******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In re Applications of) ) COMCAST CELLULAR HOLDINGS, CO.) Transferor,) )DA 99-1318 AND)File Nos. 8-EX-TC-1999; et al. ) SBC COMMUNICATIONS, INC.) Transferee,) ) For Consent to Transfer of Control of) Licenses and Authorizations) MEMORANDUM OPINION AND ORDER Adopted: July 2, 1999 Released: July 2, 1999 By the Deputy Chief, Wireless Telecommunications Bureau: I. INTRODUCTION and Summary 1. On March 4, 1999, Comcast Cellular Holdings, Co. ("Comcast Cellular") and SBC Communications Co. ("SBC") (collectively "Applicants") filed applications seeking Commission consent to transfer control of all of Comcast Cellular's cellular, Personal Communications Service ("PCS"), point-to-point microwave, and experimental radio licenses and authorizations to SBC. To accomplish the transaction, SBC intends to purchase the stock of Comcast Cellular, and thereby assume control over the licenses and authorizations held by Comcast Cellular and its subsidiaries. 1. On March 26, 1999, the Wireless Telecommunications Bureau ("Bureau"), by delegated authority, issued a Public Notice to announce that the applications had been accepted for filing, and to establish a pleading cycle to permit interested parties an opportunity to comment on the proposed transaction. We received no comments or other pleadings in response to this Public Notice. We note that portions of Comcast Cellular's wireless holdings being transferred to SBC overlap with wireless properties held by Ameritech, Co. ("Ameritech"), and that SBC and Ameritech have filed applications seeking Commission consent to merge. We note also that Ameritech has filed applications seeking consent to transfer control of the licenses that overlap Comcast Cellular's licenses to GTE Corp. ("GTE"). We find in this order that the possible future overlap between Comcast Cellular and Ameritech licenses does not preclude grant of these applications or require the imposition of specific conditions in this matter, because there is no overlap caused by the instant transaction and we have full authority to ensure compliance with applicable Commission rules when we consider the SBC/Ameritech and GTE/Ameritech applications. Based on Applicants' assertions that SBC and Comcast Cellular do not compete, and our conclusion that this transaction will serve the public interest, convenience, and necessity, we hereby grant the applications. II. Discussion A. Statutory Authority 1. Section 310(d) of the Communications Act of 1934, as amended ("the Act"), provides in pertinent part that "[n]o construction permit, or station license, or any rights thereunder, shall be transferred, assigned, or disposed of in any matter, voluntarily or involuntarily, directly or indirectly, or by transfer of control of any corporation holding such permit or license, to any person except upon application to the Commission and upon finding by the Commission that the public interest, convenience, and necessity will be served thereby." Section 310(d) also requires the Commission to consider the license transfer or assignment application as if it were filed pursuant to Section 308 of the Act, which governs applications for new facilities and for renewal of existing licenses. Applicants are directed to "[s]et forth such facts as the Commission by regulation may prescribe as to the citizenship, character, and financial, technical, and other qualifications of the applicant to operate the station." Section 308(b) authorizes the Commission to require, at any time after the filing of an application or during the term of a license, that the applicant submit "further written statements of fact" to permit a determination as to whether an application should be granted. If the Commission finds on the basis of the application, the pleadings filed, or other information that it may officially notice, that grant of the application would be consistent with the public interest, convenience, and necessity, it is directed to grant the application. A. Qualifications 1. As a regular part of our public interest analysis, we determine whether the proposed licensee is qualified to hold a Commission license and whether grant of the application would violate any Commission rules. The Commission has previously found that SBC is properly qualified as a licensee, and no party has raised any objection to SBC acquiring these licenses and authorizations. Therefore, we find that SBC is properly qualified to acquire these licenses and authorizations. 1. Nor do we find that the proposed transaction will result in a violation of any Commission rules, such as the CMRS spectrum aggregation limit, 47 C.F.R.  20.6, or the cellular cross-interest rule, 47 C.F.R.  22.9042. As more fully explained below, there are no CMRS overlaps between SBC and Comcast Cellular. We note that Comcast Cellular's wireless holdings in Illinois being acquired by SBC do overlap with cellular properties held by Ameritech, which has filed an application seeking Commission consent to merge with SBC. Ameritech has also filed applications seeking consent to transfer to GTE control of its licenses that overlap the Comcast Cellular licenses. Because there is no overlap caused by the transaction under review and because we will be able to ensure that SBC complies with applicable Commission rules when we consider the SBC/Ameritech and GTE/Ameritech applications, we see no reason to require the imposition of any conditions to this transaction. B. Public Interest Analysis 1. In addition to ensuring that transferor and transferee are duly qualified and comply with our rules, we also consider the effects on competition of a proposed transfer of control as part of our examination under the "public interest, convenience, and necessity" standard of section 310(d) of the Communications Act. At a minimum, this requires that a merger not interfere with the objectives of the Communications Act and must include, among other things, consideration of the possible competitive effects of the transfer. Under Commission precedent, our public interest analysis is not limited to traditional antitrust principles, but also encompasses the broad aims of the Communications Act, including evaluating whether any public interest benefits may result from the merger. Applicants bear the burden of proving that the proposed transaction serves the public interest, and we must determine whether they have met this burden. 