**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+-----------------------------------+---+------------------------------+
| In re Applications of             | * | IB Docket No. 00-187         |
|                                   | * |                              |
| VOICESTREAM WIRELESS              | ) | IB Docket No. 00-187         |
|                                   | * |                              |
| CORPORATION,                      | * | IB Docket No. 00-187         |
|                                   |   |                              |
| POWERTEL, INC.,                   | * | IB Docket No. 00-187         |
|                                   | * |                              |
| Transferors,                      | ) |                              |
|                                   | * |                              |
| and                               | * |                              |
|                                   |   |                              |
| DEUTSCHE TELEKOM AG,              | * |                              |
|                                   | * |                              |
| Transferee,                       | ) |                              |
|                                   | * |                              |
| for Consent to Transfer           | * |                              |
|                                   |   |                              |
| Control of Licenses and           | * |                              |
| Authorizations                    | * |                              |
|                                   | ) |                              |
| Pursuant to Sections 214 and      | * |                              |
| 310(d) of the                     | * |                              |
|                                   |   |                              |
| Communications Act and            | * |                              |
|                                   | * |                              |
| Petition for Declaratory Ruling   | ) |                              |
|                                   | * |                              |
| Pursuant to Section 310 of the    | * |                              |
| Communications Act                |   |                              |
|                                   | * |                              |
| and                               | * |                              |
|                                   | ) |                              |
| POWERTEL, INC.,                   | * |                              |
|                                   | * |                              |
| Transferor,                       |   |                              |
|                                   | * |                              |
| and                               | * |                              |
|                                   | ) |                              |
| VOICESTREAM WIRELESS              | * |                              |
|                                   | * |                              |
| CORPORATION,                      |   |                              |
|                                   | * |                              |
| Transferee,                       | * |                              |
|                                   | ) |                              |
| for Consent to Transfer           | * |                              |
|                                   | * |                              |
| Control of Licenses and           |   |                              |
| Authorizations                    | * |                              |
|                                   | * |                              |
| Pursuant to Sections 214 and      | ) |                              |
| 310(d) of the                     | * |                              |
|                                   | * |                              |
| Communications Act                |   |                              |
|                                   | * |                              |
| and                               | * |                              |
|                                   | ) |                              |
| ELISKA WIRELESS VENTURES LICENSE  | * |                              |
| SUBSIDIARY I, L.L.C., WIRELESS    | * |                              |
| ALLIANCE L.L.C., COOK INLET/VS    |   |                              |
| GSM IV PCS, LLC and               | * |                              |
|                                   | * |                              |
| COOK INLET/VS GSM V PCS, LLC      | ) |                              |
|                                   | * |                              |
| Petitions for Declaratory Ruling  | * |                              |
| Pursuant to Section 310(b)(4) of  |   |                              |
| the Communications Act            | * |                              |
|                                   | * |                              |
| and                               | ) |                              |
|                                   | * |                              |
| IOWA WIRELESS SERVICES HOLDING    | * |                              |
| CORPORATION,                      |   |                              |
|                                   | * |                              |
| *et al*.                          | * |                              |
|                                   | ) |                              |
| Petition for a Declaratory Ruling | * |                              |
| Pursuant to Section 310(b)(4) of  | * |                              |
| the Act, and for a Ruling that    |   |                              |
| the Transfer of a Minority        | * |                              |
| Ownership Interest in the         | * |                              |
| Licensee does not constitute a    | ) |                              |
| transfer of control under Section | * |                              |
| 310(d)                            | * |                              |
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+-----------------------------------+---+------------------------------+

**MEMORANDUM OPINION AND ORDER**

**Adopted:** April 24, 2001 **Released:** April 27, 2001

By the Commission: Commissioner Furchtgott-Roth approving in part,
dissenting in part, and issuing

a statement.

**TABLE OF CONTENTS**

Paragraph

I. INTRODUCTION and background 1

A. The Applicants 4

1\. VoiceStream Wireless Corporation 4

2\. Deutsche Telekom AG [6](#deutsche-telekom-ag)

3\. Powertel, Inc. 8

B. The Merger Transactions 9

C. Applications and Review Process 12

1\. Commission Review 12

2\. Department of Justice Review 16

D. Framework for Analysis 17

II\. QUALIFICATIONS OF APPLICANTS 19

A. Qualifications of Transferors 19

1\. Background 21

2\. The \$5 Billion Investment 23

3\. Section 5.15 of the VoiceStream-DT Merger Agreement 28

B. Qualifications of Transferee 30

III\. Statutory Interpretation of SectionS 310(a) AND (b) 33

A. Background 34

B. Analysis 38

C. Section 310(b)(4) Framework 49

IV\. alleged harms associated with Foreign government Ownership 51

A. Foreign Government Control of DT 56

B. Foreign Government Ownership and Possible Financial Advantages 60

1\. Preferential Access to Capital and Government Subsidies 60

2\. Possible Favorable Regulatory Treatment 66

C. Strategic Trade Policy Concerns 71

D. National Security, Law Enforcement, and Public Safety Interests 73

V. alleged Harms to competition in specific u.s. markets 78

A. Domestic Mobile Telephony Markets 79

1\. Relevant Markets and Significant Participants 81

2\. Competitive Analysis 83

3\. Rural Market Entry 93

B. U.S. International Services Market 96

1\. Relevant Market and Significant Participants 97

2\. Competitive Analysis 98

3\. Dominant Carrier Safeguards 100

C. Global Wireless Issues 103

1\. Background 105

2\. Competitive Analysis 107

a\. International roaming 107

b\. Third generation technology 112

c\. Expansion of global footprint 113

D. Conclusion 115

VI\. alleged pro-competitive Benefits 116

VII\. CONCLUSIONs 125

A. Section 310(b)(4) 125

B. Sections 214 and 310(d) 126

VIII\. Related petitions 127

A. CIVS IV and CIVS V 129

B. Wireless Alliance, L.L.C. 132

C. Iowa Wireless 135

D. Eliska Wireless Ventures 139

IX\. ORDERING CLAUSES 143

APPENDIX A: Commenters and Filings

APPENDIX B: DT--VoiceStream/DOJ/FBI Agreement

# INTRODUCTION and background

1.  In this Order, we consider the joint applications filed by Deutsche
    Telekom AG (DT), VoiceStream Wireless Corporation (VoiceStream), and
    Powertel, Inc. (Powertel) (collectively, Applicants), pursuant to
    sections 214(a) and 310(d) of the Communications Act of 1934, as
    amended (Communications Act or Act),[^1] for authority to transfer
    control of licenses and authorizations held by VoiceStream and
    Powertel to DT in connection with their proposed merger.[^2] We
    conclude that approval of the applications to transfer control is in
    the public interest, subject to the conditions specified herein. We
    grant the petition filed by the U.S. Department of Justice and the
    Federal Bureau of Investigation to condition grant of the
    applications on the Applicants' compliance with their joint
    agreement regarding foreign ownership and national security issues.
    We also grant, to the extent specified herein, the petitions for
    declaratory ruling pursuant to section 310(b)(4) of the Act filed by
    VoiceStream and Powertel and find that the public interest would not
    be served by denying the proposed indirect foreign ownership of
    VoiceStream and Powertel by DT in excess of 25 percent.

2.  We also grant, to the extent specified herein, four separate
    petitions for declaratory ruling pursuant to section 310(b)(4),
    allowing indirect foreign ownership resulting from the VoiceStream
    DT proposed merger, filed by the following entities: (i) Cook
    Inlet/VS GSM IV PCS, L.L.C., and Cook Inlet/VS GSM V PCS, L.L.C.
    (CIVS IV and CIVS V); (ii) Wireless Alliance, L.L.C.; (iii) Iowa
    Wireless Services Holding Corporation; and (iv) Eliska Wireless
    Ventures License Subsidiary I, L.L.C.[^3]

3.  In the event that the merger of VoiceStream and DT is not
    consummated, we grant in the alternative Powertel's application to
    transfer control of licenses and authorizations it holds to
    VoiceStream, as discussed further herein.[^4]

## The Applicants

### VoiceStream Wireless Corporation

4.  VoiceStream is a publicly-traded Delaware corporation, headquartered
    in Bellevue, Washington.[^5] VoiceStream operates personal
    communications service (PCS) systems throughout much of the United
    States, using the global system for mobile communications (GSM)
    standard.[^6] VoiceStream subsidiaries are also licensed to operate
    point-to-point microwave, local multipoint distribution service
    (LMDS), wireless communications service (WCS), and specialized
    mobile radio (SMR) systems in various markets in the United
    States.[^7]

5.  In the first half of 2000, VoiceStream acquired two other GSM-based
    PCS operators, Omnipoint Corporation and Aerial Communications,
    Inc., making VoiceStream the eighth-largest mobile telephony
    operator in the United States in terms of subscribership.[^8] In
    addition, VoiceStream recently acquired control of a number of PCS
    and WCS licenses from Cook Inlet Region, Inc.[^9] By the end of
    2000, VoiceStream served approximately 3.9 million customers,
    ranking seventh among mobile telephony operators in the United
    States in terms of subscribership and revenues.[^10] VoiceStream is
    also an authorized provider of international global resale services,
    and intends to continue to provide such services through several of
    its wholly-owned subsidiaries.[^11]

### Deutsche Telekom AG

6.  DT, a publicly-traded German corporation, is headquartered in Bonn,
    Germany.[^12] Currently, the German government holds a 60-percent
    voting interest in DT.[^13] The Applicants state that the
    government's interest will decline to 45.7 percent as a result of
    DT's merger with VoiceStream, and will decline further to
    approximately 45 percent following the closing of DT's merger with
    Powertel.[^14]

7.  Within Germany, DT provides telecommunications and information
    services, including local and long distance services, mobile
    services, Internet services, data and IP system solutions, ISDN
    services, and cable television distribution services.[^15] DT is
    Germany's largest carrier, accounting as of June 2000 for
    approximately 80 percent of minutes generated daily in Germany.[^16]
    DT provides mobile telephony services in Germany and throughout
    Europe through T‑Mobile International AG (T‑Mobile). T‑Mobile is
    Germany's second-largest wireless carrier with approximately 13.4
    million subscribers constituting 39 percent of the German market as
    of June 2000.[^17] T‑Mobile serves an additional 7.6 million
    subscribers in other European countries through entities that it
    controls.[^18] T‑Mobile's PCS systems use a GSM platform to provide
    voice and data services. DT provides international services between
    the United States and other countries through Deutsche Telekom, Inc.
    (DTI), a wholly-owned subsidiary of DT that is authorized to provide
    U.S. international facilities-based and resale services.[^19] DT
    also holds an approximately nine percent non-attributable interest
    in Sprint PCS.[^20]

### Powertel, Inc.

8.  Powertel is a publicly-traded Delaware corporation, headquartered in
    West Point, Georgia.[^21] Powertel, through its various wholly-owned
    subsidiaries, is licensed to provide wireless PCS service in 12
    states in the southeastern United States.[^22] Like DT and
    VoiceStream, Powertel uses the GSM standard in its provision of PCS
    service. As of June 30, 2000, Powertel served approximately 727,000
    customers.[^23] Powertel is also authorized to provide international
    global resale services.[^24]

## The Merger Transactions 

9.  On July 23, 2000, VoiceStream and DT entered into an Agreement and
    Plan of Merger (VoiceStream DT Merger Agreement) that, upon
    consummation, will make VoiceStream a wholly-owned subsidiary of
    DT.[^25] Under the terms of the VoiceStream DT Merger Agreement, DT
    will acquire 100 percent of the outstanding stock of
    VoiceStream.[^26] To accomplish this acquisition, DT has created a
    wholly-owned subsidiary under Delaware law that will be merged with
    and into VoiceStream, with VoiceStream as the surviving entity.[^27]

10. On August 26, 2000, Powertel and DT entered into an Agreement and
    Plan of Merger (Powertel DT Merger Agreement) that will, upon
    consummation, give DT ultimate control of Powertel.[^28] The
    Powertel DT merger will occur only if DT and VoiceStream consummate
    their proposed merger.[^29] After consummation of the VoiceStream DT
    and the Powertel DT mergers, the parties anticipate that Powertel's
    services will be provided under the VoiceStream brand. Under the
    Powertel DT Merger Agreement, DT will acquire 100 percent of the
    outstanding common stock of Powertel.[^30] To accomplish this
    acquisition, DT has incorporated a wholly-owned subsidiary, pursuant
    to Delaware law, that will be merged with and into Powertel, with
    Powertel as the surviving entity.[^31]

11. If DT and VoiceStream do not consummate their proposed merger,
    VoiceStream intends to acquire Powertel directly. Therefore,
    VoiceStream and Powertel concurrently filed applications seeking
    authority to transfer control of Powertel's licenses and
    authorizations to VoiceStream in the event that the VoiceStream-DT
    merger is not consummated.[^32] The VoiceStream Powertel Application
    does not include a petition for declaratory ruling pursuant to
    section 310(b)(4) because the level of foreign ownership in the
    merged entity would be consistent with VoiceStream's current foreign
    ownership authorization.[^33]

## Applications and Review Process

### Commission Review

12. The applications described above cover the proposed transfer of
    control of VoiceStream's and Powertel's radio licenses pursuant to
    section 310(d) of the Act. Pursuant to section 214 of the Act,
    VoiceStream and Powertel also filed certain applications seeking
    Commission approval to transfer to DT control of international
    section 214 authorizations held by various operating subsidiaries of
    VoiceStream or Powertel.[^34]

13. Both the VoiceStream DT Application and the Powertel DT Application
    (collectively, the DT Transfer Applications) also include Petitions
    for Declaratory Ruling pursuant to the Commission's *Foreign
    Participation Order*,[^35] seeking Commission approval of the
    indirect foreign ownership of common carrier radio licenses held by
    certain licensee subsidiaries of VoiceStream and Powertel.[^36]
    VoiceStream and Powertel also filed Foreign Carrier Affiliation
    Notifications with the Commission stating that, after the proposed
    transaction, they will have an affiliation, within the meaning of
    section 63.09 of the Commission's rules, with a foreign carrier that
    has market power in its home market.[^37]

14. On October 11, 2000, the International Bureau and the Wireless
    Telecommunications Bureau released a Public Notice seeking public
    comment on the proposed transactions.[^38] More than 25 parties
    timely filed comments supporting or opposing grant of the
    applications, or petitions to deny the applications.[^39] On
    December 6, 2000, the International Bureau adopted a protective
    order under which third parties would be allowed to review
    confidential or proprietary documents that the Applicants
    submitted.[^40] In February 2001, International Bureau staff
    requested additional information from the Applicants,[^41] and the
    Applicants' responses are included in the record.

15. In addition, on February 1, 2001, the International Bureau released
    a Public Notice seeking comment on four petitions for declaratory
    ruling pursuant to section 310(b)(4) and one petition for
    declaratory ruling under sections 310(b)(4) and 310(d) of the Act,
    filed by entities in which VoiceStream currently holds indirect,
    non-controlling interests.[^42]

### Department of Justice Review

16. The Antitrust Division of the U.S. Department of Justice reviews
    telecommunications mergers pursuant to section 7 of the Clayton Act,
    which prohibits mergers that are likely to substantially lessen
    competition.[^43] The Antitrust Division's review is limited solely
    to an examination of the competitive effects of the acquisition,
    without reference to national security, law enforcement or other
    public interest considerations.[^44] The Antitrust Division reviewed
    both the potential horizontal and vertical effects of the proposed
    acquisition of VoiceStream by DT and concluded that the proposed
    acquisition does not violate the Clayton Act.[^45] Specifically, the
    Antitrust Division concluded that DT's minority interest in Sprint,
    in combination with its proposed acquisition of VoiceStream, would
    not substantially lessen competition in the United States.[^46] The
    Antitrust Division also considered whether, with respect to calls
    between DT's German and U.S. customers, the proposed acquisition
    would enable DT to use its dominant position in Germany to
    substantially lessen competition through the vertical relationship
    between DT and VoiceStream. The Antitrust Division concluded that
    VoiceStream accounts for such a small portion of the origination and
    termination of U.S.--German calls that competition would not be
    substantially lessened by the proposed acquisition.[^47]

## Framework for Analysis

17. Pursuant to sections 214(a) and 310(d) of the Act, the Commission
    must determine whether the Applicants have demonstrated that the
    proposed transfer of control of VoiceStream's and Powertel's
    licenses will serve the public interest, convenience and
    necessity.[^48] We also must determine whether the transfers of
    control are consistent with the requirements of sections 310(a)
    and (b) regarding foreign ownership of radio licenses. Section
    310(d) further requires that we consider the applications as if the
    proposed transferee were applying for the licenses directly under
    section 308 of the Act.[^49] Thus, we must examine DT's
    qualifications to hold licenses. In discharging these statutory
    responsibilities, we have weighed the potential public interest
    harms of the proposed transactions against the potential public
    interest benefits to ensure that, on balance, the transfers of
    control serve the public interest, convenience, and necessity.[^50]

18. Because DT is a foreign carrier, we are also guided by the
    Commission's policies regarding foreign participation in U.S.
    markets. Specifically, in 1997, in response to market changes such
    as the market-opening commitments undertaken by World Trade
    Organization (WTO) Members in the WTO Basic Telecommunications
    Agreement,[^51] the Commission adopted the *Foreign Participation
    Order*, which contains rules and policies relating to the
    participation in United States telecommunications markets of foreign
    carriers and U.S. carriers affiliated with foreign carriers.[^52] In
    the *Foreign Participation Order*, the Commission found that foreign
    investment can promote competition in U.S. markets and that the
    public interest is served by permitting more open investment in U.S.
    common carrier radio licensees by entities from WTO member
    countries.[^53] Accordingly, the Commission adopted, as a factor in
    the public interest analysis, a rebuttable presumption that
    competitive concerns under sections 214 and 310(b)(4) of the Act are
    not raised by applications that propose indirect ownership by
    entities from WTO Members of common carrier and aeronautical radio
    licensees, unless granting the application would pose a very high
    risk to competition in a U.S. market that cannot be addressed by
    conditions.[^54]

# QUALIFICATIONS OF APPLICANTS

## Qualifications of Transferors

19. As a threshold matter, we must determine whether the Applicants meet
    the requisite qualifications to hold and transfer licenses under
    section 310(d) of the Act and our rules. In general, when evaluating
    assignment and transfer applications under section 310(d), we do not
    re-evaluate the qualifications of transferors.[^55] The exceptions
    to this general rule occur where issues related to basic
    qualifications have been designated for hearing by the Commission or
    have been sufficiently raised in petitions to warrant the
    designation of a hearing.[^56]

20. Although no party has directly challenged the basic qualifications
    of Powertel or VoiceStream as transferors, Senator Hollings has
    alleged that VoiceStream is currently a representative of the German
    government.[^57] Specifically, Senator Hollings questions whether a
    September 6, 2000, investment of \$5 billion by DT in VoiceStream,
    and the provisions contained in the VoiceStream DT Merger Agreement,
    violate the foreign ownership restrictions of section 310(b)(4) of
    the Act,[^58] and, in effect, constitute an unauthorized transfer of
    control of VoiceStream to DT in violation of section 310(d) of the
    Act.[^59] These arguments also directly raise broader issues
    regarding foreign government ownership in DT that implicate our
    public interest analysis under section 310(b)(4) of the Act, and we
    address those issues in Part IV below. We limit our discussion in
    this section to the narrow issue of whether the \$5 billion
    investment in VoiceStream by DT, in conjunction with provisions of
    the VoiceStream DT Merger Agreement, violate the Act or our rules.
    We conclude that they do not, and that there are no substantial and
    material questions of fact to warrant the designation of a hearing
    on these issues.[^60]

### Background

21. The relevant facts underlying the allegation that there has been a
    violation of section 310(b)(4) of the Act and an unauthorized
    transfer of control are not in dispute. On September 6, 2000, DT
    purchased 3,906,250 shares of VoiceStream voting preferred stock for
    \$5 billion, which carried with it voting rights of less than 1.7
    percent of VoiceStream's outstanding voting shares.[^61] The
    preferred stock is convertible at DT's option to 31,250,000 shares
    of VoiceStream common stock if, and only if, the VoiceStream DT
    Merger Agreement is terminated.[^62] At the time of the investment,
    VoiceStream had a total of 217,936,318 shares on a fully diluted
    basis.[^63] DT's shares, if converted, would have represented 11.49
    percent of the total shares of VoiceStream on a fully diluted
    basis.[^64]

22. In addition, section 5.15 of the VoiceStream DT Merger Agreement,
    requires, among other things, that VoiceStream and members of a
    DT-appointed Acquisitions Committee develop a schedule of maximum
    amounts that VoiceStream would be permitted to bid on individual
    licenses, as well as in the aggregate, in any Commission spectrum
    auction occurring during the pendency of the merger
    transaction.[^65] Further, during an auction, to the extent
    VoiceStream desires to bid in excess of the maximum approved bid
    amounts, VoiceStream would be required to seek further approval from
    at least one member of the DT-appointed Acquisitions Committee that,
    under the terms of the VoiceStream DT Merger Agreement, is charged
    with reviewing acquisitions by VoiceStream prior to consummation of
    the merger.[^66]

### The \$5 Billion Investment

23. Senator Hollings argues that, in assessing the level of foreign
    ownership of an entity, Commission precedent requires us not merely
    to count the number of shares owned by a foreign entity, but also to
    compare the percentage of capital being invested by the foreign
    entity with the total invested capital.[^67] Using a total
    paid-in-capital approach to calculate foreign ownership, this
    argument suggests that the \$5 billion investment by DT represents a
    foreign ownership interest of 39 percent in VoiceStream,[^68]
    thereby causing VoiceStream to exceed the 25-percent benchmark in
    section 310(b)(4),[^69] and concludes that, because VoiceStream
    failed to seek prior Commission consent for this level of ownership,
    it violated section 310(b)(4) of the Act.[^70]

24. We agree that we must closely examine the extent of foreign
    ownership interests. Under Commission precedent, stock ownership in
    a publicly-traded corporation has generally been the measure of an
    investor's beneficial ownership of that corporation. However, in
    assessing the extent of alien ownership interests in some cases, we
    have found that the section 310(b)(4) benchmark should be applied
    "in a manner that considers factors in addition to the number of
    alien-owned shares of stock where the distribution of shares of
    stock is not proportionate to equity interests."[^71] Specifically,
    in *Fox I*, the decision upon which the alternate interpretation
    ultimately relies, the Commission stated that it will use a
    paid-in-capital analysis to determine foreign ownership in those
    instances in which "a simple 'count the shares' methodology leads to
    patently absurd results."[^72] As explained below, however, we find
    that, in this case, a count-the-shares approach accurately measures
    DT's beneficial ownership of VoiceStream.

25. In *Fox I*, the ultimate holding company of Fox Television Stations
    (FTS), News Corporation Ltd. (News Corp.), had contributed 99
    percent of the paid-in capital and held 100 percent of the issued
    common stock of FTS' corporate parent, which entitled News Corp. to
    only 24 percent of the voting rights.[^73] The Commission found it
    significant that News Corp., as holder of all of the common stock,
    had the right to substantially all of the licensee's corporate
    parent's profits and losses and had the right to substantially all
    of FTS's assets upon its sale or dissolution.[^74] Given the widely
    divergent characteristics of the various classes of stock and the
    disparity between the ownership of corporate shares and the
    beneficial ownership, the Commission found that a count-the-shares
    approach produced an absurd result. The Commission, therefore,
    adopted a paid-in-capital analysis, which, for a privately-held
    corporation such as the one at issue in *Fox I*, produced a more
    accurate result.[^75] Similarly, in the *NextWave* case, the
    Wireless Telecommunications Bureau used the paid-in-capital approach
    applied in *Fox I* to unravel the level of foreign ownership of a
    privately-held company that was trying to qualify as a small
    business under the Commission's auction eligibility rules.[^76] In
    that case, because much of the foreign investment was held in
    instruments improperly characterized as debt rather than equity,
    application of a count-the-shares approach would have produced a
    misleading determination of the extent of foreign ownership.[^77]

26. In addition to the unique factual circumstances in *Fox I* that led
    the Commission to use a paid-in-capital analysis, the Commission
    also recognized that using paid-in capital as the appropriate
    measure could present problems in accurately measuring foreign
    ownership interests in widely-held corporations.[^78] The instant
    case illustrates the validity of those concerns. Because the prices
    paid for shares of a widely-held, publicly-traded company, such as
    VoiceStream, differ based upon the time when each shareholder makes
    an investment, application of a paid-in-capital methodology for
    evaluating equity interests in such companies does not accurately
    reflect a shareholder's equity interests. Although different
    shareholders likely paid different prices for their shares because
    of fluctuations in the market between the times of different
    shareholder investments,[^79] any individual shareholder's equity
    stake in VoiceStream is not a function of the price it paid for its
    shares. The market price DT agreed to pay for its shares did not
    entitle it to shareholder rights materially different from the
    rights of all common shareholders.[^80] In particular, DT's stake is
    no different, on a share-for-share basis, from any other shareholder
    of VoiceStream.[^81] Furthermore, VoiceStream, unlike the
    corporations at issue in *Fox I* and *NextWave*, is a
    publicly-traded company with a market value ascertainable from the
    public market. Thus, it was VoiceStream's market value at the time
    of the \$5 billion investment on which DT's investment was
    based.[^82] Therefore, VoiceStream's status as a widely-held,
    publicly-traded company, the nature of the relationship between
    stock and equity generally, and the specific facts of DT's
    investment---factors which distinguish this case from the precedent
    on which Senator Hollings relies---lead us to conclude that a
    count-the-shares approach for determining DT's post-investment
    ownership of VoiceStream yields an accurate measure of DT's
    beneficial ownership.[^83]

27. Accordingly, we find that the total foreign ownership interest
    created in VoiceStream by DT's \$5 billion investment on a fully
    converted basis,[^84] was 11.49 percent at the time of
    investment,[^85] well below the 25-percent benchmark of section
    310(b)(4).[^86] Further, we affirm the determination of the
    International Bureau and Wireless Telecommunications Bureau
    (collectively, the Bureaus) in the *VoiceStream-CIRI Order* that
    DT's \$5 billion investment, which the Bureaus assumed *arguendo* in
    that proceeding constituted an additional 11.49 percent foreign
    ownership interest, was well below the level authorized by the most
    recent rulings on VoiceStream's foreign ownership.[^87]
    Specifically, those rulings permitted VoiceStream's common carrier
    licensees to be indirectly owned by Hutchison Whampoa Limited, a
    Hong Kong limited liability company, up to 30.6 percent.[^88] The
    rulings also stated that VoiceStream is authorized to accept an
    additional up-to-25-percent indirect foreign ownership interest
    without seeking an additional ruling.[^89] The Bureaus found that
    the aggregation of VoiceStream's foreign ownership interests other
    than that of Hutchinson Whampoa Limited, including that interest now
    held by DT, remained within the 25 percent foreign ownership
    benchmark.[^90] Thus, we find that VoiceStream was not required to
    seek additional Commission approval for the \$5 billion investment
    by DT, and did not violate section 310(b)(4).

### Section 5.15 of the VoiceStream-DT Merger Agreement

28. We also do not conclude that, because of limitations imposed on
    VoiceStream's future participation in spectrum auctions by section
    5.15 of the VoiceStream DT Merger Agreement, "the German government,
    through Deutsche Telekom, is already exercising control over
    VoiceStream,"[^91] in effect, making VoiceStream a representative of
    the German government in violation of section 310(a) of the Act, and
    constituting an unauthorized transfer of control under section
    310(d) of the Act.[^92] Because DT's approximate 1.7 percent voting
    interest in VoiceStream is limited, we focus our analysis on the
    provisions of section 5.15(b) of the VoiceStream DT Merger
    Agreement, which we find are substantially similar to the types of
    agreements previously found by the Commission not to constitute
    transfers of control.[^93] We therefore find that there has been no
    unauthorized transfer of control of VoiceStream to DT, or indirectly
    to the German government.

