Before the

Federal Communications Commission

Washington, D.C. 20554

In re Applications of )

)

Motorola, Inc.; Motorola SMR, Inc.; and ) DA 00-2352

Motorola Communications and Electronics, Inc. )

Assignors; ) File Nos. 0000224876

) 0000224877

) 0000224878

and )

)

)

FCI 900, Inc. )

Assignee, )

)

)

For Consent to Assignment of 900 MHz )

Specialized Mobile Radio Licenses )

**ORDER**

Adopted: April 16, 2001 Released: April 17, 2001

By the Chief, Wireless Telecommunications Bureau:

TABLE OF CONTENTS

[Paragraph]{.underline}

I. INTRODUCTION [2](#introduction)

II\. BACKGROUND [2](#background)

III\. Discussion 5

A. Statutory Authority 6

B. Qualifications 7

C. Public Interest Impacts 9

1\. Competitive Framework 9

2\. Relevant Markets 11

a\. Product Markets 11

b\. Geographic Markets 25

3\. Market Analysis 26

a\. Interconnected Mobile Voice Services 26

b\. Trunked Dispatch Services 27

i\. Urban Markets 27

ii\. Rural Markets 34

4\. Analysis of Public Interest Benefits 35

D. Roaming 37

E. Conclusion 38

IV\. Ordering clauses 39

#  INTRODUCTION

1 In this Order, we grant the above-referenced applications to assign
various 900 MHz Specialized Mobile Radio ("SMR") licenses from Motorola,
Inc., Motorola SMR, Inc., and Motorola Communications and Electronics,
Inc. (collectively, "Motorola") to FCI 900, Inc. ("FCI 900"), a
subsidiary of Nextel Communications, Inc. ("Nextel").[^1] We deny the
request of Southern LINC ("Southern") that we deny these
assignments.[^2]

#  BACKGROUND

2 On September 25, 2000, pursuant to section 310(d) of the
Communications Act of 1934, as amended ("the Communications Act"),[^3]
Motorola and Nextel filed applications seeking Commission consent for
Motorola to assign 59 900 MHz SMR licenses to Nextel.[^4] Nextel has a
nationwide licensed-area footprint, and is the largest service provider
using SMR frequencies, with approximately 6.7 million subscribers in the
United States at the end of 2000.[^5] Nextel uses its facilities in the
900 MHz band for analog dispatch service. However, the vast majority of
Nextel's subscribers purchase any of a variety of services over a
digital, wide-area SMR network using Nextel's 800 MHz SMR licenses,
provided by Nextel on a single handset. On this handset, Nextel offers a
bundled service that provides a customer with interconnected mobile
voice along with trunked dispatch service (marketed under the brand name
"Direct Connect^®^") that allows instant, real-time conferencing on a
one-to-one or one-to-many basis.[^6] Customers can also subscribe to
other optional services, including paging, text/numeric messaging, and
wireless Internet access.[^7] In addition to its 800 MHz and 900 MHz SMR
holdings, Nextel holds licenses in the 220 MHz band and Guard Band
manager licenses in the 700 MHz band.[^8] Nextel also has an
attributable interest in Nextel Partners, Inc., which provides digital
wireless communications services on its own 800 MHz SMR frequencies in
mid-sized and smaller markets throughout the United States.[^9]

3 Motorola is the sole supplier of Nextel's wide-area SMR handsets[^10]
and owns approximately 15 percent of Nextel.[^11] Motorola provides the
iDEN[^12] infrastructure and subscriber unit equipment used throughout
Nextel's domestic markets and most of its international markets. Nextel
works closely with Motorola to improve existing products and develop new
technologies. In urban markets, Motorola, like Nextel, uses its 900 MHz
SMR facilities to provide analog, non-interconnected dispatch
services.[^13] In non-urban markets, Motorola has not yet built out its
900 MHz systems.[^14]

4 On October 19, 2000, by delegated authority,[^15] the Wireless
Telecommunications Bureau ("Bureau") issued a Public Notice to announce
that the applications for consent to assign licenses to Nextel had been
accepted for filing and to establish a pleading cycle to enable
interested parties to comment on the proposed transaction.[^16] In
response to this Public Notice, Southern filed comments requesting that
we deny the Applications.[^17]

#  Discussion

5 As explained below, we find that the assignment of the licenses to
Nextel does not pose an undue risk of harm to competition in U.S.
telecommunications markets. In addition, we find that these assignments
should result in certain public benefits. Accordingly, we conclude that,
pursuant to section 310(d) of the Communications Act, grant of the
pending requests for assignment of the licenses to FCI 900 would serve
the public interest.[^18] Hence, we deny the Southern Petition and grant
the specified applications.

## Statutory Authority

6 Pursuant to Section 310(d) of the Communications Act, the Commission
must determine whether the proposed assignment will serve the public
interest, convenience, and necessity.[^19] Section 310(d) further
requires that we consider the applications as if the proposed assignee
were applying for the licenses directly under section 308.[^20] Thus, we
must examine Nextel's qualifications to hold licenses. In discharging
these statutory responsibilities, we weigh the potential public interest
harms of the proposed transactions against the potential public interest
benefits to ensure that, on balance, the assignments serve the public
interest and convenience.[^21]

## Qualifications

7 In evaluating assignment and transfer applications under section
310(d) of the Communications Act, we generally do not re-evaluate the
qualifications of the assignor or transferor unless issues related to
their basic qualifications have been designated for hearing by the
Commission or have been sufficiently raised in petitions to warrant the
designation of a hearing.[^22] In this case, Southern has not challenged
the basic qualifications of Motorola.

8 By contrast, as a regular part of our analysis, we determine whether
the proposed assignee is qualified to hold a Commission license.[^23]
Because Southern has not challenged the basic qualifications of Nextel,
and because we have determined in prior proceedings that Nextel is
qualified to hold Commission licenses,[^24] we see no reason to conclude
otherwise here.

## Public Interest Impacts

### Competitive Framework

9 Southern contends that the overall effect of this transaction will be
to decrease competition in a trunked dispatch market such that approval
of these applications is not in the public interest. To analyze
Southern's claims, we first determine the markets potentially affected
by the proposed transaction.[^25] Second, we assess the effects that the
transaction may have on competition in these markets.[^26] Third, we
consider whether the proposed transaction will result in
transaction-specific public interest benefits.[^27] Ultimately, we must
weigh any harmful and beneficial effects to determine whether, on
balance, the transaction is likely to enhance competition in the
relevant markets.

10 In transactions involving the acquisition and aggregation of SMR
spectrum through assignment or transfer of control of licenses, we focus
our competitive analysis initially on whether the combination complies
with our commercial mobile radio service ("CMRS") spectrum aggregation
rule.[^28] Because, after this transaction, Nextel will hold only SMR
spectrum, it is attributed with no more than 10 MHz in every
market,[^29] which does not exceed the limit. Southern alleges that the
transaction will result in undue harm to consumers that is unrelated to
compliance with the spectrum aggregation limit. Therefore, we analyze
Southern's allegations of the competitive effect of the transaction.

### Relevant Markets

#### Product Markets

11 In evaluating the competitive effects of this transaction, the
Applicants and Southern employ significantly different product market
definitions.[^30] As discussed further below, Southern would limit the
product market to trunked dispatch services being provided only by SMR
operators at 800 MHz and 900 MHz.[^31] By contrast, the Applicants would
employ a product market definition encompassing all CMRS providers.

12 We will analyze this transaction with respect to its effects both on
an interconnected mobile voice market and on a trunked dispatch market.
We include, in this second market, at the very least, service providers
at 800 MHz, 900 MHz, 220 MHz, 217-219 MHz, and 450-470 MHz. We find it
unnecessary to reach the issue of whether it is appropriate to define a
market that includes all CMRS providers because we conclude that the
applications may be granted even assuming narrower market definitions.
Nonetheless, we also recognize the increasing convergence of CMRS
services and may well adopt a broader market definition in reviewing
future transactions.

