` ` ЙСTriton Communications L.L.C (Triton) filed a request for a permanent waiver of д ЌxEдthe CMRS spectrum cap as applied to holdings of Triton and Telecorp PCS, Inc. (Telecorp) д —R­а4 Ќx—дbased on investment interests that Chase Capital Partners holds in Triton and Telecorp.ж‹Hш­ Шwд ~JўЖ' "I дСŠСRequest of Triton Communications L.L.C. for Waiver of Commission Rule Section 20.6 (filed July 17,1998) д ~JЦ œ' ЌxТ д(УУTriton RequestФФ). The Wireless Telecommunications Bureau has extended the deadline for Triton to come into д ЌxQ дcompliance with section 20.6 pending the release of an order resolving Triton's request for a permanent waiver in д ~JV"œ' Ќx дthe Memphis MTA. УУSeeФФ Letter to James F. Rogers, counsel for Triton Communications, from Steven E. Weingarten, Chief, Commercial Wireless Division, dated July 31, 1998).‹ж Triton д Ќxдseeks a waiver of an approximately 12 percent population overlap in ten counties in Mississippi д Ќxдin which the Telecorp licenses for the BЉblock Memphis MTA and the FЉblock Memphis BTA д —RDа4 ЌxŠдoverlap Triton's licenses for Mississippi Rural Service Areas 1, 3 and 4.жKIШDPШwд ~JE'Ж'дСŠСУУTriton RequestФФ at 3.Kж Triton argues that the д Ќxсдwaiver would serve the public interest because it would allow for investment in a rural cellularд"!рIˆ,C)C)UU н"д д —Rа4 ЌxБдprovider and thus encourage the provision of CMRS service to rural populations.ж@JШШwд ~JyЖ'дСŠСУУId.ФФ at 6.@ж The Western д —Rна4дand Triton waiver requests are pending, and will be dealt with separately from this proceeding.жKАнXШwд ~JцЖ' "  дСŠСУУSeeФФ Wireless Telecommunications Bureau Seeks Comment on Western PCS I Licensee Corporation Request д ~JЎœ' Ќx дfor Waiver of Section 20.6 of the Commissions Rules,УУ Public NoticeФФ, DA 98Љ1559 (rel. Aug. 5, 1998); Wireless д ЌxЙ дTelecommunications Bureau Seeks Comment on Triton Communications Request for Waiver of Section 20.6 of the д ~J>œ' Ќxx дCommissions Rules,УУ Public NoticeФФ, DA 98Љ1626 (rel. Aug. 13, 1998); Wireless Telecommunications Bureau Seeks д Ќx… дComment on Western PCS II Licensee Corporation Request for Waiver of Section 20.6 of the Commissions Rules, д ~JЮœ'дУУPublic NoticeФФ, DA 98Љ2017 (rel. Oct. 7, 1998);ж д —R—а4 e ПќдСŠСи‚28.иС` ` ЙСУУУУThird FNPRMФФФФ. In the УУThird FNPRM ФФin GN Docket No. 93Љ252,жULX—аШwд ~J Ж' "Ч дСŠСImplementation of Sections 3(n) and 332 of the Communications Act -Љ Regulatory Treatment of Mobile д ~Jр œ' Ќx дServices, GN Docket No. 93-252, УУThird Further Notice of Proposed Rulemaking, ФФ10 FCC Rcd 6880 (1995) (УУThird д ~JЈ œ'дFNPRMФФ). Uж the Commission д ЌxNдexamined whether the CMRS spectrum cap should be extended to all cellular, SMR, and д ЌxEдbroadband PCS providers regardless of whether they are classified as Private Mobile Radio д —R.а4 Ќx@дServices (PMRS)жMx.№ Шwд ~JЯЖ' "К дСŠСPMRS is defined as a mobile service that is neither a commercial mobile radio service nor the functional д ЌxЕ дequivalent of a service that meets the definition of commercial mobile radio service. PMRS includes, but is not д Ќx дlimited to, notЉforЉprofit land mobile radio and paging services that serve the licensee's internal communications д Ќx дneeds as defined in Part 90; mobile radio service offered to a restricted class of eligible users; 220Љ222 MHz land д Ќxb дmobile service and automatic vehicle monitoring systems that do not offer interconnected service or that are notЉforЊд Ќxo дprofit; Personal Radio Services under Part 95; Maritime Service Stations under Part 80; and Aviation Service Stations д ~Jœ'дunder Part 87. УУSeeФФ 47 C.F.R. РР 20.3.ж or CMRS providers.жSNX.0Шwд ~JЖ' "Ч дСŠСImplementation of Sections 3(n) and 332 of the Communications Act -Љ Regulatory Treatment of Mobile д ~Jзœ' Ќx дServices, GN Docket No. 93-252, УУThird Further Notice of Proposed Rulemaking, ФФ10 FCC Rcd 6880 (1995) (УУThird д ~JŸœ'дFNPRMФФ).Sж In that proceeding the Commission questioned whether д —R а4 Ќxдthe applicability of section 20.6 should turn on the CMRS/PMRS distinction.жcOШ PШwд ~J Ж'дСŠСУУThird FNPRMФФУУ,ФФ 9 FCC Rcd at 6881 РР 3.cж It noted that д ЌxŠдservices provided by PMRS providers may be viewed as competitive alternatives to CMRS, and д Ќxцдthus excluding them from section 20.6 might provide a competitive advantage to PMRS д —RЂа4 Ќxћдproviders.ж:PШЂрШwд ~J3 Ж'дСŠСУУId.ФФ:ж For those reasons, the Commission proposed to amend section 20.6 to apply to all д —R а4 ЌxЄдcellular, SMR and broadband PCS licensees regardless of regulatory classification.жMQШ pШwд ~J "Ж'дСŠСУУId.ФФ at 6881Љ82 РР 4.Mж Ten parties д —R\ а4 Ќxндfiled comments or reply comments in response to the УУThird FNPRMФФ.ж7Rш\ Шwд ~J %Ж' "" дСŠСComments were filed on June 5, 1995, by Advanced MobileComm, Inc.; AirTouch Communications, Inc.; д Ќxx дAmerican Mobile Telecommunications Association, Inc.; CTIA; GTE Service Corporation (GTE); McCaw Cellular д ЌxЫ дCommunications, Inc; Nextel Communications, Inc.; Pacific Telesis Mobile Services and Pacific Bell Mobile д ЌxЕ дServices (PacTel/PacBell); and PCS PrimeCo, L.P. (PCS PrimeCo). Rural Cellular Association (RCA) filed Reply Comments on June 26, 1995.7ж Most commentersд"\ АRˆ,C)C)UUm "д д Ќx&дsupported extending the CMRS spectrum cap to PMRS providers of SMR, cellular and broadband д —Rна4дPCS service.жЖSнШwд ~JVЖ' "  дСŠСУУSee, e.g,ФФ GTE comments at 1Љ2; PacTel/PacBell comments at 1; PCS PrimeCo comments at 1, RCA reply comments at 1Љ3.Жж д —R—а4 e ПлдСŠСи‚29.иС` ` ЙСУУУУФФФФУУCTIA Forbearance PetitionФФ.жŠTШ— Шwд ~JhЖ'дСŠСWe discuss the CTIA Forbearance petition in greater detail УУinfraФФ at section IV.C.4.Šж On September 30, 1998, the Cellular д ЌxдTelecommunications Industry Association filed a Petition for Forbearance (CTIA Forbearance д —RQа4 ЌxcдPetition). CTIA requests that the Commission use its authority under Section 10 of the ActжaUXQАШwд ~JВ Ж' " дСŠС47 U.S.C. РР 160(a)(1Љ3). Section 10(c), 47 U.S.C. РР 160 permits the Commission to forbear from the д Ќxъ дapplication of virtually any regulation or any provision of the Act to a telecommunications carrier or telecommunications service, or a class of carriers or services.aж to д —R.а4 Ќxpдforbear from applying section 20.6 of the Commission's rules.жNVШ.аШwд ~JЏЖ'дСŠСУУSee ФФ 47 C.F.R. РР20.6Nж CTIA urges the Commission to д Ќxдrely upon a caseЉbyЉcase determination of permissible levels of horizontal ownership as part of д —Rша4дthe Section 310(d)жиWш` Шwд ~JљЖ' "y дСŠС47 U.S.C. 310(d) requires the Commission to find that a proposed license transfer or assignment would serve the public interest, convenience and necessity.иж license transfer review.жPXШшИ Шwд ~JQЖ'дСŠСCTIA Forbearance Petition at 3.Pж д —RЂЖ4дСрОьDСУ УIV. DISCUSSIONФ Фƒ д —R\ Ж'дУ УA.СŠСOverview д —R а4 e ПыдФ ФСŠСи‚30.иС` ` ЙСThe Commission last reviewed the CMRS spectrum aggregation limits in 1996.жuYШ H Шwд ~JЖ'дСŠСУУSee CMRS Spectrum Cap Report and OrderФФ, 11 FCC Rcd at 7864Љ87.uж д ЌxЧдSince that time, there have been several developments that have significantly affected CMRS д ЌxОдmarkets. Perhaps the most notable of these are the changes brought about by the deployment of д Ќxидdigital wireless services to mass market consumers. When the CMRS spectrum cap was initially д ЌxЫдadopted, mobile voice markets in most areas of the county consisted of only two cellular carriers. д ЌxадSince then, however, we have issued new licenses authorizing the use of additional CMRS д ЌxŠдspectrum. In many areas of the country, broadband PCS auction winners have also pursued the д Ќx дopportunities presented by newer digital technologies and have begun to provide an expanded д ЌxEдarray of mobile services. Cellular and broadband PCS providers, in turn, have also begun to д ЌxБдencounter competition from a nationwide SMR company whose capabilities have been enhanced д ЌxОдby acquiring new spectrum rights and its own digital strategy. Competition is also emerging from д Ќx дproviders of paging services, data services, wireless eЉmail and other nonЉvoice services. Beyond д Ќx<дCMRS markets, there have also been profound changes in related telecommunications markets д Ќxџдas the Commission implemented the Telecommunications Act of 1996. While we are encouraged д Ќx†дby these developments, we recognize, however, that this emerging competition is not uniformд",иYˆ,C)C)UU#н"д д Ќxдacross the country. In some areas, consumers' choices regarding wireless services continue to be limited. д —R—Љ4 e ПЗдСŠСи‚31.иС` ` ЙСSection 11 of the Communications Act requires that we review regulations "that д Ќxидapply to the operation or activities of any provider of telecommunications service" and "determine д Ќxѓдwhether any such regulation is no longer necessary in the public interest as the result of д —R.а4 Ќxcдmeaningful economic competition between providers of such service."жDZШ.Шwд ~JЇЖ'дСŠС47 U.S.C. РР 161.Dж In light of the mandate д Ќxдin section 11 and the developments in the marketplace since 1996, we seek comment in this д ЌxхдNotice on whether we should retain, modify, or repeal the CMRS spectrum cap. Specifically, we д Ќxћдfirst reassess the spectrum cap, and then set out for comment possible modifications and other alternatives to the option of retaining the existing cap. д —R\ Ж'дУ УB. СŠСФ ФУ УReassessment of the CMRS Spectrum Cap д —R9 Љ4дФ ФСŠС д —R Љ4 e П„дСŠСи‚32.и С` ` ЙСУУBackgroundФФ. The CMRS spectrum cap was designed to "discourage д Ќx[дanticompetitive behavior while at the same time maintaining incentives for innovation and д —Rа а4 ЌxОдefficiency."жo[Ша XШwд ~JйЖ'дСŠСУУCMRS Third Report and OrderФФ, 9 FCC Rcd at 8105 РР 251.oж The Commission found that the CMRS spectrum cap would "further [ ] the public д Ќxюдinterest by promoting competition in CMRS services, allowing review of CMRS acquisitions in д —RŠа4 Ќx0дan administratively simple manner, and lend [ ] certainty to the marketplace."ж:\ШŠшШwд ~J#Ж'дСŠСУУId.ФФ:ж In its д —RgЉ4 Ќx"дreaffirmation of the cap in the УУCMRS Spectrum Cap Report and OrderФФ, the Commission also д Ќxcдfound that the cap "furthers the goal of diversity of ownership that we are mandated to promote д —R!а4 Ќxcдunder section 309(j)" of the Communications Act.жœ]Ш!xШwд ~JJЖ'дСŠСУУCMRS Spectrum Cap Report and Order,ФФ 11 FCC Rcd at 7873 РР 102 (УУcitingФФ 47 U.S.C. РР 309(j)).œж The Commission also found that a 45 MHz д Ќx+дspectrum cap most effectively accomplished our goals by preventing cellular licensees from д —Rла4 ЌxЖдgaining too great a competitive advantage over new entrants in mobile wireless markets.жx^ШлШwд ~J”Ж'дСŠСУУCMRS Spectrum Cap Report and OrderФФ, 11 FCC Rcd. at 7873 РР 101.xж д ЌxїдTherefore, it decided that a "single 45 MHz CMRS cap [would] give both cellular and PCS д Ќxддproviders more flexibility to participate in a more competitive marketplace" and counteract the д —Rrа4дsuperior competitive position held by cellular carriers.жL_Шr˜Шwд ~JЛ Ж'дСŠСУУId. ФФat 7875 РР 105.Lж д —R,Љ4 e П дСŠСи‚ 33.и С` ` ЙСGenerally, we conduct our assessment of the competitive nature of relevant markets д ЌxVдin large part by measuring market concentration. Concentration is typically calculated based on д Ќxдmarket shares, which may be computed using capacity, production, or sales information. д —RУЉ4 Ќx3дTherefore, in the УУCMRS Spectrum Cap Report and OrderФФ, the Commission relied to a significant д Ќx†дdegree on measurements of market concentration known as "HerfindahlЉHirschman Indices"д" ( _ˆ,C)C)UUŠн"д д Ќx"д(HHI's), computed in that instance using assigned spectrum as a proxy for the market capacity д —Rна4дof individual firms.