29. The Commission has held that certain types of investor protections
    and purchaser safeguards, including limitations on a company making
    substantial outlays of capital without first obtaining the consent
    of the buyer or investor, do not *per se* constitute a premature
    transfer of control.[^94] Further, the Commission has allowed many
    types of safeguards to permit licensees to attract investment,
    recognizing that "the inclusion of such provisions is a common
    practice to induce investment and ensure that the basic interests of
    such shareholders are protected."[^95] The sections in the
    VoiceStream DT Merger Agreement regarding VoiceStream's
    participation in spectrum auctions are part of larger provisions
    governing acquisitions by VoiceStream generally during the pendency
    of the merger.[^96] The substantial outlay of capital required in a
    spectrum auction is demonstrated by VoiceStream's participation in
    Auction 35.[^97] We agree that the provisions of section 5.15 of the
    VoiceStream DT Merger Agreement do not indicate "that VoiceStream
    has ceded or will cede day-to-day operating control of the company
    to DT in violation of the Commission's rules."[^98] In addition, the
    evidence in the record regarding how the Applicants applied this
    provision in the context of VoiceStream's participation in Auction
    35 causes us no further concern.[^99] Accordingly, we find that the
    provisions of section 5.15(b) of the VoiceStream DT Merger Agreement
    did not result in an unauthorized transfer of control of VoiceStream
    to DT in violation of section 310(d) of the Act, nor did these
    provisions make VoiceStream a representative of DT or, by extension,
    the German government, in violation of section 310(a) of the Act. We
    conclude, therefore, that neither DT's \$5 billion investment in
    VoiceStream nor the provisions of the VoiceStream DT Merger
    Agreement raise substantial and material questions of fact regarding
    VoiceStream's qualifications as transferor, warranting a hearing

## Qualifications of Transferee

30. Pursuant to section 308 of the Act, and as a regular part of our
    public interest analysis, we determine whether the proposed
    transferee or assignee is qualified to hold Commission
    licenses.[^100] Except to the extent that the foreign government
    ownership issues discussed below bear on DT's qualifications, no
    parties have challenged the legal, financial or other basic
    qualifications of DT as transferee. Therefore, based on our
    independent review of the legal qualifications of DT as transferee,
    and having found no reason to examine further DT's qualifications,
    we conclude that DT is legally and otherwise qualified to hold the
    licenses at issue.[^101]

31. Likewise, no party has directly challenged VoiceStream's basic
    qualifications as transferee of the Powertel licenses with respect
    to the proposed alternative transaction between VoiceStream and
    Powertel.[^102] However, Senator Hollings raises issues that would
    implicate VoiceStream's qualifications as transferee of the Powertel
    licenses, asserting that, because of the \$5 billion investment by
    DT and certain provisions in the VoiceStream-DT Merger Agreement,
    VoiceStream has effected an unauthorized transfer of control and
    violated sections 310(a), 310(b)(4), and 310(d) of the Act.[^103] As
    discussed above, however, we find that there has been no
    unauthorized transfer of control or violation of the Act or our
    rules. Accordingly, because the Bureaus have previously found that
    VoiceStream is fully qualified to hold Commission licenses,[^104]
    and no party has raised any direct objection to VoiceStream's
    holding the Powertel licenses, we do not find an independent reason
    to examine further VoiceStream's qualifications as transferee.
    Therefore, we find that VoiceStream is fully qualified to acquire
    these licenses.

32. In addition to our inquiry as to a proposed transferee's
    qualifications, where applications seek consent to transfer control
    of C and F block PCS licenses, such as the instant applications, we
    normally are required to determine whether the proposed transferee
    meets the eligibility criteria under the Commission's rules.[^105]
    We need not do so in this case, however, given the unique history of
    these licenses. VoiceStream recently acquired control of certain C
    and F block PCS licenses from Cook Inlet Region, Inc. (CIRI).[^106]
    CIRI transferred the 144 C and F block PCS licenses to VoiceStream
    pursuant to section 8149 of the Department of Defense Appropriations
    Act of 2001 (the Defense Appropriations Act).[^107] Section 8149 of
    the Defense Appropriations Act removed all eligibility restrictions
    and modified the applicable unjust enrichment provisions with
    respect to the C and F block licenses at issue in this
    transaction.[^108] Accordingly, we need not address the issue of
    whether DT is eligible to hold these licenses under the Commission's
    rules.

# Statutory Interpretation of SectionS 310(a) AND (b) 

33. The proposed transfer of control of licenses from VoiceStream and
    Powertel to DT will result in the companies becoming wholly-owned
    subsidiaries of DT, a company organized under the laws of Germany in
    which the German government still owns and will continue to own a
    substantial interest.[^109] The Applicants have petitioned the
    Commission to find that the resulting indirect foreign and
    government ownership of their common carrier wireless licenses is
    permissible under section 310(b)(4) of the Act.[^110] Insofar as
    this case requires the Commission to resolve the relationship
    between the restrictions on foreign government ownership in section
    310(a) and the provision providing for indirect foreign government
    ownership in section 310(b)(4), it is a matter of first impression
    for the Commission.[^111] We first address the interpretation of the
    foreign ownership restrictions contained in sections 310(a) and (b)
    and respond to issues raised by commenters in order to identify the
    appropriate framework for analyzing this case. Based on our
    analysis, we conclude that, pursuant to the terms of the statute,
    indirect ownership of the licensee by a foreign government, foreign
    corporation, and aliens resulting from the proposed transaction
    should be addressed only under section 310(b)(4). That section
    provides that an alien or foreign government or their respective
    representatives or any corporation organized under the laws of a
    foreign country may hold greater than a 25-percent interest in a
    corporation that controls a corporate licensee, unless the
    Commission finds that the public interest will be served by refusal
    or revocation of the license.[^112] We then consider the facts
    before us in accord with this statutory standard.

## Background

34. Section 310 provides several discrete categories of restrictions on
    foreign ownership of radio licenses. First, sections 310(a) and
    310(b)(1) and 310(b)(2) provide:

> \(a\) The station license required under this Act shall not be granted
> to or held by any foreign government or the representative thereof.

(b) No broadcast or common carrier or aeronautical en route or
    aeronautical fixed radio station license shall be granted to or held
    by --

\(1\) any alien or the representative of any alien;

> \(2\) any corporation organized under the laws of any foreign
> government;

Thus, sections 310(a), (b)(1), and (b)(2) by their express terms
prohibit radio licenses from being "granted to or held by" foreign
governments and their representatives, aliens and their representatives,
and foreign corporations.[^113] Section 310(b)(3) extends the
prohibition to corporations that are more than 20 percent owned directly
by the entities identified in sections 310(a), (b)(1), and (b)(2).[^114]
Section 310(b)(3) provides:

> \(b\) No broadcast or common carrier or aeronautical en route or
> aeronautical fixed radio station license shall be granted to or held
> by --

(3) any corporation of which more than one-fifth of the capital stock is
    owned of record or voted by aliens or their representatives or by a
    foreign government or representative thereof or by any corporation
    organized under the laws of a foreign country.

Finally, section 310(b)(4) provides:

> \(b\) No broadcast or common carrier or aeronautical en route or
> aeronautical radio station license shall be granted to or held by --
>
> \(4\) any corporation directly or indirectly controlled by any other
> corporation of which more than one-fourth of the capital stock is
> owned of record or voted by aliens, their representatives, or by a
> foreign government or representative thereof, or by any corporation
> organized under the laws of a foreign country, if the Commission finds
> that the public interest will be served by the refusal or revocation
> of such license.

Therefore, section 310(b)(4) extends the prohibition to any corporation
that is directly or indirectly controlled by another corporation that is
more than 25 percent owned by the entities identified in sections
310(a), (b)(1), and (b)(2), if the Commission finds that the public
interest will be served by not granting a license in this
circumstance.[^115]

35. The legislative evolution of these statutory provisions indicates
    that the categories of restrictions developed over time to reach
    situations where the foreign connection was progressively less
    direct and imposed restrictions that were progressively less
    absolute. The first restrictions, set forth in the Radio Act of
    1912, required licensees to be U.S. citizens or domestic
    corporations (effectively prohibiting aliens, foreign governments,
    or foreign corporations from holding licenses).[^116] That
    requirement was almost immediately interpreted, according to its
    plain language, to allow a license to be held by a domestic
    corporation that was itself a subsidiary of a foreign
    corporation.[^117] The Radio Act of 1927 imposed foreign ownership
    restrictions in language quite similar to that currently contained
    in sections 310(a), (b)(1), (b)(2), and (b)(3).[^118] It addressed a
    circumstance not covered under the 1912 Act (foreign ownership of
    domestic corporations holding licenses) by extending the prohibition
    of alien ownership to corporations that were more than 20 percent
    owned by the prohibited entities, in language now reflected in
    section 310(b)(3).[^119] Like sections 310(a), (b)(1) and (b)(2),
    section 310(b)(3) establishes an absolute prohibition on interests
    exceeding the 20 percent limit. At the same time, by allowing
    licensee corporations with up to 20 percent foreign ownership, the
    provision allows some degree of investment in licensees by those
    barred from holding licenses directly.

36. In the Communications Act of 1934, Congress added the provision now
    contained in section 310(b)(4) to address another circumstance not
    previously covered: foreign ownership of domestic holding companies
    that directly or indirectly controlled domestic corporations holding
    licenses.[^120] The provision represented a compromise between
    competing policy considerations. The Navy argued for an absolute
    prohibition against foreign participation and control of licenses
    through holding companies.[^121] Others countered that restricting
    foreign control in holding companies that controlled licenses, such
    as International Telephone and Telegraph, would be detrimental to
    domestic and international competition and would lead to
    international retaliation.[^122] Balancing these conflicting
    concerns, Congress chose not to adopt an absolute prohibition.[^123]
    Instead, it barred the entities described in sections 310(a), (b)(1)
    and (b)(2) from owning more than 25 percent of such a holding
    company only if the FCC found such restrictions to be in the public
    interest in the particular case.[^124]

37. When section 310 of the Communications Act was enacted in 1934, the
    provisions contained in current sections 310(a) and (b) were
    contained in a single section 310(a). In 1974, the Communications
    Act was amended to separate sections 310(a) into the current
    sections 310(a) and 310(b).[^125] The legislative history reflects
    that this structural change was designed to lessen the burden on
    private radio licensees and permit entities other than foreign
    governments and their representatives to hold private radio licenses
    directly.[^126]

## Analysis

38. The primary dispute about the applicable legal standard with respect
    to foreign government ownership in this case focuses on the
    interpretation of section 310(a) and its relationship to section
    310(b)(4). Senator Hollings asserts that section 310(a) is an
    absolute prohibition, not only against a foreign government's or its
    representative's holding a license itself, but against any indirect
    control by a foreign government or its representative of a licensee
    as well, including the indirect control structures described in
    section 310(b)(4).[^127] This interpretation would limit the
    application of section 310(b)(4) to circumstances where ownership
    exceeds the 25 percent statutory benchmark, but does not amount to
    indirect control of the licensee. On the other hand, the Applicants
    urge us to read section 310(a) as prohibiting only the direct
    holding of a license by a foreign government or its
    representative.[^128] We acknowledge that the statutory provisions
    and the Commission's interpretations of them are not entirely free
    from ambiguity. For the reasons that follow, we believe the
    interpretation most consistent with the statutory language and its
    history is to address the facts of this case under the standard set
    out in section 310(b)(4).

39. First, turning to the statutory language, we note that section
    310(a) does not expressly prohibit indirect foreign government
    control of licensees. Meanwhile, the express terms of section
    310(b)(4) allow indirect ownership of a licensee corporation in
    excess of 25 percent by foreign governments and their
    representatives---as well as aliens, aliens' representatives, and
    foreign corporations---as long as the Commission does not find it
    would serve the public interest to deny such ownership. Nothing in
    the language of section 310(b)(4) limits its application to holdings
    that amount to less than control.

40. An interpretation of the statute that section 310(a) absolutely
    prohibits indirect control of a licensee corporation under the
    structure described in section 310(b)(4) therefore requires both
    reading section 310(a) to cover a situation (indirect control) it
    does not expressly address, and reading section 310(b)(4) not to
    cover a situation (ownership of a holding company that also
    constitutes indirect control of the licensee) that is within its
    express terms. Furthermore, the legislative history demonstrates
    that section 310(b)(4) was added in 1934 to address indirect
    ownership and control situations that were not considered covered by
    the prohibitions in current sections 310(a) or 310(b)(1)-(3). The
    Conference Report, for example, expressly noted with regard to the
    precursor of sections 310(a) and 310(b)(1)-(3), "Section 12 of the
    Radio Act restricting alien control of radio-station licenses does
    not apply to holding companies."[^129] In adopting section
    310(b)(4), however, Congress did not follow the pattern of
    non-discretionary prohibitions like those in the earlier sections as
    some had urged it to do. Instead, section 310(b)(4) makes the
    permissibility of indirect alien, foreign government, or foreign
    corporate ownership in excess of 25 percent subject to a public
    interest determination by the Commission.[^130]

41. Historically, the Commission has analyzed cases involving indirect
    alien ownership as described in section 310(b)(4) under that section
    rather than sections 310(b)(1) or (3), even where the ownership
    amounted to indirect *de jure* control of the licensee through a
    holding company that controls the licensee. [^131] For example, in
    the *Cable & Wireless* decision the Commission had to decide whether
    the proposed controlling interest in the licensee by an indirect,
    wholly-owned, subsidiary of a publicly-traded English parent company
    would be permitted.[^132] If the Commission had adopted the
    alternate interpretation urged here by commenters, it would have
    analyzed the *Cable & Wireless* transaction first under section
    310(b)(1) and subsequently applied the permissive provisions of
    section 310(b)(4) in order to allow the transaction to proceed.
    Instead, because the ultimate holding company was under alien
    control, the Commission considered the transaction solely under
    section 310(b)(4). In similar fashion, when adjudicating the *GRC
    Cablevision* application, where the ultimate shareholders were
    Canadian citizens, the Commission analyzed the transaction directly
    under the provisions of section 310(a)(5) (the precursor to section
    310(b)(4)), rather than first under section 310(b)(1).[^133]

42. These cases stand for the proposition that section 310(b)(1) does
    not bar indirect alien control of corporations holding licenses, and
    we find that they are relevant to the foreign government ownership
    case before us here. Both sections 310(a) and (b) employ the same
    operative language involving restrictions on licenses "granted to or
    held by" foreign governments or aliens and foreign corporations,
    respectively. In the alien ownership decisions, section 310(b)(4)
    applies where a holding company is controlled by alien ownership.
    The language in section 310(b)(4) gives no indication that foreign
    governments are to be treated any differently than aliens or foreign
    corporations.

43. Our analysis is also consistent with the Commission's decision in
    the *Intelsat* case.[^134] The Commission there resolved the
    indirect alien ownership issue by referring solely to section
    310(b)(4), since *Intelsat* involved alien control of a holding
    company that owned the entity holding the license. In that case, the
    Commission did not look first at the extent of alien ownership under
    section 310(b)(1) to determine the existence of control and then
    proceed to analyze issues under section 310(b)(4). Instead, the
    Commission considered that the matter was governed exclusively by
    section 310(b)(4). We believe that a consistent approach ought to be
    applied to our analysis of foreign government ownership, as the
    language in section 310(b)(1) prohibiting aliens from holding
    licenses parallels the language in section 310(a) prohibiting
    foreign governments from holding licenses. Although our discussion
    of section 310(a) in the *Intelsat* case could be read to take a
    different approach, we find that discussion not controlling. In
    response to arguments made by PanAmSat asserting that foreign
    government components of *Intelsat* had *de jure* and *de facto*
    control over Intelsat LLC (the licensee), the Commission pointed out
    that the 30 percent government-controlled interest in Intelsat
    constituted neither *de jure* nor *de facto* control over the
    licensee. That statement was sufficient to dispose of the arguments
    in *Intelsat*; nothing in the language was intended to imply that
    section 310(a) is applicable to indirect *de jure* control or to
    reflect any determination concerning the appropriate scope of
    matters covered by section 310(a). [^135] To the extent that there
    is any confusion, we take this opportunity to make clear that
    nothing in the *Intelsat* case should be read as contrary to our
    current analysis of section 310(a) as the issue is squarely
    presented by this case.

44. Similarly, in *Telecom Finland*, the only previous decision to
    discuss the relationship between sections 310(a) and 310(b)(4), the
    International Bureau was persuaded by the petitioners' argument and
    adopted its language that, "\[s\]ection 310(b)(4) creates an
    *exception* to section 310(a) to permit a foreign government to hold
    indirectly a U.S. license."[^136] We believe the better reading is
    that transactions involving the types of indirect foreign ownership
    addressed by section 310(b)(4) are governed solely by that section
    and fall outside the scope of section 310(a) and (b)(1)-(3).
    *Telecom Finland's* reference to section 310(b)(4) as an *exception*
    to section 310(a) unnecessarily complicates the analysis. To the
    extent that *Telecom Finland* can be read to conflict with today's
    decision, it is hereby overruled.

45. Notwithstanding an acknowledgement that control of a licensee by an
    *alien* in circumstances described in section 310(b)(4) should be
    dealt with under that section and is not prohibited by section
    310(b)(1),[^137] an argument has been made that the same
    circumstances involving foreign government, rather than alien,
    control should be prohibited by section 310(a).[^138] This argument
    apparently is grounded on the fact that since the 1974 amendments,
    the foreign ownership restriction found in section 310(a) has been
    set apart from the restrictions in section 310(b). While the
    statutory structure might plausibly be subject to several different
    interpretations, our review of section 310 as a whole, the history
    of these essentially parallel statutory provisions, and the reasons
    for the 1974 amendments best support an interpretation that treats
    foreign individuals, corporations, and governments in the same
    manner. Thus, we conclude that the scope of sections 310(a) and (b)
    should be interpreted consistently.

46. As previously noted, prior to 1974, what is now section 310(a) was
    incorporated in a single list of foreign ownership prohibitions in
    section 310. It was moved out into a separate subsection in
    1974.[^139] According to the Senate committee report, the purpose of
    the legislation was to amend section 310 "to permit direct licensing
    of aliens and corporations with certain alien officers, directors or
    stockholders rather than licensing them indirectly."[^140] There is
    no indication in the committee reports that the 1974 amendments
    should be interpreted to impose more stringent alien ownership
    restrictions.[^141] We decline, therefore, to infer from the 1974
    amendments that Congress intended the Commission either to expand
    the categories of transactions prohibited by the language placed in
    section 310(a), or to read into the provision placed in section
    310(b)(4) a limitation on indirect corporate control by foreign
    governments that does not apply to indirect corporate control by
    aliens.[^142]

47. Some commenters have also argued that DT is a "representative" of
    the German government within the meaning of section 310(a)'s
    prohibition because the government allegedly influences management
    decisions of DT, provides substantial financial backing to DT, and
    guarantees certain civil service benefits to employees of DT.[^143]
    This interpretation of the term "representative" seems to be based
    on the assumption that if it can be shown that a foreign government
    exercises *de facto* control over an entity, that entity becomes a
    "representative of" the foreign government. Such an interpretation
    would expand the definition beyond the scope of the statute's plain
    language and the Commission's precedent. The Commission consistently
    has construed "representative" of an alien or foreign government to
    apply to *individuals* "acting on behalf of" or "in conjunction
    with" the foreign entity.[^144] Granting "representative" a broader
    reach effectively reads section 310(a) to include situations already
    covered by the plain language of section 310(b)(4), which covers
    specific indirect forms of investments involving "foreign
    governments or representatives thereof." This broader interpretation
    also is inconsistent with the use of "representative of any alien"
    in section 310(b)(1), which has been recognized not to be an
    absolute bar to 100 percent indirect non-government, alien ownership
    of a licensee.[^145] Because this broader interpretation of the term
    "representative" proposed by some commenters is inconsistent with
    the text of sections 310(a) and 310(b) and Commission precedent, we
    decline to adopt it.

48. The Commission has been guided in its interpretation and application
    of the foreign ownership restrictions in sections 310(a) and (b) by
    Congress's balancing in 1934 of concerns about national security
    against the benefits of allowing foreign investment, both creating a
    more competitive market for American consumers and avoiding
    retaliation against U.S. investment in foreign markets.[^146] The
    public interest provisions of the Act allow the Commission to
    examine this balance and reach a conclusion based on the particular
    facts in cases involving indirect control of licensees by a foreign
    government. In this case, for example, section 310(b)(4) allows the
    Commission to take into account the potential adverse impacts of
    prohibiting indirect ownership and control in this case (e.g., lost
    domestic competition and international retaliation) at a time when
    the structure of international competition in telecommunications
    markets is at least as critical to U.S. consumers and businesses as
    it was in 1934.[^147] Therefore, we confirm that the language in
    section 310(b)(4) permits the Commission, without implied
    limitation, to find that the public interest would not be served by
    denying indirect foreign government ownership that amounts to
    control of a licensee.

## Section 310(b)(4) Framework

49. In Parts IV-V below, we consider the facts of this case pursuant to
    our public interest analysis under section 310(b)(4) of the Act.
    After DT's acquisition of VoiceStream and Powertel, the German
    government, either directly or through KfW, its nominee, will own
    approximately 45 percent of DT's stock.[^148] Total non-U.S.
    ownership of DT (i.e., ownership by the German government, aliens
    and foreign corporation) will amount to approximately 77
    percent.[^149] Thus, both the German government's holdings and the
    total non-U.S. holdings post merger will exceed the 25-percent
    benchmark set forth in section 310(b)(4). In addition, DT is a
    foreign corporation and its holdings will exceed the 25-percent
    benchmark. We must therefore examine whether denying such levels of
    alien, foreign government, and foreign corporate ownership would be
    consistent with the public interest.

50. In making this public interest determination, we first analyze
    whether, as some commenters have alleged, there are special risks to
    competition in the United States associated with the German
    government's partial ownership of DT. We also determine whether DT's
    control of the licenses at issue raises concerns relating to
    national security, law enforcement, and public safety.[^150]
    Finally, in Part V, *Alleged Harms to Competition in Specific U.S.
    Markets*, we examine and reject claims---analytically distinct from
    the allegations regarding DT's partial government ownership---that,
    as the dominant carrier in Germany, DT has access to monopoly
    profits and through predatory pricing or other methods of leveraging
    its dominance in Germany would gain an unfair competitive advantage
    for its U.S. operations.

# alleged harms associated with Foreign government Ownership

51. In the *Foreign Participation Order*, the Commission set forth the
    standards for analyzing competitive concerns resulting from foreign
    participation in U.S. telecommunications markets.[^151] The
    Commission found that applying an "open entry" standard under
    section 310(b)(4) to indirect foreign ownership in licensees
    involving WTO Members, in conjunction with enhanced safeguards and
    WTO Members' commitments to liberalize and privatize their markets,
    would better achieve its pro-competition goals.[^152] The Commission
    therefore removed the previous Effective Competitive Opportunities
    (ECO) test from the public interest analysis in making section
    310(b)(4) determinations with respect to WTO Members.[^153] The
    Commission replaced the ECO test with a rebuttable presumption in
    favor of entry for applicants from WTO Members.[^154] In adopting
    this presumption as a factor in its public interest analysis, the
    Commission made no distinction between government and private
    foreign ownership.

52. Several commenters, including the United States Chamber of Commerce
    and the European Union, argue that construing section 310 to
    absolutely prohibit indirect foreign government control could lead
    to retaliation and might be inconsistent with the United States'
    foreign trade obligations under the WTO Basic Telecom
    Agreement.[^155] We note that our interpretation harmonizes the
    statutory language, Congressional and Commission policy, and the
    U.S. obligations under the WTO.[^156]

53. While acknowledging the benefits of increased foreign participation
    in the U.S. telecommunications marketplace, the Commission has
    remained sensitive to its responsibility to promote U.S. competition
    and to protect national security and other interests raised by the
    Executive Branch in reviewing proposed foreign ownership. As to
    competition, the Commission stated in the *Foreign Participation
    Order* that the commitments made by WTO Members, the Commission's
    regulatory safeguards, and antitrust laws should, collectively,
    address competitive concerns resulting from foreign participation by
    carriers from WTO Members in U.S. telecommunications markets.[^157]
    Nevertheless, the Commission has acknowledged the possibility that
    entry by a foreign carrier might under some circumstances be so
    detrimental that the standard competitive safeguards would be
    ineffective.[^158] In such a case, the Commission has made clear
    that it would impose conditions on an authorization, or where an
    application poses a "very high risk to competition" in the U.S.
    market that cannot be addressed by such conditions, deny an
    application.[^159]

54. Several commenters argue that the German Government's ownership in
    DT will increase DT's ability to harm competition in U.S. markets.
    [^160] They allege that government ownership may permit an entity to
    acquire capital at an artificially low cost or permit it to engage
    in predatory behavior by subsidizing its entry into U.S. markets
    through supra-competitive pricing or cost misallocation in its
    foreign market if there is lax or discriminatory regulatory
    oversight.[^161] Commenters further argue that the Applicants will
    have extraordinary access to financial resources; will be more
    likely to engage in anti-competitive behavior because of favorable
    regulatory treatment of DT in Germany; and will possess additional
    advantages not enjoyed by competitors in the U.S. marketplace
    because of the Applicants' special relationship with the German
    Government.[^162]

55. We address each of these concerns below and conclude that DT's
    German government ownership does not confer any unique advantages
    that are likely to pose a risk to competition in the U.S.
    telecommunications market.[^163] We note further that after careful
    review and analysis of the proposed transaction (including the
    recognition that foreign government ownership of a party to a
    specific merger may be relevant to the analysis of the merger's
    competitive effect in some circumstances), the Antitrust Division of
    the Department of Justice concluded that the limited vertical
    integration resulting from the proposed transaction would not be
    likely to substantially lessen competition in violation of the
    antitrust laws. [^164]

## Foreign Government Control of DT

56. As a threshold matter, several commenters contend that the proposed
    transaction violates section 310(a) because it would result in the
    German government having *de facto* control over the corporations
    that hold the licenses. As explained above, the existence of such
    *de facto* control would not result in an absolute prohibition under
    section 310(a). Nevertheless, the existence and degree of control by
    the German government is relevant along with other factors in
    determining the public interest under section 310(b)(4). We
    therefore begin with an examination of the degree of control the
    German government will have over DT.

57. DT's German competitors and other commenters specifically allege
    that the German government will control DT because the government
    could exercise its shareholder rights to elect members of the
    Supervisory Board of Directors, which ultimately affects the
    appointment of the company's top managers and determines its
    strategy.[^165] DT's Supervisory Board, which is the upper tier of a
    German corporation's two-tier board structure, consists of twenty
    individuals, ten of whom are elected by shareholder vote and ten by
    representatives of the employees' unions.[^166] The commenters note
    that after the merger, the German government will retain a voting
    interest in DT of approximately 45 percent, while no other
    shareholder will own more than five percent of DT.[^167] Therefore,
    commenters allege, as DT's largest shareholder, the German
    government will effectively retain the ability to name as many of
    the ten shareholder-appointed members of the Supervisory Board as it
    chooses, and thereby dominate the management of DT.[^168] Commenters
    also allege that the German government meets regularly with DT
    officials to direct its activities.[^169] Finally, comments state
    that the government loan guarantees and the fact that most of DT's
    workforce is former civil service employees are important indicia of
    control.[^170]

58. The Applicants respond that after the merger, the German government
    will not control DT's management or operations and that DT does not
    act on behalf of the German government.[^171] Although the
    government has the right to appoint ten members of DT's Supervisory
    Board, the Applicants argue that to date the Government and its
    nominee have only appointed two members. In addition, the Applicants
    state that the German government historically has always voted in
    line with the majority of the other shareholders.[^172] The
    Applicants further contend that the Government's guarantee of DT's
    pre-privatization loans and the civil service-like benefits that
    some of DT's employees receive are simply by-products of DT's former
    status as a government entity.[^173]

59. As the Commission has previously stressed, "there is no exact
    formula for determining control and ... questions of control turn on
    the specific circumstances of the case...\[t\]hus...we examine the
    totality of the circumstances."[^174] In this case, however, we need
    not decide this contentious issue. Assuming *arguendo* that
    post-merger the German government would control DT, we find, as
    explained below, that the German government's ownership of DT does
    not confer unique financial advantages or otherwise create a high
    risk to competition or consumers in the United States that warrants
    special conditions.

## Foreign Government Ownership and Possible Financial Advantages

### Preferential Access to Capital and Government Subsidies

60. First, we disagree with arguments that DT enjoys special financial
    advantages because its government ownership could be used to
    anti-competitively cross-subsidize operations in U.S. and global
    markets. Specifically, commenters argue that the proposed
    transaction will give the Applicants a "virtually unlimited supply
    of capital" through favorable interest rate terms reflecting a lower
    risk of defaulting, or through loan guarantees or special
    subsidies.[^175] For example, Novaxess contends that because the
    German government is DT's principal shareholder, it will ensure
    payment of DT's liabilities, allowing DT to increase its debt to a
    greater extent than a privatized firm would be able to do.[^176]

61. The Applicants acknowledge that certain debt acquired by DT prior to
    its privatization in 1995 is guaranteed by the German
    government.[^177] We are not persuaded, however, that this perceived
    benefit increases the likelihood that the Applicants will engage in
    anti-competitive behavior and harm competition in the United States.
    The record indicates that the German government does not guarantee
    debt incurred by DT subsequent to the company's privatization in
    1995;[^178] that DT has paid off approximately half of the
    guaranteed debt;[^179] and that, pursuant to a payment schedule, DT
    expects to pay most of the balance by 2004.[^180] Therefore, to the
    extent that, in the case of default, past loan guarantees increase
    the likelihood of payment of unguaranteed debts, thereby lowering
    DT's cost of capital, any benefit from the government guarantee of
    prior debts is limited, both in amount and duration.[^181]

62. The record also indicates that partial government ownership in DT
    does not otherwise lower DT's cost of capital or create other
    advantages in financial markets. Indeed, commenters note that DT and
    other foreign companies with government ownership may be at a
    competitive disadvantage: government-owned firms typically are less
    efficient and less profitable and may have obligations such as high
    labor costs and extensive universal service requirements.[^182]
    These factors may especially disadvantage DT and other foreign
    companies when they seek to expand abroad into competitive markets
    like the United States, where efficiency is such a key determinant
    of success.[^183] Equity investors may judge that these negative
    factors counter-balance or completely outweigh the positive impact
    of loan guarantees on the risk-level of an investment. If so,
    partial government ownership may have a negligible, or possibly even
    negative, effect on the cost of capital.

