Before the

Federal Communications Commission

Washington, D.C. 20554

In re Applications of )

)

VOICESTREAM WIRELESS CORPORATION ) File Nos. 0000016354, *et al.*

or OMNIPOINT CORPORATION, ) DA 99-1634

Transferors, )

) File No. 0000054383

and ) WTB Report No. 405

)

VOICESTREAM WIRELESS HOLDING ) File No. 50001-CW-AL-00

COMPANY, COOK INLET/VS GSM II PCS, ) DA 99-2737

LLC, or COOK INLET/VS GSM III PCS, LLC, )

Transferees, )

)

and )

)

Various Subsidiaries and Affiliates of )

OMNIPOINT CORPORATION, )

Assignor, )

)

and )

)

COOK INLET/VS GSM II PCS, LLC, or )

COOK INLET/VS GSM III PCS, LLC, )

Assignees, )

)

For Consent to Transfer of Control and )

Assignment of Licenses and Authorizations )

**MEMORANDUM OPINION AND ORDER**

Adopted: February 14, 2000 Released: February 15, 2000

By the Commission: Commissioner Furchtgott-Roth issuing a statement.

TABLE OF CONTENTS

Page

I. INTRODUCTION [2](#introduction)

II\. BACKGROUND [3](#background)

III\. Discussion [5](#discussion)

A. Statutory Authority [5](#statutory-authority)

B. Qualifications of VWHC [7](#qualifications-of-vwhc)

C. Public Interest Analysis [11](#public-interest-analysis)

1\. Competitive Framework [11](#competitive-framework)

2\. Analysis of Potential Adverse Effects
[11](#analysis-of-potential-adverse-effects)

a\. Mobile Voice Services [12](#mobile-voice-services)

i\. Overlapping Interests [12](#overlapping-interests)

ii\. Spectrum Cap Issues [14](#spectrum-cap-issues)

b\. International Services [15](#international-services)

3\. Pioneer's Preference [17](#pioneers-preference)

4\. Public Interest Benefits [21](#public-interest-benefits)

5\. Executive Branch Concerns [21](#executive-branch-concerns)

IV\. CONCLUSION [23](#conclusion)

V. Ordering clauses [23](#ordering-clauses)

#  INTRODUCTION 

1 On July 15 and 16, 1999, Omnipoint Corporation ("Omnipoint") and
VoiceStream Wireless Corporation ("VoiceStream") (collectively,
"Applicants") filed applications pursuant to sections 214 and 310 of the
Communications Act of 1934, as amended ("the Act"),[^1] seeking
Commission consent to: (1) transfer control of Omnipoint's licenses and
authorizations to VoiceStream Wireless Holding Company ("VWHC"); (2)
transfer control of VoiceStream's licenses and authorizations to VWHC;
and (3) assign designated entity ("DE") licenses held by Omnipoint to
Cook Inlet/VS GSM II PCS, LLC ("CIVS II") or Cook Inlet/VS GSM III PCS,
LLC ("CIVS III"). These applications were filed in the context of the
proposed merger of VoiceStream and Omnipoint ("the Merger"). On August
16, 1999, the Wireless Telecommunications Bureau ("Bureau"), on
delegated authority,[^2] issued a Public Notice to announce that the
applications had been accepted for filing, and to establish a pleading
cycle to permit interested parties an opportunity to comment on the
proposed transaction.[^3]

2 As discussed in more detail below, in this Order we grant the pending
applications for transfer of control or assignment and the joint
petition filed by the Federal Bureau of Investigation ("FBI") and the
U.S. Department of Justice ("DOJ"). We dismiss or deny the remaining
petitions or comments.

#  BACKGROUND

3 Omnipoint is a publicly traded corporation headquartered in Maryland.
Through subsidiaries, Omnipoint constructs and operates PCS systems
based on Global System for Mobile Communications ("GSM") technology,
predominantly throughout the Eastern and Central United States.[^4]
Omnipoint previously has qualified as a DE under the Commission's
rules,[^5] and holds a number of PCS and WCS licenses in blocks reserved
for DEs.