13 As background, we note that customers today may purchase any of a
variety of dispatch services. The Motorola licenses that are in service
involve spectrum and facilities currently being used to provide analog
trunked dispatch service in the 900 MHz frequency band. The SMR service
was originally created to provide businesses with commercial dispatch
service. "Dispatch" is commonly understood to refer to service that
allows two-way, real-time, push-to-talk voice communications between
mobile units and fixed units, or between two or more mobile units.[^32]
Dispatch differs from mobile voice communications offered by personal
communications services ("PCS") and cellular carriers because it is
generally not interconnected with the public switched telephone network
and allows instant, real-time conferencing with groups, including both
one-to-many and many-to-one communications.[^33] It has been described
as "neither an industry nor a distinct technology," but instead, simply
an application that can be provided by various technologies.[^34] The
term "trunked" refers to dispatch offered on systems allowing automatic
sharing of multiple radio channels. Trunking may be employed either on
analog or digital systems, and is more spectrally efficient than
conventional channel use because the ability of equipment to choose one
radio channel among many at the beginning of a call allows less blocking
and provides service to more radios per channel. Because a trunked
system is engineered so that other users wanting a radio channel will
not break in on a channel already in use, it also provides customers a
greater degree of privacy than non-trunked systems.

14 Commission policy permits flexible use of 800 and 900 MHz SMR
spectrum, permitting the provision of paging, dispatch, mobile voice,
mobile data, facsimile, or combinations of these services.[^35] Like
Motorola, Nextel provides trunked analog dispatch services with its 900
MHz licenses. Nextel has applied a digital technology to its 800 MHz
frequencies, allowing it to offer a bundled service on these frequencies
that includes interconnected mobile voice, paging, and text messaging,
as well as trunked dispatch communications that allow instant
conferencing.[^36] The digital technology (iDEN) allows Nextel to
provide wide-area coverage and a nationwide network.[^37] By contrast,
the analog service being provided on the 900 MHz band consists primarily
of localized instant group communications for small and mid-sized
businesses, and is generally offered at lower prices than digital
service.[^38] The 900 MHz frequency band also is well suited technically
for the provision of paging, dispatch, mobile voice, mobile data, or
combinations of these services. Although technology is not presently
available to provide the same digital services available at 800 MHz
using the 900 MHz SMR frequency, Nextel indicates that it is developing
a 900 MHz iDEN service with Motorola that will be integrated into its
800 MHz iDEN system.[^39]

15 Our prior cases have analyzed similar transfers and assignments with
respect to two product markets: interconnected mobile voice services and
trunked dispatch services. Most recently, in the *Geotek Order*, [^40]
we stated that the relevant market participants in the interconnected
mobile voice market are firms providing commercially available two-way,
mobile voice services that access the public switched telephone network,
such as those provided by cellular companies, PCS providers, and
interconnected trunked SMR carriers, such as Nextel and Southern. We
defined the relevant market participants in the trunked dispatch market
as firms offering, on a commercial basis, both one-to-one and
one-to-many calling services on either analog or digital trunked
systems,[^41] and noted that such services were provided primarily by
carriers operating at 800 MHz, 900 MHz, and 220 MHz, and also by
qualified private land mobile operators.[^42] The Applications now raise
the issue whether the market definitions employed in our analyses of
these earlier transactions are still valid*.*

16 The Applicants and Southern present diametrically opposite views of
the product market. Southern urges us to limit our analysis to the
competitive effects of the acquisition on a trunked dispatch market, and
would confine this market to 800 and 900 MHz SMR licensees, which is
narrower even than our analysis set forth in the *Geotek* *Order*.[^43]
By contrast, Nextel maintains that the time has come to broaden our
product market analysis significantly in these types of transactions to
the entire CMRS marketplace, which would include all spectrum used for
commercial mobile services.[^44] As explained below, for purposes of
analyzing this transaction we do not agree entirely with either Southern
or the Applicants.

17 In defining a product market, we generally include firms offering
services competing with those offered by the assignor and assignee.[^45]
For the purposes of this transaction, we will analyze such competition
narrowly, and will limit our review to an interconnected mobile voice
market and a trunked dispatch market without foreclosing the possibility
that we may adopt an expanded market definition in a future transaction.
Motorola, the assignor, provides analog trunked dispatch services with
its 900 MHz licenses. In the *Pittencrieff Order* and the *Geotek
Order*, we described Nextel's services as straddling both the
interconnected mobile voice and trunked dispatch markets,[^46] and this
description remains accurate.[^47] Nextel is currently using its 900 MHz
licenses to provide analog trunked dispatch services, but has indicated
its intention to convert this spectrum to digital use so that it may
offer additional services on this band.[^48] Therefore, we analyze the
Applications as they affect both interconnected mobile voice and trunked
dispatch services markets, but we do not foreclose the possibility that
we may adopt an expanded market definition in reviewing a future
transaction.

18 While we examine these Applications in the context of a trunked
dispatch market, we reject, for several reasons, Southern's limited
definition of such a market, which would confine our analysis solely to
services being provided at 800 and 900 MHz. First, trunked dispatch
service is now available on the 220 MHz band in addition to the 800 and
900 MHz bands.[^49] Southern asserts that the 220 MHz spectrum is not a
reasonable alternative to 800 MHz and 900 MHz SMR trunked dispatch
services, arguing that the quality of the spectrum is poor, there is
insufficient incentive to provide service on this frequency, and there
is a chronic equipment supply problem.[^50] We disagree. We have
previously found that quality of this spectrum is not a concern. [^51]
Further, there is evidence that entry into a trunked dispatch market
using the 220 MHz frequency band is continuing, primarily in major
metropolitan areas.[^52] Although growth of this segment has not been as
rapid as initially expected,[^53] we believe this is not due to a lack
of incentive to provide service on this frequency or a chronic problem
with the spectrum or equipment. While there is evidence that delivery of
equipment necessary to provide trunked dispatch service at 220 MHz has
experienced short-term delays, the pace of orders placed during 2000
indicates that there is continued demand for such equipment,[^54] and we
expect an increase in the provision of trunked dispatch services at 220
MHz as licensees continue to build out their licensed areas. Industry
analysts also predict that growth will continue.[^55] The present and
anticipated development of the 220 MHz band for the provision of
dispatch services therefore warrants its inclusion in a trunked dispatch
market.

19 Second, trunked dispatch services currently are being provided on the
217-219 MHz frequency band, commonly referred to as Automated Maritime
Telecommunications System ("AMTS") spectrum. The Commission in 1997
adopted a rule permitting current AMTS public coast stations to serve
units on land,[^56] and land-based service is now becoming available on
that spectrum.[^57] Furthermore, the Commission is required to auction
additional spectrum at 218-219 MHz by September 30, 2002.[^58] AMTS
signals propagate far inland and, therefore, may be able to serve major
population centers located on or near the coast. [^59] Though the
service has certain technical constraints (*i.e.*, call times may be
limited to short duration),[^60] AMTS trunked dispatch is a viable
alternative for at least some inland customers.

20 Third, some commercial providers in the 450 MHz frequency band[^61]
offer trunked dispatch service.[^62] Nextel argues that 450 MHz spectrum
should be included in an analysis of a trunked dispatch market because
all 450 MHz licensees are authorized to provide commercial dispatch
service.[^63] While neither the Applicants nor Southern have provided us
with specific information regarding how many 450 MHz systems have been
trunked, we note that at least one industry report notes that migration
by Nextel's former 800 MHz trunked dispatch customers has spurred growth
in the 450 MHz band.[^64] Trunked dispatch service has been slow to
develop in the 450 MHz band because the band is licensed on a shared
basis, meaning that multiple co-channel licenses may be granted in the
same service area.[^65] However, there has been a generally high rate of
growth of dispatch subscribers on 450 MHz systems.[^66] Subscribership
increased by 49 percent from 1999 to 2000, reflecting a continued demand
for low-priced analog dispatch services.[^67] It is reasonable to assume
that, if there is an increase in demand for trunked dispatch services at
450 MHz, additional licensees may find it beneficial to trunk their
systems. We therefore find that trunked dispatch service offered at 450
MHz is a viable substitute for some customers and should be included as
part of our market analysis.