63. Based on evidence regarding the cost of capital and credit ratings,
    as well as the labor and civil service obligations discussed above,
    we find that the German governments' partial ownership in DT does
    not provide DT with easier access to capital than the major
    incumbents in U.S. markets. For example, the evidence regarding DT's
    weighted average cost of capital (WACC)---the cost of debt and
    equity combined---reveals that DT's cost of capital is higher than
    that of its competitors. According to one of the commenters, DT's
    WACC is 11.7 percent, which is higher than the WACCs of SBC (10.8
    percent), Sprint (10.1 percent), AT&T (9.8 percent), Verizon (8.7
    percent), and BellSouth (8.6 percent), all of which are large,
    privately held carriers.[^184]

64. Furthermore**,** DT does not enjoy a higher bond rating than other
    large, but fully-privatized telecommunications carriers.[^185] Bond
    ratings affect cost of capital by influencing the interest rate at
    which a firm can obtain long-term debt, a key component of the cost
    of capital. High bond ratings mean that lenders face less risk of
    default by the borrower, thereby resulting in lower interest rates.
    Although the German government enjoys the highest bond rating of AAA
    (Standard & Poor's), DT is only rated at A-, which is a lower rating
    than SBC (AA-), Verizon (A+), British Telecom (A), and AT&T (A), all
    of which are large, privately-held carriers.[^186] Both Standard &
    Poors and Moody's downgraded DT's credit rating subsequent to DT's
    most recent bond issue in June of 2000,[^187] and Moody's has placed
    DT under review for a possible further downgrade to its credit
    rating, as a result of its \$7 billion pledge for third-generation
    wireless licenses in Germany and its \$50 billion offer for
    VoiceStream.[^188]

65. DT's government ownership does not appear to confer any other
    financial advantages. Under German and European Union (E.U.) law, DT
    cannot receive discriminatory tax benefits, subsidies, or state aid.
    E.U. law prohibits "any aid granted by a member state or through
    state resources in any form whatsoever which distorts or threatens
    to distort competition" by favoring certain companies.[^189]
    Moreover, the European Commission, in cooperation with the German
    government, is expressly required to keep any such system of state
    aid "under constant review" and may initiate enforcement proceedings
    if it finds a system of state aid to be incompatible with the common
    market.[^190] We therefore conclude that there is no basis to find
    that DT has easier access to capital than the major incumbents in
    U.S. markets, much less an advantage that is so great that it would
    enable DT to act anti-competitively in U.S. markets.

### Possible Favorable Regulatory Treatment

66. Contrary to arguments raised in the record, we also find remote the
    possibility of discriminatory regulatory treatment in the German
    market sufficient to enable DT to finance anti-competitive behavior
    in U.S. markets. To the extent such a possibility exists, it does
    not rebut the presumption favoring investment by WTO Member
    countries, articulated in the Commission's *Foreign Participation
    Order*.[^191]

67. Several commenters contend that DT's German government ownership has
    created a "tangled" relationship between DT and the German
    regulator, Regulatory Authority for Telecommunications and Posts
    (RegTP), which was created pursuant to the German Telecommunications
    Act.[^192] Specifically, DT's German competitors allege that (i) DT
    receives favorable and discriminatory treatment from RegTP in light
    of the government's financial interest in DT; (ii) RegTP does not
    enforce existing regulations;[^193] (iii) RegTP does not act
    independently because other parts of the German Government are able
    to dictate RegTP's policies;[^194] and (iv) current regulation is
    inadequate to foster competitive markets.[^195] According to these
    commenters these advantages could be exploited to improve the
    Applicants' market position and distort competition in the U.S.
    market.[^196] A coalition of DT's German competitors, the German
    Competitive Carrier Association (VATM)[^197] also has made numerous
    allegations that the German government is highly protectionist of DT
    and suppresses competition in the German marketplace through
    political influence, as evidenced by what these competitors perceive
    as RegTP's unwillingness to initiate enforcement or take aggressive
    policy stands.[^198] Commenters also express concern about a
    guidance paper released by the Ministry of Economics and Technology
    that they fear may reduce the effectiveness of RegTP and the
    premature release of DT from its dominant carrier obligations in
    Germany which they believe would result in anti-competitive
    behavior.[^199] Moreover, VATM argues that the U.S. Trade
    Representative (USTR) has been unsuccessfully seeking to address
    these concerns with the German government.[^200] Therefore, they
    request that the Commission condition any grant of the DT Transfer
    Applications on competition commitments relating to the German
    market.[^201]

68. We recognize the dispute in the record regarding the efficacy of
    RegTP in promoting competition in the German telecommunications
    market. For example, VATM claims that RegTP has "adopted an overly
    passive and accommodating stand on issues such as \[DT\]'s predatory
    pricing."[^202] The Applicants counter that, as is occurring in many
    developed economies, the German telecommunications market is
    undergoing liberalization, in which DT is being challenged by new
    competitors. While we acknowledge that both the German
    Telecommunications Act and Germany's liberalization and
    privatization commitments under the WTO Agreement require the
    independence and transparency of RegTP's decisionmaking, under the
    *Foreign Participation Order* we focus our analysis on the
    competitive effects of DT's entry on U.S. markets.

69. As we discuss in greater detail below, the likelihood of the
    Applicants engaging in predatory behavior in U.S. markets because of
    DT's position in the German market is low.[^203] Predatory tactics
    work only in markets in which incumbents and entrants are
    financially weak and/or have poor access to capital markets.
    Otherwise, a predator cannot succeed in driving out and keeping
    rivals out of the market. Because the U.S. wireless and U.S.
    international markets are characterized by strong incumbents and
    potential entrants with access to the world's deepest capital
    markets, predation is highly unlikely to be a sustainable strategy,
    even if DT did receive favorable regulatory treatment in
    Germany.[^204]

70. Moreover, the Commission has recognized that USTR, as the Executive
    Branch agency that negotiates and enforces U.S. trade laws and
    rights under international agreements, is responsible for responding
    to complaints and bringing disputes regarding alleged violations of
    WTO commitments by trading partners that do not affect competition
    in domestic U.S. markets.[^205] We recognize that USTR, in its most
    recent report regarding its annual Section 1377 review, has noted
    progress in Germany with respect to Germany's compliance with its
    trade obligations, but USTR also recognizes the need for additional
    progress and maintains a focus on the activities of the German
    regulator.[^206]

## Strategic Trade Policy Concerns

71. We also find no reason to conclude, as certain commenters argue,
    that the German government, through its partial ownership of DT,
    will choose to promote or protect its ownership interest regardless
    of market forces in a manner that would harm competition in the
    United States.[^207] DT's German competitors argue that DT's
    majority government control places DT beyond the reach of market
    forces, and they therefore urge the Commission to review closely the
    potential competitive impact of the level of government ownership
    and control of DT.[^208] We recognize that a government-controlled
    company in a private sector market may choose for reasons other than
    commercial profit-maximization, i.e., political, nationalistic, or
    other reasons, to engage in predatory or other anti-competitive
    behavior as a strategic trade initiative.[^209] We find it highly
    unlikely, however, that the German government, through its control
    of DT, would direct the Applicants to engage in unprofitable
    predatory practices in the United States to pursue national goals
    unrelated to maximizing profits.

72. First, numerous laws, including both U.S. antitrust laws and
    Germany's WTO trade obligations, are available to deter such
    predatory behavior. Second, as we explain fully below, predation in
    the U.S. wireless and international markets would almost surely be
    an unprofitable strategy, and DT's non-government shareholders would
    lose value should the German government attempt to pressure DT into
    such a predatory strategy. Therefore, DT's fiduciary responsibility
    to its private shareholders would likely deter DT from pursuing
    anti-competitive cross-subsidy schemes, because such schemes would
    inevitably fail and result in legal liability to its private
    shareholders.[^210] Because DT is listed on the New York stock
    exchange, is subject to registration by the U.S. Securities and
    Exchange Commission, and has a fiduciary responsibility to its
    private stockholders, we believe there are particularly strong
    incentives to avoid engaging in unprofitable strategies. For these
    reasons, we find it highly unlikely that the German government would
    engage in anti-competitive behavior unrelated to earning profits.

## National Security, Law Enforcement, and Public Safety Interests

73. In acting on applications pursuant to sections 214 and 310(b)(4), we
    also consider any national security, law enforcement, foreign
    policy, and trade policy concerns raised by the Executive Branch.
    [^211] In this case, the Department of Justice and Federal Bureau of
    Investigation have raised such concerns, noting in particular the
    foreign government ownership of DT. On December 15, 2000, the
    Department of Justice, the Federal Bureau of Investigation, and the
    Applicants filed a Joint Petition to Defer Action (Petition to
    Defer) that expressly raised concerns that approving the DT Transfer
    Applications as filed would present significant impediments to the
    ability of the U.S. government to preserve national security,
    enforce the laws, and protect the public safety. [^212] The Petition
    to Defer requested that the Commission defer approval of the
    proposed transaction until such time as an agreement could be
    reached between the Applicants and the Executive Branch resolving
    all such concerns.[^213]

74. On January 25, 2001, the Department of Justice and the Federal
    Bureau of Investigation filed a Petition to Adopt Conditions to
    Authorization and Licenses (Petition to Adopt Conditions).[^214] The
    Petition to Adopt Conditions requests that the Commission: (i)
    approve an Agreement, effective on the date the DT mergers with
    VoiceStream and Powertel close, reached between the Applicants and
    the Department of Justice and Federal Bureau of Investigation
    (DT--VoiceStream/DOJ/FBI Agreement); and (ii) condition grant of the
    instant application on compliance with the terms of the
    DT--VoiceStream/DOJ/FBI Agreement.

75. The DT--VoiceStream/DOJ/FBI Agreement provides, *inter alia*, that
    VoiceStream and/or DT shall: (i) ensure that its network is
    configured so as to be capable of complying with lawful U.S.
    process;[^215] (ii) make certain call and subscriber data available
    in the United States, if VoiceStream stores such data;[^216] (iii)
    take reasonable measures to monitor the use of facilities used in
    domestic telecommunications (specifically, with respect to personnel
    holding sensitive positions), information storage, and access to
    foreign entities;[^217] and (iv) not disclose domestic
    communications, transactional data, classified or sensitive
    information to any foreign government, agent, component or
    subdivision thereof without the express written consent of the
    Department of Justice or a court of competent jurisdiction.[^218]
    The Department of Justice and the Federal Bureau of Investigation
    gave particular attention to negotiating provisions designed to
    limit the control or influence of foreign governments or their
    representatives on DT's ability to perform these duties and
    obligations.[^219] Specifically, DT expressly and irrevocably waives
    immunity from any legal action that may attach based on sovereignty
    or status as an agency or instrumentality of a foreign
    government.[^220] DT also agreed to provide written notice to the
    Department of Justice and Federal Bureau of Investigation if any
    foreign government or entity controlled by a foreign government
    obtains an ownership interest or increases its existing ownership
    interest in DT.[^221]

76. In assessing the public interest, we take into account the record
    and afford the appropriate level of deference to Executive Branch
    expertise on national security and law enforcement issues.[^222] We
    recognize that, separate from our licensing process, VoiceStream and
    DT have entered into the DT--VoiceStream/DOJ/FBI Agreement, and that
    the Agreement expressly states that these agencies will not object
    to grant of the pending DT Transfer Applications, provided that the
    Commission approves the agreement and conditions grant of the DT
    Transfer Applications on compliance with it.[^223] This resolution
    of the Executive Branch's national security and law enforcement
    concerns addresses allegations that foreign government control of a
    U.S. carrier would pose a threat to our national security.[^224]

77. We note that the DT--VoiceStream/DOJ/FBI Agreement contains certain
    provisions relevant to this transaction that, if broadly applied,
    would have significant consequences for the telecommunications
    industry. These provisions, if viewed as precedent for other service
    providers and potential investors, would warrant further inquiry on
    our part, and we will consider any subsequent agreements on a
    case-by-case basis. Notwithstanding these concerns about the broader
    implications of the DT--VoiceStream/DOJ/FBI Agreement, however, we
    see no reason to modify or disturb the agreement of the parties on
    this matter. Therefore, in accordance with the request of the
    Department of Justice and the Federal Bureau of Investigation, in
    the absence of any objection from the Applicants,[^225] and given
    the discussion above, we condition our grant of the DT Transfer
    Applications on compliance with the DT--VoiceStream/DOJ/FBI
    Agreement.

# alleged Harms to competition in specific u.s. markets

78. Having concluded that DT's partial government ownership does not
    contravene the public interest in promoting competition, advancing
    consistent trade policy, and protecting national security and law
    enforcement interests, we now consider allegations that DT's entry
    into U.S. markets and DT's provision of global services raise
    significant anti-competitive issues in specific U.S. markets. For
    example, some commenters contend that DT earns monopoly rents in
    certain service markets in Germany, where it possesses market power,
    and will be able to use those rents to subsidize domestic,
    international, and global services provided by VoiceStream in the
    United States.[^226] This section analyzes these allegations by
    considering the competitive effect of the proposed merger in each of
    these markets. We note that our analysis is confined to specific
    harms alleged in the U.S. telephony markets, and does not consider
    harms that may occur in German telephony markets and any resulting
    impact on German consumers.[^227] Ultimately, we conclude that the
    transfer of VoiceStream's and Powertel's licenses and authorizations
    to DT is unlikely to cause the harm alleged by the commenters and
    that the public interest would not be served by denying or
    conditioning our approval as proposed by some commenters.

## Domestic Mobile Telephony Markets

79. Where a transaction involves the acquisition and aggregation of
    spectrum in the domestic mobile telephony markets through assignment
    or transfer of control of licenses, our competitive analysis focuses
    on an assessment of whether the combination complies with our CMRS
    spectrum aggregation rule.[^228] The Applicants have certified that,
    while the combination creates PCS license overlaps in nine
    geographic markets,[^229] grant of the applications would not
    violate the CMRS spectrum aggregation rule,[^230] and we agree with
    the Applicants' assessment. In this case, however, commenters have
    alleged that this transaction involves competitive harms not
    addressed by the application of the spectrum aggregation
    limit.[^231]

80. Some commenters specifically allege that DT earns monopoly rents in
    certain service markets in Germany, and will use these rents to
    subsidize VoiceStream's U.S. domestic mobile telephony services,
    harming U.S. consumers.[^232] Other commenters allege that DT will
    use its monopoly rents to subsidize its expansion in U.S. mobile
    telephony markets, harming competition in the United States.[^233]
    We interpret these comments as suggesting that DT will use its
    monopoly rents to practice price predation in the United
    States.[^234] As a first step in analyzing these claims, we review
    the domestic mobile telephony market structure, which involves
    identifying the relevant product and geographic markets and other
    significant market participants. After establishing this predicate
    for our analysis, we discuss the potential for DT to earn monopoly
    rents and undertake a successful predatory pricing scheme. We also
    address DT's ability to predate were it to choose to forego profit
    maximization.

### Relevant Markets and Significant Participants

81. *Relevant Product and Geographic Markets.* With respect to the
    domestic wireless markets, we conclude that the relevant product
    market is mobile telephony services and that the relevant geographic
    markets are the geographic areas in the United States where DT,
    VoiceStream and Powertel are readily capable of providing a
    facilities-based service.[^235] According to the Applicants,
    VoiceStream and Powertel each hold licenses to provide PCS and
    supporting services.[^236] VoiceStream controls licenses to provide
    PCS services to most of the country, but, according to the
    Applicants, still falls short of a fully nationwide licensed area,
    with gaps in California, Nevada, the Chicago metropolitan area, and
    the southeastern United States, among other places.[^237] Powertel
    operates PCS systems in twelve states, primarily in the southeast,
    using GSM technology.[^238]

82. *Significant Market Participants.* U.S. mobile telephony service
    providers offer local, regional, and nationwide service plans and
    are differentiated in their ability to compete in their product
    markets based on, among other things, the size and locations of
    their licensed areas and the extent to which they have built out
    their network. U.S. mobile telephony markets are characterized by as
    many as six mobile telephony carriers with nationwide or near
    nationwide licensed areas: Verizon Wireless, Cingular Wireless, AT&T
    Wireless, Sprint PCS, Nextel Communications, and VoiceStream. There
    are also a number of large regional carriers, including ALLTEL
    (midwest, southwest, southeast) and U.S. Cellular (primarily in the
    midwest with a presence on parts of the eastern and western
    seaboards) and medium-sized or smaller regional carriers, such as
    Southern LINC and Powertel (both southeast).

### Competitive Analysis

83. Some commenters assert that DT earns monopoly rents (or profits) in
    certain service markets in Germany, where it possesses market power,
    and will be able to use those rents to subsidize domestic services
    provided by VoiceStream in the United States.[^239] Commenters also
    suggest that DT could shift certain costs of operating VoiceStream
    in the United States to DT in Germany, so that German rate payers
    would pay for those costs through increased prices of
    non-competitive services in Germany.[^240] Commenters further argue
    that, because of the monopoly rents and cost shifting, the merged
    entity would have the incentive and ability to engage in predatory
    pricing in the U.S. domestic mobile telephony market.[^241]

84. The Applicants respond that DT's ability to earn monopoly rents in
    Germany is constrained, *inter alia*, by regulation in Germany.
    [^242] For example, the Applicants argue that price cap regulation
    of DT in Germany would prevent DT from shifting costs of its U.S.
    mobile telephony operations to its regulated services in Germany and
    recovering the additional costs in Germany by raising prices for its
    regulated services.[^243]

85. We believe that the ability of DT to obtain monopoly rents in German
    markets depends on the degree to which DT dominates these markets,
    and the nature and the effectiveness of German regulation. The
    record indicates that competitors have not made significant inroads
    into the local exchange market. [^244] According to a recent study
    conducted by the German Competitive Carrier's Association (VATM), DT
    retains approximately 97 percent of the local exchange market.[^245]
    According to the Applicants, DT's market share in the local exchange
    market has declined to 95 percent as competition in these markets
    has increased.[^246] Based on DT's market share, it appears possible
    that DT may have some capability to earn monopoly rents in the
    provision of local exchange services.

86. In long-distance and international markets, however, there is
    conflicting evidence in the record regarding DT's ability to earn
    monopoly rents. The Applicants assert that DT's share in these
    markets has fallen to 60 percent of the long-distance market and 52
    percent of the market for international long-distance service.[^247]
    The Applicants also state that there have been substantial price
    decreases for long-distance and international services.[^248]
    However, some commenters allege that, although there has been an
    increase in competition in the long distance and international
    markets, DT continues to dominate these markets[^249] and that these
    markets are not yet "contestable."[^250] Commenters also provide
    some indication that only a few companies exert sustained
    competitive pressure on DT in these markets.[^251] Though it appears
    that the long-distance and international markets are more
    competitive than the local exchange market, we do not have enough
    information in the record to conclude that DT is unable to dominate
    these markets.

87. With respect to the nature and effectiveness of German regulation,
    the record also presents conflicting evidence. The record indicates
    that Germany has enacted regulations to liberalize its
    telecommunications markets.[^252] Also, DT is currently operating
    under a price cap regime for local exchange, long distance, and
    international services, although that regime expires at the end of
    2001.[^253] Several commenters, however, argue that, despite the
    liberalization and price cap regulation, there is a lack of
    regulatory oversight by the German regulator, RegTP, and DT is
    therefore able to behave in an anti-competitive manner.[^254]

88. In Part IV.B above, we declined to reach a conclusion regarding the
    effectiveness of dominant carrier regulation or deregulation in
    Germany, because even if DT were able to earn monopoly rents and to
    shift costs from non-regulated to regulated services, the merged
    entity is unlikely to be able to engage in successful price
    predation in U.S. domestic mobile telephony services markets. The
    commenters here allege a standard price predation scheme that would
    require the merged entity to incur losses (that will increase as the
    predator's market share increases relative to those of its
    competitors) in order to drive out competitors and obtain the
    ability to price above competitive levels in the future. However, an
    investment by DT in this predatory strategy is likely to prove
    unprofitable. As the Supreme Court explained in *Matsushita Electric
    Industrial Co. v. Zenith Radio Corp.:*

> \[T\]he success of such \[predatory\] schemes is inherently uncertain:
> the short-run loss is definite, but the long-run gain depends on
> successfully neutralizing the competition. Moreover, it is not enough
> simply to achieve monopoly power, as monopoly pricing may breed quick
> entry by new competitors eager to share in excess profits. The success
> of any predatory scheme depends on *maintaining* monopoly power for
> long enough both to recoup the predators' losses and to harvest some
> additional gain. . . . For this reason, there is consensus among
> commentators that predatory pricing schemes are rarely tried, and even
> more rarely successful.[^255]

89. Based on the record, and on a careful review of the conditions in
    U.S. mobile telephony markets, we find that the merged entity would
    likely be unable to engage in successful price predation. We note
    that currently there are at least six other mobile wireless
    companies that have more subscribers and more revenues in the United
    States than VoiceStream.[^256] If the merged entity were to attempt
    to engage in predatory pricing, it is highly unlikely that it would
    be able to maintain such an artificially low price for a
    sufficiently long period of time to drive competitors out of
    business. Indeed, given that VoiceStream's licensed areas are less
    built out than many of its competitors, it is likely that many
    customers would choose to stay with their current provider, even if
    VoiceStream priced its services lower than its competitors.[^257]

90. Further, even assuming that DT were successful at driving one of the
    six larger competitors (measured either by subscribership or
    revenue) out of the market, the licenses and sunk facilities of the
    bankrupt firm would be available for purchase by any existing or
    potential competitor, which, if not DT, would then resume competing
    against DT. While DT might seek to acquire the bankrupt firm's
    spectrum and facilities in order to prevent acquisition by another
    competitor, such a transaction would require the Commission's
    approval and be subject to review by U.S. antitrust authorities. For
    these reasons, even if DT rejected rational, profit maximizing
    behavior, it likely would be unable to drive any competitors out of
    the market, or even assuming it could do so, to keep competitors
    out. Therefore, we find no high competitive risk to markets or
    consumers in the United States such that additional reporting
    requirements or other safeguards would be required.

91. Moreover, the foregone profits associated with predatory pricing
    represent an investment that must be weighed against alternative
    investments.[^258] We note that VoiceStream currently accounts for
    less than four percent of the U.S. domestic mobile telephony market,
    and currently has only built out its network to 45 percent of its
    licensed area.[^259] Thus, while VoiceStream has aggressively
    pursued nationwide coverage, there remain significant gaps in its
    nationwide licensed area.[^260] In light of this and the obligations
    under our rules requiring VoiceStream to meet certain build-out
    standards,[^261] it is reasonable to assume that the merged entity
    would use its financial resources to complete its network build-out
    and fill in any remaining substantial gaps in its nationwide
    licensed area, rather than to engage in an extremely costly, and
    almost certainly unsuccessful, scheme of predation.

92. Therefore, it is unlikely that any attempt by the merged entity to
    engage in price predation in the United States would be successful.
    That the expected return on any investment in a predatory pricing
    strategy is almost surely negative suggests that the merged entity,
    if it were a rational, profit-maximizing firm, would have no
    incentive to engage in such a money-losing strategy. Finally, even
    if the merged entity rejected profit-maximizing behavior and
    attempted to predate, U.S. consumers would benefit from the lower
    prices during the period of predation. Moreover, because spectrum
    and facilities likely would not be lost to the national market in
    the long run, these customers would not suffer subsequent price
    increases as a result of particular firms being forced from the
    market.[^262]

### Rural Market Entry

93. Several commenters further argue that the VoiceStream DT Application
    should not be granted because VoiceStream has not shown sufficient
    commitment to build out its network in rural areas, and
    VoiceStream's acquisition by DT would exacerbate that situation, to
    the detriment of U.S. rural consumers. This issue was first raised
    in a petition to deny approval of VoiceStream's recent acquisition
    of control of approximately 144 PCS and nine WCS licenses from Cook
    Inlet Region, Inc. (CIRI).[^263] We deferred consideration of the
    Jordan-Soldier Valley Telephone Co. (d/b/a WITCO), CIRI and
    VoiceStream arguments, regarding DT's acquisition of VoiceStream, to
    this proceeding and address them here.[^264] WITCO argues that the
    pending merger of DT and VoiceStream militates against granting
    consent for VoiceStream to take control of licenses to serve rural
    markets.[^265] WITCO argues that DT will be primarily interested in
    further establishing its global footprint and will not be likely to
    invest in rural portions of the VoiceStream territories,
    particularly in Iowa and Nebraska, to the detriment of rural
    customers.[^266] Further, WITCO argues that the transfer of licenses
    from VoiceStream to DT would frustrate Congressional objectives in
    sections 254 and 706 of the Telecommunications Act of 1996[^267] in
    that it will further widen the disparity between urban and rural
    consumers in the deployment of advanced telecommunications
    capability.[^268]

94. UTStarcom and the Alliance for Public Technology have also raised
    issues about the effect of the proposed merger of DT and VoiceStream
    on rural markets. UTStarcom argues that, to establish its global
    footprint, DT will be interested in building out its GSM networks
    only in large, urban areas where DT can earn a greater return on its
    investment, and that this strategy would be evident in VoiceStream's
    decisions with respect to the acquisition of PCS licenses in the
    recent auction of PCS licenses.[^269] UTStarcom argues further that
    DT could be expected to ignore the smaller towns and rural areas
    that will not generate large volumes of roaming, and that
    competition is likely to be harmed further because DT would acquire
    control of a larger number of entrepreneurs' block PCS licenses when
    it acquired VoiceStream.[^270] UTStarcom proposes that, as a
    condition of granting the DT Transfer Applications, we require DT to
    make some amount of the entrepreneurs' block spectrum available for
    purchase or lease by eligible entrepreneurs.[^271] The Alliance for
    Public Technology urges the Commission, to fulfill its
    responsibilities under Section 706 of the Act and to impose
    reporting and review conditions on the merged company's deployment
    in rural areas.[^272] The Alliance for Public Technology further
    requests that the Commission impose similar conditions in all
    mergers. In response to WITCO, VoiceStream asserts that approval of
    the VoiceStream DT Application would further the development of
    VoiceStream's advanced national GSM network in both urban and rural
    areas.[^273] In response to UTStarcom's request to condition the
    grant of the DT VoiceStream Application on VoiceStream making
    spectrum available to eligible entrepreneurs in rural markets, the
    Applicants assert that this issue is a general policy question,
    which should be addressed in an industry-wide rulemaking, rather
    than in the instant license transfer proceeding.[^274] Further, the
    Applicants argue that the concerns raised by UTStarcom are currently
    being addressed by the Commission in other proceedings.[^275]

95. We deny the petition of WITCO and the requests of UTStarcom and the
    Alliance for Public Technology and decline to hold DT to a higher
    standard than that embodied in our rules. The Commission's rules
    establish minimum service requirements for wireless carriers, and
    WITCO's speculation as to DT's intent has not shown that these
    requirements will not be met. VoiceStream's licenses are subject to
    construction build-out requirements found in the Commission's
    rules.[^276] For PCS licenses, these rules require licensees to
    construct their systems so that there is sufficient signal strength
    to provide adequate service to one-third of the population of the
    market within five years and two-thirds within ten years.[^277] For
    WCS licenses, licensees must construct their systems so as to
    provide "substantial service" at the end of the ten-year license
    period.[^278] The construction build-out requirements apply to
    individual licenses, regardless of the licensee and are the
    standards by which all licensees' build-out performance is measured.
    [^279] We therefore deny the petition of WITCO and the requests of
    UTStarcom and the Alliance for Public Technology for conditions.

## U.S. International Services Market

96. Commenters also argue that DT could use monopoly profits from German
    markets or other financial advantages to cross-subsidize U.S.
    international services offered by the merged entity.[^280]
    Specifically, it is argued that approval will permit DT to harm U.S.
    competitors by offering end-to-end services to U.S. customers at
    rates subsidized by monopoly rents reaped in Germany.[^281] As we
    explained in Part V.A above, we find that DT has neither the
    incentive nor the ability to engage in predatory pricing in U.S.
    domestic wireless markets through the use of cross-subsidies. For
    similar reasons, we conclude that DT would be unlikely to use
    successfully a predatory strategy to harm other incumbents in U.S.
    international services markets. Moreover, we will apply to
    VoiceStream and Powertel the dominant carrier safeguards described
    below, that will serve as an additional impediment to any
    cross-subsidy or other anti-competitive strategies.

### Relevant Market and Significant Participants

97. We analyze the allegations of potential anti-competitive conduct by
    the merged entity in the provision of international services by
    reference to our precedents defining the U.S. international services
    market. This market consists of telecommunications services from the
    United States to foreign countries provided to U.S. end-users.[^282]
    The geographic markets consist of each of the routes between the
    United States and other countries.[^283] We also examine the
    allegations of potential anti-competitive conduct by determining the
    significant competitors in the U.S. international services market.
    These include the major facilities-based providers of long-distance
    service in the United States, including AT&T, WorldCom, and Sprint,
    as well as other large carriers serving individual routes.[^284]

### Competitive Analysis

98. VoiceStream, Powertel, and DTI are each participants in the U.S.
    international services market, although they are not significant
    participants. VoiceStream and Powertel are exclusively providers of
    pure resale services and have only *de minimis* market shares of the
    end-user market.[^285] DT currently provides service in the United
    States only through its affiliate DTI, which is a facilities-resale
    carrier and has only a *de minimis* share of the end-user
    market.[^286] In addition, the merger will not significantly
    increase concentration on any U.S. international route because of
    the *de minimis* market shares of DTI, VoiceStream, and
    Powertel.[^287] Therefore, the merger will not eliminate a
    significant competitor or raise significantly market concentration
    on any route.