жЭ`xнШwд ~JVЖ' "< дСŠСУУCMRS Spectrum Cap Report and OrderФФ, Appendix A, 11 FCC Rcd at 7899; HHIs are routinely employed д ЌxЫ дby federal antitrust authorities in their preliminary reviews of mergers and acquisitions. Typically, antitrust д Ќxг дauthorities follow up with inЉdepth market analysis if the HHIЉbased measurements of market concentration exceed д ~JЎœ' Ќx. дcertain numerical thresholds. These practices are codified in the УУMerger GuidelinesФФ. Department of Justice/Federal д ~Jvœ' ЌxЯ дTrade Commission Merger Guidelines, 4 Trade Reg. Rep. (CCH) РР 13,104, at 20,569 (УУMerger GuidelinesФФ). While д Ќxk дHHIs generally are used by these authorities to determine the degree to which markets are concentrated, they are not necessarily regarded as dispositive on whether a postЉmerger market would be sufficiently competitive.Эж д —R—а4 e ПBдСŠСи‚!34.иС` ` ЙСAs discussed in our УУThird Annual CMRS Competition ReportФФ,жpaШ—Шwд ~JP Ж'дСŠСУУThird Annual CMRS Competition ReportФФ at 2Љ4, 63Љ64.У УФ Фpж although the д Ќx'дevolution of the CMRS sector is still at an early stage, signs of competition are clear. In д ЌxЄдparticular, progress has been made towards competitive mobile voice markets in many areas. In д ЌxОдthe wake of our licensing of broadband PCS spectrum, entry by those firms has become a reality д ЌxЁдin many local markets throughout the United States, and further entry is continuing. д Ќx†дConsequently, we observe price and service rivalry in many markets. Cellular firms, too, are д Ќxдmaking substantial investments to provide digital service. In addition, we note that certain nonЊд Ќxддvoice services, including paging and data services, also are beginning to provide competition in д Ќx"дsome markets. And although there are local variations, on average prices are falling markedly, д —R\ а4 Ќxдservice quality is improving, and new services are becoming available.жAbШ\ ˜Шwд ~JЅЖ'дСŠСУУIdФФ at 2Љ4.Aж Mobile voice markets д ЌxŠдcontinue to grow at a significant rate, and technological progress, too, is ongoing. We recognize, д —R а4дhowever, that these competitive developments have not yet occurred in all markets.жAcШ ( Шwд ~JяЖ'дСŠСУУId.ФФ at 63.Aж д —Rа Љ4 "AдСŠСи‚"35.и УУDiscussionФФ. We begin our reassessment of the spectrum cap by examining whether д Ќxђдit has advanced the major policy goals for the cap as discussed above. Generally, we believe that д —RŠЉ4 Ќxюдthe spectrum cap УУФФhas been useful in promoting competition in mobile voice services, given that д Ќxюдthese services were largely available from only two cellular companies in each locality prior to д —RDЉ4 Ќxадour broadband PCS auctions. The 45 MHzУ УФ Ф limitУУФФ was originally devised as the Commission д Ќxyдprepared for its auction of broadband PCS spectrum, in response to concerns that incumbent д Ќx<дcellular providers had incentives to impede the development of competing networks to preserve д ЌxВдtheir competitive position. Under constraints imposed by the CMRS spectrum cap, the д Ќx<дCommission awarded broadband PCS licenses that are now, or will soon be, competing directly д Ќx}дwith these cellular providers. In many localities, significant new entry into mobile voice services д Ќxдhas already occurred. Moreover, we expect that competition will develop further as remaining д Ќx—дbroadband PCS licensees complete the initial phases of their network buildouts. We believe that д Ќxсдthe aggregation limit helped to promote the likely emergence of at least three new competitors д Ќx@дin each market. In at least several markets, mobile voice services are now being offered by seven д —Rца4 Ќxђдor more competitors.ж*dцИ Шwд ~JO'Ж' "ц дСŠСAs of October 7, 1998, seven cellular, broadband PCS and digital SMR licensees are operating in д ~J(œ'дJacksonville, Tampa, Phoenix and Tucson. У УФ Ф PCS Week, "PCS Week's Active PCS Systems List" (October 7, 1998). УУФФ*ж У УФ Ф The competitive evolution of these markets may be traced directly to ourд"цdˆ,C)C)UU‚"д д Ќxюдdecisions to auction additional spectrum wellЉsuited to the provision of mobile communications, д Ќxpдand to impose limits on the extent to which firms were permitted to aggregate spectrum in these д Ќx/дauctions. We invite comment on our assessment that the existing spectrum aggregation limit to д ЌxVдdate may have promoted competition in mobile voice markets. We also invite comment on how д ЌxЄдevidence of emerging competition should be factored into our assessment of whether the current д Ќxћдcap should be eliminated, relaxed or redefined. In particular, what weight should these factors д ЌxУдbe given relative to HHI calculations or similar measures of concentration of ownership or д Ќxдcontrol? Parties should provide discussion or analysis supporting their views. We also seek д Ќxхдcomment on the following issues and how they relate to the question of whether to retain, modify, д —RХа4 ЌxRдor repeal the spectrum cap: (1) what are the relevant product markets?;жZeXХШwд ~J> Ж' "& дСŠСPossible examples include mobile voice, mobile data, paging/messaging, wireless voice telephony (including д Ќx дboth fixed and mobile services), mobile telecommunications (including both voice and data services), wireless telecommunications, all telecommunications, etc.Zж (2) what are the д Ќxндrelevant geographic markets?; and, (3) what are the relevant measures of market capacity (assigned spectrum, operational spectrum, subscribers, revenues, traffic/minutes of use, etc.)? СŠС д —R9 Љ4 e ПчдУ УФ ФСŠСи‚#36.и С` ` ЙСWe note that the extent to which services are presently available in individual д Ќx†дmarkets varies considerably. In no market have all of the licensed broadband PCS providers д Ќxсдbegun offering service, and in a number of localities, service is not yet available from any new д —Rа а4 Ќxхдentrant.жhfШа шШwд ~JiЖ'дСŠСУУThird Annual CMRS Competition ReportФФ at Figure 2.hж For purposes of assessing the competitive nature of individual markets and calculating д —R­Љ4 Ќx дmarket shares, the УУMerger GuidelinesФФ limit market participants to firms that currently produce or д —RŠа4 Ќx—дsell the relevant product and those described as "uncommitted entrants."жYgАŠxШwд ~JГЖ' "Ч дСŠСFirms qualify as uncommitted entrants if their market entry is "likely to occur with one year and without д ЌxQ дthe expenditure of significant sunk costs of entry and exit. .... The competitive significance of supply responses д Ќx дthat require more time or that require firms to incur significant sunk costs of entry and exit [is considered separately д ~J œ' ЌxЌ дunder] entry analysis." УУMerger GuidelinesФФ at 1.32 УУSee alsoФФ Applications of NYNEX Corporation, Transferor, and д Ќxњ дBell Atlantic Corporation, Transferee, For Consent to Transfer Control of NYNEX Corporation and Its Subsidiaries, д ~J›œ'дFile No. NSDЉLЉ96Љ10,УУ Memorandum Opinion and Order, ФФ12 FCC Rcd 19985, 20051 РР 130Љ31 (1997)Yж Hence, for purposes д ЌxŠдof conducting our analysis of competition in wireless markets, we seek comment on whether we д Ќxдshould limit our assessment of market participants to only current suppliers and any other firms д Ќx“дthat have announced intentions to commence operations, declared their intentions to offer the д —RўЉ4 Ќxcдrelevant product, and will imminently begin soliciting business.У УФ Ф Particularly in smaller towns and д Ќxдrural markets, cellular incumbents continue to hold competitive advantages visЉР!РЉvis market д Ќx дentrants that are not very different from those existing when the cap was originally conceived and д ЌxЄдimplemented. Hence, our spectrum aggregation limits may well continue to be useful to promote д —Rrа4 Ќx3дcompetition in at least certain areas.жвhr№ Шwд ~J#Ж' "ћ дСŠСWe recognize that competition for important mobile communication services may emerge from operators using bands other than CMRS, including satellite.вж We invite comment on these assessments. We also solicit comment on whether we should apply the CMRS spectrum cap on a marketЉbyЉmarket basis. д" H hˆ,C)C)UUЅн"д д —RЉ4 e ПШдСŠСи‚$37.и С` ` ЙСWe also believe that with respect to mobile wireless services, the spectrum cap has д Ќxдserved the purpose of constraining undesirable erosion of existing competition through mergers д —RКа4 ЌxБдor acquisitions in major markets, where competition among multiple carriers is most advanced.жaixКШwд ~J3Ж' "y дСŠСIt will be more difficult to ascertain whether our existing aggregation limit has protected competition in д Ќxг дwireless markets other than mobile voice services. In large measure, competition in other markets is just beginning д Ќxм дto emerge. Hence, there may be less competition to protect. Furthermore, the spectrum being devoted to other д Ќxг дwireless services tends to be relatively modest, such that our existing cap would not pose a constraint on a merger д Ќxг дbetween two firms engaged in supplying only these services. We seek comment on whether the 45 MHz spectrum д Ќxk дlimit has been effective, or may become effective in the future, in protecting competition in wireless markets other than mobile voice service. aж д —R—а4 ЌxœдFor cellular and SMR incumbents especially,жлj—Шwд ~JP Ж' "Б дСŠСCellular incumbents, however, are also precluded from merging their interests within a common geographic area under our cellular crossЉownership restrictions.лж and perhaps for the early AЉ and BЉBlock д Ќxъдbroadband PCS entrants as well, we believe that incentives exist for operational carriers to д Ќxюдexplore inЉmarket merger options. Hence, it appears likely that our spectrum aggregation limit д —R.Љ4 Ќxїдhas been of some value in inhibiting competitionЉeroding spectrum consolidation. У УФ ФWe invite д Ќx†дcomment on these assessments. We also seek comment on the potential for consolidation of д —RшЉ4 ЌxБдCMRS markets if we relax or eliminate the spectrum cap, and whether such consolidation УУФФУ УФ Фwould д Ќx3дharm or benefit consumers. We request that commenters provide empirical evidence on the harms or benefits of consolidation in CMRS markets. д —R\ Љ4 e ПЊдСŠСи‚%38.и С` ` ЙСWe also invite comment on whether there are existing disciplinary factors in the д ЌxVдmarketplace that may independently minimize the likelihood that any single entity would achieve д Ќxюдan anticompetitive level of ownership of CMRS spectrum in a particular geographic area. For д ЌxКдexample, are there dis-economies of scale that will limit the size to which firms will grow, and д Ќx&дthus tend to ensure that the CMRS sector will assume a competitive structure even in the absence д Ќx+дof a spectrum cap? Is it possible that capital markets will not finance attempts by individual д ЌxПдfirms to acquire spectrum in amounts or construct systems of sizes that would threaten д ЌxŠдcompetition? Commenters arguing that such factors lessen or eliminate the need for our current д Ќxсдspectrum cap should, where possible, provide specific quantifiable examples of disЉeconomies, д ЌxNдor of points at which various types of costs or risks associated with owning or controlling д ЌxVдadditional wireless spectrum outweigh potential benefits. Because we note that many licensees д Ќxадhave not accumulated as much as 45 MHz of CMRS spectrum, we also seek comment on whether access to capital effectively disciplines market consolidation. д —RrЉ4 e ПбдСŠСи‚&39.