4 VoiceStream is a publicly traded corporation headquartered in the
state of Washington. Through subsidiaries, VoiceStream constructs and
operates PCS systems predominantly throughout the Western United
States.[^6] Using GSM technology, VoiceStream offers traditional
cellular-like telephony as well as a range of advanced mobile services,
including paging, e-mail, facsimile, voicemail and Internet access.[^7]
VWHC is a Delaware corporation organized to hold VoiceStream and
Omnipoint after the merger.[^8] VoiceStream's largest shareholder is
Hutchison Telecommunications PCS (USA) Limited, a British Virgin Islands
corporation, which is a subsidiary of Hutchison Wampoa Limited, a Hong
Kong corporation.[^9]

5 CIVS II and CIVS III are subsidiaries of Cook Inlet GSM, Inc.
("CIGSM"), a Delaware corporation, which holds a 50.1 percent in each
entity and is the sole Manager of each entity.[^10] CIGSM is a wholly
owned subsidiary of Cook Inlet Region, Inc., an Alaska corporation,
organized pursuant to the Alaska Native Claims Settlement Act
("ANCSA").[^11] Pursuant to the Commission's rules, entities owned or
controlled by entities organized pursuant to the ANCSA may qualify as
DEs.[^12] All of the designated entity PCS and WCS licenses currently
held by

Omnipoint subsidiaries will be assigned to one of these two Cook Inlet
subsidiaries immediately prior to consummation of the merger.[^13]
Omnipoint holds 49.9 percent of CIVS III and is the only non-managing
member in both CIVS II and CIVS III.[^14]

6 Pursuant to the proposed transaction, VoiceStream and Omnipoint will
merge their businesses by each becoming a wholly owned subsidiary of
VWHC. The combination of VoiceStream and Omnipoint will bring together
two major providers of GSM in the United States, creating one of the
largest wireless carriers in the country by population covered and one
of the largest licensees in the world employing GSM technology. It will
also allow for international roaming throughout the 133 countries that
have also adopted the GSM standard.[^15] Together with the companies
controlled by Cook Inlet GSM, Inc. subsidiaries, the combined company
will provide service to more than one million customers, which the
applicants state will create a seamless national network capable of
competing with other established nationwide providers.[^16]

7 In response to this Public Notice, four parties filed petitions or
comments. QUALCOMM Incorporated ("QUALCOMM") filed a petition to deny,
arguing that Omnipoint has not met the conditions of its New York MTA A
Block PCS license and that, therefore, Omnipoint's New York license
should be revoked and may not be transferred to VWHC.[^17] The arguments
raised in QUALCOMM's petition are addressed in Section IV.3 below. The
FBI and DOJ filed a joint petition asking us to defer action on the
applications pending the completion of an agreement between these
agencies and the parties.[^18] The request of the agencies is addressed
in Section IV.C below. Advanced Cordless Technologies ("ACT") filed
comments joining in QUALCOMM's arguments.[^19] Though the deadline
established in the *Acceptance Notice* for petitions and comments was
September 16, 1999, ACT filed its comments on October 15, 1999. While we
find there is a basis to dismiss ACT's comments as late-filed, ACT's
pleading is, in effect, addressed below in our discussion of the
arguments raised by QUALCOMM. Finally, a petition to deny filed by
National Telecom PCS, Inc. was subsequently withdrawn.[^20]

8 After the applications of VoiceStream and Omnipoint were filed,
Omnipoint agreed to acquire five F Block PCS licenses from East/West
Communications, Inc.[^21] No comments or petitions were received in
response to the public notice announcing this proposed acquisition, and
consent to assign the licenses to Omnipoint was granted by public notice
on February 11, 2000.[^22] Because the East/West licenses must be held
by a qualified DE, on November 23, 1999, the parties filed an
application for consent to assign these five licenses to CIVS II before
consummation of the larger VoiceStream -- Omnipoint transaction.[^23]
This application was placed on public notice on December 6, 1999.[^24]
This Order includes action on these five applications along with the
other applications for consent to assign licenses and authorizations to
CIVS II or CIVS III. In addition to the East/West licenses, Omnipoint
and VoiceStream filed an additional application on December 8, 1999, to
transfer control to VWHC of certain Omnipoint licenses that had
inadvertently been left out of the original filing.[^25] This
application was accepted for filing on December 15, 1999.[^26] No
petitions or comments were received. As indicated in the caption above,
these additional licenses are also addressed by this action.

#  Discussion

9 As explained below, we find that the proposed merger between Omnipoint
and VoiceStream poses no risk of harm to U.S. telecommunications markets
and would permit the merged companies to form a near-nationwide GSM
network capable of competing better with other nationwide service
offerings. Accordingly, we find that pursuant to sections 214(a), 310(b)
and 310(d) of the Communications Act, as amended ("the Act"), grant of
the pending requests for transfer of control would serve the public
interest. Therefore, we deny the petitions and grant the applications,
as discussed in more detail below.