21 For these reasons, we believe that Southern's proposed product market
analysis is too narrow, and thus we include, at the very least, trunked
dispatch services provided at 220 MHz, 217-219 MHz (land-based AMTS),
and 450 MHz in addition to those provided at 800 MHz and 900 MHz in an
analysis of such a product market.[^68]

22 For the following reasons, we do not include group calling plans
offered by cellular and PCS carriers in a trunked dispatch market for
purposes of this transaction.[^69] There is evidence that dispatch-like
group services to businesses are emerging in the service offerings of
cellular and PCS carriers, and that some cellular and PCS companies
appear to be positioning themselves to compete specifically with
Nextel's Direct Connect^®^ service.[^70] We find that cellular and PCS
group calling and conferencing features may appeal to some customers
with dispatch needs,[^71] even if these plans do not offer the same
degree of one-to-many functionality found in dispatch services.[^72]
However, we do not have information in the record as to the nature of
customer dispatch usage to make a determination regarding the extent to
which cellular and PCS group calling plans should be included in a
trunked dispatch market.[^73] We concluded in the *Geotek Order,* and
continue to believe, that cellular and PCS firms have the ability to
increase their presence in a trunked dispatch market easily and
significantly because they hold spectrum licenses, have relevant
physical assets in place, have expertise in wireless technologies and
markets, are ongoing businesses with recognizable brand names, and have
adequate capital resources to offer new products and services.[^74] As
explained below, therefore, such group calling plans, even though not in
the product market, do place some constraints on possible exercise of
market power by Nextel.[^75]

23 The Applicants would also include services to be provided using the
recently auctioned 700 MHz guard band spectrum in analyzing a trunked
dispatch market.[^76] However, none of the license holders of this
spectrum is currently providing service, and Nextel anticipates that it
will not be marketing its own services over this spectrum for 12 to 18
months after it places an order for equipment.[^77] Furthermore, there
are incumbent broadcasters on portions of this spectrum, and current FCC
rules do not require these incumbents to move off the spectrum until
December 31, 2006, at the earliest.[^78] Accordingly, we do not believe
that it is appropriate, at this time, to include services expected to be
offered using the 700 MHz guard band spectrum in a trunked dispatch
market.

24 Therefore, we will analyze the assignment of Motorola's 900 MHz
licenses to Nextel for its effects on two separate markets: (a)
interconnected mobile voice and (b) trunked dispatch, where trunked
dispatch includes, at the very least, services provided at 800 MHz, 900
MHz, 220 MHz, 217-219 MHz (land-based AMTS spectrum) and commercial 450
MHz. We recognize that these product markets continue to evolve so that
the dividing line between these two markets is becoming less clear, but
we need not consider a significantly expanded market definition in this
transaction, because we approve these applications even under the
narrower market analysis.

#### Geographic Markets

25 Properly defined geographic markets aggregate consumers that face
similar choices regarding vendors of a particular product or
service.[^79] There is no dispute regarding Applicants' proposal to
separate the geographic market into urban and rural areas for purposes
of analyzing these Applications.[^80] For an interconnected mobile voice
market, urban areas tend to have a greater number of providers and,
therefore, more competition than rural areas because most providers have
chosen to build out urban areas first.[^81] This means that the choices
available to urban consumers differ from those currently available to
rural consumers, therefore we agree with the Applicants that urban and
rural areas may be viewed as separate geographic markets for purposes of
analyzing the effect of this transaction on an interconnected mobile
voice market. For trunked dispatch operators, the types of services that
can be supplied economically also tends to vary between urban and rural
areas. In urban areas, demand has been high relative to available
capacity, which has resulted in limited dispatch service offerings.[^82]
In rural areas, by contrast, dispatch service providers do not face
capacity shortages, and therefore, are able to offer a broader range of
services *(i.e.,* interconnected mobile telephony service). [^83]
Therefore, dispatch consumers also have available different types of
services in urban and rural areas, and we will analyze this product
market also by separate urban and rural geographic markets.

### Market Analysis

#### Interconnected Mobile Voice Services 

26 U.S. interconnected mobile voice markets are characterized by six
carriers with nationwide or near nationwide licensed areas: Verizon
Wireless, Cingular Wireless, AT&T Wireless, Sprint PCS, Nextel, and
VoiceStream Wireless.[^84] There are also a large number of regional
carriers, including ALLTEL and U.S. Cellular, and medium or smaller
regional carriers, such as Southern. Of the total U.S. population, 88
percent live in a county where at least three different providers offer
interconnected mobile voice services.[^85] Motorola, however, does not
provide interconnected mobile voice services with its 900 MHz licenses.
Therefore, our competitive analysis of this transaction yields the
identical conclusion in both urban and rural interconnected mobile voice
markets. The number of significant competitors will not be reduced due
to the assignment of these licenses. Consequently, the assignment of
Motorola's licenses to Nextel will not harm competition. Moreover, the
transaction may have pro-competitive effects in interconnected mobile
voice markets. Although Nextel is currently not offering interconnected
mobile voice services with its 900 MHz licenses in either urban or rural
areas, it has recently indicated that technology to make this possible
will soon be available.[^86] This transaction will increase, by a small
amount, the capacity held by Nextel, a firm that currently has less
spectrum than other large rivals providing interconnected mobile voice
services,[^87] enabling it to better compete in this product market. In
sum, approval of these applications may further the development of
competition in relevant interconnected mobile voice markets.

#### Trunked Dispatch Services

##### Urban Markets

27 We also find that Nextel's acquisition of these licenses will not
result in competitive harms to urban markets for trunked dispatch
services. For the competition analysis in urban areas, Southern provides
calculations suggesting very highly concentrated trunked dispatch
markets, while the Applicants provide calculations suggesting that
concentration is not problematic.[^88] As explained below, while we find
the calculations offered by each side are flawed, we believe that the
Applicants' approach is more reasonable. Even if the Applicants'
calculations were adjusted to yield a more conservative estimate of
market concentration, we find that the assignment of the Motorola
licenses to Nextel will not unduly increase concentration or otherwise
cause competitive harm in urban markets because there exist: (1) a
number of alternatives for trunked dispatch service; (2) the potential
for additional entry into this market fostered by recent Commission rule
changes;[^89] and (3) other dispatch-like services that we have not
included in the market will nonetheless be effective competitive
alternatives for some trunked dispatch consumers. As explained in more
detail below, we find that all of these factors prevent Nextel from
charging supracompetitive prices to customers or otherwise behaving
anticompetitively.

28 We first find that Southern's analysis is flawed, yielding an
unreasonably high picture of concentration. Southern maintains that the
trunked dispatch market is already highly concentrated and will become
even more dominated by Nextel should the Commission grant an assignment
of Motorola's licenses.[^90] Southern calculates market concentration at
both the national and local levels using Herfindahl-Hirschman Indices
("HHIs"),[^91] and shows very high market concentration for the top nine
urban markets.[^92] Southern's analysis adopts the trunked dispatch
market definition from the *Geotek Order,* which included trunked
dispatch services provided at 800 MHz, 900 MHz, and 220 MHz.[^93] While
Southern argues that we should not include the 220 MHz spectrum in the
product market its HHI analysis includes that spectrum making the market
appear less concentrated. Southern's analysis, however, does exclude 800
MHz site licensees, non-SMR 800 MHz licensees that are providing
commercial trunked dispatch service, commercial trunked 450 MHz, and
land-based AMTS at 217-219 MHz. Essentially, Southern argues that the
trunked dispatch market should be limited to SMR spectrum at 800 and 900
MHz. Conversely, Southern overstates Nextel's position by including all
of Nextel's 800 MHz spectrum in the trunked dispatch market. Because
this spectrum is used for both trunked dispatch and interconnected
mobile voice services, it is not appropriate to assign Nextel's 800 MHz
capacity entirely to the trunked dispatch market as Southern urges.[^94]
Overall, we believe that Southern's HHI calculations are significantly
inflated.

29\. While the Applicants' analysis somewhat understates concentration
in a trunked dispatch market, we find the Applicants' approach in
analyzing trunked dispatch market concentration more defensible than
that of Southern. The Applicants furnish HHI analyses that show a much
lower level of concentration in the top nine urban markets under its
trunked dispatch definition.[^95] The Applicants' analysis shows an
unconcentrated trunked dispatch market based on an estimate of Nextel's
and Southern's portion of spectrum that is used for trunked dispatch
service, other 800 MHz and 900 MHz spectrum, 220 MHz spectrum, 450 MHz
spectrum, and 700 MHz spectrum.[^96] We generally agree that their
approach on this point is reasonable. The Applicants' analysis, however,
prematurely assumes that iDEN is available on the 900 MHz band and,
consequently, allocates some portion of Nextel's 900 MHz licenses to an
interconnected mobile voice market, when, at this time, the 900 MHz
licenses are only being used to provide trunked dispatch services.[^97]
Further, the Applicants' analysis overstates the spectrum input markets
by including the entire 220 MHz spectrum allocation and the entire
450-470 MHz spectrum allocation, both of which should only be included
in part,[^98] and the entire 700 MHz guard band spectrum, which should
not be included at all.[^99] On the other hand, Applicants did not
include AMTS spectrum, which would have slightly lowered their market
concentration calculation.[^100]