99. We find that, for the same reasons discussed in Part V.A. above, the
    merger will not provide DT with the incentive or the ability to
    engage in a predatory pricing strategy through cross-subsidy and
    harm the U.S. international services market. VoiceStream, Powertel,
    and DTI are not significant participants in the U.S. end-user
    international services market. Thus, based on the existence of
    significantly stronger competitors in international services, we
    conclude that the merged entity would not be able to maintain an
    artificially low price for a sufficiently long period to drive
    competitors out of business.

### Dominant Carrier Safeguards

100. In the *Foreign Participation Order*, we established rules to
     identify instances of potential competitive harm by U.S. market
     entry of a foreign carrier and to guard against them. Under these
     rules, we classify a U.S. carrier as dominant on a particular route
     if it is affiliated with a foreign carrier that controls essential
     facilities on that route.[^288] A carrier classified as dominant is
     subject to dominant carrier safeguards.[^289] These safeguards
     include various accounting, structural separation, and reporting
     requirements that are designed to address the possibility that a
     foreign carrier with control over facilities or services that are
     essential inputs for the provision of U.S. international services
     could discriminate against rivals of its U.S. affiliates (i.e.,
     vertical harms). In the *Foreign Participation Order*, we concluded
     that these safeguards, along with our benchmark and no special
     concession rules, are sufficient to protect against vertical harms
     by carriers from WTO countries in virtually all
     circumstances.[^290] In the exceptional case where an application
     poses a very high risk to competition in the U.S. market, and where
     our standard safeguards and additional conditions would be
     ineffective, we reserve the right to deny the application.[^291]

101. We apply the requirements of the *Foreign Participation Order* to
     the merger application as follows. DT controls long-distance and
     local termination facilities within Germany, Slovakia, Hungary, and
     Croatia.[^292] We currently regulate DT as dominant on the
     U.S.-Germany route, the U.S.-Slovakia route, the U.S.-Hungary
     route, and the U.S.-Croatia route as reflected in DTI's recent
     section 214 authorizations and foreign carrier notifications.[^293]

102. Therefore, VoiceStream and Powertel, as affiliates of DT, are
     subject to dominant carrier safeguards under section 63.10 of our
     rules.[^294] Under sections 63.09 and 63.10 of our rules,
     VoiceStream and Powertel, as entities controlled by DT, will also
     be classified as dominant international carriers on the
     U.S.--Germany, U.S.--Slovakia, U.S.--Hungary, and U.S.--Croatia
     routes. Accordingly, on each of these routes, VoiceStream and
     Powertel will be required, for the provision of international
     services, to maintain separate books of account from DT and the
     affiliated foreign carriers in these markets; not jointly own
     transmission or switching facilities with DT and these carriers;
     file quarterly reports of revenue and traffic; file quarterly
     reports summarizing the provisioning and maintenance of all basic
     network facilities and services procured from DT and these
     carriers; and file quarterly circuit status reports.[^295] These
     requirements are designed to make a carrier's interaction with its
     affiliated foreign carrier transparent and thereby guard against
     discriminatory conduct.[^296] We believe that the imposition of
     dominant carrier safeguards along with our benchmark and no special
     concession rules are sufficient to prevent vertical harms by the
     merging parties. In addition, some of the dominant carrier
     safeguards---such as the requirement to maintain separate books and
     the prohibition on joint ownership of facilities---provide
     additional confidence that DT will not have the ability to engage
     in cross-subsidization with respect to international services
     provided by its U.S. affiliates. We therefore find that merger will
     not create risks to competition in the U.S. international services
     market that would warrant the imposition of additional competitive
     safeguards.[^297]

## Global Wireless Issues

103. Several commenters ask that we carefully evaluate whether the
     merger of DT and VoiceStream will allow DT to act
     anti-competitively in the provision of wireless services in the
     global market, thereby harming U.S. competitors in the provision of
     global wireless services. These commenters urge us to impose
     additional safeguards to promote competition in this market.[^298]
     Specifically, they argue that, because DT and VoiceStream employ
     the same GSM technology, the merged company will have an unfair
     advantage in the global market.[^299] They further contend that
     given DT's significant investment in universal mobile
     telecommunications system (UMTS) licenses and its expanding global
     footprint into the United States, DT is positioning itself for
     global dominance.[^300]

104. We decline to define a global wireless services market at this time
     because we do not have evidence that such a market yet exists.
     While there is some evidence that markets for U.S. international
     roaming services as well as international roaming services in
     foreign countries are developing,[^301] we are not yet aware that
     customers are demanding a complete seamless wireless service.
     Nevertheless, because the global evolution of the wireless industry
     is likely to have an important effect on U.S. end-users, we will
     examine whether the proposed merger could have an anti-competitive
     impact on this evolution and harm competition for these services in
     the United States. Specifically, we address allegations
     regarding (i) the availability of international roaming services to
     U.S. end-users; (ii) the reliance on global standards for the
     development of "third generation" wireless technology;[^302]
     and (iii) the development of multinational footprints by DT and
     other wireless carriers.

### Background

105. With the explosive growth of the wireless industry throughout the
     world, we recognize that carriers are offering wireless service in
     an increasingly global context. For example, U.S. mobile telephony
     service providers have begun to offer international roaming
     services and are seeking the ability to allow customers to use
     their mobile telephones outside the United States. [^303] New
     technology is bringing the World Wide Web to wireless phones. When
     evaluating potential competitive harms, however, our concern is not
     solely whether a particular service provider will possess
     competitive advantages in the provision of global wireless
     services, as commenters contend DT will. Instead, we ultimately
     assess whether the competitive advantage confers the ability to
     exclude rivals from the market, thereby impeding competition and
     causing harm to end-users. A mere finding that a firm has certain
     advantages over its competitors, therefore, is not a basis for
     concluding that the firm has engaged in or will engage in
     anti-competitive behavior because the development of unique
     competitive advantages is the essence of the competitive process.

106. Based on our analysis of technological and economic factors, we
     find that any advantage that the merged entity may enjoy (because
     both VoiceStream and DT currently use GSM technology, or because DT
     has a wireless presence in many countries and has recently acquired
     "third generation" UMTS wireless licenses) is unlikely to produce
     anti-competitive effects in the provision of global services.

### Competitive Analysis

#### International roaming 

107. We conclude that the merger of DT and VoiceStream is unlikely to
     permit them to act anti-competitively in providing international
     roaming services. First, we note that, regardless of the technology
     a mobile telephony provider chooses, roaming can only be
     accomplished with the use of compatible equipment. Thus, for any
     carrier to offer international roaming services in a country where
     carriers use only a GSM air interface, its customers must have
     compatible GSM equipment.[^304] We also note that U.S. GSM
     equipment is not compatible with overseas GSM networks without
     further modification because different spectrum bands are employed.

108. While both DT and VoiceStream employ GSM, the current European
     allocation of spectrum for mobile telephony services differs from
     that in the United States. European providers of mobile telephony
     services generally operate either in the 900 MHz or 1700 and 1800
     MHz bands, while U.S. mobile telephony service providers using PCS
     operate between 1850 and 2200 MHz,[^305] those using cellular
     licenses operate in the 800 MHz band,[^306] and those using SMR
     licenses operate at 220, 800 and 900 MHz.[^307] Because different
     frequencies are used in Europe and the United States, no U.S.
     mobile telephony carrier currently can provide international
     roaming services on a single-band mobile telephone tuned for U.S.
     allocations for mobile telephony. Therefore, as a practical matter,
     all U.S. mobile telephony carriers, including VoiceStream, must
     provide different or upgraded equipment to offer these services via
     a single handset. In order to offer international roaming services,
     GSM U.S. mobile telephony carriers must provide "dual-band"
     equipment; non-GSM U.S. mobile telephony carriers must provide
     "dual-mode" equipment that is capable of operating with a GSM
     network (or any other technology employed in a network).

109. We also note that a number of U.S. mobile telephony service
     providers, including VoiceStream, currently provide international
     roaming services to Europe (and other countries where GSM is
     employed) through roaming agreements and offer the purchase or
     rental of special equipment for this purpose.[^308] While the
     international roaming rates charged by all U.S. providers are
     comparable, VoiceStream charges less to consumers for the equipment
     needed for international roaming than other U.S. mobile telephony
     service providers.[^309] Assuming that this price differential is
     related to VoiceStream's choice of the GSM standard, which
     eliminates the need for a dual-mode phone, it may be possible that
     VoiceStream's choice of GSM already provides it with some
     competitive advantage in international roaming. Both the Applicants
     and some commenters believe that VoiceStream's GSM network is a key
     asset for the provision of advanced global services, such as
     worldwide voicemail access and single source billing.[^310]
     However, we do not find anything anti-competitive about this.
     Anti-competitive effects may occur when rivals are excluded from
     use of compatible standards. However, the various second and third
     generation wireless standards are open standards and are available
     for all carriers to use.

110. We further note that commenters do not clearly identify how the
     merger of DT and VoiceStream---as distinguished from their use of a
     common GSM air interface absent the merger---will reduce
     competition in the provision of international roaming services, nor
     do they suggest a specific condition that would address the issues.
     Even assuming the merger somehow may lower VoiceStream's cost of
     providing international roaming in those countries where DT holds a
     license and provides additional global services, producing
     additional competitive advantage for VoiceStream, we find no basis
     in the record to conclude that the merger of DT and VoiceStream
     would cause other U.S. mobile telephony service providers to be
     excluded from providing these services, or otherwise permit the
     merged entity to act anti-competitively.[^311]

111. Finally, DT's ownership of VoiceStream does not leave other U.S.
     mobile telephony service providers without options for roaming
     partners in Germany and other countries where DT's T‑Mobile has a
     subsidiary. Any foreign provider of mobile telephony services is a
     potential roaming partner for U.S. providers, regardless of network
     technology, and there appear to be a sufficient number of potential
     partners to support an open market for international roaming
     agreements. In this regard, we note that DT's U.K. wireless
     subsidiary, One2One, has international roaming agreements in
     Germany with three of DT's rivals.[^312] We therefore have no
     specific reason to expect that the merger of DT and VoiceStream
     will result in the inability of other U.S. mobile telephony service
     providers to offer international roaming services in Germany. In
     summary, we find insufficient basis to conclude that the merger
     would lead to anti-competitive behavior by the merged entity in the
     provision of international roaming services to U.S. consumers.

#### Third generation technology 

112. We also are not persuaded by commenters' claim that DT's
     acquisition of "third generation" UMTS wireless licenses will have
     an anti-competitive, exclusionary effect, either globally or in the
     United States.[^313] DT's mobile subsidiary, T‑Mobile, recently won
     two UMTS licenses in Germany and plans to offer third generation
     services by 2003.[^314] However, other companies, e.g.*,* E-Plus,
     Group 3G, MobilCom, and Viag Intercom, have also won UMTS licenses
     in Germany. [^315] Moreover, it is unlikely that VoiceStream will
     be the sole U.S. carrier to adopt WCDMA, the technical standard
     European wireless carriers will use to provide UMTS services.[^316]
     Both AT&T Wireless and Cingular Wireless plan to rely on
     WCDMA,[^317] greatly reducing any VoiceStream competitive advantage
     based on its choice of technology. Further, even if VoiceStream has
     a competitive advantage as the only U.S. mobile telephony service
     provider to employ a technology similar to carriers in other
     countries, this fact alone would not suggest that it was engaging,
     or could engage, in anti-competitive behavior because U.S. carriers
     are free to choose among competing technical standards for the
     provision of third generation wireless services.[^318]

#### Expansion of global footprint

113. Several commenters further argue that by expanding its global
     footprint into the United States, DT is positioning itself for
     global dominance. Upon consummation of the merger, DT will own
     wireless carriers in Germany, the United Kingdom, Austria, Hungary,
     and the United States, as well as hold interests in wireless
     carriers in other countries. [^319] DT's most important subscriber
     bases will be Germany (13 million subscribers), the United Kingdom
     (6 million subscribers) and the United States (3.9 million
     subscribers).[^320] DT is not alone, however, in seeking an
     international footprint. Nor is it the first or the largest carrier
     to do so. Verizon Wireless, which is 45 percent owned by Vodafone
     Airtouch Plc, is already part of the Vodafone Group
     Worldwide,[^321] which serves more subscribers in these key
     countriesGermany, the United Kingdom, and the United Statesthan
     DT.[^322] In addition, AT&T Wireless and NTT DoCoMo, the largest
     wireless carrier in Japan, have formed an alliance.[^323] That
     other large carriers are expanding their worldwide coverage
     suggests that this is a sensible competitive strategy rather than
     an independent attempt by DT unfairly to dominate global services.
     We would expect other U.S. carriers also to try to take advantage
     of the likely pro-competitive benefits of global expansion, such as
     economies of scale, seamless service through standardization,
     reduction of risk through geographic diversification, and speed in
     disseminating innovations. Because the global expansion of other
     U.S. mobile telephony service providers is underway, the merger of
     DT and VoiceStream is not likely to preclude other U.S. carriers
     from pursuing a global strategy. Moreover, as a signatory to the
     WTO accords, the United States has endorsed global competition in
     wireless services.[^324] Permitting DT's effort to gain a
     competitive advantage by expanding into the U.S. mobile telephony
     service market is consistent with the U.S. WTO obligations.

114. Therefore, because we conclude that the transfer will result in no
     anti-competitive effects in the provision of global services in the
     United States, we find that this is not a basis for denying, or
     further conditioning, approval of the proposed transfers.

## Conclusion

115. In summary, as discussed in Parts IV and V, the harms that could
     flow from the proposed VoiceStream Powertel DT merger, or the
     alternative VoiceStream Powertel merger, are remote. DT's partial
     government ownership does not appear to increase the likelihood of
     anti-competitive activity or present unique competitive harms.
     Contrary to commenters' assertions, we find no basis to conclude
     that DT has the incentive or ability to anti-competitively
     cross-subsidize its operations in any relevant market. We also note
     that the Applicants' agreement with the Department of Justice and
     Federal Bureau of Investigation substantially reduces the potential
     for harm to U.S. national security, law enforcement, and public
     safety interests.

# alleged pro-competitive Benefits 

116. *DT-VoiceStream-Powertel Merger.* The Applicants contend that the
     proposed DT-VoiceStream-Powertel merger will generate significant
     public interest benefits and efficiencies.[^325] They argue that
     consumers will benefit from the significant expansion of the
     nationwide footprint for GSM subscribers, which will result in
     additional competition in the mobile voice market nationwide, which
     is currently served, in addition to VoiceStream, by Verizon
     Wireless, Cingular Wireless, Sprint PCS, AT&T Wireless, and Nextel
     Communications.[^326] Further, they claim that the proposed merger
     will produce benefits through economies of scale and scope,
     improved spectrum efficiency, and wider availability of advanced
     services.[^327]

117. The Applicants further contend that the proposed merger will
     provide VoiceStream with the resources necessary to accelerate the
     build-out of VoiceStream's existing licenses and to acquire
     additional spectrum to fill out its near nationwide
     footprint.[^328] The build-out and extension of VoiceStream's
     network will enable the merged company to deploy additional
     wireless services, including services that DT provides in Europe
     but are not yet available in the United States.[^329] As
     VoiceStream's network is built out and new spectrum added, roaming
     charges incurred by VoiceStream's subscribers will be
     reduced.[^330]

118. The Applicants also argue that the merger will present
     opportunities for a single-handset global service on DT's GSM
     network[^331] with such features as worldwide voicemail access
     numbers and transferable prepaid calling plans.[^332] In addition,
     the Applicants claim that the merger will produce benefits through
     economies of scale and scope by allowing VoiceStream to procure
     handsets and infrastructure equipment at attractive prices and
     drive down other costs, and these cost savings may be passed on to
     customers.[^333] The Applicants argue that the merger with DT will
     provide VoiceStream with the needed financing in order to deploy
     next-generation wireless services, which will provide U.S.
     consumers with another choice in obtaining high-speed data
     services.[^334]

119. According to the Applicants, DT's acquisition of Powertel will
     provide consumer benefits similar to those provided by its
     acquisition of VoiceStream, and some of these benefits will be
     greater for Powertel users than for VoiceStream users.[^335] DT's
     acquisition of Powertel will provide the capital necessary to build
     out and upgrade Powertel's network and allow the deployment of
     advanced services over this network, that otherwise would not take
     place given the fact that Powertel is a regional and not a national
     operator.[^336] Since Powertel is a regional provider, folding
     Powertel's network into VoiceStream's will decrease roaming charges
     to Powertel's customers and give them access to a provider with a
     near nationwide footprint.[^337] Also, the acquisition of Powertel
     will fill in one of VoiceStream's remaining substantial gaps in its
     national footprint in the southeastern United States.[^338]

120. Commenters in this proceeding discuss many of the same public
     benefits claimed by the Applicants. The Organization for
     International Investment, Communication Workers of America, Siemens
     and Stan Kugell each argue that the merger will provide VoiceStream
     with an infusion of capital that will permit it to build out its
     network and extend its national footprint.[^339] These commenters
     each claim that the merger will enable VoiceStream to deploy new
     services including next generation wireless services.[^340] Siemens
     and Stan Kugell point out the benefits of the merged entity being
     able to offer a global wireless network to VoiceStream's
     customers.[^341] The Communications Workers of America argue that
     U.S. consumers and workers will benefit from a transfer of positive
     elements of DT's corporate culture, such as a strong
     labor/management partnership and corporate involvement in
     connecting schools to the Internet.[^342] The National Consumers
     League similarly claims that consumers can be expected to benefit
     in view of DT's record as a good employer and corporate
     citizen.[^343]

121. We agree with the Applicants that the build-out and extension of
     VoiceStream's network to expand VoiceStream's reach significantly,
     both nationwide and internationally, constitutes a clear,
     transaction-specific public interest benefit. A significant
     percentage of mobile phone users desire nationwide access, and
     those users will benefit from the continued expansion of the
     VoiceStream network and the resulting increase in competition in
     mobile services. We are persuaded that new services, new features,
     and potentially reduced roaming charges to consumers will result
     from the merger. We also believe that the combined
     DT/VoiceStream/Powertel company will become a stronger competitor
     among other large companies providing international roaming
     services and that U.S. consumers will gain benefits from increased
     choices and competition in such international roaming services.

122. We agree with the Applicants that GSM subscribers will benefit from
     the expanded licensed area to be created by combining VoiceStream
     and Powertel under ownership of DT, and that all mobile phone users
     needing nationwide access will benefit significantly from the
     expansion of VoiceStream's licensed area. Moreover, this expansion
     of VoiceStream's licensed area will provide more consumers in the
     southeast United States with an additional, and possibly less
     expensive, opportunity to subscribe to a carrier that enables both
     local and international access.

123. *VoiceStream-Powertel Merger.* The Applicants contend that the
     proposed VoiceStream-Powertel merger, which will occur only if the
     proposed merger between DT and VoiceStream is not consummated, will
     generate significant public interest benefits.[^344] The Applicants
     argue that acquisition of control of Powertel will permit
     VoiceStream to fill a major gap in its national PCS footprint. They
     claim that consumers will benefit from this significant expansion
     of the nationwide footprint for GSM subscribers, which will result
     in additional competition in the mobile voice market.[^345]

124. We agree with the Applicants that the expansion of VoiceStream's
     network to the portion of the southeastern United States that
     Powertel---but not VoiceStream---reaches at present constitutes a
     clear, transaction-specific public interest benefit. A significant
     percentage of mobile phone users desire nationwide access, and
     those users will benefit from the expanded licensed area to be
     created by combining VoiceStream and Powertel.

# CONCLUSIONs 

## Section 310(b)(4)

125. In response to the petition filed by the Applicants seeking a
     Commission determination that the levels of alien and foreign
     government ownership resulting from the proposed transactions would
     be consistent with the public interest, we have examined, as
     required by the *Foreign Participation Order*, whether the proposed
     foreign government ownership would pose a high risk of harm to
     competition in the U.S. market and have concluded that it would
     not. We therefore decline to impose conditions related to DT's
     conduct in the German market, as requested by some commenters. We
     also have accorded deference to the expertise of the Executive
     Branch regarding national security and law enforcement concerns and
     will condition grant of the DT Transfer Applications on compliance
     with the DT--VoiceStream/DOJ/FBI Agreement.

## Sections 214 and 310(d)

126. Based upon our section 310(b)(4) analysis and our reviews under
     sections 214(a) and 310(d) of the Act, we find that the Applicants
     are legally and otherwise qualified to hold the licenses at issue.
     We determine that the proposed merger will likely not result in
     harm to competition in any relevant market and will likely yield
     tangible public interest benefits to U.S. consumers. We conclude,
     therefore, that the transfers serve the public interest,
     convenience and necessity and decline to designate the DT Transfer
     Applications for hearing.

# Related petitions

127. We also consider in this proceeding three petitions for declaratory
     ruling under section 310(b)(4) of the Act, and one petition for
     declaratory ruling under sections 310(b)(4) and 310(d) of the Act,
     from entities in which VoiceStream currently holds indirect,
     non-controlling interests (the Related Petitions).[^346] On
     February 1, 2001, the Bureaus issued a public notice to announce
     that the petitions were accepted for filing, and to establish a
     pleading cycle to permit interested parties an opportunity to
     comment on the petitions.[^347] In response to the *Declaratory
     Ruling Public Notice* no comments were filed. As discussed above,
     under section 310(b)(4), we determine whether the public interest
     would be served by allowing these common carrier licensees to have
     indirect foreign ownership that exceeds 25 percent.[^348]

128. We find no reason that the foreign ownership attributable to DT
     would raise concerns with respect to the Related Petitions
     different from those addressed in this order with respect to DT
     generally. Therefore, consistent with our findings with respect to
     the proposed acquisition by DT of VoiceStream Powertel in general,
     we conclude pursuant to section 310(b)(4) that the public interest
     is served by allowing the proposed levels of indirect foreign
     ownership requested in the Related Petitions. Each petition is
     discussed individually below.

## CIVS IV and CIVS V

129. On October 13, 2000, Cook Inlet/VS GSM IV PCS, LLC (CIVS IV) and
     Cook Inlet/VS GSM V PCS, LLC (CIVS V) filed a Petition for
     Declaratory Ruling under Section 310(b)(4) of the Act stating that
     it is in the public interest to permit an indirect ownership
     interest of up to 49.9 percent in CIVS IV and CIVS V by DT. On
     April 4, 2001 CIVS IV and CIVS V filed an amendment to their
     Petition requesting that the Commission extend its section
     310(b)(4) ruling in this proceeding to allow CIVS IV and CIVS V to
     exercise their right to call additional capital from VoiceStream up
     to the point where VoiceStream would have an 85 percent equity
     stake in CIVS IV and V.[^349] CIVS IV and CIVS V each are Delaware
     limited liability companies.[^350] CIVS IV is a wholly-owned,
     direct subsidiary of Cook Inlet/VS GSM IV PCS Holdings, LLC; CIVS V
     is a wholly-owned, direct subsidiary of Cook Inlet/VS GSM V PCS
     Holdings, LLC. Each of the CIVS IV Holdings and CIVS V Holdings has
     two members. Cook Inlet Mobile Corporation (CIMC) holds a 50.1
     percent membership interest in and is the sole manager of CIVS IV
     Holdings; Cook Inlet Wireless, Inc. (CIWC) holds a 50.1 percent
     membership interest in and is the sole manager of CIVS V Holdings.
     CIMC and CIWC each are wholly-owned, direct subsidiaries of Cook
     Inlet Region, Inc., an Alaska Native Regional Corporation organized
     pursuant to the Alaska Native Claims Settlement Act. Omnipoint
     Investment, LLC, a wholly-owned subsidiary of VoiceStream, holds a
     49.9 percent membership interest in each of CIVS IV Holdings and
     CIVS V Holdings.

130. In the event that DT acquires VoiceStream as contemplated, CIVS IV
     and CIVS V require Commission approval for the resulting indirect
     foreign ownership of CIVS IV and CIVS V attributable to DT.[^351]
     We received no comments in response to the Public Notice of CIVS IV
     and CIVS V petition for a declaratory ruling.

131. Our grant of this petition allows the following foreign ownership:
     CIVS IV and CIVS V are authorized to be indirectly owned up to 85
     percent by DT and DT's German shareholders. CIVS IV and CIVS V
     would need additional Commission authority under section 310(b)(4)
     before DT or DT's German shareholders could increase investment
     above the authorized levels. Foreign entities other than DT or DT's
     German shareholders may acquire as much as 25 percent aggregated
     indirect ownership in each of CIVS IV and CIVS V. Any such
     ownership in excess of 25 percent will require additional
     Commission authority.

## Wireless Alliance, L.L.C.

132. On October 16, 2000, Wireless Alliance, L.L.C. (Wireless Alliance)
     filed a Petition for Declaratory Ruling under Section 310(b)(4) of
     the Act (Wireless Alliance Petition) stating that it is in the
     public interest to permit an indirect ownership interest of up to
     30 percent in Wireless Alliance by DT. Wireless Alliance is a
     Delaware corporation owned and controlled 70 percent by Rural
     Cellular Corporation, a Minnesota corporation, and 30 percent owned
     by APT Minneapolis, Inc., a wholly-owned subsidiary of
     VoiceStream.[^352]

133. In the event that DT acquires VoiceStream as contemplated, Wireless
     Alliance requires Commission approval for the resulting indirect
     foreign ownership of Wireless Alliance attributable to DT. We
     received no comments in response to the Public Notice of Wireless
     Alliance's petition for a declaratory ruling.

134. Our grant of this petition allows the following foreign ownership:
     Wireless Alliance is authorized to be indirectly owned up to 30
     percent by DT and DT's German shareholders. Wireless Alliance would
     need additional Commission authority under section 310(b)(4) before
     DT or DT's German shareholders could increase investment above this
     authorized level. Foreign entities other than DT or DT's German
     shareholders may acquire as much as 25 percent aggregated indirect
     ownership in Wireless Alliance. Any such ownership in excess of 25
     percent will require additional Commission authority.

## Iowa Wireless

135. On January 5, 2001, Iowa Wireless filed a Petition for Declaratory
     Ruling under sections 310(b)(4) and 310(d) (Iowa Wireless Petition)
     of the Act stating that it (1) is in the public interest to permit
     an indirect ownership interest of up to 38 percent in Iowa Wireless
     by DT and (2) based on the particular provisions of the Iowa
     Wireless organizational documents, the transfer to DT of
     VoiceStream's 38 percent limited partnership interest in Iowa
     Wireless either does not constitute a transfer of control of Iowa
     Wireless, or in the alternative, constitutes only a *pro forma*
     transfer of control of Iowa Wireless. Subsequently, on March 9,
     2001, VoiceStream and DT, with the consent of Iowa Wireless,
     submitted an application for the transfer of control of
     VoiceStream's limited partnership interest in Iowa Wireless from
     VoiceStream to DT and asked that the application be subject to the
     processing procedures for substantive transfers of control.[^353]
     The Applicants state that they seek to resolve "any question
     regarding the appropriate manner in which this application should
     be processed under the Commission's rules."[^354] Accordingly, we
     find that the Applicants have rendered moot the need for a
     declaratory ruling under section 310(d) of the Act, and do not
     address the issue further. Instead, we limit our analysis of the
     Iowa Wireless Petition to the ruling requested under section
     310(b)(4) of the Act.

136. *Section 310(b)(4)*. Iowa Wireless is a Delaware corporation,
     wholly-owned by IWS-LP, which in turn is comprised of a general
     partner, INS Wireless, Inc., an Iowa corporation, which holds a 62
     percent general partnership interest, and a limited partner,
     VoiceStream PCS I Iowa Corporation, an indirect wholly-owned
     subsidiary of VoiceStream, which holds a 38 percent limited
     partnership interest.[^355]

137. In the event that DT acquires VoiceStream as contemplated, Iowa
     Wireless requires Commission approval for the resulting indirect
     foreign ownership of Iowa Wireless attributable to DT. We received
     no comments in response to the Public Notice of Iowa Wireless'
     petition for a declaratory ruling.

138. Our grant of this petition allows the following foreign ownership:
     Iowa Wireless is authorized to be indirectly owned up to 38 percent
     by DT and DT's German shareholders. Iowa Wireless would need
     additional Commission authority under section 310(b)(4) before DT
     or DT's German shareholders could increase investment above this
     authorized level. Foreign entities other than DT or DT's German
     shareholders may acquire as much as 25 percent aggregated indirect
     ownership in Iowa Wireless. Any such ownership in excess of 25
     percent will require additional Commission authority.

## Eliska Wireless Ventures

139. On January 24, 2001, Eliska Wireless Ventures License Subsidiary I,
     L.L.C. (Eliska License Sub) filed a Petition for Declaratory Ruling
     under Section 310(b)(4) (Eliska License Sub Petition) of the Act
     stating that it is in the public interest to permit an indirect
     ownership interest of 49.9 percent equity in Eliska License Sub by
     DT. Eliska License Sub is a limited liability corporation formed
     under the laws of the state of Delaware. It is a wholly-owned
     subsidiary of Eliska Wireless Ventures I, Inc., a Delaware
     corporation which in turn is wholly-owned by EWV Holding Company,
     Inc., a Delaware corporation.