и С` ` ЙСWe also seek comment on whether the convergence and substitutability of other д Ќxдtelecommunications networks, including wireline, cable, private wireless, and satellite networks д Ќxœдamong others, should affect the application or public interest considerations underlying the д Ќxlдspectrum cap. It is important that commenters addressing this issue supply detailed analysis, identify all underlying assumptions, and provide factual support for any projections. д"У` jˆ,C)C)UUн"дŒд —RЉ4 e ПдСŠСи‚'40.и С` ` ЙСWe also note that the Commission has scheduled an auction for March 1999, that д —Rна4 Ќxlдwill include licenses for operation on C and F block frequencies,жІkXнШwд ~JVЖ' "­ дСŠСC Block PCS Spectrum Auction Scheduled for March 23, 1999, УУPublic NoticФФe, DA 98Љ2318 (rel. Nov. 12, д Ќxx д1998); Additional Information Regarding Broadband PCS Spectrum Included in the Auction Scheduled for March д ~Jцœ'д23, 1999; Comment Sought on Auction Procedural Issues, УУPublic NoticeФФ, DA 98Љ2337 (rel. Nov. 19, 1998).Іж and that there are certain д —RКа4 Ќx<дrestrictions on the sale of entrepreneur block licenses (C and F blocks).жQlШКшШwд ~JSЖ'дСŠСУУSeeФФ 47 C.F.R. РР 24.709.QжУ УФ ФУ У Ф Ф We believe that our д ЌxЫдentrepreneur block rules will help ensure that this spectrum was and will be assigned in a manner д —Rtа4 ЌxЄдthat promotes rather than inhibits competition.ж™mШtxШwд ~J Ж'дСŠС FCC Report to Congress on Spectrum Auctions, Report, WT Docket No. 97Љ150 (rel. Oct. 9, 1997). У УФ Ф ™ж We invite comment on whether these rules are д Ќx~дsufficient to prevent undesirable spectrum consolidation. We also solicit views on any д ЌxБдrelationship between this proceeding, including the timing of our final decision, and the successful completion of the upcoming C block auction. д —RХЉ4 e ПЭдСŠСи‚(41.иС` ` ЙСIn two pending requests for permanent waiver of the spectrum cap, Western д Ќx}дWireless has argued that the CMRS spectrum cap impairs the realization of potential economies д —R а4 ЌxКдof scope or scale.ж­nX Шwд ~J8Ж' "  дСŠСRequest of Western PCS II Licensee Corporation for Waiver of Section 20.6 of the Commission's Rules д ~Jœ' ЌxТ д(filed July 11, 1997, amended Sept. 8, 1998) (УУDenver RequestФФ); Request of Western PCS I Licensee Corporation д ~JШœ'дfor Waiver of Section 20.6 of the Commission's rules (filed Jan. 29, 1998) (УУOklahoma RequestФФ).­ж The potential for economies of scale arises in connection with spectrum д Ќxадholdings when the unit costs of providing service decline as the carrier's spectrum holdings д Ќx3дincrease. Additional spectrum lessens a carrier's need to engage in spectrum reuse and allows for д Ќx3дwider spacing between tower sites using any particular frequency. Economies of scope may arise д ЌxЄдif a firm can offer new products or services by leveraging existing assets to do so. For example, д Ќx"дit may be possible for an incumbent cellular firm to offer additional services in a particular area д —R­Љ4 Ќxћдat lower cost than would be possible for a УУde novoФФ entrant, because existing facilities could be used at little or no incremental cost to furnish the second service. д —RDЉ4 e ПдСŠСи‚)42.и С` ` ЙСWith respect to economies of scope, we envision several scenarios that might д Ќx3дsupport arguments for relaxing spectrum aggregation limitations to accommodate consumer needs. д ЌxБдWe anticipate that arguments will be made that wireless providers could offer additional services д —RлЉ4 Ќxддof significant value to the public (УУe.g.ФФ, highЉspeed mobile data services) by acquiring spectrum д Ќxсдin excess of our current 45 MHz limit, and that such flexibility would therefore be in the public д Ќxхдinterest. Specifically, we anticipate the argument that if they were not subject to the cap, existing д Ќxдproviders would be able to furnish new services at lower cost relative to new entrants because д —ROЉ4 Ќxсдincumbents can capitalize on existing facilities (УУe.g.ФФ, towers) or other assets (УУe.g.ФФ, brand name д Ќxћдrecognition, established customer base). We invite comment on these scenarios, or any others д ЌxЄдthat we have not anticipated, where economies of scope may provide a rationale for relaxing our д Ќxхдspectrum aggregation limit. We invite comment generally on the concepts of economies of scope and scale and their relationship to spectrum aggregation limits. д —R}Љ4 e П‡дСŠСи‚*43.и С` ` ЙСIn reЉassessing the CMRS spectrum cap, we also seek comment on whether there д Ќxpдare other efficiency benefits or progress toward other public interest goals that would flow fromд"Z( nˆ,C)C)UUін"д д Ќx дchanges in the cap that might counterbalance concerns about possible anticompetitive effects д Ќx"дresulting from increased geographic concentration of ownership. For example, might a relaxed д Ќxlдcap allow efficient deployment of thirdЉgeneration wireless services that would be prevented д Ќx}дunder the present cap? Or, might a relaxed cap facilitate provision of fixed wireless services by д ЌxџдCMRS firms, perhaps as universal service providers? What, if any, impact would altering the cap д Ќxhдhave on the provision of wireless services to underЉserved areas? Would an enforceable д Ќxюдcommitment to provide such service in highЉcost or lowЉincome areas override anticompetitive concerns? We explore certain of these issues below. д —RХа4 e П9дСŠСи‚+44.и С` ` ЙСУУService in rural areas. ФФAs we discussed previously,жKoШХШwд ~J> Ж'дСŠСУУSee supraФФ section I.Kж one of the principles that д Ќx­дwe will employ in evaluating the continuing need for the CMRS spectrum cap is ensuring that д Ќx}дrural and underЉserved areas enjoy the benefits of modern telecommunications services. In that д Ќxyдregard, we seek comment on whether the CMRS spectrum cap has facilitated the ubiquitous provision of wireless services. д —Rѓ Љ4 e П5дСŠСи‚,45.и С` ` ЙСWe recognize that many rural and certain other markets have not yet seen the д Ќx"дdevelopment of competition in the mobile wireless service markets to the degree that is evident д —R­а4 Ќxидin urban areas.жqpШ­XШwд ~JЖЖ'дСŠСУУThird Annual CMRS Competition ReportФФ at 18 and Figure 4. qж Throughout most of the nation, including rural/highЉcost areas, the Commission д —RŠа4 Ќx†дlicensed two cellular carriers.жCqXŠшШwд ~J#Ж' "­ дСŠСThere are exceptions. In Alaskan tribal areas, for example, more than two entities have been authorized д ЌxZ дto provide service in some rural service areas. There are also numerous sparsely or unpopulated areas where coverage is not available. Cж Most cellular carriers now provide coverage throughout the д Ќxдentirety of their licensed service areas. As a result, cellular providers offer coverage spanning д —RDа4 ЌxIдabout 90 percent of the nation's territory,жqrШDШwд ~J§Ж'дСŠСFor a coverage map, see .qж and 98 percent of the populationжsШD˜Шwд ~JЖ'дСŠСDonaldson, Lufkin & Jenrette, The Wireless Communications Industry (Spring 1998) at Table 4.ж based on where д Ќx"дthey reside. Hence, cellular coverage is relatively ubiquitous. By contrast, rural localities have д Ќx дwitnessed limited entry by the new digital carriers. As of June, 1998, about 40 percent of the д —Rла4 Ќx3дnation's BTAs did not have access to service from either a PCS or digital SMR provider.жрt л( Шwд ~JДЖ' " дСŠСУУThird Annual CMRS Competition ReportФФ at 18 and Figure 4. Our data with respect the 273 BTAs where д Ќx дcoverage from new entrants has been initiated indicated only that coverage was available somewhere within the д Ќx; дBTA. Accordingly, these measures of geographic and population coverage from PCS and other digital carriers were д ~J "œ'дoverstated. УУId.ФФ at n.88.рж More д ЌxОдrecent evidence indicates that about 22 percent of the nation's population does not currently have д —R•а4 Ќxђдaccess to service from any of these carriers.жЃu•Шwд ~JV%Ж' "“ дСŠСPaul Kagan Associates, Wireless Market Stats, "PCS Pops Coverage Up 50% in 1998," Oct. 31, 1998 at 14.Ѓж Moreover, in some outlying areas, coverage may д ЌxRдbe available but only along interstate and other major highways. Consequently, the available д Ќx/дinformation suggests that many of the nation's residents living in rural and other highЉcost areasд"Ohuˆ,C)C)UU9н"д д ЌxОдdo not yet have meaningful competitive alternatives to the incumbent cellular carriers. However, д Ќxсдwe invite more data specifically concerning competition in highЉcost and rural markets to form a reliable basis for evaluating our policy options with respect to these markets. д —RtЉ4 e ПFдСŠСи‚-46.и С` ` ЙСWe seek comment on whether the relative lack of competition in certain rural and д Ќx&дother markets suggests that there is a continuing need for the CMRS spectrum cap in those areas. д Ќx"дCommenters should address whether the cap be should be retained, at least in those areas until д Ќx3дincreased competition begins to emerge. On the other hand, we recognize that the cap may affect д Ќxћдthe ability of a CMRS provider to attain certain economies of scale and scope. Spectrum may д ЌxŠдbe made newly available for commercial use through partitioning agreements, but the economics д Ќx‚дof offering service to these lowerЉdensity populations may nevertheless limit the extent of д —R а4 Ќx—дcompetitive, facilitiesЉbased entry.жжv  Шwд ~Jј Ж' "l дСŠСWe note that while we allow a licensee to partition or disaggregate its license subject to review by the д ~JР œ' Ќxo дCommission, the licensee is under no obligation to do so. УУSeeФФ Geographic Partitioning and Spectrum Disaggregation д ~Jˆ œ' ЌxЯ дby Commercial Mobile Radio Services Licensees, WT Docket No. 96Љ148, УУReport and OrderФФ, 11 FCC Rcd 21831 (1996). жж Thus, we seek comment on whether the existing spectrum д ЌxКдcap may impede delivery of potentially lowerЉcost service to rural customers as economies of д Ќxyдscope go unrealized. In particular, should we permit more concentration of spectrum in rural д ЌxVдmarkets, perhaps allowing for leveraging of existing facilities? We seek comment on the extent д Ќxъдto which the current 45 MHz aggregation limit may be thwarting the realization of potential д ЌxОдeconomies, and solicit evidence on the magnitude of any such savings or efficiencies in particular market settings. СŠС д —RgЉ4 e ПедСŠСи‚.47.и С` ` ЙСУУAdvancement of competition in local markets.ФФ Another principle that we will use д ЌxЖдin our reЉevaluation of the cap is the facilitation or competition in local telecommunications д ЌxŠдmarkets. Consequently, we seek comment on how the spectrum cap affects wireless providers' д Ќxддability to enter into and compete in markets other than mobile voice service. In large measure, д ЌxУдthe development of competition involving other applications for wireless spectrum depends д ЌxŠдprimarily on marketЉdriven decisions by consumers and firms regarding the most valued uses for д ЌxEдthis spectrum. Because current demand for nonЉvoice wireless services (mobile data, voice д Ќx<дdispatch, messaging) seems to be met using far less spectrum than that used to provide existing д —ROЉ4 Ќxсдvoice and data services, it may not be necessary to be concerned about the adequacy of УУФФentry д Ќxадopportunities into these markets. But we also note that while spectrum itself may be highly д Ќxћдfungible, networks often cannot be readily or economically reconfigured to furnish services for д —Rца4 ЌxŠдwhich they were not originally designed.