30\. Given our various adjustments to the Applicants' numbers, we
conclude that their overall analysis is more reasonable than that of
Southern. While we believe that the parties' HHI submissions have
limitations as a means of analyzing the proposed transaction, we
conclude that the Applicants' HHI calculations are more convincing than
Southern's.[^101] When we apply the same HHI methodology used by both
parties to a trunked dispatch market as we have defined it above,[^102]
the result is that six of the affected markets show both pre- and
post-transfer HHIs of less than 1000, indicating no market concentration
either before or after the transaction. The three remaining markets show
pre-and post-assignment HHIs in the 1000 to 1800 range, indicating
moderate concentration levels, but in none of these cases does the HHI
index rise by more than 100 as a result of the transaction, which is the
threshold identified in the Revised Horizontal Merger Guidelines as
indicating a significant increase in concentration.[^103] Overall, these
results are significantly closer to those presented by the Applicants
than those presented by Southern.[^104]

31\. Based on this conclusion, we proceed to determine the likelihood of
entry into a trunked dispatch market and the existence of services that,
while not included in a trunked dispatch market, nevertheless constrain
the potential for Nextel to exercise market power. With respect to
entry, we expect that, in the relatively near future, there will be
additional entry into a trunked dispatch market. First, we expect
continued growth in service at 220 MHz, 217-219 MHz, and 450 MHz.[^105]
Second, current trends indicate that cellular and PCS carriers are
offering dispatch-like group calling services that appear to be
encroaching on Nextel's Direct Connect^®^ service.[^106] Third the
Commission recently amended its rules to allow 800 MHz B/ILT licensees
to (1) assign or transfer their spectrum to CMRS licensees for use in
CMRS operations,[^107] and (2) modify their Private Mobile Radio Service
("PMRS") licenses to allow CMRS use in their own systems.[^108]
Accordingly, existing private licensees in the 800 MHz band are now
permitted to transfer their licenses to commercial SMR operators.[^109]
We conclude that entry from these sources can mitigate any potential for
Nextel to exercise market power in this market.

32\. Further, we believe that the ability of at least some consumers to
use, in the alternative, traditional dispatch,[^110] private
dispatch,[^111] and data dispatch provides additional constraint against
the ability of Nextel to wield market power.[^112] First, traditional
dispatch services are likely to be viable competitive alternatives for
customers who desire inexpensive dispatch service and do not have
privacy concerns.[^113] Second, owning and operating an in-house radio
system or private dispatch system may be a competitive alternative for
some large, trunked dispatch consumers.[^114] Third, it appears that,
for some customers, wireless data communications are increasingly
becoming a satisfactory alternative to voice communications for dispatch
applications.[^115]

33\. Based on our analysis of the current state of a trunked dispatch
market, we believe that approval of these applications would not result
in undue competitive harm in urban markets for trunked dispatch
services. Given our expectations of near-term and longer-term future
entry, we are satisfied that Nextel will remain constrained from
exercising market power. On the basis of this record, we do not believe
that this assignment will give Nextel the ability to charge
supracompetitive prices or otherwise behave anticompetitively.

##### Rural Markets

34\. Since Motorola generally has not provided dispatch services in
rural areas,[^116] the number of competitors in a rural trunked dispatch
market will not be reduced due to the assignment of these licenses.
Furthermore, our general policy is to permit the aggregation of CMRS
spectrum and interests therein up to the limits permitted under the
spectrum aggregation rule, provided that such aggregation neither
reduces actual competition nor stymies the development of competition in
any market.[^117] We find no special circumstances here that warrant
adopting a different view.

### Analysis of Public Interest Benefits

35\. Nextel contends that the assignments will result in more efficient
use of spectrum by allowing it: (1) in the long term, to create a 900
MHz iDEN service that will build on Nextel's current 800 MHz iDEN
system,[^118] and (2) in the nearer term, to use the 900 MHz spectrum to
relocate willing 800 MHz incumbents, thereby freeing additional 800 MHz
spectrum for Nextel's existing iDEN services.[^119] Nextel further
states that the assignment will increase competition in the overall CMRS
marketplace by enhancing Nextel's competitiveness by improving its
lesser spectrum position vis-a-vis its CMRS competitors in the United
States, and allow it to realize cost and operation economies similar to
those of cellular and PCS providers.[^120]

36\. We agree with Nextel's analysis of the potential public interest
benefits of this transaction. By creating a 900 MHz iDEN service that
will be integrated into Nextel's 800 MHz iDEN spectrum,[^121] Nextel,
facilitated by the Commission's flexible use policies, will be in a
position to make the highest valued use of the spectrum. Also, by
deploying iDEN technology on the 900 MHz band, Nextel should be able to
better facilitate global roaming for U.S. consumers, since mobile
telephony services are offered in some countries on the 900 MHz
band.[^122] More immediately, using the 900 MHz spectrum to relocate 800
MHz incumbents and thereby freeing up additional spectrum for the
digital iDEN technology is in the public interest. Accordingly, we find
that there are some positive public interest benefits from the proposed
assignments.

## Roaming

37\. Southern also urges that, should the Commission grant these
applications, Nextel should be required to provide it roaming on
Nextel's digital SMR frequencies.[^123] We deny this request. First, the
alleged harm is not caused by the proposed transaction. Southern does
not now have roaming agreements with Nextel or Motorola, and it will be
in the same position after this transaction. Second, the remedy proposed
does not address the harm claimed. There is no nexus between Southern's
roaming proposal, which relates to Southern's interconnected mobile
voice services, and a trunked dispatch market. Given that the current
state of technology does not permit dispatch calling in a roaming mode,
such a condition would not remedy any alleged harm to a trunked dispatch
marketplace, which is the basis for Southern's expressed concerns about
this transaction.[^124] Third, if, as Southern asserts, Nextel is
denying Southern manual roaming in contravention of our rules,[^125] the
appropriate remedy would be through an enforcement action,[^126] and not
a roaming condition on the grant of an unrelated set of applications.
Finally, regulation of automatic and manual roaming services are the
subject of a separate rulemaking proceeding,[^127] and broader issues
related to any proposed roaming requirements are more appropriately
addressed in that proceeding.

## Conclusion

38\. We find that the proposed transaction is not likely to cause
competitive harm in either the interconnected mobile voice or trunked
dispatch markets and that it is likely to produce some public interest
benefits. Therefore, on balance, we find that the proposed transaction
is in the public interest. We also find that conditioning this grant on
a roaming requirement is inappropriate.

#  Ordering clauses

39\. ACCORDINGLY, IT IS ORDERED, pursuant to sections 4(i) and (j), 309,
and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§
154(i), 154(j), 309, and 310(d), that the request of Southern LINC that
we deny these applications IS DENIED.

40\. IT IS FURTHER ORDERED, pursuant to sections 4(i) and (j), 309, and
310(d) of the Communications Act of 1934, as amended, 47 U.S.C.
§§ 154(i), 154(j), 309, 310(d), that the Motion to Dismiss of Nextel
Communication, Inc., Motion to Strike of Motorola, Inc., and Southern
Communications Services, Inc., d/b/a Southern LINC Motion to Strike
Nextel Communications, Inc. Letter of March 8, 2001, ARE DENIED.

41\. IT IS FURTHER ORDERED, pursuant to sections 4(i) and (j), 309, and
310(d) of the Communications Act of 1934, as amended, 47 U.S.C.
§§ 154(i), 154(j), 309, 310(d), that the applications filed by Motorola,
Inc., Motorola SMR, Inc. and Motorola Communications and Electronics,
Inc. to assign licenses to FCI 900, Inc. ARE GRANTED.

42\. This action is taken on delegated authority under section 0.331 of
the Commission's rules, 47 C.F.R. § 0.331.

FEDERAL COMMUNICATIONS COMMISSION

Thomas J. Sugrue

Chief, Wireless Telecommunications Bureau

[^1]: Applications of Motorola for Consent to Assign Licenses to FCI
    900, Inc., filed Sept. 23, 2000, ULS File Nos. 0000224876,
    0000224877, 0000224878 ("Applications").

[^2]: *See* Comments of Southern LINC, filed Nov. 20, 2000 ("Southern
    Comments").

[^3]: 47 U.S.C. § 310(d).

[^4]: The "900 MHz" SMR band refers to spectrum allocated in the 896-901
    and 935-940 MHz bands. *See* 47 C.F.R. §90.603. Other SMR
    frequencies are found in the "800 MHz" band, which refers to
    spectrum allocated in the 806-824 and 851-869 MHz bands. *See* 47
    C.F.R. §90.603; *see also* 47 C.F.R. § 90.7 (defining "specialized
    mobile radio system").