140. Powertel owns 49.9 percent of the equity and holds 24.95 percent of
     the voting rights in Eliska. In the event that DT acquires Powertel
     as contemplated, Eliska requires Commission approval for the
     resulting indirect foreign ownership of Eliska attributable to DT.
     We received no comments in response to the Public Notice of
     Eliska's petition for a declaratory ruling.

141. The International Bureau previously authorized Eliska to be
     indirectly owned up to 35.99 percent by any one of the following
     foreign entities: Sonera Holding BV, Sonera Corporation, and Sonera
     Ltd.[^356] We stated that Eliska would need additional Commission
     authority under section 310(b)(4) before any of these Sonera
     entities could increase investment above this authorized level.
     Additional authority also would be required before any other
     foreign entity or entities acquire, in the aggregate, a
     greater-than-twenty five-percent indirect interest in Eliska.[^357]

142. Our grant of this petition allows the following foreign ownership
     in addition to that previously authorized with respect to the
     Sonera entities: Eliska is authorized to be indirectly owned up to
     49.9 percent by DT and DT's German shareholders. Eliska would need
     additional Commission authority under section 310(b)(4) before DT
     or DT's German shareholders could increase investment above this
     authorized level. Foreign entities other than the Sonera entities,
     DT, and DT's German shareholders may acquire as much as 25 percent
     aggregated indirect ownership in Eliska. Any such ownership in
     excess of 25 percent will require additional Commission authority.

# ORDERING CLAUSES 

143. Accordingly, having reviewed the applications, the petitions and
     the record in this matter, IT IS ORDERED, pursuant to sections 4(i)
     and (j), 214(a) and (c), 309, and 310(b) and (d) of the
     Communications Act of 1934, as amended, 47 U.S.C. §§154(i) and (j),
     214(a) and (c), 309, and 310(b) and (d), that the applications
     filed by VoiceStream and Powertel for authority to transfer control
     of licenses and authorizations to DT, and the petitions for
     declaratory ruling filed by VoiceStream and Powertel in the
     above-captioned proceeding ARE GRANTED, to the extent specified in
     this order and subject to the conditions specified below.

144. IT IS FURTHER ORDERED that, pursuant to section 214 of the
     Communications Act of 1934, as amended, 47 U.S.C. § 214, this
     authorization to VoiceStream and Powertel to transfer control of
     their international section 214 authorizations to DT is subject to
     the condition that said section 214 authorizations shall be subject
     to rules governing dominant carriers set forth in section 63.10 of
     the Commission's rules, 47 C.F.R §63.10, on the U.S.Germany,
     U.S.Hungary, U.S.Slovakia, and U.S.--Croatia routes.

145. IT IS FURTHER ORDERED that the above grant shall include authority
     for DT to acquire control of: (a) any authorization issued to
     VoiceStream's and Powertel's subsidiaries during the Commission's
     consideration of the transfer of control applications or the period
     required for consummation of the transaction following
     approval; (b) construction permits held by such licensees that
     mature into licensees after closing; and (c) applications filed by
     such licensees and that are pending at the time of consummation of
     the proposed transfer of control.

146. IT IS FURTHER ORDERED that, pursuant to sections 4(i) and (j),
     214(a) and (c), 309 and 310(b) and (d) of the Communications Act of
     1934, as amended, 47 U.S.C. §§ 154(i) and (j), 214(a) and (c), 309,
     310(b) and (d), that the Petition to Adopt Conditions to
     Authorization and Licenses filed by the Department of Justice and
     the Federal Bureau of Investigation, on January 25, 2001, IS
     GRANTED, and that the authorizations and licenses related thereto
     which are to be assigned or transferred as a result of this Order
     are subject to compliance with provisions of the Agreement between
     VoiceStream and DT on the one hand, and the Department of Justice
     and the Federal Bureau of Investigation on the other, effective on
     the date when the DT mergers with VoiceStream and Powertel have
     closed, which Agreement is designed to address the national
     security, law enforcement, and public safety concerns of the
     Department of Justice and the Federal Bureau of Investigation
     regarding the authority granted herein, is fully binding upon
     VoiceStream and DT and those subsidiaries, successors and assigns
     of both companies that provide telecommunications services within
     the United States. Nothing in the Agreement is intended to limit
     any obligation imposed by Federal law or regulation including, but
     not limited to, 47 U.S.C. §§ 222(a) and (c)(1) and the Commission's
     implementing regulations.

147. IT IS FURTHER ORDERED that the petitions for declaratory ruling
     filed by CIVS IV and CIVS V; Wireless Alliance; Iowa Wireless; and
     Eliska Wireless Ventures ARE GRANTED to the extent specified in the
     order; accordingly these entities are authorized to accept indirect
     foreign ownership in excess of the 25-percent benchmark of section
     310(b)(4) of the Communications Act of 1934, as amended, to the
     extent specified in this Order.

148. IT IS FURTHER ORDERED pursuant to sections 4(i) and (j), 214(a) and
     (c), 309, and 310(b) and (d) of the Communications Act of 1934, as
     amended, 47 U.S.C. §§154(i) and (j), 214(a) and (c), 309, and
     310(b) and (d), that the application filed by Powertel to transfer
     control of licenses and authorizations to VoiceStream in the above
     captioned proceeding IS GRANTED, in the alternative, if the
     proposed merger between DT and VoiceStream, as described herein, is
     not consummated.

149. IT IS FURTHER ORDERED that, pursuant to section 4(i) and (j),
     214(a), 214(c), 309, 310(b) and 310(d) of the Communications Act of
     1934, as amended, 47 U.S.C. §§ 4(i) and (j), 214(a) and (c), 309,
     310(b) and (d), the Petition of WITCO to deny the applications of
     VoiceStream and DT for transfer of control is DENIED for the
     reasons stated herein.

150. IT IS FURTHER ORDERED that this Memorandum Opinion and Order SHALL
     BE EFFECTIVE upon release. Petitions for reconsideration under
     section 1.106 of the Commission's rules, 47 C.F.R. § 1.106, may be
     filed within thirty days of the date of public notice of this
     order.

     FEDERAL COMMUNICATIONS COMMISSION

     Magalie Roman Salas

Secretary

**APPENDIX A: Commenters and Filings**

**Petitions for Declaratory Ruling Filed by:** (5)

1.  Cook Inlet/VS GSM IV PCS, LLC

2.  Cook Inlet/VS GSM V PCS , LLC

3.  Eliska Wireless Ventures License Subsidiary I, L.L.C.

4.  Iowa Wireless Services Holding Corporation

5.  Wireless Alliance, L.L.C.

    **Petitions to Deny Filed by:** (1)

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1.  Jordan-Soldier Valley Telephone Co. d/b/a/ WITCO[^358]

    **Comments Filed by:** (21)

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1.  Alliance for Public Technology

2.  Broadnet Wireless Broadband Networks

3.  Communications Workers of America

4.  Computer & Communications Industry Association

5.  Federal Bureau of Investigation, et al.

6.  Gary C. Hufbauer and Edward M. Graham

7.  Global TeleSystems, Inc.

8.  KKF.net AG

9.  National Consumers League

10. NetCologne GmbH

11. Novaxess B.V.

12. Organization for International Investment

13. QS Communications AG

14. Robert J. Stankey, Jr.

15. Securities Industry Association

16. Siemens Corporation

17. Stan Kugell

18. The Honorable Ernest F. Hollings

19. The Honorable Michael Kantor

20. United States Chamber of Commerce

21. UTStarcom

    **Reply Comments Filed by:** (6)

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1.  Callahan Associates International LLC

2.  European Telecommunications Network Operators

3.  European Union Delegation of the European Commission

4.  Novaxess B.V.

5.  Organization for International Investment

6.  VoiceStream Wireless Corporation, et al

[^1]: 47 U.S.C. §§ 214(a), 310(d).

[^2]: *VoiceStream Wireless Corp. and Deutsche Telekom AG,* Application
    for Transfer of Control and Petition for Declaratory Ruling, IB
    Docket No. 00-187 (filed Sept. 18, 2000) (VoiceStream DT
    Application); *Powertel, Inc. and Deutsche Telekom AG,* Application
    for Transfer of Control and Petition for Declaratory Ruling, IB
    Docket No. 00-187 (filed Sept. 18, 2000) (Powertel DT Application).

[^3]: *See* Five Entities Seek Declaratory Ruling Pursuant to Section
    310(b)(4) Allowing Indirect Foreign Ownership Resulting From the
    Proposed Acquisition of VoiceStream Wireless Corporation by Deutsche
    Telekom AG, and Iowa Wireless Seeks Declaratory Ruling Pursuant to
    Section 310(d), IB Docket No. 00-187, Public Notice, DA 01-280 (rel.
    Feb. 1, 2001) (Declaratory Ruling Public Notice).

[^4]: *VoiceStream Wireless Corp. and Powertel, Inc.*, Application for
    Transfer of Control, IB Docket No. 00-187 (filed Sept. 18, 2000)
    (VoiceStream Powertel Application).

[^5]: VoiceStream DT Application at 3. VoiceStream previously was a
    subsidiary of Western Wireless Corporation, but was spun off in its
    entirety to shareholders of that company on May 3, 1999. VoiceStream
    DT Application at 4.

[^6]: *Id.* at 4*.*

[^7]: *Id.* at 3-4.

[^8]: *Id*. at 5. VoiceStream (including Omnipoint and Aerial) ranked
    eighth behind Verizon Wireless, Cingular, AT&T Wireless, Sprint PCS,
    ALLTEL, Nextel, and U.S. Cellular. *Id*.; *see also Annual Report
    and Analysis of Competitive Market Conditions with Respect to
    Commercial Mobile Services,* Fifth Report, FCC 00-289 at App. 5,
    Table 3 (rel. Aug. 18, 2000).

[^9]: *In re Applications of Cook Inlet Region, Inc. and VoiceStream
    Wireless Corporation*, WT Docket No. 00-207, Order, 15 Rcd 24691
    (Wir. Tel. Bur. 2000) (*VoiceStream/CIRI Order*).

[^10]: *VoiceStream Wireless Announces 2000 Financial Result*, Press
    Release, February 14, 2001.

[^11]: VoiceStream DT Application at 6 and n.11 (listing the six
    international section 214 authorizations controlled by VoiceStream
    and its operating subsidiaries).

[^12]: *Id*. at 8; *see also* Articles of Incorporation of Deutsche
    Telekom, Exhibit A to VoiceStream DT Application.

[^13]: VoiceStream DT Application at 10; VoiceStream Powertel DT Reply
    at 37. Until it became a stock corporation in 1995, DT was
    wholly-owned by the German government. Since 1995, the German
    government has been gradually divesting its stake in DT. VoiceStream
    DT Application at 9-10. At the time the applications were filed, the
    German government owned 58.2 percent of DT. After France Telecom
    sold its stake in DT to the Kreditanstalt fuer Wiederaufbau, or KfW,
    bank (which is controlled by the German government and federal
    states) in December 2000, the level of German government ownership
    in DT (held directly or through KfW) rose to 60 percent. VoiceStream
    Powertel DT Reply at 37.

[^14]: VoiceStream DT Application at 10; VoiceStream Powertel DT Reply
    at 37. *See* *also infra* Part IV discussing DT's German government
    ownership and DT's corporate governance structure.

[^15]: VoiceStream DT Application at 8.

[^16]: *See* Mid-year Report 2000, Regulatory Authority for
    Telecommunications and Posts (RegTP) at 13. According to RegTP, when
    volumes of domestic long distance, international, and fixed to
    mobile calls are considered, DT accounts for 60 percent of the
    market. *Id.*

[^17]: VoiceStream DT Application at 8*.*

[^18]: *Id.*

[^19]: *Id*. at 9.

[^20]: *See* Letter from John H. Harwood II, Counsel for Deutsche
    Telekom AG, to Magalie Roman Salas, Secretary, Federal
    Communications Commission, at 2 (filed Feb. 23, 2001) (DT Feb. 23
    *Ex Parte* Letter); VoiceStream DT Application at 29 n.87.

[^21]: Powertel DT Application at 3.

[^22]: *Id*.

[^23]: *Id*.

[^24]: Powertel received authority to provide global resale services in
    FCC File No. ITC-214-20000727-00441 (effective Aug. 18, 2000).
    Powertel has notified the Commission that its operating subsidiaries
    are providing service under their parent's authorization, pursuant
    to section 63.21(i) of the Commission's rules, 47 C.F.R. § 63.21(i).

[^25]: VoiceStream DT Application, Exh. B, *VoiceStream Wireless Corp.
    and Deutsche Telekom AG*, Agreement and Plan of Merger between
    Deutsche Telekom AG and VoiceStream Wireless Corporation Dated July
    23, 2000 and Related Documents.

[^26]: VoiceStream DT Application at 16.

[^27]: *Id*. VoiceStream shareholders will receive 3.2 shares of DT's
    stock and \$30 cash for each share of VoiceStream common stock,
    subject to certain adjustments. Alternatively, VoiceStream
    shareholders may elect an all-stock (3.7647 DT shares per
    VoiceStream share) or an all cash (\$200 per VoiceStream share)
    option, subject to proration and other adjustments. DT also will
    assume approximately \$5 billion of the net debt of VoiceStream.
    Following the closing of the merger, current VoiceStream
    shareholders are expected to own approximately 22 percent of DT.
    VoiceStream is expected to become a subsidiary of T‑Mobile, but will
    continue to use the VoiceStream brand. The Applicants state that
    VoiceStream's existing senior management will continue to lead
    T‑Mobile's U.S. mobile operations. *Id.*

[^28]: *See* Letter from Louis Gurman, Counsel for VoiceStream Wireless
    Corp., *et al*., to Don Abelson, Chief, International Bureau, IB
    Docket No. 00-187, App. B, *Powertel, Inc. and Deutsche Telekom AG*,
    Agreement and Plan of Merger between Deutsche Telekom AG and
    Powertel, Inc. Dated August 26, 2000, (DT Powertel Merger Agreement)
    (filed Feb. 9, 2001) (Applicants Feb. 9 Response to Supplemental
    Information Request).

[^29]: Powertel DT Application at 2.

[^30]: Applicants Feb. 9 Response to Supplemental Information Request,
    App. B, DT Powertel Merger Agreement at 2.

[^31]: Applicants Feb. 9 Response to Supplemental Information Request,
    App. B, DT Powertel Merger Agreement at 2. Holders of Powertel
    common stock will receive 2.6353 shares of DT's stock; holders of
    Powertel Series A and B Preferred Shares will receive 121.9294
    shares of DT's stock; holders of Powertel Series D Preferred Shares
    will receive 93.0106 shares of DT's stock; and holders of Powertel
    Series E and F Preferred Shares will receive 179.5979 shares of DT's
    stock (plus 2.6353 shares of DT's stock for each share of Powertel
    common stock that such preferred shareholders are owed as
    dividends). Powertel DT Application at 8. DT will also assume
    approximately \$1.2 billion of Powertel's debt. *Id*.

[^32]: *See* *Powertel, Inc. and VoiceStream Wireless Corporation*,
    Application for Transfer of Control, IB Docket No. 00-187 at 2
    (filed Sept. 18, 2000) (VoiceStream Powertel Application).

[^33]: Powertel DT Application at 1-2; VoiceStream Powertel Application
    at 19-21; *see also* Letter from John H. Harwood II, Counsel for
    Deutsche Telekom AG, *et. al*., to Jacquelynn Ruff, Associate
    Division Chief, Telecommunications Division, International Bureau,
    IB Docket No. 00-187 (filed Mar. 12, 2001) (Applicants Mar. 12
    Response to Supplemental Information Request). VoiceStream is
    currently authorized to be indirectly owned up to 30.6 percent by
    Hutchison Whampoa Limited, a Hong Kong company. *See Applications of
    VoiceStream Wireless Corporation or Omnipoint Corporation,
    Tranferors, et al.*, Memorandum Opinion and Order, 15 FCC Rcd 3341,
    3347-50, paras. 13-20 (2000) (*VoiceStream/Omnipoint Order*)*.*
    Applicants estimate that the merged entity would have approximately
    17.6 percent Hong Kong ownership. *See* Applicants Mar. 12 Response
    to Supplemental Information Request. The merged entity also would
    have approximately 17.03 percent non-Hong Kong foreign ownership,
    *id*., an amount within the 25-percent benchmark in section
    310(b)(4).

[^34]: VoiceStream Wireless Corporation, Powertel, Inc., and Deutsche
    Telekom AG Seek FCC Consent to Transfer Control of Licenses and
    Authorizations and Request Declaratory Ruling Allowing Indirect
    Foreign Ownership, IB Docket No. 00-187, Public Notice, DA 01-280
    (rel. Oct. 11, 2000) (VoiceStream DT Public Notice).

[^35]: *Rules and Policies on Foreign Participation in the U.S.
    Telecommunications Market, Market Entry and Regulation of Foreign
    Affiliated Entities*, IB Docket Nos. 97-142, 95-22, Report and Order
    and Order on Reconsideration, 12 FCC Rcd 23891 (1997) (*Foreign
    Participation Order*) (specifying procedure for section 310(b)(4)
    filings).

[^36]: VoiceStream DT Application at 33; Powertel DT Application at 22.

[^37]: *See* 47 C.F.R. § 63.09.

[^38]: *See* VoiceStream DT Public Notice, *supra* note 34. The initial
    pleading cycle set November 13, 2000 as the deadline for
    petitions/comments and November 27, 2000 as the deadline for
    oppositions/responses. On November 8, 2000, the Bureau granted a
    request for a 30-day extension of the comment deadline filed by the
    Honorable Ernest F. Hollings, U.S. Senate (Senator Hollings).
    *VoiceStream Wireless Corporation and Powertel, Inc. and Deutsche
    Telekom AG*, IB Docket No. 00-187, Order, 15 FCC Rcd 21575 (Intl.
    Bur. 2000).

[^39]: The parties that filed formal pleadings in this proceeding are
    listed in Appendix A. In addition to those formal pleadings, we have
    received many informal comments through *ex parte* submissions.
    These *ex parte* filings are available on the Commission's website
    at www.fcc.gov/transaction/voicestream-deutsche.html.

[^40]: *VoiceStream Wireless Corporation and Powertel, Inc. and Deutsche
    Telekom AG*, IB Docket No. 00-187, Order Adopting Protective Order,
    15 FCC Rcd 24042 (Intl. Bur. 2000).

[^41]: *See* Letters from Donald Abelson, Chief, International Bureau,
    to Cheryl A. Tritt, *et al.*, Counsel for VoiceStream Wireless Corp.
    (Feb. 2, 2001); William T. Lake*, et al.*, Counsel for Deutsche
    Telekom AG (Feb. 2, 2001); and Edward Yorkgitis, Jr., Counsel for
    Powertel (Feb. 2, 2001).

[^42]: *See* Declaratory Ruling Public Notice, *supra* note 3; *see
    also* *infra* Part VIII discussing related petitions.

[^43]: 15 U.S.C. § 18.

[^44]: *See* DT VoiceStream Powertel Reply, App. C, Tab C, Letter from
    Robert Raben, Assistant Attorney General, U.S. Department of Justice
    to the Honorable Billy Tauzin, Chairman, Subcommittee on
    Telecommunications, Trade, and Consumer Protection, Committee on
    Commerce, U.S. House of Representatives, IB Docket No. 00-187 (Sept.
    14, 2000) (Department of Justice Sept. 14 Letter).

[^45]: *See* Department of Justice Sept. 14 Letter at 1.

[^46]: *See id*. at 2.

[^47]: *See* *id*. (noting that "by any measure VoiceStream accounts for
    only a very small portion of the origination and termination of
    U.S.--German calls")*.*

[^48]: 47 U.S.C. §§ 214(a), 310(d).

[^49]: Section 310 provides that the Commission shall consider any such
    applications "as if the proposed transferee or assignee were making
    application under Section 308 for the permit or license in
    question." 47 U.S.C. § 310(d). Furthermore, the Commission is
    expressly barred from considering "whether the public interest,
    convenience, and necessity might be served by the transfer,
    assignment, or disposal of the permit or license to a person other
    than the proposed transferee or assignee." *Id.*

[^50]: *See, e.g., In the Matter of AT&T Corp., British
    Telecommunications, plc, VLT Co. L.L.C., Violet License Co. LLC, and
    TNV \[Bahamas\] Limited Applications For Grant of Section 214
    Authority, Modification of Authorizations and Assignment of Licenses
    in Connection with the Proposed Joint Venture Between AT&T Corp. and
    British Telecommunications, plc*, IB Docket No. 98-212, Memorandum
    Opinion and Order, 14 FCC Rcd 19410 (1999) (*AT&T/BT Order*).

[^51]: The commitments are incorporated into the General Agreement of
    Trade in Services (GATS) by the Fourth Protocol to the GATS. *See*
    Fourth Protocol to the General Agreement on Trade in Services (WTO
    1997), 36 I.L.M. 366 (1997).

[^52]: *See generally Foreign Participation Order*,12 FCC Rcd 23891.

[^53]: *Id*. at 23940, para. 111.

[^54]: *Id*. at 23913-14, paras. 50-53 (describing exceptional
    circumstances that could justify denial).

[^55]: *See VoiceStream/Omnipoint Order*, 15 FCC Rcd at 3347, para.13
    n.38 (citing *MobileMedia Corporation et al.,* Memorandum Opinion
    and Order*,* 14 FCC Rcd 8017, 8018, para. 4 (1999) (citing
    *Jefferson Radio Co. v. FCC,* 340 F.2d 781, 783 (D.C. Cir. 1964));
    *see also* Stephen F. Sewell, Assignments and Transfers of Control
    of FCC Authorizations Under Section 310(d) of the Communications Act
    of 1934, 43 Fed. Comm. L.J. 277, 339-40 (1991) (stating that the
    policy of not approving assignments or transfers when issues
    regarding the licensee's basic qualifications remain unresolved is
    designed to prevent licensees from evading responsibility for
    misdeeds committed during the license period).

[^56]: *See VoiceStream/Omnipoint Order*, 15 FCC Rcd at 3347, para. 13
    n.38*.*

[^57]: Senator Hollings first raised these concerns in a letter, filed
    in this docket in advance of a recent spectrum auction (Auction 35),
    requesting a declaratory ruling as to whether DT's \$5 billion
    investment, when combined with the provisions of section 5.15 of the
    VoiceStream DT Merger Agreement, disqualified VoiceStream for
    participation in Auction 35. *See* Letter from the Honorable Ernest
    F. Hollings, Ranking Democrat, Committee on Commerce, Science and
    Transportation, U.S. Senate, to William E. Kennard, Chairman,
    Federal Communications Commission, IB Docket No. 00-187 (filed Nov.
    30, 2000) (Senator Hollings Nov. 30 *Ex Parte* Letter). On December
    8, 2000, Chairman Kennard responded to Senator Hollings, declining
    to issue a declaratory ruling and indicating that VoiceStream's
    qualifications to hold a license won at Auction 35 would be
    addressed as part of the Commission's long-form review in the event
    VoiceStream was a successful bidder at the auction. *See* Letter
    from William E. Kennard, Chairman, Federal Communications
    Commission, to The Honorable Ernest F. Hollings, Ranking Member,
    Committee on Commerce, Science, and Transportation, U.S. Senate
    (dated Dec. 8, 2000). Senator Hollings again raised the issue of
    DT's current control of VoiceStream in his comments filed in this
    proceeding. Senator Hollings Comments at 5.

[^58]: 47 U.S.C. § 310(b)(4) (providing that "\[n\]o broadcast or common
    carrier . . . radio station license shall be granted to or held by .
    . . any corporation directly or indirectly controlled by any other
    corporation of which more than one-fourth of the capital stock is
    owned of record or voted by aliens, their representatives, or by a
    foreign government or representative thereof, or by any corporation
    organized under the laws of a foreign country, if the Commission
    finds that the public interest will be served by the refusal or
    revocation of such license").

[^59]: 47 U.S.C. § 310(d) (providing that "\[n\]o construction permit or
    station license, or any rights thereunder, shall be transferred,
    assigned, or disposed of in any manner, 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").

[^60]: A request has been made for the designation of a hearing based on
    these issues. *See* Senator Hollings Comments (as amended) at 2.
    Generally, requests to designate applications for hearing must meet
    the test set out in *Astroline Communications Company Limited
    Partnership v. FCC*, 857 F.2d 1556 (D.C. Cir. 1988), which is the
    two-step test established in sections 309(d)(1) and (2) of the Act.
    *Id.* at 1560. These provisions require a protesting party to
    "submit a petition containing 'specific allegations of fact
    sufficient to show . . . that a grant of the application would be
    prima facie inconsistent with \[the public interest, convenience,
    and necessity\].' " *Id.* (citing 47 U.S.C. 309(d)(1)); *see also*
    47 C.F.R. § 1.939(d). If the Commission finds that the petition to
    deny satisfies this standard, the Commission then determines whether
    "on the basis of the application, the pleadings filed, or other
    matters which it may officially notice\[,\] . . . a substantial and
    material question of fact is presented." *Id*. at 1561 (citing 47
    U.S.C. § 309(d)(2)). When a petition to deny meets the threshold
    standard, the Commission has wide latitude in determining whether
    the record as a whole presents a substantial and material question
    of fact warranting a hearing. *Id.* Even though no petitions to deny
    were filed with respect to these issues, we recognize the
    seriousness of the allegations and consider below whether they,
    nevertheless, raise a substantial and material question of fact
    warranting the designation of a hearing.

[^61]: VoiceStream Powertel DT Reply at 26-27 n.88; Applicants Feb. 9
    Response to Supplemental Information Request at 15 n.43.

[^62]: VoiceStream DT Application, Exh. B, Tab 19, Certificate of
    Designation of Rights at 1(i); VoiceStream-DT Merger Agreement at
    section 5.15(b).

[^63]: The 217,936,318 shares represent the total shares of VoiceStream
    common stock then outstanding (214,458,732) combined with the number
    of common shares that would result if Hutchison Whampoa Ltd.
    (26,227,586) and DT (31,250,000) converted their preferred shares
    into common. Applicants Response to Supplemental Information Request
    at 15 n.44.

[^64]: Applicants Feb. 9 Response to Supplemental Information Request at
    15.

[^65]: VoiceStream DT Merger Agreement at § 5.15(b). Section 5.15 of the
    VoiceStream DT Merger Agreement also places restrictions on
    VoiceStream's abilitypending closing of the instant mergerto make
    certain acquisitions without prior approval from the Acquisitions
    Committee.

[^66]: *Id.* Any member of the Acquisitions Committee may, within 24
    hours of being notified of a proposed acquisition, object to such
    acquisition, or consent is deemed granted. *Id.* The four members of
    the Acquisitions Committee are specified in Schedule 5.15(c) to the
    VoiceStream DT Merger Agreement. *See* Letter from Cheryl A. Tritt,
    et al., Counsel for Applicants to Jacquelynn Ruff, Associate
    Division Chief, International Bureau, Federal Communications
    Commission, IB Docket No. 00-187 at Schedule 5.15(a)(D) (filed Mar.
    2, 2001) (Applicants Mar. 2 Response to Supplemental Information
    Request).

[^67]: Senator Hollings Nov. 30 *Ex Parte* Letter at 2 (citing
    *Applications of NextWave Personal Communications, Inc.*, *for
    Various C-Block Broadband PCS Licenses*, Memorandum Opinion and
    Order, 12 FCC Rcd 2030, 2045 (Wir. Tel. Bur. 1997) (*NextWave*)).

[^68]: Senator Hollings Nov. 30 *Ex Parte* Letter at 2. In calculating
    the 39 percent interest, Senator Hollings states that adding the \$5
    billion investment by DT to "VoiceStream's previously reported
    shareholder equity of \$7.8 billion leads to the conclusion that the
    Deutsche Telekom investment represents 39% of the new total of
    \$12.8 billion in paid-in equity." *Id*. The Applicants disagree
    with the use of the paid-in-capital analysis and question Senator
    Hollings's reliance on the \$7.8 billion figure. *See* Applicants
    Feb. 9 Response to Supplemental Information Request at 16 n.49.

[^69]: Senator Hollings Nov. 30 *Ex Parte* Letter at 2.

[^70]: *Id.*

[^71]: *See In re Applications of Fox Television Stations, Inc*.,
    Memorandum Opinion and Order, 10 FCC Rcd 8452, 8468, para. 36
    (1995)(*Fox I*); *see also* *NextWave*, 12 FCC Rcd at 2044-45, para.
    35.

[^72]: *Fox I*, 10 FCC Rcd at 8471, 8473, paras. 43 & 47; *see also*
    *NextWave*, 12 FCC Rcd at 2044-45, para. 35.

[^73]: *Fox I*, 10 FCC Rcd at 8454, para. 2.

[^74]: *Id*. at 8474, para. 50.

[^75]: *Id.* at 8471-74, paras. 43-74.

[^76]: *See* *NextWave*, 12 FCC Rcd at 2035-43, paras. 12-32; 47 C.F.R.
    §§ 24.709, 24.712, 24.720.

[^77]: *NextWave*, 12 FCC Rcd at 2049-67, paras. 43-78.

[^78]: *Fox I*, 10 FCC Rcd at 8474, para. 49.