жцwцАШwд ~JG Ж' "  дСŠСTo cite several examples, some cellular carriers have encountered challenges upgrading to digital д Ќxр дtechnologies while continuing to offer analog services. Also, cellular and broadband PCS carriers have apparently д ~Jз!œ' Ќxb дnot progressed significantly in their ability to offer group conferencingУУ (i.ФФУУe.ФФ, dispatch) services, despite the apparent д ~JŸ"œ' Ќx; дcommercial success of one digital SMR company that competes largely on the basis of this capability. УУФФ Applications д ~Jg#œ' Ќx^ дof Pittencrieff Communications, Inc. and Nextel Communications, Inc., УУMemorandum Opinion and OrdeФФr, 13 FCC д ЌxЦ дRcd. 8935, 8940 РР 10 (WTB 1997). Technological obstacles facing mobile voice carriers have also resulted in rather д ~Jї$œ' ЌxU дslow acceptance of their twoЉway mobile data services. УУФФ Application of Motorola, Inc. and American Mobile Satellite д ~JП%œ' Ќx7 дCorporation for Consent to Transfer Control of Ardis Company,УУ Memorandum Opinion and OrderФФ, 13 FCC Rcd. д ~J‡&œ'д5182, 5187 РР 7 (WTB 1997).УУФФУ УФ Фцж Hence, if existing networks are optimized to provide д Ќxhдa particular service (such as mobile voice), and if most of the available spectrum must be д Ќxcдdedicated so that these systems operate efficiently, a 45 MHz spectrum limit may not be able toд" € wˆ,C)C)UUюн"д д Ќxдsimultaneously ensure that adequate competition will develop in the provision of both mobile д Ќx"дvoice services and other wireless services that consumers may wish to obtain. In other words, д Ќx_дto the extent that incumbent licensees build networks coupled with CMRS spectrum that are д Ќx“дtargeted mainly to mobile voice users, opportunities for entry and development of competition д Ќxlдin other services may be limited in the short to medium term. We thus seek comment on the д Ќxидextent to which existing networks are capable of economically supporting the delivery of wireless д Ќxђдservices other than fixed or mobile voice and paging/messaging. In particular, we invite comment д ЌxЫдon the technical and economic feasibility of offering dispatch, highЉspeed Internet, and other twoЊд Ќx—дway data services over existing cellular, broadband PCS, and SMR network platforms. We also д ЌxVдinvite views on the extent to which any limitations on currently installed networks may be eased д ЌxVдin the foreseeable future as newly available technologies are adopted. Finally, we note that one д Ќxlдof the primary goals of the Telecommunications Act of 1996 is to promote competition in the д Ќxдlocal telecommunications market. In that light, we seek comment on the more general issue of д Ќxlдwhether an aggregation limit would be useful for promoting competition in emerging wireless д Ќx@дservices. For example, we are especially interested in views on whether the current spectrum cap д Ќxuдis enhancing or impeding the provision of wireless services as a competitive alternative to д —Rа Љ4дwireline services.УУ д —R­Љ4дФФ д —RŠЉ4 e ПqдСŠСи‚/48.и С` ` ЙСУУDevelopment and deployment of new technologies and services. ФФWe also wish to д ЌxБдensure that any spectrum aggregation limits promote, rather than impede, the introduction of new д Ќx дservices and technologies. In that regard, we seek comment on whether the spectrum cap serves д Ќxѓдas a barrier to firms that wish to offer additional services or to adopt advanced network д —Rўа4 Ќxхдtechnologies. We share the concerns expressed by CTIAжXxШўШwд ~JwЖ'дСŠСCTIA Forbearance Petition at 12, 22Љ27.Xж about any possible impediments that д Ќx­дmay be imposed by the spectrum cap on the plans of CMRS providers to expand the array of д Ќxдwireless services that they will be able to offer. Specifically, some wireless carriers are д ЌxRдexamining technical options related to thirdЉgeneration wireless networks that may provide a д —Rrа4 Ќx/дplatform for delivering highЉspeed mobile data services.жyаrXШwд ~J{Ж' "  дСŠСThe Commission recently sought comment on the issue of thirdЉgeneration mobile wireless communications д ~JCœ' ЌxD дin the context of its work with the International Telecommunication Union. УУSeeФФ Commission Staff Seek Comment д ~J œ' ЌxТ дon Spectrum Issues Related To Third Generation Wireless/IMTЉ2000, УУPublic NoticeФФ, DAЉ98Љ1703 (rel. Aug. 26, д Ќx’ д1998). Sprint PCS stated that it could provide IMTЉ2000 services within the existing 45 MHz CMRS spectrum cap. д Ќxk дAT&T Wireless Communications, Bell Atlantic Mobile, BellSouth, and CTIA favored elimination of the spectrum д Ќx— дcap while U.S. West supported raising the cap but not eliminating it. They and others, including Airtouch д Ќx— дCommunications, Bell Mobility, Motorola, Personal Communications Industry Association, SBC Wireless, д Ќx– дTelecommunications Industry Association, and the Universal Wireless Communications Consortium commented that д Ќxk дthe existing spectrum cap would inhibit existing PCS licensees from using higher data rates that would be needed for providing some third generation IMTЉ2000 services. ж Other companies are contemplating д Ќx†дthe use of wireless spectrum to offer local exchange services. Hence, we seek comment on д Ќx†дwhether the current aggregation limit poses an obstacle to the introduction of more advanced д ЌxБдnetwork technologies. We also seek comment on whether the existing spectrum limit constitutes д ЌxКдa significant constraint on firms' abilities to offer wireless local loop or highЉspeed mobile data д Ќxдservices, either on a standЉalone basis or bundled with mobile voice services. In particular, we д Ќx"дinvite comment on the extent to which companies are able to acquire and use spectrum outside д Ќxдof CMRS bands to achieve these goals. We also invite comment on the possible use of ourд"}№ yˆ,C)C)UUЫн"д д Ќxдwaiver process to consider petitions for supplemental spectrum that may be needed to launch new wireless services. д —R—Ж'дУ УC.СŠСModifications and Alternatives to Existing CMRS Spectrum CapФ Ф д —RQЉ4 e П(дСŠСи‚049.и С` ` ЙСThere are a number of options available for consideration when evaluating the д Ќxидgeographic aggregation of CMRS spectrum by licensees. These options range from retaining the д ЌxŠдcurrent CMRS spectrum cap to eliminating the general rule pertaining to geographic aggregation д Ќx/дof CMRS spectrum, and instead relying on caseЉbyЉcase analysis under our authority to review д Ќxдassignment of licenses and transfers of control pursuant to section 310(d) of the Act. Another д Ќx—дoption would be to modify the existing cap by either expanding the allowable geographic overlap, д Ќxђдincreasing the 45 MHz limitation, amending the attribution rules associated with the spectrum cap, д Ќxћдor some combination thereof. In conjunction with retaining or modifying the spectrum cap, we д ЌxVдcould also establish a procedure for sunsetting the cap. We could also, as CTIA has requested, д Ќxђдforbear from enforcing the spectrum cap under our authority in section 10 of the Communications д ЌxcдAct. We discuss various alternatives to retaining the existing spectrum cap in turn. Proponents д ЌxОдof the alternatives to the current cap should explain why the current cap is no longer in the public interest and should support their assertions with specific data and analysis. д —RgЖ'дСŠСУ У1.Ф ФС` ` ЙСУ УModification of Significant Overlap ThresholdФ Ф д —R!Љ4 e ПыдСŠСи‚150.и С` ` ЙСThe CMRS spectrum cap prohibits a licensee from having more than 45 MHz of д Ќxддspectrum in broadband PCS, cellular or SMR services with significant overlap in a geographic д —Rла4 Ќxсдarea.жHzШлШwд ~JTЖ'дСŠС47 C.F.R. РР 20.6(c).Hж A "significant overlap" occurs when at least ten percent of the population of the PCS д —RИа4 Ќx&дlicensed service area is within the cellular geographic service area and/or SMR service area(s).ж:{ШИXШwд ~JСЖ'дСŠСУУId.ФФ:ж д ЌxЫдTherefore, a carrier's spectrum counts toward the spectrum cap if the carrier is licensed to serve д —Rrа4д10 percent or more of the population of the designated service area.жy|XrшШwд ~J Ж' "Š дСŠСIf the significant overlap is between 10 and 20 percent, the divesture provision of the CMRS spectrum cap д Ќx’ дallows the licensee up to ninety days from the final grant of license that causes the licensee to exceed the 45 MHz limit, to come into compliance with section 20.6. 47 C.F.R. РР 20.6(e).yж д —R,Љ4 e ПSдСŠСи‚251.и С` ` ЙСIn the УУCMRS Spectrum Cap Report and OrderФФ, the Commission was concerned д ЌxЖдabout the potential for existing cellular operators to exercise undue market power over the д Ќxддfledgling broadband PCS and SMR services. It found that a potential for the exercise of such д —RУа4 Ќxlдmarket power was slight with a 10 percent population overlap.жw}ШУШwд ~J|#Ж'дСŠСУУCMRS Spectrum Cap Report and OrderФФ, 11 FCC Rcd at 7876 РР 107.wж The Commission was also д —R а4 ЌxЫдconcerned that a threshold above 10 percent might lead to anticompetitive practices.ж:~Ш ˜Шwд ~Jщ%Ж'дСŠСУУId.ФФ:ж We seek д Ќxдcomment on the effect of recent changes in CMRS markets, particularly concerning the д ЌxЄдemergence of broadband PCS carriers as competitors to cellular operators, on the rationale for aд"Z( ~ˆ,C)C)UUн"д д Ќxхд10 percent overlap threshold. We also seek comment on the public interest benefits of increasing д Ќxидthe threshold and whether those benefits outweigh any potential for anticompetitive concentration of ownership or control of CMRS licenses. д —RtЉ4 e ПzдСŠСи‚352.и С` ` ЙСAs we noted previously, we have received requests for a waiver of the 10 percent д Ќx дgeographic overlap restriction. In its request, Poka Lambro argued that "permitting it, a small д ЌxЫдbusiness, and its parent, a rural telephone company, to both operate in the [same] BTA will serve д Ќxpдthe public interest by allowing it to bring advanced telecommunications to rural areas." Western д ЌxEдcontends that divestiture of its markets (or portions thereof) could impair its competitiveness д ЌxЧдrelative to its larger regional rivals, and therefore thwart its efforts to provide better service at д —RЂа4 Ќxддlower rates.ж…ШЂШwд ~J Ж'дб#єXє\  PŽ6G;m8єP#бСŠСDenver Request at 15; Oklahoma Request at 12.…ж Western also argues that waiving section 20.6 will promote the purpose of the д ЌxIдunderlying rules and advance the public interest by facilitating prompt introduction of broadband д ЌxЖдPCS service to the public in rural areas and allowing continued public access to Western's д Ќxћдexisting cellular infrastructure and expertise without compromising the spectrum cap's purpose д —R а4дof deterring anticompetitive practices.ж‹€Ш XШwд ~JЖ'дб#єXє\  PŽ6G;m8єP#бУУСŠСФФDenver Request at 15; Oklahoma Request at 12.‹ж д —Rа Љ4 e П`дСŠСи‚453.