## Statutory Authority

10 Pursuant to section 214(a) of the Act, the Commission must determine
whether the Applicants seeking transfer or assignment of the Title II
authorizations at issue have demonstrated that their proposed
transaction will serve the public interest, convenience and
necessity.[^27] A similar standard applies with respect to the Title III
licenses at issue. Section 310(d) of the Communications Act provides, in
pertinent part, that "\[n\]o construction permit, or station license, or
any rights thereunder, shall be transferred, assigned, or disposed of in
any 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."[^28] Section 310(d) also requires the
Commission to consider the license transfer or assignment application as
if it were filed pursuant to section 308 of the Communications Act,
which governs applications for new facilities and for renewal of
existing licenses.[^29]

11 In addition to ensuring that assignor and assignee are duly qualified
and comply with the Commission's rules, we also consider, as part of our
examination under the "public interest, convenience, and necessity"
standard of sections 310(d) and 214(a) of the Communications Act, the
effect on competition of a proposed assignment.[^30] Under Commission
precedent, our public interest analysis is informed by, rather than
limited to, traditional antitrust principles[^31] and also encompasses
the broad aims of the Communications Act,[^32] including evaluating
whether any

public interest benefits may result from the proposed transaction.[^33]
Applicants bear the burden of proving that the proposed transaction
serves the public interest,[^34] and we must determine whether they have
met this burden.[^35]

12 The public interest standard of Sections 310(d) and 214(a) requires a
balancing of the potential public interest harms of the proposed
transaction against its potential public interest benefits.[^36] In
summary, the Applicants must demonstrate that the transaction will not
violate or interfere with the objectives of the Act or Commission rules,
and that the overall effect of the assignment will be to advance the
public interest.[^37]

## Qualifications of VWHC

13 As a regular part of our public interest analysis under section
310(d), we determine whether the proposed licensees are qualified to
hold Commission licenses and whether grant of the application would
result in the violation of any Commission rules.[^38] In this case, no
party has challenged the qualifications of VWHC or the Cook Inlet
entities. Based on our independent review of the qualifications of the
transferee and the assignees, we conclude that we need examine further
only the legal qualifications of proposed transferee VWHC with respect
to its foreign ownership.

14 Section 310(b)(4) of the Act allows the Commission to deny or revoke
a common carrier radio license if: (1) more than 25 percent of any
entity that controls the applicant or licensee is owned of record or
voted by aliens, foreign governments or their representatives, or
foreign corporations, and (2) the Commission finds that denial or
revocation would serve the public interest.[^39] The Commission most
recently refined this public interest inquiry in its *Foreign
Participation Order.*[^40] As a result of the merger, Hutchison Whampoa
Limited (Hutchison), a limited liability holding company based in the
Hong Kong Special Administrative Region of the People's Republic of
China, will increase its indirect ownership from 23.97 percent in
VoiceStream to 30.6 percent in VWHC.[^41] Therefore, a public interest
analysis under Section 310(b)(4) is required.[^42]

15 In a prior proceeding, the Telecommunications Division of the
International Bureau ("Division") concluded that indirect foreign
ownership of up to 39.9 percent in VoiceStream (including the 19.9
percent interest then held by Hutchison) was in the public
interest.[^43] In that decision, the Division found that Hutchison's
alien investment satisfied the Commission's "effective competitive
opportunities" ("ECO") analysis under section 310(b)(4) and would enable
VoiceStream to "develop services, build network infrastructure more
quickly, and introduce new international capabilities."[^44] The
Commission's ECO analysis under section 310(b)(4) considers whether
effective competitive opportunities exist for U.S. investment in the
foreign investor's "home market" for the analogous radio-based service.
This analysis begins with a determination of the appropriate national
market of the foreign investor. The Commission has stated that the
foreign investor's home market should reflect its principal place of
business.[^45] In Hutchison's case, the Division found that Hong Kong
was the appropriate home market for comparison and that Hong Kong's
wireless telecommunications market satisfies the ECO test.[^46] The
Division also found that the other public interest factors support
approval of Hutchison's investment.

16 Since adoption of the Division's order, the Commission has
implemented new rules on foreign participation in the U.S. market. These
rules cover, among other things, requests to exceed the 25 percent
indirect foreign ownership benchmark contained in section 310(b)(4) of
the Act. In the *Foreign Participation Order*, the Commission stated
that, because additional foreign investment can promote competition in
the U.S. market, the public interest would be served by permitting more
open investment by foreign entities whose home market is a member of the
World Trade Organization ("WTO").[^47] In such a case, the Commission
does not apply an ECO analysis, and there is a strong presumption that
no competitive concerns are raised by the indirect foreign
investment.[^48] The Commission also stated in the *Foreign
Participation Order* that parties who have already received approval to
exceed the 25 percent benchmark up to a certain level of indirect
foreign ownership must continue to seek further Commission approval in
order to increase that level of ownership. [^49] In the present
transaction, therefore, we evaluate the merits of Hutchison's proposed
increased ownership to 30.6 percent of VWHC based on the record now
before us.