[^79]: Applicants Feb. 9 Response to Supplemental Information Request at
    17-18.

[^80]: *Id*. at 16. The preferred shares DT holds differ from common
    shares primarily in that the preferred shares have a liquidation
    preference and receive dividends based on the number of common
    shares that DT would hold if it converted the preferred shares to
    common. *See* VoiceStream Wireless Corporation, Form 8-K, Exh. 4.1,
    Certificate and Designation of the Powers, Preferences and Relative,
    Participating, Optional and Other Special Rights and Qualifications,
    Limitations and Restrictions Thereof of Convertible Voting Preferred
    Stock of VoiceStream Wireless Corporation (VoiceStream Certification
    and Designation of Rights) at §§ 1(b), (d) and (h) (filed Oct. 11,
    2000, Securities and Exchange Commission); Applicants Response to
    Supplemental Information Request at 16.

[^81]: Applicants Feb. 9 Response to Supplemental Information Request at
    17.

[^82]: *Id*. at 15-16. DT paid "a \$160 share price for the common
    shares into which DT may convert its interest on termination of the
    merger---a price \$1 less than the opening price of VoiceStream's
    stock two days before the execution" of the agreement for the \$5
    billion investment. *Id.*

[^83]: We note that this result would be consistent with the
    Commission's treatment of similar foreign investments of DT and
    France Telecom (FT) in Sprint Corporation. *See* *Sprint
    Corporation*, Declaratory Ruling and Order, 11 FCC Rcd 1850, 1851,
    para. 10 (1996). In that case, released after *Fox I*, the
    Commission did not consider DT's and FT's paid-in capital
    contributions in measuring their ownership interests in Sprint
    Corporation, despite the stated potential fluctuations in the
    companies' capital contributions. *Id*. at 1851, para. 10.

[^84]: We note that options and other convertible instruments are not
    considered part of a company's capital stock for purposes of our
    section 310(b)(4) inquiry. *See Application of Fox Television
    Stations, Inc*., Second Memorandum Opinion and Order, 11 FCC Rcd
    5714, 5720, para. 16 (1995) (*Fox II*). *See also Univision
    Holdings, Inc.*, Memorandum Opinion and Order, 7 FCC Rcd 6672, 6674
    (1992); *Data Transmission Co.*, Declaratory Ruling, 52 FCC 2d 439
    (1975). The Applicants, however, have treated their interests on a
    fully converted basis consistently in their filings, and we evaluate
    them as such.

[^85]: According to the parties, "the shares of VoiceStream common stock
    then outstanding (214,458,732) combined with the common shares into
    which the preferred shares of both Hutchison (26,227,586) and DT
    (31,250,000) were convertible, represented 271,936,318 shares."
    VoiceStream Powertel DT Reply at 25 n.8; Applicants Feb. Response to
    Supplemental Information Request at 15 n.44.

[^86]: That DT's \$5 billion investment represents less than a 25
    percent foreign ownership interest is further illustrated by
    comparing the \$5 billion investment to DT's total cumulative
    investment after the merger is consummated (*i.e.*, the \$5 billion
    investment plus the total merger consideration). According to the
    July 24, 2000 VoiceStream and DT press releases announcing the
    merger, the transaction, not including the \$5 billion investment,
    was valued at \$50.7 billion, or \$195.75 per fully diluted
    VoiceStream share based on DT's Euro closing share price on July 21,
    2000. *See* VoiceStream DT Merger Agreement at Tab 21. Therefore,
    DT's total cumulative investment post-merger would be \$55.7
    billion. Using this figure, DT's \$5 billion investment represents
    8.97 percent of DT's total cumulative investment. We note that press
    reports at the time the merger was announced valued the deal between
    \$44.85 billion and \$51 billion. *See* Jill Carroll and Daniel
    Schwammenthal, *Deutsche Telekom Confronts Criticism of VoiceStream
    Deal*, Wall St. J. Europe, Jul. 25, 2000; *Political Potholes in
    DT's Path*, Comm. Daily, Jul. 25, 2000. Even using the lower
    estimate of \$44.85 billion, the \$5 billion investment would
    represent only 10.10 percent of DT's total cumulative investment.

[^87]: *See VoiceStream/CIRI Order*, 15 FCC Rcd at 24697, para. 11. No
    question was raised in the CIRI proceeding as to the proper
    measurement of DT's foreign ownership, and the *VoiceStream/CIRI
    Order* did not make a specific finding as to the amount of foreign
    ownership represented by DT's \$5 billion investment. The Bureaus,
    however, recognized that a question had been raised in the instant
    proceeding concerning whether VoiceStream's foreign ownership, as
    currently structured, is consistent with sections 310(a) and (b)(4)
    of the Act, and stated that the action in the CIRI proceeding was
    without prejudice to any future action by the Commission in the
    instant docket, or any other proceeding. *See id.* at 24696, para.
    10 n.33.

[^88]: *VoiceStream/Omnipoint Order*, 15 FCC Rcd at 3347-50, paras.
    13-20; *In re Applications of Aerial Communications, Inc.,
    Transferor, and VoiceStream Wireless Holding Corp.*, *Transferee*,
    WT Docket No. 00-3, Memorandum Opinion and Order, 15 FCC Rcd 10089,
    10094-96, paras. 10-16 (Wir. Tel. Bur. 2000) (*VoiceStream/Aerial
    Order*).

[^89]: *VoiceStream/Omnipoint Order*, 15 FCC Rcd at 3347-50, paras.
    13-20; *VoiceStream/Aerial Order*, 15 FCC Rcd at 10094-96, paras.
    10-16.

[^90]: *VoiceStream/CIRI Order*, 15 FCC Rcd at 24691, para. 11.

[^91]: Senator Hollings Comments at 5. These concerns are based on
    statements made in DT's Form F-4 filed with the Securities and
    Exchange Commission (SEC) on October 4, 2000, which summarized the
    provisions of the VoiceStream DT Merger Agreement. Senator Hollings
    Comments at 5 (citing Form F-4 Registration Statement filed by
    Deutsche Telekom AG, with the U.S. Securities and Exchange
    Commission, dated Oct. 4, 2000).

[^92]: Senator Hollings Nov. 30 *Ex Parte* Letter at 2; Senator Hollings
    Comments at 5.

[^93]: *Applications of Puerto Rico Telephone Authority, Transferor, and
    GTE Holdings (Puerto Rico) LLC, Transferee*, Memorandum Opinion and
    Order, 14 FCC Rcd 3122, 3141-42, paras. 43-44 (1999);
    *Implementation of Section 309(j) of the Communications
    ActCompetitive Bidding*, PP Docket No. 93-253, Fifth Memorandum
    Opinion and Order, 10 FCC Rcd 403, 447-448, para. 81 (1994)
    (*Competitive Bidding Order*); *Request of MCI Communications
    Corporation, British Telecommunications plc, Joint Petition for
    Declaratory Ruling Concerning Section 310(b)(4) and (d) of the
    Communications Act of 1934, as amended*, Declaratory Ruling and
    Order, 9 FCC Rcd 3960, 3962, para. 14 (1994) ("The Commission has
    previously held that covenants that give a party the power to block
    certain major transactions of a company do not in and of themselves
    represent the type of transfer of corporate control envisioned by
    Section 310(d).").

[^94]: *See id.*

[^95]: *Competitive Bidding Order*, 10 FCC Rcd at 447-448, para. 81
    (1994); *see also* *NextWave*, 12 FCC Rcd at 2042-43, para. 30;
    *Applications of GWI PCS, Inc.*, 12 FCC Rcd 6441, 6455, para. 33
    (Wir. Tel. Bur. 1997); *but see* 47 C.F.R. § 1.2110(c)(2);
    *Amendment of Part 1 of the Commission's Rules---Competitive Bidding
    Procedures*, WT Docket No. 9782, Order on Reconsideration, Fifth
    Report and Order, and Fourth Notice of Proposed Rulemaking, 15 FCC
    Rcd 15293, 15323-27, paras. 58-67 (amending small business
    eligibility rule to attribute "controlling interests").

[^96]: For example, section 5.15(a) provides that VoiceStream is
    required to seek approval for any acquisition exceeding \$500
    million, or acquisitions, in the aggregate exceeding \$750 million.
    VoiceStream DT Merger Agreement at section 5.15(a). VoiceStream
    disclosed that it had an agreement with DT relating to the licenses
    being auctioned in its FCC Form 175 application, filed in
    anticipation of Auction 35. *See* VoiceStream PCS BTA I License
    Corporation, Form 175, Exh. B (filed Nov. 6, 2000, resubmitted Nov.
    28, 2000).

[^97]: VoiceStream was the high bidder for 19 licenses, representing
    more than \$482 million in bids, and holds an ownership interest in
    another entity, Cook Inlet/VS GSM V, LLC, which placed winning bids
    totaling more than \$500 million. *See* Applicants Feb. 9 Response
    to Supplemental Information Request at 22; *C and F Block Broadband
    Personal Communications Services (PCS) Auction, Applications
    Accepted for Filing, Auction Event No. 35*, Public Notice, DA 01-520
    (rel. Feb. 27, 2001).

[^98]: Letter from John W. Stanton, Chairman and Chief Executive
    Officer, VoiceStream Wireless, to William E. Kennard, Chairman,
    Federal Communications Commission, at 2 (filed Dec. 4, 2000); *see
    also* VoiceStream Feb. 9 Response to Supplemental Information
    Requests at 22.

[^99]: *See* Applicants Feb. 9 Response to Supplemental Information
    Request at 22. According to the Applicants, the bidding strategy
    used by VoiceStream in Auction 35 was first approved by
    VoiceStream's own Board of Directors, and DT's Acquisitions
    Committee, after notification, failed to veto the strategy prior to
    the auction commencing. *Id.* In addition, when, during the course
    of Auction 35, VoiceStream needed to deviate from that strategy, the
    Acquisitions Committee again failed to object. *Id.*

[^100]: *See* 47 U.S.C. § 308; *VoiceStream/Omnipoint Order*, 15 FCC Rcd
    at 3347, para. 13; *see also In re Applications of AirTouch
    Communications, Inc. and Vodafone Group, plc*, Memorandum Opinion
    and Order, 14 FCC Rcd 9430, 9432-34, paras. 5-9 (Wir. Tel. Bur.
    1999) (*Vodafone/AirTouch Order*).

[^101]: 47 C.F.R. § 1.945(c)(2); *see also* 47 C.F.R. § 1.903(b).

[^102]: As discussed above, VoiceStream and Powertel seek Commission
    consent to the proposed transfer of control of VoiceStream's
    licenses to Powertel in the event that the DT-VoiceStream merger is
    not consummated. *See* VoiceStream Powertel Application at 7.

[^103]: Senator Hollings Nov. 30 *Ex Parte* Letter at 2; Senator
    Hollings Comments at 5-6. We note that these comments do not address
    the alternative VoiceStream-Powertel transaction specifically.

[^104]: *See VoiceStream/CIRI Order*, 15 FCC Rcd at 24695, para. 8
    (citing *VoiceStream/Omnipoint Order*, 15 FCC Rcd at 3347-50, paras.
    13-20; *VoiceStream/Aerial Order*, 15 FCC Rcd at 10094-96, paras.
    10-16).

[^105]: *See* 47 C.F.R. §§ 1.2110, 24.709, 24.839. We note that, in
    making arguments about the negative impact of the proposed transfers
    of control to DT generally, UTStarcom raises specific concerns with
    the transfer of control of C and F block PCS licenses to DT.
    UTStarcom Comments at 1.

[^106]: *See VoiceStream/CIRI Order*, 15 FCC Rcd at 24697-98, para. 13.

[^107]: Pub. L. No. 106-259, § 8149, 114 Stat. 656 (2000).

[^108]: *See VoiceStream/CIRI Order*, 15 FCC Rcd at 24692, para. 14.

[^109]: The German Government began privatizing DT in 1995. As detailed
    above and discussed further below, the German Government currently
    owns approximately 60 percent of DT. *See supra* note 13 and
    accompanying text. Post-transaction, the German government's
    interest in the licensees will be approximately 45 percent. *See
    infra* Parts III.C and IV discussing alien and foreign government
    ownership of DT.

[^110]: Specifically, the Applicants request that the Commission find
    that DT's indirect foreign control over VoiceStream's and Powertel's
    licensee subsidiaries and non-controlling interests in other
    wireless carriers is in the public interest. VoiceStream DT
    Application at 1, 18, 33-44; Powertel DT Application at 1, 9, 22-24.
    *See supra* Part I.

[^111]: The Commission's International Bureau previously addressed this
    issue in *In the Matter of Telecom Finland, Ltd*, Order, 12 FCC Rcd
    17648 (Int'l Bur. 1997) (*Telecom Finland*), discussed *infra* at
    para. 44.

[^112]: *See* 47 U.S.C. § 310(b)(4).

[^113]: 47 U.S.C. §§ 310(a), 310(b)(1)-(b)(2).

[^114]: 47 U.S.C. § 310(b)(3).

[^115]: 47 U.S.C. § 310(b)(4).

[^116]: *See* Radio Act of Aug. 13, 1912, Pub. L. No. 62-264, § 2, 37
    Stat. 302, 303 (stating "such license shall be issued only to
    citizens of the United States or \[Puerto\] Rico, or to a company
    incorporated under the laws of some State or Territory or of the
    United States or \[Puerto\] Rico").

[^117]: *Radio Communication---Issue of Licenses*, 29 Op. Att'y Gen. 579
    (1912); *see also* J. Gregory Sidak, *Foreign Investment in American
    Telecommunications* 27-28 (1997) (*Foreign Investment*) (discussing
    Attorney General George W. Wickersham's advisory opinion concerning
    the Radio Act's foreign ownership provisions).

[^118]: Section 12 of the Radio Act of 1927 provided, among other
    things, that:

    > The station license required hereby shall not be granted to, or
    > after the granting thereof of such license shall not be
    > transferred in any manner, either voluntarily or involuntarily, to
    > (a) any alien or the representative of any alien; (b) to any
    > foreign government, or the representative thereof; (c) to any
    > company, corporation, or association organized under the laws of
    > any foreign government; (d) to any company, corporation, or
    > association of which any officer or director is an alien, or of
    > which more than one-fifth of the capital stock may be voted by
    > aliens or their representatives or by a foreign government or
    > representative thereof, or by any company, corporation, or
    > association organized under the laws of a foreign country.

    Radio Act of 1927, Pub.L. No. 69-632, § 12, 44 Stat. 1162, 1167.

[^119]: *Id.*

[^120]: Study of Communications by an Interdepartmental Committee;
    Letter from the President of the United States to the Chairman of
    the Committee on Interstate Commerce transmitting a Memorandum from
    the Secretary of Commerce Relative to a Study of Communications by
    an Interdepartmental Committee, S. Comm. Print, 73d Cong. 2d Sess. 6
    (1934) (*Interdepartmental Study*) ("In 1927 when the Radio Act was
    made law, Congress . . . went to a great length in section 12 of
    that act to prevent foreign influence from entering our
    communication system. They were unsuccessful, to some extent, as a
    loophole in the law permits a *foreign-dominated* holding company to
    own United States communication companies. This flaw in the law has
    already been utilized for that very purpose and the one member
    strongly advises that now is the time to remedy the defect.")
    (emphasis added).; *see also* *Federal Communications Commission:
    Hearings on S. 2910 Before the Sen. Comm. on Interstate Commerce*,
    73d Cong., 2d Sess. 166-68 (1934) (*1934 Senate Hearings*); Sidak,
    *Foreign Investment* at 64-73.

[^121]: *Federal Communications Commission: Hearings on H.R. 8301 Before
    the House Comm. on Interstate and Foreign Commerce*, 73d Cong., 2d
    Sess. 51-53 (1934). For example, Captain Hooper, Director of Naval
    Communications testified that "the communications facilities of a
    nation must be controlled and operated exclusively by citizens of
    that nation, and entirely free from foreign influence." *1934 Senate
    Hearings* at 170; *see also* Sidak, *Foreign Investment* at 64-65
    (discussing Hooper's testimony).

[^122]: *See To Amend the Radio Act of 1927: Hearings on H.R. 7716
    Before the Sen. Comm. on Interstate Commerce,* 72d Cong., 1st Sess.
    16 (1932) (statement of Sen. White) ("It might cost this American
    company its entire foreign setup in some of the countries that might
    be affected by it. I think, we would all agree that we would much
    prefer that there were none of these foreign directors but I think
    that weighs but a feather against the tremendous advantage of having
    this company maintain its radio services throughout the world and
    maintain for us here in this country the competitive services which
    result from their system.").

[^123]: *See* H.R. Conf. Rep. No. 1918, 73d Cong., 2d Sess. 48-49; H.R.
    7716, 72d Cong., 2d Sess., at 17 (1932); *see also* *Noe v. Federal
    Communications Commission,* 260 F.2d 739, 741 (D.C. Cir. 1958).
    Congress declined to adopt an outright ban on alien interests,
    fearing that such a ban would invite international retaliation. *See
    1934 Senate Hearings* at 123.

[^124]: This restriction also applied to aliens serving as officers or
    as more than 25 percent of the board of directors until Congress
    removed the restriction in 1996.

[^125]: Section 310(a)(1)-(5), prior to the 1974 amendments, provided as
    follows:

    \(a\) The station license required shall not be granted to or held
    by --

    \(1\) Any alien or the representative of any alien;

    \(2\) Any foreign government or the representative thereof;

    \(3\) Any corporation organized under the laws of any foreign
    government;

    \(4\) Any corporation of which any officer or director is an alien
    or of which more than one-fifth of the capital stock is owned of
    record or voted by aliens or their representatives or by a foreign
    government or representative thereof, or by any corporation
    organized under the laws of a foreign country;

    \(5\) Any corporation directly or indirectly controlled by any other
    corporation of which any officer or more than one-fourth of the
    directors are aliens, or of which more than one-fourth of the
    capital stock is owned of record or voted, after June 1, 1935, by
    aliens, their representatives, or by a foreign government or
    representative thereof, or by any corporation organized under the
    laws of a foreign country, if the Commission finds that the public
    interest will be served by the refusal or the revocation of such
    license.

    47 U.S.C. § 310(a)(1)-(5) (1970).

[^126]: *See* S. Rep. No. 795, 93d Cong., 2d Sess. 1 (1974) ("The
    purpose of this legislation is to amend section 310 of the
    Communications Act of 1934, as amended, to permit direct licensing
    of aliens and corporations with certain alien officers, directors or
    stockholders rather than licensing them indirectly under subsection
    310(a)(5) of the Communications Act of 1934, as amended, which has
    been utilized to set up a subsidiary corporation with no alien
    officers or directors, to be the radio licensee."). *See also*
    *infra* para. 46 discussing the purpose of the 1974 amendments.

[^127]: Senator Hollings Comments at 2-3.

[^128]: VoiceStream Powertel DT Reply at 25-26 (arguing that the plain
    language of section 310(a) only prohibits a government or its
    representative from actually holding a license in its own name);
    Applicants Mar. 8 *Ex Parte* Letter at 1, 4-6; *see also* Letter
    from the Honorable Michael G. Oxley, Chairman, Committee on
    Financial Services, U.S. House of Representatives to William E.
    Kennard, Chairman, Federal Communications Commission, IB Docket No.
    00-187 (filed Jan. 18, 2001) (arguing that section 310 does not
    prohibit a foreign government-owned carrier from obtaining a
    controlling, indirect ownership interest in a U.S. wireless
    licensee, provided the FCC finds that ownership to be in the public
    interest, and noting that denying approval would violate U.S.
    commitments under the WTO Basic Telecommunications Agreement).

[^129]: *See* H.R. Rep. No. 1918, 73d Cong., 2d Sess., 48; *see also*
    *supra* note 120 and accompanying text.

[^130]: *Fox I,* 10 FCC Rcd at 8475-76, paras. 53-55. Until 1996, this
    restriction also applied to alien board membership in excess of 25
    percent or to any alien officer.

[^131]: *See* *In the Matter of the Applications of Intelsat LLC*,
    Memorandum, Opinion, Order and Authorization, 15 FCC Rcd 15460,
    15481, para. 48 (2000) (*Intelsat*) (analyzing indirect holding or
    control under section 310(b)(4)); *In the Matter of Petition of
    Cable & Wireless, Inc.,* Declaratory Ruling and Memorandum Opinion
    and Order, Authorization and Certificate, 10 FCC Rcd 13177,
    13178-80, paras. 11-23 (1995) (*Cable & Wireless*) (approving
    controlling interest by aliens of parent corporation that controlled
    corporation applying for very small aperture terminal licenses); *In
    re Applications of GRC Cablevision, Inc.,* Memorandum Opinion and
    Order, 47 FCC 2d 467-68, para. 3 (1974) (*GRC Cablevision*)
    (approving controlling interest by aliens of parent corporation that
    controlled corporation applying for cable antenna radio services
    licenses at time when such licenses were covered by section 310(b));
    *see also In re Application of MAP Mobile Communications, Inc.,*
    Order, 12 FCC Rcd 6109, 6115-16 (Int'l Bur., 1997) (authorizing
    wholly-foreign owned company to bid for PCS and CMRS licenses); *In
    the Matter of Melbourne International Communications, Ltd.,* Order,
    Authorization and Certificate, 12 FCC Rcd 898, 902, para. 11 (Int'l
    Bur., 1997) (approving controlling interest by aliens of parent
    corporation that controlled corporation holding two common carrier
    satellite earth stations); *In the Matter of GCI Liquidating Trust,*
    Memorandum Opinion and Order, 7 FCC Rcd 7641, paras. 3-4 (Dom. Fac.
    Div. 1992) (approving acquisition of controlling interest by aliens
    of parent corporation that controlled common carrier microwave
    licensee).

[^132]: *See Cable & Wireless*, 10 FCC Rcd at 1378-80, paras. 11-23.

[^133]: *See* *GRC Cablevision*, 47 FCC 2d at 467-68, para. 3.

[^134]: *Intelsat,* 15 FCC Rcd at 15481-84, paras. 48-55.

[^135]: In *Intelsat*, the Commission described the test for invoking a
    section 310(a) analysis as "whether a foreign government or
    representative thereof exercises direct *de jure* or *de facto*
    control over a licensee." *Id.*

[^136]: *Telecom Finland*, 12 FCC Rcd at 17651, para. 7 (emphasis
    added).

[^137]: Senator Hollings Comments at 8 (stating "\[t\]he only way to
    reconcile \[section 310(a) and 310(b)(4)\], then, is to conclude
    that section 310(b)(4) allows the FCC to find the public interest is
    served by allowing indirect foreign control, and/or ownership up to
    100% of 'station licenses' only when the foreign ownership is by a
    non-government controlled entity").

[^138]: *Id.*

[^139]: *See supra* para. 37 discussing the 1974 amendments to the
    Communications Act.

[^140]: S. Rep. No. 795, 93d Cong., 2d Sess. 1 (1974).

[^141]: *Id*; H.R. Rep. No. 1423, 93d Cong. 2d Sess. (1974) (noting that
    "\[p\]resent law works an inequity upon small corporations which are
    without the resources and skills necessary to establish subsidiary
    corporations, and upon partnerships or individual entrepreneurs to
    whom this options is unavailable" and that the "legislation is
    designed to provide relief to those persons who use radio services
    as an incident to their business").

[^142]: The Applicants, going in the opposite direction, argue that the
    proper interpretation of section 310(a) is to limit it to its
    express terms, prohibiting only governments and their
    representatives from actually holding a license. VoiceStream
    Powertel DT Reply at 25-26. As explained above, we agree with the
    Applicants that section 310(a) was not intended to govern matters
    that are specifically addressed in section 310(b)(4). We believe,
    however, there may be circumstances in which it is appropriate to
    consider under sections 310(a) and (b) a variety of issues relating
    to *de facto* control in factual settings that do not implicate the
    provisions of section 310(b)(4). *In the Matter of Orion Satellite
    Corporation*, Memorandum Opinion, Order and Authorization, 5 FCC Rcd
    4937, 4939, para 18 n.26 (1990) (*Orion*) (allowing transaction not
    covered under section 310(b)(4), based on compliance with broadcast
    attribution rules to ensure that aliens were adequately insulated
    from day-to-day business and policy decisions of partnership); *In
    the Matter of Spanish International Communications Corp.*, MM Docket
    Nos. 83-540 to 83-544, 84-380 to 84-834, Memorandum Opinion and
    Order, 2 FCC Rcd 3336, 3338-40 (1987) (considering whether stations
    were under alien control based on historic ties between the alien
    and the licensees, the ownership structure of the licensee and
    boards of directors, the station's day-to-day management and control
    over programming); *Channel 31, Inc., Debtor-in-Possession,* Letter,
    FCC 79-164 (rel. Mar. 15, 1979) (considering whether Canadian
    corporation had acquired *de facto* control of licensee through
    conversion rights and long term contract even though corporation's
    stock only amounted to 20 percent); *see also* *Telemundo v. FCC,*
    802 F.2d 513, 516 (1986) (noting that "\[E\]ven in instances in
    which the technical statutory requirements are met, the Commission
    may still find that aliens exercise an effective control over the
    operations of a station that is contrary to statutory policy.").

[^143]: Senator Hollings Comments at 4-8; Novaxess Comments at 4-5
    (arguing that the German government heavily influences DT): QSC
    Comments at 8-9 (arguing that the German government is "deeply
    intertwined" with DT); Letter from Michael Noll to William E.
    Kennard, Chairman, Federal Communications Commission (filed Nov. 20,
    2000 (arguing that aliens or their representatives are not to be
    granted licenses).

[^144]: *QVC Network, Inc.,* Memorandum Opinion and Order, 8 FCC Rcd
    8485, 8490-91 para. 21 (1993); *see* *Fox I*, 10 FCC Rcd 8452, 8522,
    para. 175; *The Seven Hills Television Company*, Decision, 2 FCC Rcd
    6876, 6886, paras. 63-65 (Rev. Bd. 1987); *Russell G. Simpson*,
    Letter, 2 FCC 2d 640 (1966); *cf.* *Noe v. FCC*, 260 F.2d 739, 741
    (D.C. Cir. 1958) (finding that section 310(a) did not apply to
    Loyola University's relationship to the Society of Jesus).

[^145]: Senator Hollings Comments at 8.

[^146]: As discussed above, Congress ultimately declined to adopt an
    absolute prohibition on indirect foreign control. Congress also
    rejected the Navy's suggestion to flatly prohibit foreign indirect
    ownership over 25 percent for national security reasons, in part out
    of fear of foreign retaliation and the threat to free trade. *1934
    Senate Hearings* at 123.

[^147]: *Foreign Participation Order,* 12 FCC Rcd at 23894, para. 4
    (U.S. companies allowed to enter previously closed foreign markets
    and develop competing networks for local, long distance, wireless
    and international services).

[^148]: *See supra* Part I.A.2 discussing the German government
    ownership of DT.

[^149]: *See* Applicants March 12 *Ex Parte* Letter at 2.

[^150]: *Foreign Participation Order*, 12 FCC Rcd at 23940-41, para. 113
    and at 23919, paras. 61-62; *see also Foreign Government Ownership
    of American Telecommunications Companies, Hearing Before the
    Subcomm. on Telecommunications, Trade, and Consumer Protection of
    the House Comm. on Commerce*, 106^th^ Cong. 2d Sess. (Sept. 7, 2000)
    (testimony of William E. Kennard regarding Commission interaction
    with Executive Branch and ability of the Department of Justice and
    the Commission to address satisfactorily national security concerns
    associated with foreign ownership of U.S. telecommunications
    carriers). In practice, the Commission accords deference to the
    expertise of Executive Branch agencies with respect to these
    concerns in making its public interest determinations. *See, e.g.,
    In the Matter of AT&T Corp., British Telecommunications, Plc, VLT
    Co. L.L.C., Violet License Co. L.L.C., and TNV \[Bahamas\] Limited
    Applications for Grant of Section 214 Authority, Modification of
    Authorizations and Assignment of Licenses in Connection with the
    Proposed Joint Venture between AT&T Corp. and British
    Telecommunications, Plc*, IB Docket No. 98-212, Memorandum Opinion
    and Order, 14 FCC Rcd 19140, 19197-218, App. B, Agreement on
    National Security Issues (1999); *In re Applications of VoiceStream
    Wireless Corp*, Memorandum Opinion and Order, 15 FCC Rcd 3341,
    3366-81, App. A, DOJ/FBI Agreement (2000).

[^151]: *See generally Foreign Participation Order*, 12 FCC Rcd at
    23894, para 4. In the *Foreign Participation Order*, the Commission
    determined that U.S. consumers and companies would reap tangible
    benefits from the removal of obstacles to entry into all
    telecommunications service markets, including those entry barriers
    that exist in the U.S. market. *Id.* at 23894-95, paras. 4-5. The
    Commission concluded that in light of market access commitments
    undertaken by WTO members, as well as the Commission's increasingly
    more deregulatory framework, it served the public interest to take
    steps, in parallel with the United States's major trading partners,
    to ease requirements for entry by foreign companies into the U.S.
    market. *Id.* at 23983-94, para. 2. The Commission observed that the
    WTO commitments would create obligations on foreign governments to
    allow U.S. companies to enter previously closed foreign markets and
    to develop competing networks abroad for local, long distance,
    wireless, and international services. *Id.* at 23894, para. 4.
    Likewise, the Commission reasoned that additional foreign investment
    in the U.S. market would promote further competition and result in
    substantial benefits to U.S. consumers, including lower prices for
    existing services and greater service innovation. *Id.* at 23896-97,
    para. 10.