и С` ` ЙСWe seek comment on whether a geographic overlap standard of greater than a 10 д ЌxВдpercent overlap should be adopted. If so, we seek comment on what would be a more д Ќx"дappropriate standard of geographic overlap and why. We seek comment on whether a greater д Ќx_дoverlap may facilitate anticompetitive behavior. We also seek comment on what degree of a д ЌxRдpermissible geographic overlap could promote anticompetitive conduct. In addition, we seek д Ќxдcomment on whether we should permit carriers in highЉcost and underЉserved markets to have д Ќx†дa greater than 10 percent population overlap, and how we should define highЉcost and underЊд Ќxдserved markets for purpose of the significant overlap threshold. We also seek comment on д Ќx3дwhether there is a need to allow a greater overlap in highЉcost and underЉserved areas if we adopt д ЌxIдour proposal to allow for a higher cap in rural areas. In addition, we seek comment on whether д Ќx"дa separate geographic overlap standard for rural areas may be in the public interest by possibly д Ќxђдencouraging a greater number of service options and better service quality. In the alternative, we д ЌxЫдsolicit comment on whether there is a mechanism for triggering the application of a spectrum cap in given geographic areas that might be superior to our current significant overlap standard. д —RУЖ'дСŠСУ У2.Ф ФС` ` ЙСУ УModification of 45 MHz LimitationФ Ф д —R}Љ4 e П$дСŠСи‚554.и С` ` ЙСThe CMRS spectrum cap allows a single entity to control up to 45 MHz of д —RZа4 ЌxMдbroadband PCS, cellular, and SMR spectrum in a geographic area.жHШZшШwд ~Jѓ"Ж'дСŠС47 C.F.R. РР 20.6(a).Hж As we discussed previously, д Ќx дthe Commission adopted the 45 MHz spectrum aggregation limit prior to the auctioning of the д —RЉ4 Ќx@дbroadband PCS spectrum. In the УУCMRS Third Report and OrderФФ the Commission explained that д Ќxсд45 MHz was an appropriate cap because it would prevent excessive concentration by a single д Ќxpдlicensee, but still allow PCS operators 40 MHz of spectrum to obtain additional spectrum so that д Ќxдthey would have incentives to offer other services and take advantage of new innovation orд"Ћ!xˆ,C)C)UU "н"д д —Rа4 Ќxyдeconomies of scale.жt‚ШШwд ~JyЖ'дСŠСУУCMRS Third Report and OrderФФ, 9 FCC Rcd at 8109Љ8110 РР 263.tж The Commission also noted that a 45 MHz cap would allow an SMR д ЌxЧдoperator with 5 MHz or less to acquire both a 30 MHz and a 10 MHz broadband PCS license д —RКа4дin the same area.ж;ƒШКXШwд ~JУЖ'дСŠСУУ Id.ФФ;ж д —RtЉ4 e ПЁдСŠСи‚655.и С` ` ЙСWe seek comment on whether a 45 MHz CMRS spectrum limitation is appropriate д Ќx­дgiven increased competition in the CMRS marketplace. For instance, the vast majority of the д Ќxдbroadband PCS licenses have been assigned and there are broadband PCS licensees providing д Ќxћдservice in competition with cellular carriers and each other in many markets. An expansion of д ЌxКдnonЉvoice offerings has also contributed to increasing competition among CMRS services. In д Ќxћдparticular, we seek comment on what would be an appropriate spectrum aggregation limitation д —RЂа4 ЌxЧдin light of current and future prospects for competition in CMRS markets.жg„шЂшШwд ~J;Ж' "R дСŠСIf the cap were increased to 50 MHz it would allow 30 MHz PCS licensees to acquire more than one 10 д ЌxV дMHz block. An increase to 55 MHz would allow mergers between firms with significant overlaps in their д Ќxі дrespective cellular and 30 MHz PCS properties. A 60 MHz limitation would allow a single entity to control in the д Ќx дsame geographic area (1) two 30 MHz PCS systems (2) one 30 MHz PCS system and three 10 MHz PCS systems, or (3) one 30 MHz PCS system, a cellular system, and a 5 MHz SMR system.gж We request that commenters provide analytical support for any limitation that they propose. д —R9 Љ4 e ПrдСŠСи‚756.и С` ` ЙСAnother option would be to raise the 45 MHz limitation when competition in д Ќxїдrelevant markets reaches a particular level. For example, one possible option would permit д Ќxдlicensees to exceed the 45 MHz limit as long as a certain number of competitors would remain д ЌxОдin a market after the assignment. We seek comment on such an option. How many competitors д Ќxcдin a market would be sufficient to allow a licensee to exceed the 45 MHz limitation? Would the д ЌxКдsame number of competitors be required for wireless services other than mobile voice? How д —RgЉ4 Ќxcдwould we identify qualifying competitors? У УФ ФShould we only consider facilitiesЉbased competitors? д ЌxIдShould we consider other factors in addition to the number of facilitiesЉbased carriers in a given д Ќx/дmarket in determining when to lift the restriction? We seek comment on whether there should be any restraints on how much spectrum a licensee could obtain under such an option. д —RИЉ4 e ПmдСŠСи‚857.и С` ` ЙСA similar option would be to allow the cap to be raised/exceeded in rural or underЊд Ќxџдserved areas. We recognize that broadband PCS providers holding licenses covering lowЉdensity, д Ќx<дrural, or highЉcost areas, face significant economic challenges since it may be difficult for these д Ќx~дareas to profitably support a large number of independent facilitiesЉbased competitors. д ЌxдConsequently, users of mobile communications services in rural areas may not be able to enjoy д Ќxlдthe same degree of competition now emerging in urban markets that may be needed to bring д —Rца4 Ќxpдdesired improvements in service and pricing.жЖ…ц˜Шwд ~J/$Ж' " дСŠСWe include herein the clients of metropolitan systems who demand access to network services while roaming in rural areas.Жж We seek comment on the benefits that may be д Ќxдobtained by allowing licensees serving rural, highЉcost areas to hold more than 45 MHz of д Ќxgдbroadband CMRS spectrum in those areas. We also seek comment on how we should define those д Ќxддareas. One possibility would be to use rural service areas, or RSAs. Another option would be д Ќxђдto use highЉcost areas as defined in our universal service proceeding. We seek comment on theseд"Z№ …ˆ,C)C)UUін"д д Ќx}дpossible determinations of rural/underЉserved areas. Commenters that suggest other definitions д Ќxћдfor rural or underЉserved areas are requested to precisely set out their proposed definition, and explain the type and number of areas that would come within that definition. д —RtЉ4 e ПдСŠСи‚958.и С` ` ЙСWe also seek comment whether the partnerships anticipated under this option д Ќx_дwould result in meaningful convergence in service quality and rates between urban and rural д Ќx“дsubscribers. Furthermore, we solicit views on whether any claimed efficiencies of scope are д ЌxIдlikely to be commercially significant in magnitude for operators in rural markets. We also invite д ЌxОдcomments on whether this option would discourage broadband PCS carriers from extending their digital network buildouts beyond urban and suburban centers. д —RЂЉ4дУУУ УФФФ ФУ УУУФ ФФФУ УФ Ф д —R Ж'дСŠСУ У3.С` ` ЙСModification of Ownership Attribution Thresholds Ф Ф д —R9 Љ4 e ПІдСŠСи‚:59.и С` ` ЙСAnother option for relaxing the CMRS spectrum cap would be to modify the д Ќxcдattribution criteria. Generally, a controlling interest in a licensee, in whatever manner exercised, д —Rѓ а4 Ќx"дincluding negative control, is considered an attributable interest.жK†Шѓ Шwд ~JlЖ'дСŠС47 C.F.R. РР 20.6(d)(1).Kж Under the CMRS spectrum д ЌxЧдcap, ownership interests of 20 percent or more (40 percent if held by a small business or rural д Ќx дtelephone company), including general and limited partnership interests, voting and nonЉvoting д —RŠа4 Ќxpдstock interests or any other equity interest are considered attributable.ж‡ŠXШwд ~J“Ж' "џ дУУФФУУФФСŠСУУФФ47 C.F.R. РР 20.6(d)(2). Ownership interests held through successive subsidiaries are calculated through use д ~J[œ'дof a multiplier. 47 C.F.R. РР 20.6(d)(8).УУФФж Officers and directors д Ќxсдare attributed with their company's holdings, as are persons who manage certain operations of д —RDа4 Ќxtдlicensees, and licensees that enter into certain joint marketing arrangements with other licensees.жQˆШDАШwд ~JЅЖ'дСŠС47 C.F.R. РР 20.6(d)(7).УУФФQж д ЌxддStock interests held in trust are attributable only to those who have or share the power to vote д —Rўа4 Ќxpдor sell the stock.жQ‰Шў@Шwд ~JяЖ'дСŠСУУФФ47 C.F.R. РР 20.6(d)(3).Qж Debt does not constitute an attributable interest, nor are securities affording д ЌxЄдpotential future equity interests (such as warrants, options, or convertible debentures) considered д —RИа4 Ќxхдattributable until they are converted or exercised.жQŠШИаШwд ~J9Ж'дСŠСУУФФ47 C.F.R. РР 20.6(d)(5).Qж We seek comment generally on whether we д Ќxдshould modify any or all of these attribution criteria. We ask commenters to provide reasoning and factual support for their positions. д —R,Љ4 e ПЊдСŠСи‚;60.и С` ` ЙСWe first seek comment on whether we should modify the 20 percent ownership д Ќx—дbenchmark. The Commission chose a 20 percent attribution level for broadband CMRS in order д —Rца4 Ќxpдto increase the availability of capital investment.жъ‹ш˜ц` Шwд ~Jї$Ж' "l дСŠСУУSee e.g., ФФAmendment of the Commission's Rules to Establish New Personal Communications Services,УУ д ~JП%œ' Ќx@ дMemorandum Opinion and OrderФФ, 9 FCC Rcd 4957 РР 119 (1994).УУФФ УУSee also ФФУУThird Memorandum Opinion and д ~J‡&œ' Ќx7 дOrderФФ, GN Docket No. 90-314, 9 FCC Rcd. 6908 at n. 64 (1994) (the attribution standard for cellular interests other д Ќx дthan designated entities is set at 20 percent to account for our policy in the early days of the cellular industry to д ЌxТ дencourage the formation of settlement groups--a historic anomaly that has no counterpoint in the PCS context. д"(Šˆ,C)C)АА(У"д д ЌxŽ дAttributions levels are set higher for designated entities in accordance with our statutory mandate to promote д ~JXœ' Ќxг дopportunities in PCS for such entities); УУMemorandum Opinion and OrderФФ, GN Docket No. 90Љ314, 9 FCC Rcd. 4957 д ЌxТ дat РРРР 107, 110 (1994) (The 20 percent ownership attribution standard for cellular operators was adopted, in part, д ЌxЃ дbecause settlements during the initial phase of cellular licensing resulted in partial and often non-controlling interests д Ќx дin those licensees. In light of this history, it would be unfair and unduly restrictive to place the same 5 percent limit д ~Jxœ' ЌxQ дon cellular/PCS cross-ownership. For this reason, we decided to allow a 20 percent cellular ownership interest.); УУ д ~J@œ' Ќx* дSecond Report and OrderФФ, GN Docket No. 90Љ314, 8 FCC Rcd. 7700 at РРРР 107Љ109 (1993) (settlements encouraged д ЌxЌ дby the Commission during the initial phase of cellular licensing may have resulted in the creation of certain partial, д Ќx дoften passive ownership interest in cellular licensees, and we were concerned that we not foreclose such partial д Ќx дowners from participating in PCS. ) The narrowband PCS rules, use a 5 percent attribution level, with 10 percent д ~J` œ'дpermitted for institutional investors. УУSeeФФ 47 C.F.R. РР 24.101. ъж У УФ ФSimilarly, the Commission uses a 40 percentд"ц( ‹ˆ,C)C)UUЉ"д д Ќxдattribution level for broadband CMRS licenses held by small businesses and rural telephone д —Rна4 ЌxŠдcompanies to allow for additional investment in such CMRS providers.