[^5]: *See* Nextel website at
    www.nextel.com/about/information/corporate/profile.shtml. *See also
    The State of the SMR Industry: Nextel and Dispatch Communications*,
    Strategis Report, September 2000 ("Strategis Report, SMR"), at 5;
    *In the Matter of Implementation of Section 6002(b) of the Omnibus
    Budget Reconciliation Act of 1993, Annual Report and Analysis of
    Competitive Market Conditions With Respect to Commercial Mobile
    Services,* 15 FCC Rcd 17,660, (rel. Aug. 18, 2000) ("*Fifth CMRS
    Competition Report*"), at 70. The second largest service provider
    using SMR frequencies is Southern with approximately 200,000
    subscribers. *See* Southern LINC website at www.SouthernLINC.com,
    Press Release (Aug. 29, 2000).

[^6]: Direct Connect^®^ provides trunked dispatch customers with an
    expanded dispatch service area and higher voice quality and extra
    security than analog trunked dispatch. *See* Letter from Laura L.
    Holloway to Magalie Roman Salas, Secretary, Federal Communications
    Commission, dated March 8, 2000 ("Nextel March 8 *Ex Parte*
    Presentation") at Attachment 1, Affidavit of Greg Rosston ("Rosston
    Affidavit") at 14. Upon request, Direct Connect^®^ may be purchased
    separately from interconnected mobile voice.

[^7]: Applications, Exhibit B ("Public Interest Statement") at 2-3;
    *Nextel Reports Record Year 2000 Financial Results,* News Release,
    Nextel Communications, Inc. (Feb. 16, 2001).

[^8]: *In the Matter of Implementation of Section 6002(b) of the Omnibus
    Budget Reconciliation Act of 1993 Annual Report and Analysis of
    Competitive Market Conditions With Respect to Commercial Mobile
    Services,* 14 FCC Rcd 10,145, 10,176 ¶ 32 (citing *Nextel Reports
    1998 Results*, News Release, Nextel Communications, Inc., Feb. 23,
    1999).

[^9]: *See* Strategis Report, SMR at 47; *see also* 47 C.F.R. §
    20.6(d)(2).

[^10]: Public Interest Statement at 1-2.

[^11]: Nextel SEC Form 10K Statement (filed March 30, 2000) at 6
    (providing information for period ending December 31, 1999).

[^12]: Motorola developed iDEN, a digital technology that allows users
    to integrate, into one unit, the features of dispatch radio,
    interconnected mobile voice, short message service, and data
    transmission. This technology, which is currently available only on
    800 MHz channels, allows service providers to have six times the
    capacity as on an analog SMR network. *See* www.motorola.com.

[^13]: Public Interest Statement at 2.

[^14]: *Id.* at 14.

[^15]: 47 C.F.R. § 0.331.

[^16]: *See* Motorola, Inc. and Nextel Communications, Inc. Seek Consent
    to Assign 900 MHz SMR Licenses*, Public Notice*, DA 00-2352 (rel.
    Oct. 19, 2000).

[^17]: *See* Southern Comments. In the course of this proceeding, we
    note that Nextel, Motorola, and Southern have each filed motions to
    dismiss or to strike certain submissions filed by the opposing party
    either as untimely or repetitious. *See* Motion to Dismiss of Nextel
    Communications, Inc., filed Jan. 17, 2001; Motion to Strike of
    Motorola, Inc.,, filed Jan. 18, 2001; and Southern LINC Motion to
    Strike Nextel Communications, Inc. Letter of March 8, 2001, filed
    Mar. 30, 2001). We consider the information in these submissions
    relevant to our public interest determination and helpful in
    developing a fuller factual record. We therefore exercise our
    discretionary authority to consider all of the information submitted
    in this proceeding. Southern further asserts that Nextel\'s service
    of its March 8 submission was improper because Nextel served only
    Southern's in-house counsel, and not its outside counsel
    concurrently. We find that Nextel\'s service complies with our
    rules. *See* 47 C.F.R. § 1.47(d). Finally, each of the parties has
    had ample opportunity to respond to the pleadings, and therefore has
    not been prejudiced. Accordingly, the three motions are denied.

[^18]: We note that our approval of this transaction is consistent with
    the position of U.S. Department of Justice ("DOJ"), which has not
    challenged Nextel's proposed acquisition of Motorola's licenses.

[^19]: 47 U.S.C. § 310(d).

[^20]: 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.*

[^21]: *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,* 14 FCC Rcd 19410 (1999);
    *Applications of WorldCom, Inc. and MCI Communications Corporation
    for Transfer of Control*, CC Docket No. 97-211, Memorandum Opinion
    and Order, 13 FCC Rcd 18,025, 18,030-33 at ¶¶ 9-12 (1998)
    ("*WorldCom/MCI Order*"); *Craig O. McCaw and American Telephone and
    Telegraph Company,* 9 FCC Rcd 5836 (1994), *recon. denied on other
    grounds, Memorandum Opinion and Order on Reconsideration,* 10 FCC
    Rcd 11,786 (1995), *aff\'d sub nom. SBC Communications, Inc. v.
    FCC*, 56 F.3d 1484 (D.C. Cir. 1995).

[^22]: *See Mobilemedia Corporation et al.,* 14 FCC Rcd 8017 (rel. Feb.
    5, 1999) (citing *Jefferson Radio Co. v. FCC,* 340 F.2d 781, 783
    (D.C. Cir. 1964)); s*ee 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). 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.
    *Id.*

[^23]: *See In re applications of Various Subsidiaries and Affiliates of
    Geotek Communications, Inc. and FCI 900, Inc*., *Memorandum Opinion
    and Order,* 15 FCC Rcd 790 (WTB rel. Jan. 14, 2000) at ¶ 10
    *("Geotek Order")* (citing *In re applications of AirTouch
    Communications, Inc. and Vodafone Group, Plc*, Memorandum Opinion
    and Order, DA 99-1200, 1999 WL 413,237 (WTB rel. June 22, 1999) at
    ¶¶ 5-9).

[^24]: *See, e.g., Geotek Order* at ¶ 21.

[^25]: Our determination of the affected markets requires us to identify
    the Applicants' existing and potential product offerings, and may
    require us to determine which products offered by other firms
    compete or potentially compete with these offerings. *In re
    Applications of Neoworld Holdings, Inc. and Hughes Electronics
    Corporation and Wilmington Trust Company, Liquidating Trustee*,
    Memorandum Opinion and Order*,* 15 FCC Rcd. 13,410 (WTB rel. Aug. 4,
    2000) *("Neoworld Order")* at ¶ 16, n.30.

[^26]: Depending on circumstances, this step may include the
    identification of market participants and analysis of market
    structure, market concentration, and potential entry. *Neoworld
    Order* at ¶ 16, n.31.

[^27]: These include, but may extend beyond, factors relating to cost
    reductions, productivity enhancements, or improved incentives for
    innovation*. Neoworld Order* at ¶ 16, n.31 (citing *Applications of
    Aerial Communications, Inc. and VoiceStream Wireless Holding
    Corporation,* Memorandum Opinion and Order, 15 FCC Rcd 10,089, ¶ 30,
    n.82 (WTB/IB 2000); *In re Applications of Vodafone AirTouch PLC and
    Bell Atlantic Corporation,* 15 FCC Rcd. 16,507, ¶ 25, n.49 (WTB/IB
    2000); Horizontal Merger Guidelines Issued by the U.S. Department of
    Justice and the Federal Trade Commission, 57 Fed. Reg. 41,552, §§
    2.1, 2.2, 4 (dated Apr. 2, 1992, as revised, Apr. 8, 1997) ("Revised
    Horizontal Merger Guidelines").

[^28]: *See* 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).

[^29]: *See* 47 C.F.R. § 20.6(b).

[^30]: *See* Public Interest Statement; Southern Comments; *Ex Parte*
    Presentation submitted by Southern, Affidavit of Michael G. Baumann
    and Stephen E. Siwek of Economists, Inc. (Feb. 8, 2001) ("Baumann
    and Siwek Affidavit"); *Ex Parte* Letter from Laura L. Holloway,
    Director Government Affairs, Nextel to Lauren Kravetz, Policy and
    Rules Branch, Commercial Wireless Division, Wireless
    Telecommunications Bureau, Federal Communications Commission, filed
    Feb. 22, 2001; Rosston Affidavit; *Ex Parte* Presentation submitted
    by Southern, Supplemental Affidavit of Michael G. Baumann and
    Stephen E. Siwek of Economists, Inc., filed March 20, 2001 ("Baumann
    and Siwek Supplemental Affidavit"). Nextel and Southern also
    presented their arguments during various *ex parte* presentations to
    the Bureau (Southern on February 8, 2001 and April 2, 2001; Nextel
    on March 14, 2001).