[^152]: *Foreign Participation Order*, 12 FCC Rcd at 23897-98, para. 13.

[^153]: *Id*. The ECO test required, as a condition of foreign carrier
    entry into the U.S. market, that there be no legal or practical
    restrictions on U.S. carriers' entry into the foreign carrier's
    market. *See Market Entry and Regulation of Foreign Affiliated
    Entities,* IB Docket No. 95-22, Report and Order, 11 FCC Rcd 3873,
    3877, para. 6 (1995) (*Foreign Carrier Entry Order*).

[^154]: *Foreign Participation Order*, 12 FCC Rcd at 23913, para. 50
    (applying standard to applications for section 214 authority, as
    well as for approval under section 310(b)(4)). We note that several
    of DT's German competitors urge the Commission not to apply this
    rebuttable presumption to the DT Transfer Applications. *See*
    Novaxess Comments at 3-4; QSC Comments at 10-11. Specifically, these
    commenters argue that (i) the *Foreign Participation Order* did not
    abolish the ECO test and only contemplated using the open entry
    presumption in routine cases as a single factor in the public
    interest analysis; (ii) the Commission should not
    "\[u\]nthinking\[ly\] \[apply\] the presumption to the German local
    access market in which a dominant, government-controlled
    ex-monopolist maintains its stranglehold on competition and is
    keeping U.S. and other telecommunications carriers from \[entering
    the market.\];" (iii) the distinction between WTO and non-WTO
    Members should not apply to global players like DT; (iv) the
    Commission's assumptions about competition in WTO member countries
    do not hold true for Germany and DT, especially given the
    increasingly global market for roaming services which was unforeseen
    at the time the *Foreign Participation Order* was adopted; and (v)
    the *Foreign Participation Order* did not specifically address
    foreign government ownership. Novaxess Comments at 3-4; QSC Comments
    at 10-11.

    These commenters essentially seek further reconsideration of the
    *Foreign Participation Order*. Even if such requests were timely,
    many of their arguments were considered and rejected in the original
    Order and the subsequent Order on Reconsideration; the remaining
    arguments simply misinterpret the foreign entry policies the
    Commission adopted in 1997. First, the Commission in 1995 considered
    the possibility that a foreign carrier may operate in multiple
    markets and decided to conduct its analysis pursuant to section
    310(b)(4) by reference to a single "home market" for a carrier.
    *See* *Foreign Carrier Entry Order*, 11 FCC Rcd at 3949, para. 201;
    *Foreign Participation Order*, 12 FCC Rcd at 23941, para. 116. The
    Commission retained this "home market framework" when it adopted the
    rebuttable presumption favoring market entry by carriers with
    indirect ownership from WTO members. Second, contrary to commenters'
    claims, the Commission expressly eliminated the ECO test for WTO
    Members. *Foreign Participation Order*, 12 FCC Rcd at 23897, para.
    13 (noting that "\[o\]ur rules will no longer require applicants
    from WTO members to demonstrate that their markets offer 'ECO'") and
    23896, para. 9 (removing the ECO test and replacing it with an open
    entry standard, without making any distinction between routine or
    non-routine applications). In fact, in the *Foreign Participation
    Order*, the Commission declined a similar request from AT&T to
    continue to evaluate whether an applicant's country provides
    unrestricted market access and satisfies its market opening
    commitments. *Id.* at 23905-07, paras. 32, 36-37. Our open entry
    policy does not distinguish among WTO Members, and is not premised,
    as commenters conclude, on an analysis of actual conditions of entry
    in a foreign market. The Commission instead relies on the increase
    in global competition coupled with dominant carrier safeguards to
    protect competition in U.S. markets. We note that, to the extent
    that a WTO member fails to fulfill its WTO obligations, these are
    trade violations that can be addressed through the WTO dispute
    resolution process.

[^155]: *See, e.g.,* European Union Delegation of the European
    Commission, Note Verbale, at paras. 9-16 (filed Jan. 25, 2001);
    Chamber of Commerce at 5.

[^156]: *Weinberger v. Rossi*, 456 U.S. 25, 30-32 (1982) (quoting
    *Murray v. The Charming Betsy*, 6 U.S. (2 Cranch) 64, 118 (1804))
    (construing treaties to include executive agreements).

[^157]: *Foreign Participation Order*, 12 FCC Rcd at 23905-09, paras.
    33-41. For example, the Commission's regulatory safeguards include
    the "No Special Concessions" rule, 47 C.F.R. § 63.14, which
    prohibits U.S. carriers from entering into exclusive arrangements
    with foreign carriers that possess sufficient market power in a
    relevant market on the foreign end of the route to affect
    competition adversely in the U.S. market. Similarly, dominant
    carrier safeguards contained in rule 63.10 apply to U.S. carriers
    affiliated with foreign carriers with market power. 47 C.F.R. §§
    63.10, 63.14.

[^158]: *Foreign Participation Order*, 12 FCC Rcd at 23914, para. 52.

[^159]: *Id.*

[^160]: *See, e.g.,* Novaxess Comments at 10-11; Senator Hollings
    Comments at 2.

[^161]: CCIA Comments at 2; Novaxess Comments at 12; Senator Hollings
    Comments at 10-11. The Computer and Communications Industry
    Association further argues that in a competitive environment, no
    business should be subjected to "the specter of competing with a
    concern that is buttressed with the 'deep pockets' or the regulatory
    authority of a government that can promote or protect its parochial
    ownership interest without regard to ordinary market forces." *See*
    CCIA Comments at 3; *see generally* Attachment to CCIA Comments,
    Joseph E. Stiglitz, et al., *The Role of Government in the Digital
    Age* (Oct. 2000).

[^162]: *See, e.g.,* CCIA Comments at 2; Novaxess Comments at 12,
    Senator Hollings Comments at 10-11.

[^163]: *See supra* Part V for an analysis of DT's entry into the
    domestic mobile telephony markets, U.S. international services
    market, and the market for the provision of global wireless
    services.

[^164]: *See* Department of Justice Sept. 14 Letter at 1-2 (noting that
    foreign government ownership may be relevant if such government
    ownership is likely to increase the existence or durability of
    market power in a foreign market and if the facts indicate that the
    merger would subsequently enable and increase the likelihood that
    the party would leverage that market power to injure U.S.
    competitors and consumers).

[^165]: Senator Hollings Comments at 5; Novaxess Comments at 5-7; GTS
    Comments at 8-9.

[^166]: VoiceStream Powertel DT Reply at 38-39; Applicants Feb. 9
    Response to Supplemental Information Request at 8-9.

[^167]: GTS Comments at 8-9; *see also* Applicants Feb. 9 Response to
    Supplemental Information Request at 13.

[^168]: GTS Comments at 8-9. Under these circumstances, nearly all of
    DT's other shareholders would have to vote collectively to block the
    German government from pursuing any particular strategy. We note in
    this regard that the Applicants have not committed to limit the
    number of Supervisory Board members that the German government would
    appoint after the merger. If the German government could control the
    composition of the Supervisory Board, it would be able to control
    the Managing Board and thus arguably dominate the management of DT.
    Finally, we note that the German government will also have the
    ability to exercise negative control in limited circumstances by
    using its votes potentially to block certain transactions that
    require a supermajority of shareholder votes. *See generally* German
    Stock Corporation Act (Aktiengesetz) §§ 52, 103, 129(1), 141, 179,
    179a, 182, 186, 193, 212, and 262 (requiring an affirmative
    shareholder vote of 75 percent for, *inter alia*, approval of
    mergers, sale of substantially all the corporation's assets and
    dissolution).

[^169]: Senator Hollings Comments at 5-6; Novaxess Comments at 4-7; GTS
    Comments at 8-9.

[^170]: Novaxess Comments at 5-6; Senator Hollings Comments at 6-7.
    These comments also emphasize the fact that the German Finance
    Ministry determined that DT's contributions to the German Slave
    Labor Fund, a foundation established to compensate the victims of
    Nazi-era forced and slave laborers, would be classified as state or
    government contributions rather than as private corporate
    contributions. Senator Hollings Comments at 8.

[^171]: VoiceStream Powertel DT Reply at 37-41. The Applicants also
    contend, on the basis of the six *Intermountain* factors, that after
    the merger has been consummated the German government will not have
    the ability to exercise *de facto* control. VoiceStream Powertel DT
    Reply at 39-41. Admittedly, the Commission has sometimes examined
    the six factors identified in the 1963 *Intermountain Microwave*
    decision to determine whether a party has *de facto* control.
    *Applications for Microwave Transfers (from Intermountain Microwave)
    to Teleprompter Approved with Warning*, Public Notice, 12 F.C.C. 2d
    559-60 (1963) (*Intermountain*) (noting that "\[t\]he normal minimum
    incidents of such interest include the unfettered use of all
    facilities and equipment used in connection therewith; day to day
    operation and control; determination of and the carrying out of
    policy decisions,...; employment, supervision, and dismissal of
    personnel; payment of financial obligations,...; and the receipt of
    moneys and profits derived from the operation of the
    ...facilities"). *Intermountain* involved an unauthorized transfer
    of control and thus the *Intermountain* factors focus on control of
    day-to-day operations and other matters directly affecting control
    of the licensee. The circumstances of this case are somewhat
    different; we are concerned with whether the German government has
    *de facto* control of the licensees' ultimate holding
    corporation---DT. Therefore, we believe that the instant transaction
    is factually distinct from *Intermountain* and that a totality of
    the circumstances test would be the more appropriate standard.

[^172]: VoiceStream Powertel DT Reply at 38.

[^173]: *Id.* at 41-43; Applicants Feb. 9 Response to Supplemental
    Information Request at 7 (noting that 97 percent of DT's guaranteed
    debt will be paid off by 2004). The Applicants also note that DT's
    contribution to the German Slave Labor Fund was categorized as a
    government contribution simply to reflect the German government's
    status as a majority shareholder. VoiceStream Powertel DT Reply at
    43-44.

[^174]: *In re Application of Ellis Thompson Corporation*, Memorandum
    Opinion and Order and Hearing Designation Order, 9 FCC Rcd 7138,
    7139, para. 10 (1994); *see also In re Application of Baker Creek
    Communications, L.P.,* Memorandum Opinion and Order, 13 FCC Rcd
    18709, 18715 para. 9 (Wir. Tel. Bur. 1998) ("...the power to control
    is a fact-based inquiry with no precise formula for evaluating all
    factors.").

[^175]: Senator Hollings Comments at 6 (German government ownership
    allows DT to attract capital easily because lenders are aware that
    the government as DT's principle shareholder will back its debts);
    QSC Comments at 15-16 (advantageous access to capital has allowed DT
    to increase its accumulated debt more than a privatized firm would
    be able to, as well as bid for German UMTS licenses); *see also*
    UTStarcom Comments at 1; WITCO Petition to Deny at 5; Novaxess
    Comments at 7 and Annex A, Testimony of Andrew D. Lipman on behalf
    of VATM, the German Competitive Carrier Association, before the
    Subcommittee on Telecommunications, Trade, and Consumer Protection,
    Commerce Committee, U.S. House of Representatives, *Foreign
    Government Ownership of American Telecommunications Companies*,
    Sept. 7, 2000, at 13-14 (VATM Testimony).

[^176]: Novaxess Comments at 7.

[^177]: VoiceStream DT Application at 39 n.118.

[^178]: VoiceStream Powertel DT Reply at 11 (asserting that the comments
    regarding DT's practices in Germany are exaggerated and misleading).
    *See also* Sidak Declaration at paras. 22-26. The Applicants also
    note that debts DT incurred after January 2, 1995 are not guaranteed
    by the German government. VoiceStream DT Application at 38-39; *see*
    Letter from Andreas Tegge, Managing Director, Deutsche Telecom Inc.,
    to Ari Fitzgerald, Deputy Chief, International Bureau, Federal
    Communications Commission, IB Docket No. 00-187 at 2 (filed Nov. 17,
    2000) (DT Nov. 17 *Ex Parte* Letter).

[^179]: VoiceStream DT Application at 39 n.118.

[^180]: *See* Applicants Feb. 9 Response to Supplemental Information
    Request at 7. In 2005, only 3.0 percent of the guaranteed debt will
    remain. *Id.*

[^181]: "Cost of capital" refers to the annual rate of return that a
    firm must pay for its combination of debt (*e.g.,* funds raised
    through bonds) and equity (*e.g.,* common stock). The MIT Dictionary
    of Modern Economics 85 (4^th^ ed. 1997).

[^182]: Fisher Testimony at 8; *see* *infra* Part IV.C discussing
    strategic trade policy concerns.

[^183]: Fisher Testimony at 8. Compared to fully privatized firms, DT
    has expensive labor obligations. A few commenters note that DT
    employees tenured prior to DT's privatization receive special
    protections pursuant to Article 143b of the German Basic Law. QSC
    Comments at 12 n.24; Senator Hollings Comments at 7. We find that
    the civil servant status of these DT employees does not confer any
    financial advantages to the Applicants and may in fact pose
    considerable costs because of the larger required contributions to
    these employees' pensions. *See* Applicants Feb. 9 Response to
    Supplemental Information Request at 4 (noting that DT is required by
    law to contribute an amount equal to 33 percent of the civil
    servants' total income toward pensions, compared to a contribution
    for all other employees equal to approximately 11 percent of their
    total income).

[^184]: Sidak Declaration at para. 32, Table 2, Weighted Average Cost of
    Capital (WACC) for Major Telecommunications Companies.

[^185]: In fact, the record does not establish a systematic relationship
    between bond ratings and the extent of government ownership in a
    firm. Some credit agencies, like equity investors, cite government
    ownership as a negative or minus factor. For example, according to
    material submitted by the Applicants, Moody's recent rating of
    Telstra, the Australian government-owned carrier, expressly
    attributed Telstra's inability to access equity markets to its 50.1
    percent government ownership. Fisher Testimony at 7 n.4.

[^186]: Sidak Declaration at paras. 27-28 (citing Standard & Poor's
    ratings obtained from Standard & Poor's New York Ratings Desk at
    (212) 438-2400 on Jan. 2, 2001; Moody's ratings obtained from
    Moody's New York Rating Desk at (212) 553-0377 on Jan. 2, 2001)
    (Ratings obtained from the Standard & Poor's New York Ratings Desk
    and the Moody's New York Ratings Desk on April 24, 2001, remain
    consistent with the ratings cited herein.) We also find insufficient
    evidence in the record to conclude, as Novaxess urges, that DT's
    current rating reflects the financial backing of the German
    government. *See* Novaxess Comments at 7.

[^187]: Sidak Declaration at para. 28.

[^188]: Fisher Testimony at 7.

[^189]: Consolidated Version of the Treaty Establishing the European
    Community, Art. 87(1) (ex Art. 92(1)).

[^190]: *Id.*, Art. 88 (ex Art. 93).

[^191]: *See Foreign Participation Order*, 12 FCC Rcd at 23913, para.
    50; *see also* *supra* Part IV discussing the Commission's standard
    for entry by foreign carriers.

[^192]: QSC Comments at 4; VATM Testimony, *supra* note 175 at 12-13;
    GTS Comments at 9; KKF Comments at 2; Broadnet Comments at 2;
    NetCologne Comments at 2; Senator Hollings Comments at 11.

[^193]: QSC Comments at 20-22; VATM Testimony, *supra* note 175 at 6-7,
    18-21, 24-25, 27; *see also* VATM Testimony, *supra* note 175, App.
    2, Propositions Regarding the Competitive and Regulatory Situation
    in the German Telecommunications Market, at 8-9 (VATM Propositions);
    WITCO Petition to Deny at 6; GTS Comments at 13, 15;

[^194]: VATM Testimony, *supra* note 175 at 12-13, 26, 30; GTS Comments
    at 15, 22; Novaxess Reply at 3-5.

[^195]: QSC Comments at 22, 24-25; VATM Testimony, *supra* note 175 at
    17-18, 26-29; VATM Propositions, *supra* note 193 at 7-9; WITCO
    Petition to Deny at 6; GTS Comments at 14-15, 20-21.

[^196]: *See, e.g.,* QSC Comments at 4; WITCO Petition at 5.

[^197]: VATM, Verband der Anbieter von Telekommunikations- und
    Mehrwertdiensten e.V., represents more than 50 telecommunications
    and multimedia companies that have entered the German market in
    competition with DT. Many of VATM's members are financed, operated,
    or controlled by U.S. interests. VATM Testimony, *supra* note 175 at
    5.

[^198]: Specifically, the VATM testimony cites concerns about the
    possible lack of transparency in RegTP's decision-making and
    persistent difficulties in obtaining interconnection and collocation
    from DT in Germany. VATM Testimony, *supra* note 175 at 24, 2,
    11-12.

[^199]: *See, e.g.,* KKF Comments at 2; GTS Comments at 10 and Exh. C,
    Position Paper of the Federal Ministry of Economics and Technology
    (BMWi) on *Competition on the Telecommunications and Post Markets*,
    at 4-6 (Position Paper of the Federal Ministry of Economics). We
    note that, in response, the Applicants state that the Position Paper
    is a "nonbinding" discussion paper that merely affirms that
    significant competitive growth in certain markets, particularly the
    international market, points in the direction of possible price
    deregulation in the future. VoiceStream Powertel DT Reply at App. A,
    3.

[^200]: VATM Testimony, *supra* note 175 at 6.

[^201]: Novaxess Comments at 2 (requesting that the Commission impose
    conditions necessary to pry open the German market to further
    competition, including specific commitments by German regulators);
    VATM Testimony, *supra* note 175 at 6; QSC Comments at 2-3 (noting
    that "the gap between market opening commitments and marketplace
    realities yawns wide" and requesting appropriate conditions).

[^202]: VATM Testimony, *supra* note 175 at 6, 12-13 (questioning the
    independence of RegTP and its ability to effectively regulate DT).

[^203]: *See infra* Part V.A (concluding that predation would likely
    fail in the U.S. domestic wireless markets). We note that the
    Department of Justice has previously reached the same conclusion in
    conducting its review pursuant to the Clayton Act. *See* Department
    of Justice Sept. 14 Letter at 2.

[^204]: *See supra* Part V.A discussing predation.

[^205]: *Foreign Participation Order*, 12 FCC Rcd at 23908, para. 39;
    Statement of the Honorable Michael Kantor at 7 (Kantor Statement);
    OII Comments at 2; Callahan Comments at 1. We note that under GATS
    Article XXII, any WTO Member may initiate a dispute settlement if it
    believes that another Member has failed to carry out its obligations
    and commitments. *Foreign Participation Order*, 12 FCC Rcd 23903,
    para. 28 n.33.

[^206]: *See* Section 1377 of the Omnibus Trade and Competitiveness Act
    of 1988, 19 U.S.C. § 3106 (2000); USTR Fact Sheet on the 2001
    Section 1377 Review (Apr. 2, 2001) (describing allegations with
    respect to Germany and progress in addressing many issues); Annual
    Review of Telecommunications Trade Agreements Highlights Concerns in
    Colombia, Mexico, South Africa, and Taiwan, USTR Press Release (Apr.
    2, 2001) (USTR to continue monitoring developments in Germany to
    ensure compliance with international telecommunications
    obligations).

[^207]: These concerns have traditionally been addressed as part of the
    economic literature regarding industrial policies. *See, e.g.*,
    Robert E. Kennedy, Harvard Business School Case 9-796-184, *Economic
    Gains from Trade: Theories of Strategic Trade* (1996).

[^208]: QSC Comments at 13 (arguing that DT enjoys an ownership
    structure that immunizes it from the demands of the marketplace);
    GTS Comments at 11 (urging the Commission to carefully review the
    potential competitive impact of DT's level of government ownership
    and control).

[^209]: *See, e.g.*, QSC Comments at 15-17 (contending DT's bidding for
    German UMTS licenses demonstrated insensitivity to capital and
    market factors and stating "it is dubious that the management of a
    firm whose obligations are not government-backed like \[DT\] would
    have shown such disregard for the judgment of the markets").

[^210]: *See* German Stock Corporation Act §§ 76, 93; Applicants Reply
    at 17.

[^211]: *Foreign Participation Order*, 12 FCC Rcd at 23918, para. 59.

[^212]: VoiceStream Wireless Corporation, Powertel, Inc. and Deutsche
    Telekom AG., IB Docket No. 00-187, Joint Petition to Defer (filed
    Dec. 15, 2000).

[^213]: *Id.* at 2.

[^214]: Department of Justice and Federal Bureau of Investigation,
    Petition to Adopt Conditions to Authorizations and Licenses in the
    Matter of VoiceStream Wireless Corporation, Powertel, Inc., and
    Deutsche Telekom AG to permit, pursuant to Section 310(b)(4), 100
    percent Indirect Foreign Ownership by Deutsche Telekom of Licenses
    and Authorizations Held by VoiceStream and Powertel, IB Docket No.
    00-187 (dated Jan. 24, 2001) (attaching the DT‑VoiceStream/DOJ/FBI
    Agreement).

[^215]: Petition to Adopt Conditions, Exh. 1, DT-VoiceStream/DOJ/FBI
    Agreement, Article 4: Disputes.

[^216]: *Id*. at Article 2: Facilities, Information Storage and Access.

[^217]: *Id*. at Article 3: Security.

[^218]: *Id*.

[^219]: Petition to Adopt Conditions at 4.

[^220]: DT--VoiceStream/DOJ/FBI Agreement, at Article 4: Disputes.

[^221]: *Id*. at Article 5: Auditing, Reporting, Notice and Limits, at
    para. 5.2.

[^222]: *See* *Foreign Participation Order*, 12 FCC Rcd at 23919-21,
    paras. 61-66.

[^223]: DT--VoiceStream/DOJ/FBI Agreement at 18-19, Articles 7.1-7.3.

[^224]: Senator Hollings Comments at 10; Stankey Comments at 1. (arguing
    that permitting a foreign nation to influence the policy or
    operations of communications facilities could lead to sabotage and
    espionage).

[^225]: Petition to Adopt Conditions at 4 (noting "\[t\]he DOJ and FBI
    are authorized to state that Deutsche Telekom, VoiceStream, and
    Powertel do not object to the grant of this petition").

[^226]: *See, e.g.,* Novaxess Comments at 10; GTS Comments at 11, 15,
    17, 25. *See also* Senator Hollings Comments at 10, 12 (arguing that
    DT is currently engaged in anti-competitive acts in Germany,
    including predatory pricing, and that, therefore the Commission
    should expect the same type of behavior in the United States).

[^227]: *See Foreign Participation Order*, 12 FCC Rcd at 23897-98,
    paras. 13-14.

[^228]: 47 C.F.R. § 20.6. As part of all applications for assignment or
    transfer of control of CMRS licenses, the assignee or transferee
    must certify that grant of the application would not cause the
    assignee or transferee to be in violation of the spectrum
    aggregation limit. *See* FCC Wireless Telecommunications Bureau
    Application for Assignments of Authorization and Transfers of
    Control (FCC Form 603).

[^229]: VoiceStream holds seven F block (10 MHz) BTA licenses that
    overlap with Powertel's 30 MHz licenses in Savannah, Georgia; Macon,
    Georgia; Albany, Georgia; Augusta, Georgia; Birmingham, Alabama;
    Huntsville, Alabama; Gadsden, Alabama; and Decatur, Alabama. *See*
    Powertel DT Application at 19. VoiceStream also holds two F block
    (10 MHz) BTA licenses that overlap with Powertel's two 10 MHz (D and
    E block) licenses in Nashville, Tennessee. *Id*.

[^230]: 47 C.F.R. § 20.6. The spectrum aggregation rule also requires us
    to consider the license holdings of other entities whose interests
    are attributable to VoiceStream, Powertel, and DT in our analysis.
    47 C.F.R. § 20.6. The license holdings of these attributable
    interests, however, do not create overlaps in any licensed area of
    VoiceStream or Powertel. *See* VoiceStream DT Application at 4 n.5
    and 29 n.87; Powertel DT Application at 4; DT Feb. 23 *Ex Parte*
    Letter at 2.

[^231]: *See, e.g.,* Novaxess Comments at 10; GTS Comments at 4, 11, 15,
    17, 25; WITCO Petition to Deny at 5. *See also* Senator Hollings
    Comments at 10, 12. We note that commenters have not alleged
    specific anti-competitive harm with respect to the proposed
    alternative transaction that would involve the transfer of
    Powertel's licenses and authorizations to VoiceStream.

[^232]: Senator Hollings Comments at 10; GTS Comments at 15.

[^233]: Novaxess Comments at 10; WITCO Petition to Deny at 5 (arguing
    that DT has special privileges in its home market that it can
    exploit to distort competition in the United States); GTS Comments
    at 17, 25.

[^234]: A firm price predates in a market by first lowering its price,
    usually below some measure of cost, in order to drive one or more
    competitors out of the market, as well as deter potential market
    entrants. Once this is accomplished, the firm raises its price high
    enough above cost to recoup its losses. *See* Dennis W. Carlton and
    Jefferey M. Perloff, *Modern Industrial Organization*, at 334-335.

[^235]: Domestic mobile telephony licenses, as a general matter, are
    awarded by geographic area. PCS licenses are awarded based on Major
    Trading Areas and Basic Trading Areas. *See* 47 C.F.R. § 24.202.
    Cellular licenses are awarded based on Metropolitan Statistical
    Areas and Rural Service Areas. *See* 47 C.F.R. § 22.909. SMR
    licenses are awarded on either a geographic area or site-specific
    basis. *See* 47 C.F.R. Part 90, Subparts S, T. Such licenses may be
    combined by a particular mobile service provider to enable the
    provider to offer a variety of products that meet consumer demand
    for regional, nationwide or global access. *See* *In re Applications
    of 360° Communications Company and ALLTEL Corporation*, Memorandum
    Opinion and Order, 14 FCC Rcd 2005, 2012, paras. 15-16 (Wir. Tel.
    Bur. 1998).

[^236]: VoiceStream subsidiaries are also licensed to operate LMDS, WCS,
    and SMR systems. No competitive issues are raised with respect to
    these licenses, however, because neither Powertel nor DT hold
    licenses in these services nor do they provide any other services
    that compete with the services VoiceStream provides with these
    licenses.

[^237]: We note that VoiceStream is continuing to diminish these gaps
    through other proposed acquisitions and through participation in
    Auction 35. *See* ULS File Nos. 0000287262, 0000287259, 0000288898,
    0000303703, and 0000365311.

[^238]: These 12 states are Georgia, Tennessee, Alabama, Mississippi,
    Kentucky, Florida, Arkansas, Louisiana, Indiana, Illinois, Missouri,
    and South Carolina. *See*
    [www.powertel.com/htm/lea/lea_cov.asp](http://www.powertel.com/htm/lea/lea_cov.asp)
    (visited Apr. 24, 2001).

[^239]: *See e.g.,* Novaxess Comments at 10; GTS Comments at 11, 15, 17,
    25; WITCO Petition to Deny at 5. *See also* Senator Hollings
    Comments at 10, 12. Specifically, several commenters allege that DT
    is able to earn monopoly rents in local exchange markets through
    anti-competitive behavior. WITCO Petition to Deny at 6; GTS Comments
    at 17-24; QSC Comments at 20-24; Novaxess Comments at 11; Novaxess
    Reply at 3; VATM Testimony, *supra* note 175 at 6, 10-11, 19-24;
    VATM Propositions, *supra* note 193 at 1-7.

[^240]: *See* Senator Hollings Comments at 10 (alleging that DT will
    compete anti-competitively in the United States); Novaxess Comments
    at 10 (noting the potential for DT to use proceeds from monopoly
    pricing to subsidize its expansion into the U.S. market).

[^241]: Novaxess Comments at 10.

[^242]: VoiceStream DT Application at 12-13, 40-41; VoiceStream Powertel
    DT Reply at 12, 15-16, App. A at 3-5; Sidak Declaration at 20-23.

[^243]: Applicants Response to Feb. 9 Supplemental Information Request
    at 1-3.

[^244]: GTS Comments at 14; Novaxess Reply at 3 and Annex; Position
    Paper of Klaus Earthel at 7; QSC Comments at 4, 19-20. *See also*
    *Sixth Report on the Implementation of the Telecommunications
    Regulatory Package*, Commission of the European Communities (Dec. 7,
    2000) (http://europa.eu.int/ISPO/infosoc/telecompolicy/
    6threport.html) (*Sixth Report*) (visited Apr. 24, 2001). With
    respect to Germany, this report notes, *inter alia*, concerns
    regarding the empowerment of the regulator (p. 13); high license
    fees (p. 15); new entrants' allegations that they must resort to
    dispute resolution in order to obtain interconnection (p. 16) and
    that the time-limit for interconnection delivery in Germany is not
    observed, despite regulatory intervention (p. 17); and the
    possibility that the incumbent will have a first mover advantage
    with respect to ADSL offerings (p. 20). On the other hand, the
    report indicates that Germany is doing better than other E.U. Member
    States in many respects, such as initiation of local loop unbundling
    (p. 19); grant of broadband wireless local loop licenses (p. 21);
    licensing of mobile service providers that use a third party's
    mobile network (p. 24); grant of "third generation" wireless
    licenses (p. 25); implementation of requirement that incumbent
    update its cost accounting system (p. 30); and application of LRAIC
    model for pricing of interconnection (p. 30).