жZŒшн( Шwд ~JЖ Ж' " дСŠСУУSee CMRS Spectrum Cap Report and OrderФФ, 11 FCC Rcd at 7880 РР 117; Implementation of Section 309(j) д ЌxЫ дof the Communications Act Љ Competitive Bidding, PP Docket No. 93Љ253; Amendment of the Commission's д ЌxБ дCellular PCS CrossЉOwnership Rule, GN Docket No. 90Љ314; Implementation of Sections 3(n) and 332 of the д ~Jœ' ЌxŸ дCommunications At Regulatory Treatment of Mobile Services, GN Docket No. 93Љ252; УУSixth Report and OrderФФ, 11 FCC Rcd 136, 162Љ64 РРРР 50Љ52 (1995).Zж We seek comment on д Ќxћдthe effect that a 20 percent attribution standard has on the ability of CMRS providers to obtain д ЌxЄдcapital. We seek comment on the public interest benefits of increasing the 20 percent attribution д Ќx‹дstandard. We also seek comment on what level we should set an attribution standard. д ЌxŠдCommenters proposing a different standard should provide analytical support for their proposals. д ЌxЫдOur goal is to identify situations where a minority ownership interest may comprise actual control д ЌxКдof a company or may provide a disЉincentive for full competition. We do recognize, however, д Ќxюдthat setting an attribution limit too low may limit the availability of capital investment. We note д Ќxсдthat attribution rules for other services typically apply much lower ownership benchmarks of 5 д —RЂа4 Ќxlд\to 10 percent than the current 20 percent we use for the CMRS spectrum cap.жEАЂиШwд ~J+Ж' "ћ дСŠС We note that both broadcast and cable use a 5 to 10 percent attribution level. In the broadcast multiple д ЌxЕ дownership context, any interest amounting to 5 percent of more of the outstanding voting stock of a corporate д ЌxŸ дbroadcast licensee, cable television system or daily newspaper is attributable, except for certain passive investors д Ќx дthat can hold up to 10 percent without being considered attributable. However, broadcast licensees can acquire up д ~JKœ' ЌxM дto 33 percent of nonЉvoting equity in another licensee in the same market. 47 C.F.R. РР 73.3555, n. 2. УУSee alsoФФ 47 C.F.R. РР 76.501, n. 2; 47 C.F.R. РР 76.503(f); 47 C.F.R. РР 76.504(h); 47 C.F.R. РР 21.912(c), n. 1.Eж We seek д Ќxидcomment on whether we should increase the benchmark as it applies to the amount of nonЉvoting д Ќxдequity interest, or interest held by a limited partner. We also seek comment on whether we д Ќxюдshould continue to have a separate 40 percent attribution standard for licenses that are held by small businesses or rural telephone companies or whether this standard should also be modified. СŠС д —Rа Љ4 e ПЗдСŠСи‚<61.иС` ` ЙСWe also seek comment on whether any of the other provisions in our ownership д Ќx+дattribution criteria should be modified. Are there any situations where an entity can acquire д Ќx†дeffective control over another entity that is not adequately contemplated under our attribution д Ќxидstandards? Alternatively, are there situations proscribed by our attribution rules that are inhibiting д Ќxъдcompetition? We request that parties be as specific as possible in identifying which, if any, д ЌxЫдattribution standards should be changed and in explaining the rationale and public interest benefits д —RўЉ4дthat might accompany such a change in our rules.УУФФ д"лPˆ,C)C)UU)н"дŒд —RЉ4 e ПЁдСŠСи‚=62.иС` ` ЙСIn the УУCMRS Spectrum Cap Report and Order,ФФ the Commission adopted a fourЊд Ќxcдprong test to qualify for a waiver of our ownership attribution standards in response to concerns д —RКа4 ЌxIдraised by the court in УУCincinnati BellФФ.жwŽШКШwд ~J3Ж'дСŠСУУCMRS Spectrum Cap Report and Order, ФФ11 FCC Rcd at 7887 РР 131.wж The test was established to allow licensees with nonЊд ЌxУдcontrolling minority investors and potentially conflicting CMRS ownership interests to seek д Ќxђдwaivers of the spectrum cap rule where the licensee is controlled by a single majority shareholder д —RQа4 Ќxидor controlling general partner.жS№ QXШwд ~JZЖ'дСŠС"Waivers of РР 20.6(d) may be granted upon an affirmative showing: д "Ж дСŠС"(1) That the interest holder has less than a 50 percent voting interest in the license and there is an unaffiliated single holder of a 50 percent or greater voting interest; СŠС"(2) That the interest holder is not likely to affect the local market in an anticompetitive manner; д "Б дСŠС"(3) That the interest holder is not involved in the operations of the licensee and does not have the ability to influence the licensee on a regular basis; and д "џ дСŠС"(4) That grant of a waiver is in the public interest because the benefits to the public of common ownership outweigh any potential anticompetitive harm to the market." 47 C.F.R. 20.6, note 3.Sж This waiver test is based on the use of a 20 percent attribution д ЌxОдstandard. We seek comment on waiver test in general, and whether we should retain the waiver test if we modify the 20 percent attribution standard. д —RХЖ'дСŠСУ У4.С` ` ЙСForbearance From Enforcing the CMRS Spectrum CapФ Ф д —R Љ4 e ПдСŠСи‚>63.иС` ` ЙСForbearance represents another option for addressing spectrum aggregation д Ќxдconcerns in CMRS. CTIA has petitioned the Commission to forbear from enforcing the spectrum д ЌxЄдcap pursuant to our authority under section 10 of the Act. Under forbearance, the spectrum cap д Ќx дwould continue to remain a codified rule, but the Commission would refrain from enforcing it. д ЌxсдHowever, the Commission could at a later date, upon reЉevaluation, determine that it would be д Ќxдin the public interest to again enforce the CMRS spectrum cap if forbearance seemed to be no д Ќxдlonger warranted. Alternatively, the Commission could later decide to eliminate the rule. In д —RŠа4 Ќxcдcontrast, if we were to eliminate the spectrum cap in this proceeding, as discussed below,жPШŠШwд ~JKЖ'дСŠСУУSee infraФФ section IV.C.6.Pж we would remove the rule. д —R!Љ4 e ПvдСŠСи‚?64.иС` ` ЙСUnder section 10, we must forbear from applying any regulation or provision of д ЌxКдthe Act to a telecommunications carrier or service, or class of telecommunications carriers or д Ќxћдservices, in any or some of its geographic markets, if a threeЉpronged test is met. Specifically, д —RИа4 Ќx+дsection 10 requires forbearance, notwithstanding section 332(c)(1)(A),жА‘И Шwд ~J &Ж' "ю дСŠС47 U.S.C. РР 332(c)(1)(A) (Commission may not forbear from applying sections 201, 202 and 208 to CMRS providers).Аж if the Commission determines that:д"•ј‘ˆ,C)C)UU1н"дŒд —RЉ4 e ПBд™ТXŠТ(1)ТX` ` ЙТenforcement of such regulation or provision is not necessary to ensure that the д e П9дcharges, practices, classifications, or regulations by, for, or in connection with that д e ПFдtelecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory;Ц(#` Ц д —RQЉ4 e ПдТXŠТ(2)ТX` ` ЙТenforcement of such regulation or provision is not necessary for the protection of consumers; andЦ(#` Ц д —RшЉ4 e П™дТXŠТ(3)ТX` ` ЙТforbearance from applying such provision or regulation is consistent with the д —RХа4дpublic interest.ж:’ШХШwд ~J> Ж'дСŠСУУId.ФФ:жЦ(#` Ц д —R Љ4 e ПдСŠСи‚@65.иС` ` ЙСTo satisfy the first prong of section 10, that enforcement of the spectrum cap is д ЌxКдnot necessary to ensure that the charges, practices, classifications, or regulations by, for, or in д Ќxдconnection with that telecommunications carrier or telecommunications service are just and д Ќxдreasonable and are not unjustly or unreasonably discriminatory, CTIA relies on statements that д —Rѓ а4 ЌxЖдthe CMRS market is competitive.жR“Шѓ XШwд ~JќЖ'дСŠСCTIA Forbearance Petition at 7Љ8.Rж CTIA also argues that principles of antitrust law and д Ќx—дeconomics provide adequate protection against the possibility of excessive concentration that the д —R­а4дspectrum cap was designed to safeguard against.жC”Ш­шШwд ~JFЖ'дСŠСУУId. ФФat 9Љ17.Cж д —RgЉ4 e ПSдСŠСи‚A66.иС` ` ЙСAddressing the second prong of the section 10 forbearance standard, CTIA seeks д —RDа4 Ќx@дto show that enforcement of the spectrum cap is not necessary for the protection of consumers.жK•ШDxШwд ~JmЖ'д СŠС47 U.S.C. РР 160(a)(2).Kж д Ќx"дCTIA contends that the Commission's section 310(d) authority is an appropriate vehicle for the д Ќx­дCommission to effectuate the "ideal approach [which] is to judge spectrum combinations on a д ЌxŠдcaseЉbyЉcase basis taking into account all of the relevant variables bearing upon competition and д ЌxБдefficiency, including the service area overlap, the populations in the respective service areas, and д —R•а4 ЌxŠдthe quantity of spectrum currently allocated to and . . . sought to be acquired by the licensee."жQ–Ш•Шwд ~JNЖ'дСŠСCTIA Forbearance Petition at 19.Qж д ЌxїдCTIA continues, "the brightЉline, inflexible nature of the cap should yield to a more tailored, д —ROа4 ЌxЫдcaseЉbyЉcase approach."ж:—ШO˜Шwд ~J˜!Ж'дСŠСУУId.ФФ:ж CTIA considers this flexible approach to be less restrictive, and thus д —R,а4дbetter able to serve consumers.жA˜Ш,( Шwд ~J$Ж'дСŠСУУId. ФФat 18.Aж д —RцЉ4 e ПvдСŠСи‚B67.иС` ` ЙСCTIA argues that the third prong of the section 10 forbearance standard is met д —RУа4 Ќx—дbecause forbearance is consistent with the public interest.жL™ШУИ Шwд ~J,(Ж'д СŠС47 U.S.C. РР 160(a)(3).Lж In evaluating whether forbearanceд"УH ™ˆ,C)C)UUд"д д ЌxЉдis consistent with the public interest, the Commission considers whether forbearance from д Ќx дenforcing the provision or regulation will promote competitive market conditions, including the д —RКа4 Ќxдextent to which forbearance will enhance competition among providers.ж[šШКШwд ~J3Ж'д УУФФСŠС47 U.S.C. РРРР 160(a)(3), (b).[ж In making this д Ќxlдassessment, the Commission may consider the benefits a regulation bestows upon the public, д —Rtа4 Ќx3дalong with any potential detrimental effects or costs of enforcing a provision.жj›ШtXШwд ~J}Ж'дСŠСУУPCIA Forbearance OrderФФ at РР27.УУУУФФУУФФФФjж CTIA argues that д Ќxlдthe public interest is better served by a caseЉbyЉcase determination of permissible ownership д —R.а4 Ќx дstructures.жQœШ.шШwд ~JЧ Ж'дСŠСCTIA Forbearance Petition at 21.Qж According to CTIA, rigid ownership limitations endangers innovation and efficiency д ЌxŠдand outweighs the administrative burden associated with reliance upon a caseЉbyЉcase approach д —Rша4дto market concentration issues.жAШшxШwд ~JЖ'дСŠСУУId. ФФat 25.Aж д —RЂЉ4 e ПЛдСŠСи‚C68.и С` ` ЙСWe seek comment on the CTIA Forbearance Petition, particularly whether CTIA's д —R Љ4 Ќxхдarguments meet the standards of section 10 for forbearance from the spectrum cap. УУФФIn regard to д Ќxџдthe third prong of the test and in connection with the above questions regarding the reЉassessment д Ќxpдof the rule under section 11, it would be useful for commenting parties to consider and comment д Ќxдupon: (i) the original purpose of the particular rule in question; (ii) the means by which the rule д Ќxсдwas meant to further that purpose; (iii) the state of competition in relevant markets at the time д ЌxЫдthe rule was promulgated; (iv) the current state of competition as compared to that which existed д ЌxБдat the time of the rule's adoption; (v) how any changes in competitive market conditions between д ЌxŠдthe time the rule was promulgated and the present might obviate, remedy, or otherwise eliminate д Ќxuдthe concerns that originally motivated the adoption of the rule; and (vi) the ultimate effect д —RDа4дforbearance may have on consumers.