17 Here, balancing the five factors of the Commission's "principal place
of business" test,[^50] we find that Hutchison principally conducts its
business in Hong Kong:

(1) *Place of incorporation:* Hong Kong.[^51]

(2) *Nationality of investment principals, officers, and directors:*
    VoiceStream states that Hutchison, a publicly traded company, is
    49.9 percent owned by Cheung Kong (holdings) Limited ("CKHL"), a
    Hong Kong Corporation, and 7.6 percent owned by the Hong Kong
    government.[^52] Li Ka-shing, a resident of Hong Kong, serves as
    Chairman of both Hutchison and CKHL and controls 34.9 percent of
    CKHL's shares.[^53] The majority of the directors of Hutchison work
    in Hong Kong and are residents of Hong Kong.[^54]

(3) *Country in which its world headquarters is located:* Hong Kong.

(4) *Country in which the majority of its tangible property is located:*
    VoiceStream states that 78.5 percent of Hutchison's investment and
    other properties is located in Hong Kong.[^55]

(5) *Country from which it derives the greatest sales and revenues from
    its operations:* VoiceStream states that 58 percent of Hutchison's
    profits is derived from its operations in Hong Kong.

    18 Based on the factors cited above, we find that Hong Kong, a WTO
    member, continues to be Hutchison's principal place of business.
    Therefore, we will not apply an ECO analysis but will, instead,
    apply the Section 310(b)(4) analysis delineated in our *Foreign
    Participation Order*.

    19 Under the *Foreign Participation Order*, VWHC is entitled to a
    strong presumption that no competitive concerns are raised by
    Hutchison's increased investment to 30.6 percent of VWHC's stock. We
    see no reason to rebut that presumption. Accordingly, considering
    Executive Branch concerns with respect to the proposed transaction,
    we conclude, pursuant to section 310(b)(4) and the Commission's
    *Foreign Participation Order*, that the public interest would be
    served by allowing the proposed indirect foreign ownership subject
    to certain Executive Branch concerns that we address below in
    Section C. In effect, this ruling allows the common carrier
    licensees of the merged company to be indirectly owned by Hutchison
    in an amount up to 30.6 percent. The company would need additional
    Commission authority under section 310(b)(4) before Hutchison could
    increase its investment above authorized levels. The merged company
    would also need additional authority before any other foreign entity
    or entities acquire, in the aggregate, a greater-than-25 percent
    indirect interest in its licensee subsidiaries. For this purpose,
    non-U.S. or non-Hong Kong ownership of Hutchison would be included
    in the total indirect foreign ownership of the licensee
    subsidiaries.

    20 We note that, in a Public Notice issued June 4, 1999, the
    Division allowed VoiceStream to increase its level of indirect
    foreign ownership in its subsidiary licensees to 49.9 percent. [^56]
    In the current proceeding, VoiceStream requests that the level of
    permissible foreign ownership in VoiceStream and its operating
    subsidiaries set forth in the *June 4th* *Public Notice* be applied
    to VWHC and the additional operating subsidiaries that it will
    acquire in connection with the Merger.[^57] We consider the June 4
    action to be applicable only to the specific foreign investment
    identified in VoiceStream's earlier petition for declaratory ruling
    that was addressed by the *June 4^th^ Public Notice*.[^58] We note,
    however, that under our *Foreign Participation Order*, the merged
    company may acquire up to and including 25 percent indirect foreign
    ownership in addition to Hutchison's foreign ownership of 30.6
    percent in VWHC.[^59] This affords the merged company the ability to
    acquire up to 55.6 percent total indirect foreign ownership under
    our decision today. If the merged company intends to permit a
    greater-than-25-percent indirect foreign ownership by entities other
    than Hutchison, or to increase Hutchison's 30.6 percent indirect
    foreign interest, it must obtain additional Commission approval to
    do so.

## Public Interest Analysis

### Competitive Framework

21 Where the transfer or assignment of licenses involves
telecommunications service providers, the Commission's public interest
determination must be guided primarily by the Communications Act, as
amended.[^60] In cases such as this that involve an international
carrier, we are guided also by the U.S. Government's commitment under
the WTO Basic Telecommunications Agreement, which seeks to promote
global markets for telecommunications so that consumers may enjoy the
benefits of competition.[^61] Our analysis of competitive effects under
the Commission's public interest standard consists of four steps. First,
we define the relevant product and geographic markets.[^62] Second, we
identify current and potential participants in each relevant market,
especially those that are likely to have a significant competitive
effect. Third, we evaluate the effects that the merger may have on
competition in the relevant markets.[^63] Fourth, we consider whether
the proposed transaction will result in merger-specific efficiencies,
such as cost reductions, productivity enhancements, or improved
incentives for innovation.[^64] Ultimately, we must weigh any harmful
and beneficial effects to determine whether, on balance, the merger is
likely to enhance competition in the relevant markets.