[^245]: VATM Testimony, *supra* note 175 at 10.

[^246]: VoiceStream Powertel DT Reply, Appendix A at 11-12. As of
    November 1999 there were 147 carriers authorized to provide local
    service in Germany. *See* VoiceStream Powertel DT Reply, App. A at
    11.

[^247]: *Id.* at 10.

[^248]: *Id.* at 11.

[^249]: Position Paper of the Federal Ministry of Economics, *supra*
    note 199 at 6 (summarizing findings of the Monopoly Commission).

[^250]: *Id.* at 7. A contestable market is a market that may be
    competitive if there is the threat of entry by other firms into the
    industry even if the industry presently has few firms. *See* Dennis
    W. Carlton and Jefferey M. Perloff, *Modern Industrial Organization*
    at 6, 76.

[^251]: Position Paper of the Federal Ministry of Economics, *supra*
    note 199 at 6.

[^252]: VoiceStream Powertel DT Reply, App. A at 6-8; Position Paper of
    the Federal Ministry of Economics, *supra* note 199 at 2-3.

[^253]: Applicants Feb. 9 Response to Supplemental Information Request
    at 2; *see also Sixth Report* at 28 (noting that Germany utilizes a
    price cap mechanism and approves the incumbent's end-user tariffs
    *ex ante*, and is considering the request of the incumbent that such
    regulations should be lifted). Our record does not reflect whether
    the price cap regulation is likely to be extended past 2001.

[^254]: QSC Comments at 21-22, 24-25; VATM Testimony, *supra* note 175
    at 6-9, 12-13, 17-21, 24-30; WITCO Petition to Deny at 6; GTS
    Comments at 13-15, 20-22; Novaxess Reply at 4-5.

[^255]: *Matsushita Electric Industrial Co. v. Zenith Radio Corp*., 475
    U.S. 574, 589 (1986) (citing Robert Bork, *The Antitrust Paradox*[,
    149-155 (1978) (]{.smallcaps}emphasis added)).

[^256]: Based on publicly available information, each of the other major
    wireless carriers had a significantly greater number of subscribers
    and substantially greater revenues than VoiceStream. At the end of
    2000, Verizon Wireless had 27.5 million subscribers and revenues of
    \$14.2 billion. *See* Verizon 2000 Annual Report, *Verizon at a
    Glance*, at 1 (available at
    <http://investor.verizon.com/annual/2000/verizon2000ar06.html>)
    (visited Apr. 24, 2001) (Verizon 2000 Annual Report). Cingular
    Wireless had 19.7 million subscribers and *pro forma* revenues of
    \$12.6 billion. *See* SBC Investor Briefing, No. 223, Jan. 25, 2001
    (available at [www.sbc.com/investor/Financial/Earning_info/
    docs/4Q00_IB.pdf](http://www.sbc.com/investor/Financial/Earning_info/docs/4Q00_IB.pdf))
    (visited Apr. 24, 2001). AT&T Wireless had 15.2 million subscribers
    with revenues of \$10.448 billion. *See* *AT&T Wireless
    Fourth-Quarter Increases 39.1 Percent*, News Release, Jan. 29, 2001
    (available at http://www.att.com/press/item/0,1354,3628,00.html)
    (visited Apr. 24, 2001). Sprint PCS had approximately 9.9 million
    subscribers with annual revenues of \$6.34 billion. *See* *Sprint
    Announces Record Fourth Quarter Yearly Results*, Press Release, Feb.
    1, 2001 (available at
    http://144.226.116.29/PR/CDA/PR_CDA_Press_Releases_Detail/
    1,1579,2206,00.html) (visited Apr. 24, 2001). Nextel Communications
    had approximately 6.7 million domestic subscribers with operating
    revenues of \$5.71 billion. *See*
    [www.nextel.com/about/information/corporate/
    profile.shtml](http://www.nextel.com/about/information/corporate/profile.shtml)
    (visited Apr. 24, 2001). ALLTEL had approximately 6.3 million
    subscribers with annual wireless revenues of \$5.5 billion. *See*
    [www.alltel.com/investors-index.html](http://www.corprate/).
    VoiceStream, on the other hand, had approximately 3.9 million
    subscribers with total revenues of \$1.9 billion. *See* *VoiceStream
    Wireless Announces 2000 Financial Results*, Press Release, Feb. 14,
    2001 (available at [www.voicestream.com/about/press/
    press_20010214a.asp#](http://www.voicestream.com/about/press/press_20010214a.asp))
    (visited Apr. 24, 2001).

[^257]: VoiceStream DT Application at 23.

[^258]: *Cf. Matsushita Electric Industrial Co. v. Zenith Radio Corp.,*
    475 U.S. at 588 ("the foregone profits may be considered an
    investment in the future. For the investment to be rational, the \[.
    . . predator\] must have a reasonable expectation of recovering in
    the form of later monopoly profits, more than the losses
    suffered.").

[^259]: *See* VoiceStream DT Application at 23-24; VoiceStream Powertel
    DT Reply at 5.

[^260]: *See* VoiceStream DT Application at 22; Powertel DT Application
    at 2, 10, 19.

[^261]: 47 C.F.R. §§ 24.203, 27.14.

[^262]: *See, e.g., Brooke Group Ltd. v. Brown & Williamson Tobacco
    Corp.*, 509 U.S. 209, 224 (1993) ("Without \[recoupment\], predatory
    pricing produces lower aggregate prices in the market, and consumer
    welfare is enhanced. . . . \[U\]nsuccessful predation is in general
    a boon to consumers.").

[^263]: *VoiceStream/CIRI Order*, 15 FCC Rcd at 24699-700, paras. 17-19.

[^264]: *See* *id*. at 24701 n.67.

[^265]: WITCO Petition to Deny at 4-6.

[^266]: *Id*. at 4.

[^267]: *Id*. 3-4 (citing Telecommunications Act of 1996, Pub. L. No.
    104-104, 110 Stat. 56, *codified* at 47 U.S.C. §§ 151 *et seq*.).

[^268]: *Id*.

[^269]: UTStarcom Comments at 1.

[^270]: *Id*.

[^271]: *Id*.

[^272]: Alliance for Public Technology Comments at 4.

[^273]: *Id*.; Opposition to Petition to Deny of WITCO, VoiceStream
    Wireless Corporation, WT Docket No. 00-207, at 7 (filed Dec. 1,
    2000).

[^274]: VoiceStream Powertel DT Reply at 53.

[^275]: *Id.* at 53 (citing *Promoting Efficient Use of Spectrum Through
    Elimination of Barriers to the Development of Secondary Markets*, WT
    Docket No. 00-230, Notice of Proposed Rulemaking, 15 FCC Rcd 24203
    (2000) (*Secondary Markets NPRM*); *Geographic Partitioning and
    Spectrum Disaggregation by Commercial Mobile Radio Services
    Licensees; Implementation of Section 257 of the Communications
    ActElimination of Market Entry Barriers*, WT Docket No. 96-148, GN
    Docket No. 96-113, Report and Order and Further Notice of Proposed
    Rulemaking, 11 FCC Rcd 21831, 21843-45, paras. 13-17 (1996)).

[^276]: *See* 47 C.F.R. §§ 24.203, 27.14.

[^277]: 47 C.F.R. §§ 24.203(a) and (b).

[^278]: 47 C.F.R. §§ 27.14(a); *see also Amendment of the Commission's
    Rules to Establish Part 27, the Wireless Communications Service
    (WCS)*, GN Docket No. 96-228, Report and Order, 12 FCC Rcd 10785,
    10843-45, paras. 111-15 (1997).

[^279]: In addition, the Commission is currently exploring how to
    enhance the effectiveness of acquisition of spectrum in the
    secondary markets to ensure, among other things, that spectrum-based
    services are fully deployed in rural markets. *See Secondary Markets
    NPRM*, at paras. 7-8.

[^280]: *See* GTS Comments at 2-3; Novaxess Comments at 10; QSC Comments
    at 12-13.

[^281]: Senator Hollings Comments at 10.

[^282]: End-user services refer to the complete telecommunications
    service offered to business or residential customers, such as
    international services on the U.S.--Germany route*. MCI
    Communications Corporation, British Telecommunications plc*,
    Declaratory Ruling and Order, 9 FCC Rcd 3960, 3970-71, para. 50
    (1994).

[^283]: "U.S. international services" comprise all U.S.-billed
    telecommunications services, including calls that originate in the
    United States and terminate at a foreign point and calls that
    originate at a foreign point but are billed by a U.S. carrier, such
    as international calling card calls. *See WorldCom/MCI Order,* 13
    FCC Rcd at 18070-71, para. 78 n.240.

[^284]: The carriers with the highest billed revenues for all U.S.
    facilities-based and facilities-resale services in 1999 were AT&T
    (\$7.34 billion), WorldCom Inc. (\$5.45 billion) and Sprint (\$1.51
    billion). The total billed revenues for all U.S. facilities-based
    and facilities-resale services for all U.S. carriers combined were
    \$15.8 billion. FCC, Common Carrier Bureau, Industry Analysis
    Division, *1999 International Telecommunications Data* (Dec. 2000),
    at 27, Fig. 7 & at 2, Fig. 1.

[^285]: In 1999, VoiceStream reported revenue of \$58,787 from
    International Message Telephone Resale Service in its own company
    name, plus \$5,557,384 for Omnipoint Corporation and \$8,171 for
    Aerial Communications, Inc. but no revenues from U.S.
    facilities-based and facilities-resale services, and Powertel did
    not report any international billed revenue in 1999. FCC, Common
    Carrier Bureau, Industry Analysis Division, *1999 International
    Telecommunications Data* (Dec. 2000), at 27, Fig. 7, at 2, Fig. 1,
    and Resale Services Pages 1-9, Table D.

[^286]: DTI did not report any international billed revenue in 1999.
    FCC, Common Carrier Bureau, Industry Analysis Division, *1999
    International Telecommunications Data* (Dec. 2000), at 27, Fig. 7,
    at 2, Fig. 1, and Resale Services Pages 1-9, Table D.

[^287]: *See supra* Part V.B.1 discussing relevant markets and
    significant participants.

[^288]: *See* *Foreign Participation Order*, 12 FCC Rcd at 23991, para.
    221.

[^289]: *See* 47 C.F.R. § 63.10.

[^290]: *See* 47 C.F.R. § 63.10; 47 C.F.R. § 63.14; *see* *Foreign
    Participation Order*, 12 FCC Rcd at 23913-14, paras. 51‑52.

[^291]: *Foreign Participation Order*, 12 FCC Rcd at 23913-14, paras.
    51-52.

[^292]: Upon consummation of the transaction, VoiceStream will become
    affiliated, within the meaning of section 63.09 of our rules, with
    DT's foreign carrier affiliates. These affiliated carriers include
    the following four carriers that are incumbents in their countries'
    long distance or local termination markets: Hrvatske
    Telecomunikacije d.d., (Croatia); Deutsche Telekom AG and operating
    subsidiaries (Germany); MATAV Magyar Tavkozlesi Rt., (Hungary);
    Slovak Telecom (Slovakia). *See List of Foreign Telecommunications
    Carriers that are Presumed to Possess Market Power in Foreign
    Telecommunications Markets*, DA 99-809, (rel. June 18, 1999); *see
    also* Application to Transfer Control of International Section 214
    Authorizations and Notification of Affiliations with Foreign
    Carriers, App. B. We note that VoiceStream will also become
    affiliated with DT's affiliate in Uzbekistan--Chirkom. The
    Applicants state however that upon closing the merger, VoiceStream
    and its subsidiaries will surrender their authorizations to provide
    service on the U.S.--Uzbekistan route. *Id.* at 7.

[^293]: *See* VoiceStream DT Application at 9 n.19, 31; Amendment to
    Applications to Transfer Control of International Section 214
    authorizations and Notification of Affiliations with Foreign
    Carriers (filed Feb. 16, 2001) at 3. *See also List of Foreign
    Telecommunications Carriers that are Presumed to Possess Market
    Power in Foreign Telecommunications Markets*, DA 99-809 (rel. June
    18, 1999).

[^294]: We note that VoiceStream and Powertel are authorized to resell
    services of other carriers, including the services of DTI, which
    will become VoiceStream's and Powertel's affiliate upon consummation
    of the merger, and is a facilities-based carrier. *See* VoiceStream
    DT Application at 31; Powertel DT Application at 21-22. Therefore,
    VoiceStream and Powertel do not qualify for the exemption from
    dominant carrier safeguards under section 63.10(a)(4) of the rules.

[^295]: *See* 47 C.F.R. § 63.10(c).

[^296]: *See Foreign Participation Order*, 12 FCC Rcd at 23991-24022,
    paras. 221-292.

[^297]: *See* *id*. at 23913, para. 51.

[^298]: GTS points to the increasing use of multi-national roaming
    agreements and the increasing capabilities of mobile technologies as
    evidence of the rapid globalization of the mobile market. GTS
    Comments at 2-3, 7 (noting that the Commission should assess the
    rapidly-developing global wireless market to determine what
    additional safeguards might be necessary to promote competition and
    protect the public interest); Senator Hollings Comments at 12
    (urging the Commission to look globally at competition in the
    wireless sector); QSC Comments at 12, 17-19 (arguing that the
    ongoing globalization of wireless markets creates unique avenues for
    exercising market power); Novaxess Comments at 9-10 (asserting that
    given the globalization of wireless markets, the U.S. domestic
    wireless market is not the only relevant market, noting efforts by
    the European Commission to promote a transnational market approach,
    and arguing that DT will exploit its unfair market advantage in
    offering global wireless services).

[^299]: Senator Hollings Comments at 12; QSC Comments at 17-19; GTS
    Comments at 2-3. DT also employs GSM in its non-European mobile
    telephone subsidiaries. Mobile telephony carriers in the United
    States, however, are not constrained in the choice of technology,
    and currently VoiceStream is the only major U.S. mobile telephony
    carrier that uses the GSM standard as the primary technology in its
    network. Powertel, a regional carrier, also employs GSM, and this
    analysis applies equally to Powertel.

[^300]: GTS Comments at 2-3; Senator Hollings Comments at 12 (arguing
    that DT is positioning itself as the dominant provider of wireless
    services in the global market, given its significant investment in
    UMTS licenses in Europe and the ability of the merged entity to
    provide international roaming on a GSM-based network).

[^301]: We acknowledge, for example, that communications firms, driven
    by competitive pressures, will seek to extend access to the services
    they provide beyond the reach of their own facilities.

[^302]: Current wireless technology is considered "second generation."
    Second generation wireless systems are digital systems such as
    digital cellular and PCS. *See In the Matter of Amendment of Part 2
    of the Commission's Rules to Allocate Spectrum Below 3 GHz for
    Mobile and Fixed Services to Support the Introduction of New
    Advanced Wireless Services, including Third Generation Wireless
    Systems*, *ET Docket No. 00-258, Notice of Proposed Rulemaking,*
    *FCC 00-455 (rel. Jan. 4, 2001)* at para. 3 n.8*.* Over the next few
    years, carriers plan to launch "third generation" wireless services
    that will support wireless Internet service at data speeds
    significantly above the current average of about 10 kilobits per
    second. *See generally, e.g.,* *Newsbytes*, "Ericsson Unveils 3G
    Technology in India" (March 26, 2001)
    (http://www.3gnewsroom.com/3g_news/news_0466.shtml) (visited Apr.
    24, 2001); Adam Creed, *ComputerUser.com*, "Australia 3G Telecom
    Auction raises \$577 Million" (March 22, 2001)
    (http://www.computeruser.com/news/01/03/26/news12.html) (visited
    Apr. 24, 2001); International Telecommunication Union, 3rd
    Generation Mobile Services And Applications (March 26, 2001)
    (http://www.itu.int/imt/what_is/3rdgen/) (visited Apr. 24, 2001).

[^303]: Roaming services are offered by mobile telephony providers
    seeking to extend their customers' access to services beyond the
    direct reach of their own facilities. International roaming occurs
    when mobile service is provided in a country in which the carrier
    does not have its own facilities.

[^304]: Similarly, in U.S. domestic mobile telephony markets, a customer
    of a CDMA carrier cannot obtain digital roaming service from a TDMA
    or GSM carrier without having a handset compatible with TDMA or GSM.

[^305]: *See* 47 C.F.R. § 24.5 (defining "Broadband PCS" spectrum).

[^306]: *See* 47 C.F.R. § 22.905.

[^307]: *See* 47 C.F.R. §§ 90.613, 90.715.

[^308]: *See, e.g.,*
    [www.attws.com/personal/explore/intl_calling/world_connect](http://www.attws.com/personal/explore/intl_calling/world_connect)
    (visited Apr. 24, 2001);
    [www.nextel.com/phone_services/worldwide/coverage/country_list.shtml](http://www.nextel.com/products/servicecatalog/worldwide/index.shtml)
    (visited Apr. 24, 2001);
    [www.voicestream.com/products/coverage/global.asp](http://www.voicestream.com/products/coverage/global.asp)
    (visited Apr. 24, 2001).

[^309]: *Compare* www.voicestream.com (advertising international mobile
    telephones at \$99.99 and \$199.99) (visited Apr. 24, 2001) *with*
    [www.nextel.com](http://www.nextel.com/) (advertising an
    international mobile telephone for purchase at a special rate of
    \$199.00 or for rent at \$9.95 per day) (visited Apr. 24, 2001).

[^310]: *See, e.g.,* DT VoiceStream Application at 27; Siemens Comments
    at 1.

[^311]: Further, we note that, of VoiceStream's annual 2000 revenue of
    \$1,923 million, only \$4 million, or 0.2 percent, is from roaming
    by German wireless customers. Of DT's German wireless operations
    year-2000 revenue of 6,483 million euros, only 0.7 million euros, or
    0.01 percent is from roaming in Germany by VoiceStream customers.
    Applicants Mar. 2 Response to Supplemental Information Request at 2.

[^312]: *See*
    [www.one2one.com/](http://www.one2one.com/inside_our_company/about_us/about_us.asp)framework/frameIE.htm
    (visited Apr. 24, 2001).

[^313]: QSC Comments at 15-17; VATM Testimony, *supra* note 175 at
    13-15; Senator Hollings Comments at 12; Novaxess Comments at 10.
    UMTS uses the wideband code division multiple access (WCDMA)
    standard and, in Europe, operates in the 2 GHz band. *See* *European
    Radiocommunications Committee Decision of 30 June 1997*, on the
    frequency bands for the introduction of the Universal Mobile
    Telecommunications Systems (UMTS), ERC/DEC/(97)07, European
    Conference of Postal and Telecommunications Administration.

[^314]: *See* http://www.t-mobile.com/technews_q3_180800.html (visited
    Apr. 24, 2001).

[^315]: QSC Comments at 15-16. E-Plus is held partly by KPN Mobile and
    NTT; Group 3G is held by Sonera (Finland) and Telefónica of Spain;
    MobilCom is held partly by France Telecom; and Viag Intercom is held
    partly by British Telecom. DT VoiceStream Application at 13-14.

[^316]: Betsy Harter, "Putting the C in TDMA?," *Wireless Review* (Jan.
    1, 2001).

[^317]: *Id.; see also* *AT&T and NTT DoCoMo Announce Strategic Wireless
    Alliance*, News Release, Nov., 30, 2000 (available at
    www.att.com/press/item/0,1354,3502,00.html) (visited Apr. 24, 2001).

[^318]: *See generally In the Matter of Amendment of Part 2 of the
    Commission's Rules to Allocate Spectrum Below 3 GHz for Mobile and
    Fixed Services to Support the Introduction of New Advanced Wireless
    Services, Including Third Generation Wireless Systems*, ET Docket
    No. 00-258, Notice of Proposed Rulemaking, FCC 00-455 (rel. Jan. 4,
    2001).

[^319]: *See* www.telekom.de/dtag.

[^320]: *See* www.telekom.de/dtag.

[^321]: *See* [www.vodafone.com](http://www.vodafone.com/).

[^322]: Verizon Wireless, a joint venture of Verizon Communications,
    Inc. and Vodafone AirTouch Plc, is the largest wireless company in
    the United States by number of subscribers, with 27.5 million
    subscribers at year-end 2000. *See* Verizon 2000 Annual Report,
    *supra* note 256. Vodafone Group Plc, the largest wireless company
    in the United Kingdom, with 10.2 million subscribers, is the parent
    company of Vodafone AirTouch. It is also the parent company of
    Mannesmann AG, the largest wireless company in Germany, with 16.4
    million subscribers. *See*
    [www.vodafone.com](http://www.vodafone.com/) (data provided as of
    Sept. 30, 2000) (visited Apr. 24, 2001).

[^323]: NTT DoCoMo recently invested \$9.8 billion in AT&T Wireless and
    plans jointly to develop the U.S. mobile multimedia market, promote
    the proliferation of WCDMA third generation wireless technology in
    the U.S. market, and develop international roaming operations. *See
    NTT DoCoMo to Buy Stake in AT&T Wireless*, News Release, Nov. 30,
    2000 (available at
    [http://www.nttdocomo.com/new/contents/00/whatnew1130b.html](http://www.nttdocomo.com/news/contents/00/whatnew1130b.html))
    (visited Apr. 24, 2001).

[^324]: *See* U.S. commitments regarding mobile services in the WTO
    Basic Telecommunications Agreement, Schedule of Specific Commitments
    of the United States of America, incorporated into the General
    Agreement on Trade in Services by the Fourth Protocol to that
    agreement (WTO 1997), 36 I.L.M. 366 (1997).

[^325]: VoiceStream DT Application at 24-29; Powertel DT Application at
    16-19; *see also* Letter from the Honorable Patty Murray, U.S.
    Senator, and the Honorable Maria Cantwell, U.S. Senator to Michael
    K. Powell, Chairman of the Federal Communications Commission, IB
    Docket No. 00-187 (filed March 15, 2001) (stating that the proposed
    merger will benefit consumers and in no way reduce competition and
    noting that denying approval would violate U.S. commitments under
    the WTO Basic Telecommunications Agreement, which could start a
    trade war damaging exports in every sector of the U.S. economy);
    Letter from the Honorable George R. Nethercutt, Jr., the Honorable
    Jennifer Dunn, the Honorable Norm Dicks, the Honorable Doc Hastings,
    the Honorable Adam Smith, the Honorable Jay Inslee, the Honorable
    Jim McDermott, the Honorable Rick Larson, and the Honorable Brian
    Baird, U.S. House of Representatives to Michael Powell, Chairman of
    the Federal Communications Commission, IB Docket No. 00-187 (filed
    Feb. 16, 2001) (citing the public interest benefits of the proposed
    merger, noting that denying approval would violate U.S. commitments
    under the WTO Basic Telecommunications Agreement).

[^326]: VoiceStream DT Application at 25-26; Powertel DT Application at
    17.

[^327]: VoiceStream DT Application at 27-29; Powertel DT Application at
    17-18.

[^328]: VoiceStream DT Application at 24-25.

[^329]: *Id*. at 27.

[^330]: *Id*. at 26.

[^331]: *Id*. at 27; Powertel DT Application at 18.

[^332]: VoiceStream DT Application at 27.

[^333]: *Id*.

[^334]: *Id*. at 28-29.

[^335]: Powertel DT Application at 16-19.

[^336]: *Id*. at 17.

[^337]: *Id*. at 17.

[^338]: *Id*. at 10.

[^339]: OII Comments at 3; CWA Comments at 3; Siemens Comments at 1;
    Kugell Comments at 1.

[^340]: OII Comments at 3; CWA Comments at 2-3; Siemens Comments at 1;
    APT Comments at 3.

[^341]: Siemens Comments at 1; Kugell Comments at 1; *but see* QSC
    Comments at 18-19. QS Communications AG disputes the claim that
    providing VoiceStream's subscribers enhanced global roaming services
    will be a public benefit. QSC contends that, if VoiceStream
    subscribers enjoy preferential rates for roaming on DT's networks,
    such rates may have been achieved through discrimination in roaming
    abroad against other U.S. carriers that are migrating to GSM
    compatible standards; such discrimination would render illusory any
    supposed benefit to competition. *Id.* As discussed in detail above,
    however, we find it unlikely that DT will be able to discriminate in
    this way given the competition and regulatory safeguard to which DT
    is already subject.

[^342]: CWA Comments at 3-6.

[^343]: National Consumer League Comments at 1.

[^344]: VoiceStream Powertel Application at 2-3.

[^345]: *Id.*

[^346]: As discussed *infra* at para. 135, in addition to the petition
    under section 310(b)(4) of the Act filed by Iowa Wireless Services
    Holding Corporation (Iowa Wireless), VoiceStream and DT, with the
    licensee's consent, also have filed an application for the transfer
    of control of VoiceStream's limited partnership interest in Iowa
    Wireless to DT. *See* ULS File No. 0000315934.

[^347]: *See* Declaratory Ruling Public Notice, *supra* note 3. The
    petition filed on October 13, 2000 by the CIVS entities was
    withdrawn as moot on April 4, 2001 as a result of VoiceStream's
    acquisition of a controlling interest in these entities. *See*
    Withdrawal Letter from Jonathan D. Blake, Christine E. Enemark, and
    Rachel C. Welch, Counsel for Cook Inlet Region, Inc., Transferor of
    the CIVS entities to Magalie Roman Salas, Secretary, Federal
    Communications Commission, IB Docket No. 00-187 (filed Apr. 4,
    2001). On April 12, 2001, the Applicants amended their Petition for
    Declaratory Ruling under section 310(b)(4) to include the CIVS
    entities as newly-acquired wholly-owned subsidiaries of VoiceStream.
    *See* VoiceStream DT Amendment to Petition for Declaratory Ruling
    (filed Apr. 12, 2001).

[^348]: 47 U.S.C. Section 310(b)(4); *see also Foreign Participation*
    *Order*, 12 FCC Rcd at 23935, para. 97.

[^349]: *See* Amendment Letter from Jonathan D. Blake, Christine E.
    Enemark, and Rachel C. Welch, Counsel for CIVS IV, CIVS V, BCN
    Communications, L.L.C. and CIVS IV License Sub I, LLC to Magalie
    Roman Salas, Secretary, Federal Communications Commission, IB Docket
    No. 00-187 (filed Apr. 4, 2001). CIVS IV and CIVS V also amended
    their petition to cover a new wholly-owned subsidiary of CIVS IV,
    BCN Communications, L.L.C. *Id*. An earlier amendment to the
    petition added wholly-owned subsidiary CIVS IV License Sub I, LLC.
    *See* Declaratory Ruling Public Notice, *supra* note 3 at 2 n.5. As
    wholly-owned subsidiaries of CIVS IV, these entities would have the
    same attributable indirect foreign ownership as CIVS IV.

[^350]: Because CIVS IV and CIVS V hold, or are intended to hold,
    entrepreneurs' block PCS licenses, they are structured to comply
    with the Commission's entrepreneurial eligibility rules. *See* 47
    C.F.R. §§ 1.2110, 24.709, 24.720.

[^351]: *See VoiceStream/Omnipoint Order*, 15 FCC Rcd at 3347-50, paras.
    13-20; *VoiceStream/Aerial Order*, 15 FCC Rcd at 10094-96, paras.
    10-16.

[^352]: Wireless Alliance Petition at 2.

[^353]: *See* ULS File No. 0000315934. This application appeared as
    accepted for filing on March 21, 2001. *See* *Wireless
    Telecommunications Bureau Assignment of Authorization and Transfer
    of Control Applications Accepted for Filing*, Public Notice, Report
    No. 810 (Mar. 21, 2001). Disposition of this application is not
    addressed in this order.

[^354]: *See* ULS File No. 0000315934, Amendment at 1. *See also* Public
    Notice Report No. 810 (Mar. 21, 2001). This application will be
    processed independently from this proceeding taking into
    consideration the determinations made herein.

[^355]: Iowa Wireless Petition at 2.

[^356]: *See DiGiPH PCS, Inc. and Eliska Wireless Ventures License
    Subsidiary I, L.L.C.*, Memorandum Opinion and Order, 15 FCC Rcd
    24501 (2000). The assignment of the DiGiPH licenses to Eliska
    License Sub was consummated on January 31, 2001. As a result, Eliska
    Wireless Investors I, L.P., an Alabama limited partnership, holds a
    60 percent voting and 20 percent equity interest. Powertel, a
    Delaware corporation, holds a 24.95 percent voting and 49.9 percent
    equity interest. Sonera Holding B.V., a company organized under the
    laws of the Netherlands, hold a 15.05 percent voting and 30.1
    percent equity interest. Petitioners anticipate that Sonera's
    ownership interest in Powertel will result in Sonera's direct and
    indirect equity interest in EWV Holding Company Inc. totaling 35.99
    percent. *See* Eliska License Sub Petition at 2.

[^357]: *Foreign Participation Order* 12 FCC Rcd at 23941, para. 114.

[^358]: ^\*^ This Petition to Deny was originally filed in the
    *VoiceStream/CIRI* proceeding, *In re Applications of Cook Inlet
    Region, Inc. and VoiceStream Wireless Corporation*, WT Docket No.
    00-207, Order, 15 Rcd 24691 (Wir. Tel. Bur. 2000).