ж`žШDШwд ~J§Ж'дСŠСУУФФУУPCIA Forbearance OrderФФ at РР 115.`ж У УФ Ф д —R!Љ4дУ УФ Ф д —RўЉ4 e ПјдСŠСи‚D69.и С` ` ЙСIf the Commission, upon review of the record, finds that the requirements set out д ЌxEдin section 10 have been satisfied, and thus the Commission has authority to forbear from the д ЌxŠдCMRS spectrum cap, we seek comment on the advantages or disadvantages of forbearing from the cap rather than modifying, sunsetting, or eliminating it. СŠС д —ROЉ4 e ПЁдСŠСи‚E70.и С` ` ЙСIf we forbear from enforcing the CMRS spectrum cap, we seek comment on what д Ќx+дstep the Commission should take next regarding the cap. Should we subsequently, in this or д Ќxдanother proceeding, develop a factual record on what happened to CMRS markets without the spectrum cap to confirm that our conclusions about the need for the cap were correct? д —R Ж'дУ УСŠС5.С` ` ЙСSunset CMRS Spectrum CapФ ФУ УФ Ф д —RZЉ4 e П дСŠСи‚F71.и С` ` ЙСIf we conclude in this proceeding that we should retain a CMRS spectrum д Ќxюдaggregation limit, we recognize that at some point market conditions may change such that the д ЌxКдrule can be eliminated. In circumstances where the Commission could foresee the necessaryд" ˜žˆ,C)C)UUзн"д д ЌxVдchange in market conditions, it has established sunsets for rules or, alternatively, specified when д —Rна4 Ќx—дthe Commission will reЉevaluate the rule.ж#ŸнШwд ~JVЖ' "} дСŠСFor example, the separate affiliate requirements for incumbent local exchange carrier provision of inЉregion д ~Jœ'дbroadband CMRS will no longer be effective after January 1, 2002. УУSeeФФ 47 C.F.R. РР 20.20(f).#ж We seek comment on the public interest benefits of д Ќxћдestablishing a sunset date for the CMRS spectrum aggregation limit in all or some markets. In д Ќxдparticular, we seek comment on the market conditions that should be present before we sunset д Ќx+дthe cap. We also seek comment on when these market conditions are likely to be generally д Ќxдpresent. We also seek comment on whether we should set a date certain for elimination of our д Ќxhдspectrum aggregation limit, or if instead, we should review the continuing need for such a д —R Љ4дrestriction at a preЉset date, УУe.g.,ФФ as part of the next biennial review process. д —RХЉ4 e ПдСŠСи‚G72.и С` ` ЙСOne alternative to a uniform date for sunsetting the CMRS spectrum aggregation д Ќx'дlimit in all or some markets, would be to sunset the cap in selected markets based on the д Ќx_дcompetitive concerns in the particular markets in question. We seek comment on whether it д Ќx/дwould be in the public interest to sunset the CMRS spectrum cap on a marketЉbyЉmarket basis, д Ќxдand if so, what criteria should be considered in determining whether to sunset the cap in a д Ќx дparticular market. One approach may be to sunset the cap when a certain number of competitors д Ќxдare present in a market. We seek comment on this approach and what level of competition should exist before we sunset the cap in a particular market. д —RŠЉ4 e П”дСŠСи‚H73.и С` ` ЙСAnother option would be to review certain types of proposed transactions involving д Ќxџдthe aggregation of CMRS spectrum under our section 310(d). Under this approach, any transfers д —RDЉ4 Ќxидin connection with a merger or acquisition where both parties have directly competing УУФФoperational д Ќx‚дwireless services in the same geographic market, would no longer be prohibited under the д Ќxyдspectrum cap. Instead, parties to these transactions involving a combination of more than 45 д ЌxОдMHz would be obligated to affirmatively demonstrate that the transaction is in the public interest. д ЌxйдThis would generally include a competitive analysis to evaluate whether the interests of д ЌxIдconsumers in relevant markets are threatened. All other transactions, including those involving д Ќx†дoverlapping licenses but where buildЉout is not complete and service is not operational, would д —ROЉ4 Ќx/дcontinue to be subject to compliance with the CMRS spectrum cap. У УФ Ф We seek comment on this д —R,Љ4дapproach.У УФ Ф д —RцЖ'дСŠСУ У6.С` ` ЙСEliminate CMRS Spectrum CapФ Ф д —R Љ4 e ПƒдСŠСи‚I74.и С` ` ЙСA final option for dealing with CMRS spectrum aggregation concerns would be д ЌxОдto eliminate the CMRS spectrum cap and consider broadband CMRS spectrum ownership issues д ЌxZдon a caseЉbyЉcase basis. The Commission currently reviews mergers and other transactions under д —R7а4 Ќxадsections 214(a) and 310(d) of the Communications Act.жG Ш7 Шwд ~J#Ж'дСŠС47 U.S.C. РР 310(d).Gж We seek comment on whether д Ќx3дelimination of the CMRS spectrum cap, and reliance on caseЉbyЉcase determinations of ownership д Ќx<дissues, would serve the public interest. We request that commenters provide facts and detailed д Ќxдanalysis supporting their position. We also seek comment on the likelihood that anticompetitive д Ќx“дbehavior would result from elimination of the cap, and request that commenters identify what д Ќxћдtype of anticompetitive behavior is likely and establish causality between elimination of the cap and that behavior.д"e#!А ˆ,C)C)UUГ#н"дŒд —RЉ4 e ПЁд™СŠСи‚J75.иС` ` ЙСCTIA argues that we should forbear from our spectrum aggregation limits because д Ќx дthe Commission's obligation to review license transfers under our public interest standard provides д ЌxEдa sufficient basis for evaluating the aggregation of spectrum in connection with mergers and д —R—а4 ЌxŽдacquisitions.жPЁШ—Шwд ~JЖ'дСŠСCTIA Forbearance Petition at 3.Pж Indeed, CTIA contends that a caseЉbyЉcase review offers the prospect for superior д ЌxAдpolicy over a "oneЉsizeЉfitsЉall" approach such as is embodied in our policy of a spectrum д —RQа4 ЌxУдaggregation limit.жєЂQXШwд ~JZЖ' "p дСŠСУУId. ФФat 20. CTIA contends that the Commission should use the УУMerger GuidelinesФФУУФФ an appropriate standard for review of licensing decisions under the Communications Act.єж We note that our public interest review allows for a balancing of proЊд Ќxдcompetitive and detrimental effects of a merger, and permits us to condition approval on д —R Љ4 Ќxџдrestructuring a transaction to meet any concerns that we may have.У УУУФФФ Ф However, we also recognize д ЌxУдthat our resources are limited. Accordingly, we seek comment on whether we should rely д —RХЉ4дexclusively on our section 310(d) authority to protect against anticompetitive effects.У УУУФФФ Ф У УФ Ф СŠС д —R Љ4 e ПєдСŠСи‚K76.иС` ` ЙСCTIA argues that the CMRS marketplace has evolved to the point where the д —R\ Љ4 Ќx"дCMRS spectrum cap is no longer necessary, and cites the Commission's УУThird Annual CMRS д —R9 а4 ЌxђдCompetition ReportФФ to demonstrate the increase in the level of competition in CMRS markets.жŠЃШ9 АШwд ~JšЖ'дСŠСCTIA Forbearance Petition at 7Љ8 УУciting Third Annual CMRS Competition Report at 63.ФФŠж д —R Љ4 ЌxpдIn the УУThird Annual CMRS Competition ReportФФ, we note that much of the deployment of new д ЌxIдmobile telephone networks is still concentrated in urban and suburban areas and that more rural д —Rа а4 ЌxОдareas are still waiting for deployment of new networks.жbЄШа @Шwд ~JСЖ'дСŠСУУThird Annual CMRS Competition ReportФФ at 63.bж We are concerned about the potential д ЌxЫдimpact on the development of competition in areas that currently have few competitors if we rely д Ќxюдsolely on a caseЉbyЉcase analysis of ownership issues. We seek comment, including empirical д Ќxђдevidence, whether CMRS markets are sufficiently competitive to allow for removal of the CMRS д Ќxћдspectrum cap. We ask commenters to address any significant changes in CMRS markets and д Ќx+дtelecommunications markets in general that would directly support elimination of the CMRS spectrum cap. д —RИЉ4 e П`дСŠСи‚L77.и С` ` ЙС CTIA argues that any administrative burdens are outweighed by the potential risk д —R•а4 Ќx0дto efficiency and innovation imposed by the cap.жRЅШ•аШwд ~JЖ'дСŠСCTIA Forbearance Petition at 4Љ5.Rж We seek comment regarding the д Ќxддadministrative burden that would presumably be placed on the Commission's limited resources by reviewing ownership issues on a caseЉbyЉcase basis. д —R Љ4 e ПOдСŠСи‚M78.и С` ` ЙСFinally, we note that other Federal and state authorities may be able to monitor д Ќxюдanticompetitive conduct in wireless markets. We invite comment on the extent to which these д Ќx<дauthorities, given their resources and broad responsibilities, would be able to effectively monitor д Ќxдthe competitive effects of smaller mergers and corporate acquisitions (those not meeting HartЊд —R}а4 Ќx<дScottЉRodino thresholds).жƒІШ}` Шwд ~JŽ'Ж'дСŠСУУSeeФФ HartЉScottЉRodino Antitrust Improvements Act of 1976, 15 U.S.C. РР 18.ƒж We also note that these authorities operate under laws that permit д Ќxддintervention only where markets are tending toward becoming monopolized. They have muchд"Z"№ Іˆ,C)C)UUDн"д д Ќxћдmore limited legal authority when a merger or acquisition threatens to impede the development д —Rна4 ЌxNдof competition where such competition does not yet exist or is in its infancy.жVЇXнШwд ~JVЖ' "Є дСŠСRegarding market's infancy,УУ see Third Annual CMRS Competition ReportФФ at 32 ("broadband PCS sector is д ЌxЌ дin its early stages of development...") and 63 ("progress towards a truly competitive mobile telephone marketplace ... is still in its early stages ...").Vж We seek д ЌxRдcomment on the ability that Federal and state authorities have under antitrust laws to protect competition in cases where competition may not yet be adequately developed. д —RQЖ'дУ УD.СŠСCellular CrossЉInterest RuleФ Ф д —R Љ4 e П‡дСŠСи‚N79.и С` ` ЙСSection 22.942 of the Commission's rules prohibits any person from having a direct д Ќx­дor indirect ownership interest in licenses for both cellular channel block in overlapping cellular д —RХа4 Ќx“дgeographic service areas (CGSAs).жGЈШХшШwд ~J^ Ж'дСŠС47 C.F.R. РР 22.942.Gж A party with a controlling interest in a license for one д ЌxКдcellular channel block may not have any direct or indirect ownership interest in the license for д Ќxддthe other channel block in the same geographic area. A party may, however, have a direct or д —R\ а4 Ќxїдindirect ownership interest of five percent or less in the licenses for both channel blocks.жJЉШ\ xШwд ~J…Ж'дСŠС47 C.F.R. РР 22.942(a).Jж д ЌxдDivestiture of interests as a result of an assignment of authorization or transfer of control must д —R а4дoccur prior to the consummation of the transfer or assignment.жJЊШ Шwд ~JЯЖ'дСŠС47 C.F.R. РР 22.942(b).Jж д —Rа а4 e П™дСŠСи‚O80.иС` ` ЙСThe cellular crossЉinterest rule was adopted in 1991.ж2ЋАа ˜Шwд ~JЖ' "} дСŠСAmendment of Part 22 of the Commission's Rules to Provide for the Filing and Processing of Applications д ~Jсœ' Ќxx дfor Unserved Areas in the Cellular Service and to Modify Other Cellular Rules, CC Docket Nos. 90Љ6, 85Љ388, УУFirst д ~JЉœ' Ќx* дReport and Order and Memorandum Opinion and Order On Reconsideration,ФФ 6 FCC Rcd 6185, 6628Љ29. When д Ќx… дthe rules was first adopted in was codified at 47 C.F.R. РР 22.902(b)(5). The rule was subsequently moved, without д Ќx} дrevision, to 47 C.F.R. РР 22.942. Revision of Part 22 of the Commission's Rules Governing the Public Mobile д ~Jœ'дServices, CC Docket 92Љ115, УУReport and OrderФФ, 9 FCC Rcd 6513, 6574 (1994).2ж At that time cellular д Ќxђдlicensees were the predominant providers of mobile voice services. In adopting the crossЉinterest д ЌxЧдrule the Commission stated that "in a service where only two cellular carriers are licensed per д Ќx/дmarket, the licensee on one frequency block in a market should not own an interest in the other д —RDа4 ЌxVдfrequency block in the same market."