### Analysis of Potential Adverse Effects

22 To determine the relevant product and geographic markets, we identify
the services offered by VoiceStream and Omnipoint and evaluate the
extent to which services offered by other communications companies
compete for the business conducted by the merging parties. According to
Applicants, both companies provide mobile communications services to
U.S. consumers. VoiceStream and Omnipoint are both licensed to provide
PCS services. With respect to the provision of commercial communications
services, VoiceStream also holds specialized mobile radio (SMR) and
local multipoint distribution service (LMDS) licenses.[^65]

23 In addition, for purposes of conducting our public interest analysis,
we also consider the offerings of other entities whose interests are
attributable to either VoiceStream or Omnipoint under our CMRS
cross-ownership rules.[^66] For present purposes, we attribute the
licenses of both (a) Western Wireless and its subsidiaries and (b) Cook
Inlet Region, Inc. and its subsidiaries[^67] to VoiceStream.[^68]

#### Mobile Voice Services

##### Overlapping Interests

24 In this section, we examine the competitive impact of overlapping
interests attributable to the Applicants and determine that the proposed
merger will not reduce actual competition in any relevant market for
mobile voice or data services. Both VoiceStream and Omnipoint provide
mobile voice and messaging services to U.S. consumers using broadband
PCS licenses. VoiceStream is directly licensed to provide PCS services
throughout much of the western United States, and selected eastern
cities.[^69] VoiceStream also holds SMR licenses in portions of the
Wichita, Kansas BTA.[^70] Omnipoint is licensed to provide PCS services
throughout the eastern United States. The PCS licenses held by
VoiceStream and Omnipoint overlap geographically in numerous
markets.[^71] However, in none of these markets do VoiceStream and
Omnipoint presently compete against each other for business.[^72]
VoiceStream currently offers PCS services to consumers

in 11 western cities and four cities in the central United States.[^73]
Omnipoint currently provides broadband PCS services in the eastern and
central United States, including New York, Philadelphia, Boston, Miami
and Detroit.[^74]

25 Similarly, the attributable interests that VoiceStream holds in PCS
licenses held by Cook Inlet Region, Inc. and its subsidiaries overlap
with licenses held by Omnipoint in Missouri,[^75] Arkansas, and
Texas.[^76] However, neither Omnipoint nor Cook Inlet currently provides
service in any of these markets. Finally, the attributable interests
that VoiceStream holds in the cellular licenses held by Western Wireless
overlap the PCS license holdings of Omnipoint in rural portions of
Kansas.[^77] In these cases, however, Omnipoint does not yet provide
service to these areas. Consequently, the proposed merger will not
reduce actual competition in any relevant market for mobile voice or
data services.

26 We recognize the possibility that Omnipoint and VoiceStream might
have become competitors at some future date, and that the Merger
eliminates any such prospects. Our general policy, however, has been to
permit the aggregation of CMRS spectrum and interests therein up to the
limits permitted under the spectrum cap rule, provided that such
aggregation neither reduces actual competition nor stymies the
development of competition in any market.[^78] We find no special
circumstances present here that warrant adopting a different view.

27 The Merger will also result in the aggregation of spectrum in certain
markets in a manner that would have violated the spectrum aggregation
limits in force at the time the Applications were filed.[^79] However,
the rules adopted in the *Spectrum Cap Order* relaxed these limits, and
eliminated the need for divestiture that otherwise would have been
required. [^80] We turn next to the remaining cases identified by the
Applicants in which the aggregation of spectrum would violate our
current rules. As discussed below, we will permit the parties to
aggregate spectrum under the circumstances presented in this case,
provided that they come promptly into compliance with our spectrum
aggregation rules.

##### Spectrum Cap Issues

28 Applicants identify numerous instances in which the surviving entity
currently holds, or would hold in the event the proposed merger is
consummated, spectrum in excess of the limits imposed by the
Commission's spectrum cap rule applicable at the time the application
was filed.[^81] Recently, however, in the *Spectrum Cap Order,* the
Commission reexamined its rules regarding the permissible aggregation of
CMRS spectrum, carefully weighing the associated benefits and costs. As
a result, the Commission relaxed its CMRS spectrum aggregation limits in
certain respects. These new rules went into effect on November 8,
1999.[^82]

29 As a consequence of its successful participation in Auction 22,
Omnipoint came to hold the C, E, and F Block broadband PCS licenses,
totaling 50 MHz of spectrum, in both Detroit and Flint, Michigan. In
these applications, the applicants seek to assign the C and F Block
authorizations to CIVS II to comply with our DE rules. However, these
licenses would continue to be attributed to Omnipoint, and ultimately,
to VoiceStream, because of Omnipoint's 49.9 percent interest in CIVS II.