1. Competitive Framework 1. Where the transfer or assignment of licenses involves telecommunications service providers, the Commission's public interest determination must be guided primarily by the Communications Act, as amended.Our analysis of competitive effects under the Commission's public interest standard consists of four steps. First, we define the relevant product and geographic markets. Second, we identify current and potential participants in each relevant market, especially those that are likely to have a significant competitive effect. Third, we evaluate the effects that the merger may have on competition in the relevant markets. Fourth, we consider whether the proposed transaction will result in merger-specific efficiencies, such as cost reductions, productivity enhancements, or improved incentives for innovation. Ultimately, we must weigh any harmful and beneficial effects to determine whether, on balance, the merger is likely to enhance competition in the relevant markets. 1. Analysis of Potential Adverse Effects 1. To determine the relevant product and geographic markets, we identify the products (or services, in this case) offered by SBC and Comcast Cellular, and evaluate the extent to which services offered by other communications companies compete for the business conducted by the merging parties. According to Applicants, SBC holds an interest in various companies that provide local exchange, wireless communications, and directory publishing services in the United States. SBC also has international communications interests in Latin America, Europe, the Middle East, and in east Asia. Comcast Cellular provides mobile communications services to more than 8 million customers in the United States, predominantly in the Mid-Atlantic region. Its parent, Comcast, is a cable service provider that also has investments in sports and entertainment franchises. 1. Both companies provide wireless communications services to portions of the United States, but SBC does not have CMRS licenses in any of Comcast Cellular's markets. SBC subsidiary Southwestern Bell Mobile Systems ("SBMS") operates cellular systems in the Chicago, Boston, and Baltimore/Washington metropolitan areas, and in upstate New York. Southwestern Bell Wireless, Inc., a subsidiary of SBMS, operates cellular and PCS systems within Texas, Missouri, Oklahoma, Kansas, and Arkansas. SBC subsidiary Pacific Bell Mobile Systems operates PCS systems in California and Nevada. SBC subsidiary SNET Cellular, Inc. provides cellular service in Rhode Island and portions of Massachusetts, and Springwich Cellular Limited Partnership serves Connecticut and other parts of Massachusetts. Comcast Cellular provides cellular and PCS services throughout Pennsylvania, New Jersey, Delaware, and Maryland. Comcast Cellular also holds cellular licenses in the Joliet and Aurora/Elgin, Illinois MSAs. Because SBC (and its affiliates) and Comcast Cellular may be able to compete against the other in markets outside of their respective license boundaries through roaming agreements, joint ventures, or via resale, we cannot dismiss the possibility that both firms may currently be competing for the same business. However, for purposes of defining relevant geographic markets, we have confined our analysis to communications services provided over each firm's respective facilities. We thus find that SBC and Comcast Cellular do not presently compete with each other in any relevant U.S. wireless market, and thus agree with the Applicants that this transaction will not cause adverse effects on competition. 1. Public Interest Benefits 1. Applicants contend that the proposed merger will enhance CMRS competition in the northeastern United States. In particular, SBC claims that the merged company will be better positioned to provide customers in the Northeast with wider-area, toll-free calling scopes, one-stop shopping, and other services. Applicants also argue that Comcast Cellular's existing customers will benefit from the greater economies of scale that SBC enjoys in purchasing network equipment and handsets. We determine that at least several of these claimed benefits are likely to materialize, although we are unable to gauge the magnitude of these benefits based on the information in this record. Largely because of the absence of any risk of public interest harms, we conclude that Applicants have furnished sufficient information regarding prospects for public interest benefits. 1. Conclusion 1. Based upon our review under Section 310(d), we determine that this merger is unlikely to result in the erosion of competition in any relevant market. We also determine that some tangible public interest benefits are likely to be forthcoming. We therefore conclude that, on balance, Applicants have demonstrated that these transfers serve the public interest II. CONCLUSION 1. For all the foregoing reasons, we conclude that Applicants have met their burden of showing that the proposed merger will serve the public interest, convenience, and necessity. Accordingly, we hereby grant the Applications. II. ordering clauses 1. Accordingly, having reviewed the applications and the record in this matter, IT IS ORDERED, pursuant to sections 4(i) and (j), 214(a) and (c), 309, and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 154(j), 214(a), 214(c), 309, 310(d), that the applications filed by Comcast Cellular Holdings, Co. and SBC Communications, Inc. in the above-captioned proceeding ARE GRANTED. FEDERAL COMMUNICATIONS COMMISSION James D. Schlichting Deputy Chief, Wireless Telecommunications Bureau