жАЌDШwд ~J!Ж' "д дСŠСУУФФУУFirst Report and Order and Memorandum Opinion and Order On Reconsideration,ФФ 6 FCC Rcd at 6628 РР 103.Аж Consequently, "[i]n order to guarantee the competitive д ЌxПдnature of the cellular industry and to foster the development of competing systems" the д ЌxддCommission adopted restrictions on a party's ability to hold ownership interests in both cellular д —Rла4дlicenses in the same geographic area.жD­ШлhШwд ~Jє%Ж'дСŠСУУId.ФФ РР 104.Dж д"И#ј­ˆ,C)C)UUЩн"дŒд —RЉ4 e ПбдСŠСи‚P81.и С` ` ЙСAs we have discussed previously, the current mobile voice marketplace includes д Ќx<дmultiple providers in many areas. In addition to two cellular providers, many markets also have д Ќx/дone or two operating broadband PCS providers, with other broadband PCS providers in various д Ќx"дstages of deployment of their systems, and a digital SMR system. Given the changes in mobile д Ќxсдvoice markets, and the fact that many markets no longer comprise primarily cellular duopolies, д Ќx/дas in 1991 when the rule was adopted, we seek comment on whether we should retain, modify, or repeal section 22.942. д —RшЉ4 e ПРдСŠСи‚Q82.и С` ` ЙСWe note that we do not have any such serviceЉspecific restrictions for either д Ќx­дbroadband PCS or SMR. In eliminating the separate spectrum cap for broadband PCS in the д —RЂЉ4 Ќx}дУУCMRS Spectrum Cap Report and OrderФФ, the Commission found that the CMRS spectrum cap д —R а4 Ќxддprovided sufficient protection from potential anticompetitive behavior by licenses.жnЎШ Шwд ~Jј Ж'дСŠСУУCMRS Spectrum Cap Report and OrderФФ, 11 FCC Rcd at 7869.nж We seek д Ќxџдcomment on whether the CMRS spectrum cap provides sufficient protection from anticompetitive д Ќxдbehavior by cellular licenses in the same market. We note that the primary effect of removing д Ќxџдthe cellular crossЉownership rules while maintaining the CMRS spectrum cap would be to remove д ЌxЧдthe more restrictive ownership restrictions in the cellular crossЉownership rules in favor of the д Ќx“дattribution provisions in the spectrum cap rule. Commenters should also address whether we д Ќxcдshould eliminate the cellular crossЉownership rule if we decide to eliminate the CMRS spectrum cap. д —RDЉ4 e П™дСŠСи‚R83.и С` ` ЙСAt the same time, we recognize that there are some markets where no PCS д —R!а4 Ќx+дprovider has yet initiated service.жSЏШ!XШwд ~J*Ж'дСŠСУУSee supra.ФФ at paras. 36, 45.Sж Where the structure of these markets has not changed д Ќxdдsignificantly, we ask whether the original purpose of the rule may still be served by its д ЌxŠдapplication. Namely, where cellular licensees are still the predominant providers of mobile voice д Ќx—дservices, we ask whether the cellular crossЉinterest rule may still be necessary to "guarantee the д —R•а4 Ќx3дcompetitive nature of the cellular industry and to foster the development of competing systems."жЏАX•шШwд ~J.Ж' "" дСŠСAmendment of Part 22 of the Commission's Rules to provide for the filing and processing of applications д ~Jіœ' Ќx› дfor unserved areas in the Cellular Service and to modify other cellular rules, CC Docket Nos. 90Љ6, 85Љ388, УУFirst д ~JОœ'дReport and Order and Memorandum Opinion and Order On Reconsideration,ФФ 6 FCC Rcd 6185, 6628Љ29.Џж д Ќx"дThus we seek comment on whether we should modify the cellular crossЉownership rule so that д Ќxдit does not apply in certain circumstances. One possibility would be to have the rule apply only д Ќxдin markets where there are a limited number of competitors to the cellular providers. We seek д Ќxдcomment on what would be an appropriate threshold for determining in which markets the rule д Ќx‹дwould not apply. We note that applying the rule in this fashion may result in essentially д Ќxcдeliminating the rule in urban areas, where broadband PCS providers have generally already built д ЌxКдout and are providing service, while maintaining the rule in rural areas, where broadband PCS д ЌxŠдproviders may not be as far along in the deployment of their systems. We seek comment on the potential effects of such an application of the cellular crossЉownership rule. д —RЉ4 e ПдСŠСи‚S84.и С` ` ЙСWe also seek comment on whether we should relax the current attribution rules д Ќx"дrelated to this rule. For example, should we allow an entity that controls the cellular A block to д Ќx8дhave some interest in the cellular B block in the same market? Further, should we relax theд"Ю $Аˆ,C)C)UUC!н"д д Ќxїдcurrent limit on what a nonЉcontrolling interest holder may have in each cellular license in a д ЌxОдgiven market? Commenters are asked to address the competitive and public interest implications of their proposals. д —R—Љ4д СрььˆСУ УФ Фƒ д —RtЖ'даадB дУ УV. CONCLUSIONФ Фдˆьдаад\Адаааааа д —R.Љ4 e ПЎдСŠСи‚T85.и С` ` ЙСIn this proceeding, we seek comment on whether our present CMRS spectrum cap д Ќxђдfurthers the public interest and encourages competition, consistent with spirit of the Act. We also д Ќxдseek comment on whether we should consider retaining, forbearing from, eliminating, or д Ќxuдmodifying our present cap. In particular, we seek comment on the petition filed by CTIA д Ќx8дrequesting forbearance from applying the CMRS spectrum cap. We also seek comment on whether we should retain, modify, or repeal the cellular crossЉinterest rule. д —R\ Љ4дУ УФ ФСрььˆСƒ д —R Ж'дСŠСУ УСрKьСVI. PROCEDURAL MATTERSФ Фƒ д —Rѓ Ж'дУ У д —Rа Ж'дA.СŠСInitial Regulatory Flexibility Analysis д —RŠЉ4 "ЬдФ ФСŠСи‚U86.и As required by the Regulatory Flexibility Act, УУseeФФ 5 U.S.C. РР 603, the Commission д Ќxсдhas prepared the Initial Regulatory Flexibility Analysis (Appendix A) of the possible impact on д ЌxОдsmall entities of the proposals set forth in this document. Written public comments are requested д ЌxУдon the Initial Regulatory Flexibility Analysis. Comments on the Initial Regulatory Flexibility д —RўЉ4 ЌxpдAnalysis must be filed in accordance with the same filing deadlines as comments on the УУNPRMФФ, д Ќxдand must have a separate and distinct heading designating them as responses to the Initial д ЌxйдRegulatory Flexibility Analysis. The Commission's Office of Public Affairs, Reference д —R•Љ4 Ќx дOperations Division, will send a copy of this УУNPRMФФ, including the Initial Regulatory Flexibility д ЌxЫдAnalysis, to the Chief Counsel for Advocacy of the Small Business Administration in accordance д —ROЉ4дwith the Regulatory Flexibility Act, УУsee ФФ5 U.S.C. РР 603(a). д —R,Ж'дУ У д —R Ж4дХtХB. СŠСУУEx ParteФФ Rules ЉЉ PermitЉButЉDisclose Proceedings д —RцЉ4дФ Ф д —RУЉ4 " дСŠСи‚V87.и This is a permitЉbutЉdisclose notice and comment rulemaking proceeding. УУEx parteФФ д Ќx[дХtХpresentations are permitted except during the Sunshine Agenda period, provided they are д —R}Љ4 Ќx}дdisclosed as provided in the Commission's rules. УУSee generallyФФ 47 C.F.R. РРРР 1.1201, 1203, and 1.1206(a). СŠС д —RЖ'дУ УC. СŠСComment Dates д —RёЉ4дФ Ф д —RЮ Љ4 "uдСŠСи‚W88.и Pursuant to Sections 1.415 and 1.419 of the Commission's rules, 47 C.F.R. РРРР 1.415, д —RЋ!Ж4 Ќxщд1.419, interested parties may file comments on or before У УJanuary 25, 1999, Ф Фand reply comments д —Rˆ"Ж4 Ќxмдon or before У УFebruary 10, 1999. Ф ФComments and reply comments should be filed in WT Docket д ЌxEд98Љ205. Comments may be filed using the Commission's Electronic Comment Filing System д —RB$Љ4 Ќx#д(ECFS) or by filing paper copies. УУSeeФФ УУElectronic Filing of Documents in Rulemaking д —R%Љ4дProceedingsФФ, 63 Fed. Reg. 24,121 (1998). д"й&%Аˆ,C)C)UU'н"д д —RЉ4 e П‡дСŠСи‚X89.иС` ` ЙСComments filed through the ECFS can be sent as an electronic file via the Internet д —RнЉ4 Ќx/дto . УУФФGenerally, only one copy of an electronic submission д Ќx†дmust be filed. Comments and reply comments should be filed in WT Docket No. 98Љ205. In д ЌxEдcompleting the transmittal screen, commenters should include their full name, Postal Service д ЌxКдmailing address, and the applicable docket or rulemaking number. Parties may also submit an д Ќx‹дelectronic comment by Internet eЉmail. To get filing instructions for eЉmail comments, д Ќxћдcommenters should send an eЉmail to ecfs@fcc.gov, and should include the following words in д ЌxКдthe body of the message, "get form Ж' ! д б#&aє\  PŽ6G;ќЦ&P#бAnnual Report and Analysis of Competitive Market Conditions with Respect to Commercial Mobile д ŠN Љ'дServices, Third Report, FCC 98Љ81 (rel. June 11, 1998) (Third Annual CMRS Competition Report). б#Xjє\  PŽ6G; рXP#бVж In this Notice of Proposed Rulemaking, we initiate a broad discussion of how two of our central spectrum aggregation and ownership д —R а4дlimits ЉЉ the 45 MHz commercial mobile radio services (CMRS) spectrum cap,ж“Щи @š€д ŠNpЖ'д б#&aє\  PŽ6G;ќЦ&P#б47 C.F.R. РР 20.6 (1997).б#Xjє\  PŽ6G; рXP#б“ж and the д —R\ а4дcellular crossЉinterest ruleж—Ъи\ рš€д ŠNэЖ'д б#&aє\  PŽ6G;ќЦ&P#б47 C.F.R. РР 22.942 (1997). б#Xjє\  PŽ6G; рXP#б—ж ЉЉ operate within the evolving wireless marketplace. С''ƒСWhile I agree that these rules are ripe for review, we must assess their continued relevance in a marketЉspecific context. Scarcely a week goes by without the announcement of a second, third, or fourth PCS provider initiating service in one of our major metropolitan markets. Yet the rash of new entrants tapers dramatically as we look beyond our urban centers to our rural communities. As the Notice indicates, roughly forty percent of our nation's Basic Trading Areas (BTAs) do not have coverage from either a PCS or digital SMR carrier. This equates to more than oneЉfifth of our citizens. For these consumers, the cellular duopoly that was uniform at the time we adopted both the crossЉinterest rule and the spectrum cap, still prevails. Furthermore, this may not change even as carriers satisfy their coverage requirements under the FCC rules, as 30 MHz licensees need serve only 2/3 of their licensed д —RИа4дpopulation, and 10 MHz licensees only 1/4, at the end of their license term.жЫиИ€š€д ŠNщЖ'д б#&aє\  PŽ6G;ќЦ&P#б47 C.F.R. РР 24.203(a), (b) (1997).б#Xjє\  PŽ6G; рXP#бж С''ƒСSimple economics suggests ЉЉ and experience bears witness ЉЉ that carriers will seek to cover more populous areas, where the fixed costs of network infrastructure will be proportionally less per subscriber. But our citizens in rural areas do not have proportionally less interest in receiving the benefits of wireless technology. The Communications Act directs the Commission to ensure that the benefits of telecommunications are available, "so far as д —RУа4дpossible, to all the people of the United States,"жlЬиУ š€д ŠN”$Ж'д б#&aє\  PŽ6G;ќЦ&P#б47 U.S.C. РР 151. УУФФlж and to help rural areas in particular.жМЭщУР š€д —R4&Ж4д УУSeeФФУУ, e.g., ФФ 47 U.S.C. РР309(j)(3)(A), (B); 47 U.S.C. РР 254(b)(3); 47 U.S.C. РР254(h). б#Xjє\  PŽ6G; рXP#б Мж I take this mandate seriously, and so I will be keenly interested in evidence and analysis of the effect of these rules on the provision of needed services in rural and high cost areas. аадŒKд* * * * *