[^31]: Southern argues that trunked dispatch is the only market that
    need be considered in this transaction. Nevertheless, even adding in
    the interconnected mobile voice market would yield the same result,
    Southern contends, because the benefits to Nextel of gaining a
    minimal amount of additional spectrum to compete against other
    interconnected mobile voice service providers are vastly outweighed
    by the competitive harms in the trunked dispatch market. Southern
    Comments at 3 and 9.

[^32]: *Fifth CMRS Competition Report* at 69.

[^33]: *See* Strategis Report, SMR at 7; *Strategis Group, U.S. Dispatch
    Markets, Executive Summary,* January 2000 ("Strategis Report,
    Dispatch") at 1.

[^34]: *Id.*

[^35]: *Principles for Reallocation of Spectrum to Encourage the
    Development of Telecommunications Technologies for the New
    Millennium,* Policy Statement*,* 14 FCC Rcd. 19868 (1999); *see also
    Geotek Order* at ¶ 25.

[^36]: Public Interest Statement at 2-3.

[^37]: Strategis Report, SMR at 45.

[^38]: *Id.* at 25 and 45.

[^39]: *See* Letter to Thomas J. Sugrue, Chief, Wireless
    Telecommunications Bureau, FCC, from Robert Foosaner, Senior Vice
    President, Government Affairs, Nextel Communications, filed Jan. 9,
    2001 ("Nextel Waiver Request"); *see also* Rosston Affidavit at 5.
    Nextel is working with Motorola to develop a dual band iDEN system
    that will integrate both Nextel's 800 MHz and 900 MHz spectrum.
    Rosston Affidavit at 5.

[^40]: *Geotek Order* at ¶ 30.

[^41]: In the *Geotek, Order* we recognized "that legitimate questions
    can be raised about the suitability of \[these\] market
    definitions," and declared that the convergence of mobile data,
    mobile voice, digital trunked dispatch, paging, and messaging
    services suggests "that consumers may begin to use more of these
    wireless services interchangeably (and that carriers may
    increasingly market such services to the same set of consumers)*."
    Geotek Order* at ¶ 27. However, we decided, at that time, not to
    address the market definition question in detail because the
    applications could be approved even under this narrower approach,
    which was used in a prior order undertaking a similar analysis.
    *Geotek Order* at ¶¶ 26-28 (discussing *Pittencrieff Communications,
    Inc., Transferor, and Nextel Communications, Inc., Transferee, For
    Consent to Transfer Control of Pittencrieff Communications, Inc. and
    its Subsidiaries,* Memorandum Opinion and Order*,* 13 FCC Rcd 8935
    (WTB 1997) ("*Pittencrieff Order*")).

[^42]: *See Geotek Order* at ¶ 32; *Pittencrieff Order* at ¶ 30. Private
    land mobile operators originally were focused on supporting the
    internal communication needs of various businesses and
    organizations. These include public safety, state and local
    governments, utilities, and business and industrial users. These
    systems may be trunked or non-trunked.

[^43]: *Id.* at ¶ 32; Southern Comments at 4-6. Southern argues that,
    even if the Commission also considers an interconnected mobile voice
    market to be relevant, the end result would not change. *See* note
    31 *supra*.

[^44]: Public Interest Statement at 8; Rosston Affidavit at 9. However,
    Nextel also evaluates the acquisition's competitive effects on the
    trunked dispatch and interconnected mobile voice services markets
    for consistency with the Bureau's prior analyses in the
    *Pittencrieff Order* and the *Geotek Order*. Public Interest
    Statement at 5-6.

[^45]: In order to determine which services are competitive, we look at
    relevant demand substitution factors. For this transaction, these
    factors include service availability and functionality, which have
    been the focus of comments made by Southern and the Applicants.
    Revised Horizontal Merger Guidelines at § 1. *See also Pittencrieff
    Order* at ¶ 18.

[^46]: *See Pittencrieff Order* at ¶ 23; *Geotek Order* at ¶ 26; *see
    also Fifth CMRS Competition Report* at 70.

[^47]: *See* ¶ 14 *supra*. The trunked dispatch service that Nextel
    offers using its 800 MHz licenses, Direct Connect^®^ , is available
    separately to customers who do not desire any of Nextel's other
    services. *See* Rosston Affidavit at 14.

[^48]: *Id.* at 5. We note that Nextel has also indicated that it may
    use some of its 900 MHz licenses to relocate other licensees
    operating in the 800 MHz bands, permitting Nextel to expand its
    service at 800 MHz. *See* Public Interest Statement at 16.

[^49]: The 220 MHz band refers to spectrum allocated in the 220-222 MHz
    band.

[^50]: *See* Southern Reply at 9-10

[^51]: *See Geotek Order* at ¶39; *see also* Strategis Report, SMR at
    18.

[^52]: For example, the SMR Advisory Group, one of the largest holders
    of 220-222 MHz spectrum, provides service in 19 states and 32 of the
    50 largest cities. *See* SMR Advisory Group website at
    www.smradvisory.com. Other providers that are offering service, or
    plan to offer service soon, include Rush Network Corporation,
    Northwest Telecommunications Corporation, Comtran Associates, Inc.,
    and Securicor Wireless. Although Southern alleges that Securicor is
    unable to deliver its planned 220 MHz dispatch system, *see* Baumann
    and Siwek Supplemental Affidavit at 9, it appears that Securicor is
    currently providing service in several markets, including San Diego,
    Los Angeles, San Francisco, and Boston. *See* Strategis Report, SMR,
    at 45.

[^53]: Strategis Report, SMR at 3-5, 18 and 25.

[^54]: *See* Datamarine International Inc., SEC Form 10K, for the fiscal
    year ended September 30, 2000 (January 16, 2001) and Datamarine
    International Quarterly Report, SEC Form 10QSB (Feb. 13, 2001)
    (reflecting that the company's backlog has increased).

[^55]: Strategis Report, SMR at 5.

[^56]: *See* 47 C.F.R. § 80.123.

[^57]: Mobex Communications, through its subsidiary Regionet Wireless
    LLC, holds AMTS licenses that currently provide land-based AMTS
    dispatch service on the East and West Coasts and in the Great Lakes
    area. *See* www.mobex.com; *see also* Kristen Beckman, "Regionet
    Uses Maritime Licenses to Offer SMR Service," Radio Communications
    Report (Aug. 16, 1999). Nextel intends to purchase a 15% equity
    interest in Regionet. *See* Application for Transfer of Licenses
    from Mobex Communications, Inc. to FCI 900, Inc., File No.
    0000285336 at Attachment.

[^58]: The Balanced Budget Act of 1997 requires the commission to
    complete all actions to permit assignment of this spectrum by Sept.
    30, 2002. Pub. L. No. 105-33, Title III, 111 Stat. 251 (1997), §
    3002(c)(1). *See also* www.fcc.gov/wtb/prs/ivds.html*.*

[^59]: Propagation of AMTS signals, which can travel 150-200 miles on
    land, varies depending on site location.

[^60]: *See* Baumann and Siwek Supplemental Affidavit at ¶ 103. We note
    there is no evidence in the record indicating that trunked dispatch
    customers demand significantly longer call times, making AMTS an
    unattractive alternative. Indeed, Southern acknowledges that a
    shorter call time can be a beneficial feature for employers. Baumann
    and Siwek Affidavit at ¶ 62.

[^61]: The "450 MHz band" refers to spectrum allocated in the 450-470
    MHz band.

[^62]: There is not sufficient information in the record regarding how
    widespread trunking is at 450 MHz.

[^63]: Rosston Affidavit at 15.

[^64]: Strategis Report, Dispatch at 72.

[^65]: In 1997 the Commission implemented a set of rules for trunking at
    less than 800 MHz. *See Replacement of Part 90 by Part 88 to Revise
    the Private Land Mobile Radio Services and Modify the Policies
    Governing Them,* PR Docket No. 92-235, *Second Report and Order,* 12
    FCC Rcd 14,307 (rel. Mar. 12, 1997). In 1999 there was a rulemaking
    that changed the rules to permit additional trunking in the
    frequencies below 512 MHz. *See Replacement of Part 90 by Part 88 to
    Revise the Private Land Mobile Radio Services and Modify the
    Policies Governing Them,* PR Docket No. 92-235, *Third Memorandum
    Opinion and Order,* 14 FCC Rcd 10,922 (rel. Jul. 1, 1999).