30 In its May 5, 1999 long form application in Auction 22, Omnipoint
requested a temporary waiver of the spectrum cap rule pending the
outcome of the rulemaking. The Bureau granted this request on September
8, 1999.[^83] With the release of the spectrum cap order on September
22, 1999, Applicants were required to come into compliance with these
rules by December 21, 1999. On December 7, 1999, Omnipoint requested an
extension of this temporary waiver until 90 days following the closing
of the Merger.[^84] Omnipoint makes this request to effect an orderly
disposition of the various licenses that it will need to divest to
comply with the spectrum cap rule, and specifically, to enable these
licenses to be sold through a single, unified transaction.[^85] On
December 9, 1999, the Bureau placed this request on public notice;[^86]
no comments were received. The Bureau subsequently granted a temporary
extension of the deadline, pending the outcome of this proceeding, for
Omnipoint to come into compliance with Section 20.6.[^87]

31 In 16 other markets, Applicants would also exceed the Commission's
spectrum aggregation limits upon consummation of the proposed Merger.
Applicants request interim waivers of the spectrum cap rule with respect
to each of these markets.[^88] As in the Detroit and Flint markets, the
relief that they request would provide them with 90 days following the
closing of the merger to comply, unless a longer period is permitted
under any amendments to section 20.6 that may have taken force
subsequent to the date of filing.[^89] We note that our current rules
require consummation of the Merger within 180 days after release of this
Order,[^90] and divestitures sufficient to come into compliance with our
spectrum aggregation limits prior to consummation of the Merger.[^91]
Thus, without a waiver the Applicants would have up to 180 days
following release of this Order to come into compliance, depending on
when they consummate the Merger.

32 As we discuss in Section III.4. below, we believe that the Merger
will promote competition by furthering the development of an additional
nationwide PCS system. Because of the extent of divestitures required
here, and the consequent need for an orderly divestiture process, we
find that the public interest in promoting this development will be
served by providing limited additional time to effect these
divestitures. We also note that this request involves a waiver of our
spectrum cap rule, rather than our cellular cross-ownership
restriction,[^92] and that none of the petitioners raised concerns
regarding this request. Therefore, we grant the Applicants a waiver of
section 20.6(e)(1) such that they will have 90 days after consummation
of the Merger, or 180 days following release of this Order, whichever is
earlier, to come into compliance with respect to these 18 markets.

#### International Services 

33 Omnipoint and VoiceStream, through their wholly owned subsidiaries,
are both currently authorized to resell international switched
telecommunications services. As part of the proposed merger, Omnipoint
and VoiceStream request authority to transfer control of several
international 214 authorizations held by certain subsidiaries of
Omnipoint and VoiceStream to VWHC. There is no allegation or evidence in
this record to demonstrate that the proposed merger would have
anti-competitive effects in any U.S. international service market,
including any input

market that is essential for the provision of international
service.[^93] Our conclusion is supported by the fact that the
applicants have no U.S. international transport facilities, [^94] and
their merger will not eliminate any significant potential participant in
the provision of international services.[^95]

34 Our conclusion that the Merger would not have anti-competitive
effects in any U.S. international service market takes into account
whether, as a result of VoiceStream's acquisition of Omnipoint (and its
operating subsidiaries), Omnipoint would become affiliated with a
foreign carrier that has market power on the foreign end of a U.S.
international route that Omnipoint is authorized to serve. As the
Commission has observed in the *Foreign Participation Order*, the
exercise of foreign market power in the U.S. market could harm U.S.
consumers through increases in prices, decreases in quality, or a
reduction in alternatives in end user markets.[^96] Generally, this risk
occurs when a U.S. carrier is affiliated with a foreign carrier that has
sufficient market power on the foreign end of a route to affect
competition adversely in the U.S. market.[^97] In circumstances in which
an authorized U.S. carrier acquires an affiliation with a foreign
carrier that has market power on the foreign end of an authorized route,
the Commission may classify the U.S. carrier as "dominant" in its
provision of international service on the newly affiliated route
altogether.[^98] In certain circumstances, it may also impose other
safeguards on the U.S. carrier's provision of service on the route, or
prohibit the carrier from operating on that route, if the affiliation
raises a concern contrary to the public interest or Commission
policies.[^99]

35 VoiceStream certifies, pursuant to section 63.18 of the Commission's
rules,[^100] that it is not a foreign carrier and is not affiliated with
a foreign carrier.[^101] VoiceStream requests that, after the merger,
Omnipoint's subsidiaries continue to be regulated as non-dominant for
the provision of international communications services to all
permissible international points.