[^66]: Strategis Report, Dispatch at 71-74.

[^67]: Strategis Report, SMR at 3 and 26.

[^68]: *See also* Strategis Report, SMR at 1 (SMR and SMR-like services
    are provided in the 800 MHz, 900 MHz, 220-222 MHz, and 450-512 MHz
    bands).

[^69]: Applicants urge us to include such group calling plans in a trunk
    dispatch market. Public Interest Statement at 13-14; Rosston
    Affidavit at 14. By contrast, Southern questions the ability and
    inclination of cellular/PCS providers to provide dispatch. Southern
    Comments at 7; Southern Reply at 5. Southern claims that
    cellular/PCS technology would need to be retrofitted in order to
    provide a push-to-talk dispatch feature and finds no evidence that a
    "true dispatch" (push-to-talk) feature is part of any interconnected
    mobile voice provider's business plans. *Id.*

[^70]: For example, AT&T offers unlimited mobile-to-mobile calling
    between group members, for groups ranging in size from two to 200,
    as well as unlimited calls from the group to five fixed lines. *See*
    Radio Comm Report, Lynnette Luna, "Group Calling is Weapon in
    Wireless War," June 28, 1999; Radio Comm Report, "AT&T Wireless
    Offers Business Group Calling," June 14, 1999. AT&T claims that its
    group calling plan is designed for local, mobile businesses such as
    sales and service, delivery and distribution, dispatch and
    contractors that operate within a specific geographic area. *Id.*
    Qualcomm is developing its "Q-Chat" handset, which will allow
    push-to-talk group mobile conferencing. According to Southern, this
    service is expected to become available between 2002 and 2004.
    Baumann and Siwek, Supplemental Affidavit at ¶ 125. Qualcomm is also
    marketing its OmniExpress Mobile Communications System
    infrastructure, which will provide mobile instant group data
    dispatch conferencing over cellular and PCS networks, and also offer
    the option of access to Sprint's wireless voice services. *See*
    http://www.qualcomm.com, "QUALCOMM Announces Roadway Express to
    Purchase OmniExpress Mobile Communications System," News Release,
    January 31, 2001; *see also* Nextel March 8 *Ex Parte* Presentation
    at 7-8.

[^71]: These services will most likely appeal to growing companies with
    dispatch needs, especially in urban markets, and will attract
    customers that want wide-area coverage, low start-up costs,
    interconnected services, and a rapid deployment time. *See*
    Strategis Group, U.S. Dispatch Markets, Executive Summary, January
    2000 at 10.

[^72]: According to Southern, the maximum group size permitted by
    cellular and PCS group calling plans for mobile conferencing is only
    four units, at this time. *See* Baumann and Siwek Supplemental
    Affidavit at ¶ 116. Our independent research indicates that AT&T
    offers mobile group conferencing with up to five units. *See* AT&T
    website, at
    www.attws.com/business/lcorp/expl...ones/grp_calling/extend_wkgrp_comm.shtml.
    In either case, the maximum group size currently marketed by
    cellular and PCS carriers is significantly fewer than the group size
    available using dispatch services at 800 MHz, 900 MHz, 450 MHz, 220
    MHz or 217-219 MHz, which can reach thousands of units.

[^73]: For example, the more trunked dispatch service is used for groups
    fewer than six units, the more substitutable cellular and PCS group
    calling functions become. Also, the call set-up time using trunked
    dispatch is generally shorter than using interconnected mobile voice
    services. *See* Baumann and Siwek Affidavit at ¶¶ 61-62. The less
    important this call set-up time difference is to customers, the more
    substitutable for trunked dispatch the cellular and PCS group
    calling functions.

[^74]: *Geotek Order* at ¶ 35.

[^75]: *See* ¶ 31, *infra.*

[^76]: Rosston Affidavit at 15. Licensing of the 700 MHz guard band
    spectrum has largely been completed. *See* DA 00-2882 (rel. Dec. 21,
    2000) (granting 70 700 MHz guard band licenses) and DA 01-408 (rel.
    Feb. 14, 2001) (granting 26 700 MHz guard band licenses).

[^77]: *Ex Parte* Letter from Laura L. Holloway, Director Government
    Affairs, Nextel to Susan Singer, Economist, Commercial Wireless
    Division, Wireless Telecommunications Bureau, Federal Communications
    Commission, filed Dec. 13, 2000.

[^78]: *See In the Matter of Service Rules for the 746-764 and 776-794
    MHz bands, and Revision to Part 27 of the Commission's Rules, Third
    Report and Order*, WT Docket 99-168 2001 WL 55614 (rel. Jan. 23,
    2001); *see also* 47 U.S.C. § 309(j)(14).

[^79]: Revised Horizontal Merger Guidelines at § 1.21. *See also
    Pittencrieff Order* at ¶ 37 (citing *Tampa Elec. Co. v. Nashville
    Co.,* 365 U.S. 329 (1961)).

[^80]: Public Interest Statement at 10; *see also Pittencrieff Order* at
    ¶¶ 37-41. Southern has not addressed this issue.

[^81]: Rural markets have, however, begun to see an increase in service,
    which will continue as interconnected mobile voice providers build
    out their licensed areas. For PCS licenses, Commission rules require
    PCS 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 10
    years. *See* 47 C.F. R. §§24.203(a) and (b). 900 MHz Major Trading
    Area ("MTA") licenses are required to build out their systems to
    cover one-third of the MTA population within three years and
    two-thirds of the MTA population within five years of the license
    grant. *See* 47 C.F.R. §90.665.

[^82]: Strategis Report, SMR at 66.

[^83]: *Pittencrieff Order* at ¶39; Strategis Report, SMR at 66.

[^84]: *Fifth CMRS Competition Report* at 10.

[^85]: *Id.* at 18.

[^86]: *See* Nextel Waiver Request at 2.

[^87]: Public Interest Statement at 18-19.

[^88]: Baumann and Siwek Affidavit at Tables EI_6.1-69 and EI_7.1-7.9.

[^89]: *See* notes 56 (AMTS) and 65 *supra* (450 MHz); notes 107 and 108
    *infra* (B/ILT).

[^90]: Southern Comments at 6-9; Southern Reply at 6.

[^91]: The HHI is used as an aid in evaluating market data to determine
    the degree of market concentration. The HHI is calculated by summing
    the squares of the individual market shares of all the participants
    in the relevant markets. In general, if the resulting number is: (1)
    below 1,000, the market is considered to be unconcentrated; (2)
    between 1,000 and 1,800, the market is considered moderately
    concentrated; (3) greater than 1,800, the market is considered to be
    concentrated. However, even a number above 1,800 may not raise
    competitive concerns, depending on the differential between the pre-
    and post-merger numbers. *See* Revised Horizontal Merger Guidelines
    at § 1.5. Southern calculates post-assignment HHIs ranging from
    3,776 to 7,060 in the top nine urban markets. *See* Baumann and
    Siwek Affidavit at Tables EI_6.1-6.9 and EI_7.1-7.9.

[^92]: Baumann and Siwek Affidavit at 12-14. Southern calculates
    post-assignment HHIs ranging from 3,776 to 7,060 in the top nine
    urban markets. *See* *id.*at Tables EI_6.1-6.9 and EI_7.1-7.9)
    (Nextel-Motorola calculations).

[^93]: *Id.* at 7.

[^94]: *See Fifth CMRS Competition Report* at 70. Nextel estimates that
    47 percent of its minutes are used for dispatch. *See* Rosston
    Affidavit at 16.

[^95]: The Applicants calculate post-assignment HHIs ranging from 530 to
    759 in the top nine urban markets. Rosston Affidavit at Table 3.

[^96]: *Id.* at Table 3.

[^97]: *Id.* at 16 , Table 2 and Table 3

[^98]: At the 220 MHz band, licensees have not fully entered the market
    and therefore only a portion of the 1.55 MHz allocated to this band
    is currently being used to provide trunked dispatch service. *See* ¶
    18 *supra.* At the 450 MHz band, although trunking is permitted, not
    all licensees have trunked their systems and are providing
    commercial trunked dispatch service. *See* ¶ 20 *supra.*
    Accordingly, only a portion of the 20 MHz of spectrum at this
    frequency should be considered in an analysis of the trunked
    dispatch market.

[^99]: *See* ¶ 23 *supra*. However, we believe that in long term, the
    700 MHz guard band spectrum may be another potential source of
    competition in the trunked dispatch market, since Commission rules
    preclude the provision of cellular services on this spectrum. *In
    the Matter of Service Rules for the 746-764 And 776-794 MHz Bands,
    and Revisions to Part 27 of the Commission's Rules,* *Second Report
    and Order,* WT Docket No. 99-168, FCC 00-90, 15 FCC Rcd 5299 at 5300
    (rel. Mar. 9, 2000).

[^100]: Rosston Affidavit at Tables 2 and 3. The AMTS spectrum would
    have added another 2 MHz of spectrum to the market analysis.
    However, not all 2 MHz of this spectrum is currently being used to
    provide land-based trunked dispatch, and therefore, only a portion
    of this spectrum should be included in a market concentration
    analysis.

[^101]: The Revised Horizontal Merger Guidelines suggest using the
    variable that best indicates firms' future competitive significance,
    which may include sales, shipments, production, capacity, or
    reserves. Revised Horizontal Merger Guidelines at § 1.41. Both the
    Applicants and Southern use spectrum as the underlying variable for
    their market concentration analyses. Spectrum is an input in the
    provision of telecommunication services and a measure of capacity.
    For the trunked dispatch market, measures of output are unavailable.
    The choice of spectrum may be a reasonable alternative, but when, as
    here, extensive build-out has occurred, spectrum is a less accurate
    measure of the firms' future competitive significance, because other
    factors such as technology choice may affect subscribership and
    revenues. In the future, data on output measures may become
    available and this data could be used to assess the competitiveness
    of the trunked dispatch market. *See 1998 Biennial Regulatory
    Review, Spectrum Aggregation Limits for Wireless Telecommunications
    Carriers,* WT Docket 98-205, WT Docket 96-59, GN Docket 93-252,
    Report and Order at ¶ 29 (rel. Sept. 15, 1999).

[^102]: Our analysis is based on the limited information in the record
    concerning the amounts of spectrum in the 450 MHz, 217-219 MHz, and
    non-SMR 800 and 900 MHz bands being used to provide trunked
    dispatch, and how ownership of that spectrum is distributed. In
    addition, we have relied on estimates provided in the record of the
    percentages of Nextel and Southern spectrum holdings that are
    attributable to trunked dispatch, rather than interconnected mobile
    voice service.

[^103]: The Revised Horizontal Merger Guidelines identify changes of 100
    or more points as potentially significant in moderately concentrated
    markets (markets with post-transaction HHI between 1000 and 1800),
    and changes of 50 or more points as potentially significant in
    highly concentrated markets (markets with post-transaction HHI above
    1800). Revised Horizontal Merger Guidelines at § 1.51.

[^104]: We note that because there are now more providers of trunked
    dispatch service than was the case at the time of our *Geotek
    Order*, using spectrum bands that were not then being used as widely
    for provision of trunked dispatch, our calculation here actually
    results in lower concentration than we would have measured had we
    computed HHIs in the *Geotek Order*. Indeed, while we said in the
    *Geotek Order* that the trunked dispatch market was "concentrated,"
    these results suggest that this may not be the case today. *See
    Geotek Order* at ¶¶ 31-34.

[^105]: *See* ¶¶ 18-20 *supra*.

[^106]: *See* ¶ 22 *supra*.

[^107]: *Implementation of Sections 309(j) and 337 of the Communications
    Act of 1934 as Amended*, WT Docket No. 99-87 (FCC 00-403), *Report
    and Order and Further Notice of Proposed Rule Making*, (rel. Nov.
    17, 2000) ("*BBA Order*") at ¶ 110.

[^108]: *Id.* at ¶ 111. The Commission is currently considering whether
    to extend this rule to existing private licensees in the 900 MHz
    band, *id*. at ¶ 144, which may provide another potential source of
    future competition in the trunked dispatch market.

[^109]: Southern argues that there will be little incentive for private
    entities to convert B/ILT spectrum to commercial use given the
    prohibition against obtaining new B/ILT spectrum in the same
    location for one year after such conversion, and against making such
    a conversion until five years after the initial grant date of the
    license. *See* Baumann and Siwek Supplemental Affidavit at ¶¶ 19-31;
    *see also* *BBA Order* at ¶¶ 7, 114-115. The purpose of this rule
    change was to increase the efficient use of spectrum through
    creating flexibility for PLMR licensees needing to fill their
    communications needs and CMRS licensees needing additional spectrum.
    *BBA Order* at ¶ 109. We do not believe these prohibitions, which
    were put in place to prevent trafficking in PLMR spectrum, will
    significantly chill the conversion of spectrum that is otherwise
    lying fallow. Southern further argues that for various reasons, it
    is unlikely that electric utilities will convert their current
    dispatch operations to a digital trunked system in order to offer
    commercial service. *See* Baumann and Siwek Affidavit at ¶¶ 32-61.
    Southern fails to consider the possibility that some electric
    utilities may choose to offer simple analog trunked dispatch service
    within their licensed area, if doing so would be profitable. While
    we cannot predict with certainty the extent to which B/ILT licenses
    will be converted to commercial use, there is no question that the
    potential of using this spectrum for trunked dispatch exists.

[^110]: "Traditional dispatch" refers to non-interconnected, non-CMRS
    services provided on a for-profit basis (typically non-trunked
    analog systems). Traditional systems do not offer a comparable level
    of efficiency or privacy to commercial trunked systems.

[^111]: "Private dispatch" refers to in-house systems operated by
    companies solely to support their own business operations.

[^112]: *See Geotek Order* at ¶ 34; Strategis Report, SMR at 8, 27-28;
    Strategis Report, Dispatch at 10; *Fifth CMRS Competition Report* at
    66-67.

[^113]: *See Geotek Order* at ¶ 34.

[^114]: *Id.*

[^115]: Strategis Report, SMR at 27-28. Data services are spectrum
    efficient; permit group dispatch, and allow for wide area and
    nationwide coverage. Although data dispatch does not offer
    real-time, voice communications, such providers are offering
    increasingly sophisticated fleet management, automated scheduling,
    and dispatch communications capabilities. Strategis Report, Dispatch
    at 10; Strategis Report, SMR at 8. These services are provided by
    companies such as TeleTrac, HighwayMaster, and BellSouth Wireless
    Data. Strategis Report, SMR at 8. *See also Fifth CMRS Competition
    Report* at 66-67. Also, data dispatch features are increasingly
    being bundled with trunked dispatch, reflecting once again the
    fluidity of CMRS services.

[^116]: Public Interest Statement at 18.

[^117]: *See In re Applications of VoiceStream Wireless Corp. or
    Omniiiont Corp. and VoiceStream Wireless Holding Co., Cook Inlet/VS
    GSM II PCS, LLC, or Cook Inlet/VS GSM II PCS, LLC*, Memorandum
    Opinion and Order, 15 FCC Rcd. 3341, ¶ 26 (2000).

[^118]: Public Interest Statement at 4.

[^119]: *Id.* at 16.

[^120]: *Id.* at 4.

[^121]: *See* Nextel Waiver Request and Nextel March 8 *Ex Parte*
    Presentation at 10.

[^122]: In 2000, Nextel began to offer international roaming using a
    dual mode/dual band handset (iDEN/GSM). *See* Nextel March 8 *Ex
    Parte* Presentatioan at 10.

[^123]: Southern Reply at 18-19. Southern argues that a mobile service
    that does not offer out-of-territory roaming is significantly less
    valuable. Baumann and Siwek Supplemental Affidavit at ¶ 43.

[^124]: *See* Rosston Affidavit at 18.

[^125]: *Id.* *See also In re Automatic and Manual Roaming Obligations
    Pertaining to Commercial Mobile Radio Service; Notice of Proposed
    Rulemaking,* WT Docket No. 00-193, 15 FCC Rcd 21628 (rel. Nov. 1,
    2000) *("Automatic and Manual Roaming NPRM*") at ¶¶ 5-7 (explaining
    current requirement) and Southern Reply, Exhibit A (Comments of
    Southern LINC submitted in response to the *Automatic and Manual
    Roaming NPRM* ).

[^126]: *See, e.g.,* 47 U.S.C. §§ 208, 202. We are not persuaded by
    Southern's statement in its comments in the Roaming Proceeding that
    available enforcement mechanisms are too cumbersome and risky.
    Comments of Southern LINC to Roaming Proceeding at 20-22. The fact
    that Southern has elected not to pursue its available remedies does
    not justify placing an extraneous condition on a separate and
    unrelated transaction.

[^127]: *See Automatic and Manual Roaming NPRM*. In that rulemaking, the
    Commission has sought comment on whether to impose an automatic
    roaming rule for CMRS and/or to sunset the currently applicable
    manual roaming requirement.