36 There is no evidence in the record, and we are unaware of any
information, that contradicts the certifications and statements made by
VoiceStream with respect to its foreign affiliations. We therefore find
that the proposed merger would not result in Omnipoint or its operating
subsidiaries acquiring an affiliation with a foreign carrier with market
power. This finding supports our conclusion that the merger would not
have anti-competitive effects in any U.S. international market and would
serve the public interest, convenience, and necessity. We also grant, on
the basis of this finding, VoiceStream's request to maintain Omnipoint's
classification as a non-dominant carrier on all U.S. international
routes.[^102]

### Pioneer's Preference

37 QUALCOMM argues that we should deny the application to transfer
control of Omnipoint's New York MTA A Block PCS license, and should
instead revoke Omnipoint's license, because Omnipoint has not met the
terms of the pioneer's preference that was awarded with the
license.[^103] QUALCOMM does not, however, challenge either Omnipoint's
or VoiceStream's overall qualifications as a licensee, nor does it
challenge the transfer of control and assignment applications relating
to Omnipoint's other license holdings.[^104] Specifically, QUALCOMM
argues that Omnipoint has not complied with the condition in its New
York MTA license that requires it to make "substantial use" of the
proprietary IS-661 technology that was the basis for the Commission's
award of the pioneer's preference. QUALCOMM further argues that
Omnipoint is not using the IS-661 technology to provide commercial
service to customers in New York, and that the predominant technology
being used by Omnipoint in the New York MTA is GSM.[^105] In support,
QUALCOMM cites a statement in a trade publication that Omnipoint has not
deployed the

IS-661 technology commercially,[^106] statements in an Omnipoint SEC
filing that IS-661 covers only one-third of the New York MTA,[^107] and
statements by Omnipoint that describe its system as a GSM system.[^108]

38 Omnipoint responds that it has fulfilled the condition on its license
that it make "substantial use" of the IS-661 technology.[^109] Omnipoint
states that between 1992 and 1998, it built, deployed, and used three
generations of IS-661 technology in the New York MTA;[^110] that it
spent over \$130 million to develop and deploy IS-661 technology;[^111]
that it operates an IS-661/GSM integrated network there;[^112] that it
has the capability of providing service with IS-661 to 36.94% of the MTA
(9,756,074 persons);[^113] and that IS-661 has been accepted by the
technical community.[^114] Omnipoint also argues that it has engaged in
substantial efforts to market the IS-661 technology for use in other
markets. Omnipoint states that it entered into a commercial relationship
with Nortel to integrate Omnipoint's equipment into Nortel's GSM
architecture, which meant that IS-661 could be implemented as a
commercial product for sale to any PCS license holder.[^115] This effort
did not succeed, Omnipoint contends, because once other PCS systems
chose other technologies, they had no interest in a technology that was
being used in only one MTA.[^116] Omnipoint acknowledges that its
deployment of IS-661 technology has not been commercially successful,
but maintains that the appropriate interpretation of "substantial use"
involves assessing what Omnipoint has done to deploy the technology, and
not whether customers have accepted the technology. QUALCOMM does not
dispute Omnipoint's factual assertions with respect to its use of the
IS-661 technology, but contends that they are insufficient to support a
finding of "substantial use."

39 The issue presented by QUALCOMM's petition is whether Omnipoint's use
of the IS-661 technology as described above constitutes "substantial
use" within the meaning of our pioneer's preference rules. For the
reasons stated below, we conclude that it does. Alternatively, as
discussed below, we conclude that the record before us also justifies a
waiver of the "substantial use" condition if we had determined that it
had not been met in this case. In either case, we conclude that QUALCOMM
has failed to demonstrate that Omnipoint's New York license should be
revoked or that there is any other obstacle to approving the transfer of
control of the New York license to VWHC.

40 In the *Third Report and Order*, we granted pioneer's preferences to
three companies, including Omnipoint.[^117] In that Order, we stated
that pioneer's preferences were intended to foster development of new
services and improve existing services by reducing the delays and risks
that innovators would otherwise face in the licensing process.[^118]
Applicants for a pioneer's preference were required to demonstrate the
technical feasibility of the new service or technology.[^119] We
conditioned each award of a license pursuant to a pioneer's preference
on the licensee "building a system that substantially uses the design
and technologies upon which its preference award is based"[^120] and
stated that "the risk an innovator takes is that it may not be able to
translate its developmental work into full business operation."[^121] We
also stated that there were circumstances under which we would consider
a waiver of the substantial use condition. Specifically, we stated that
we would consider a waiver "in a case in which there is an overriding
national objective that may be thwarted, such as if nationwide PCS
interoperability were to be thwarted."[^122]

41 QUALCOMM's argues that the "substantial use" test is not met in this
case because Omnipoint has not put the IS-661 technology into commercial
use in the New York market, and has in fact used a different technology,
GSM, as the basis for its commercial system. We reject the argument that
commercial acceptance is a necessary element of "substantial use."[^123]
We did not condition the award of pioneer's preference licenses on
achieving a certain level of commercial acceptance for the technology.
Nor did we intend that failure of the technology to be commercially
viable would result in the loss of the pioneer's preference license.
Instead, we have stated that the substantial use test requires careful
assessment of a variety of factors:

A finding of 'substantial use' entails a judgment of the degree and/or
nature of deployment and use, which can be affected by the nature and
extent of other technologies with which the pioneer's preference
technology is entwined, the effect of market forces, the effect of
ensuing technological advancements, and other factors.[^124]

42 In this case, our assessment of these factors leads us to conclude
that Omnipoint has met the substantial use condition. First, Omnipoint
has invested significant capital to develop and deploy IS-661 technology
in the New York market.[^125] Moreover, while IS-661 currently is used
only for internal Omnipoint communications,[^126] the IS-661 system is
deployed throughout at least one-third of Omnipoint's New York MTA
license area. We conclude that this level of deployment is sufficient to
meet the requirement that Omnipoint "build a system" that substantially
uses the pioneer technology. In addition, we find that Omnipoint has
made a *bona fide* effort to market the IS-661 technology for commercial
use.[^127] The record indicates that this effort did not succeed due to
both technological and market factors. We agree with Omnipoint, however,
that the substantial use determination should be based on whether the
licensee made an earnest effort to commercialize the technology, not on
a *post hoc* determination of whether the attempt has been a commercial
success.[^128] The fact that Omnipoint has ultimately provided
commercial service in New York via its GSM network does not undercut
this conclusion. Therefore, we find that Omnipoint has met the
requirements of the substantial use condition.

43 Assuming, *arguendo*, that we could reasonably find that the
substantial use condition has not been met, we conclude that the
circumstances that exist here justify a waiver of the condition. As
noted above, we stated in the *Third Report & Order* that we would
consider a waiver of the substantial use condition "in a case in which
there is an overriding national objective that may be thwarted, such as
if nationwide PCS interoperability were to be thwarted."[^129] We
believe that the circumstances anticipated in the *Third Report and
Order* are present here. Omnipoint is the only GSM carrier in the New
York MTA, and Omnipoint's New York GSM system is an essential building
block of any effort to create a nationwide GSM network. If we were to
require Omnipoint to use IS-661 on a commercial basis in the New York
MTA as a condition of its license, we would be mandating the use of a
technology that is not interoperable with any other PCS system in any
other market. At the same time, the practical effect today would be to
thwart the potential for the nation's largest market to be part of any
GSM network.

44 The case for a waiver is made even more compelling because the
prospect of a nationwide GSM network is concrete and immediate, not
merely theoretical. One of the principal goals and public interest
benefits of the proposed Merger is that it will facilitate the
development of a nationwide GSM network in the near term. Under these
circumstances, enabling Omnipoint to include its New York system in the
Merger clearly and directly furthers the objective of achieving
nationwide interoperability. Therefore, in addition to finding that
Omnipoint has met the substantial use condition, we conclude that waiver
of the condition on our own motion is appropriate as an alternative
basis for our denial of QUALCOMM's petition. [^130]

### Public Interest Benefits

45 Applicants contend that the proposed merger will generate significant
benefits and efficiencies. Applicants argue that consumers will benefit
from the creation of a nationwide footprint for GSM subscribers, which
will result in additional competition in this market currently served by
AT&T Wireless, Sprint PCS and Nextel Communications.[^131] In addition,
Applicants claim that the Merger will produce benefits through economies
of scale and scope, improved spectrum efficiency, and wider availability
of advanced services.[^132]

46 We agree with Applicants that GSM subscribers will benefit from the
expanded footprint to be offered by VoiceStream, and that all mobile
phone users needing access throughout the nation will benefit
significantly from the creation of another competitor with a
near-nationwide footprint. Moreover, the Merger may also provide more
U.S. consumers with the opportunity to subscribe to a carrier that
enables both local and international access, where GSM technology often
prevails. While Applicants' remaining claims are certainly plausible, we
are unable to gauge the likelihood or significance of these benefits
based on the information in this record.[^133]

### Executive Branch Concerns

47 The Executive Branch has raised concerns regarding national security
and law enforcement in this proceeding, which, pursuant to the public
interest analysis articulated in the Commission's *Foreign Participation
Order*,[^134] we must consider. In their petition, DOJ and FBI

state that there are national security, law enforcement, and public
safety issues raised by the proposed merger because the newly-created
and larger telecommunications service offering of the merged company
(specifically, PCS) would be subject to foreign control.[^135]

48 On January 28, 2000, DOJ and FBI requested that the Commission adopt
an agreement between DOJ, FBI, and VoiceStream ("DOJ/FBI Agreement")
that resolves the national security, law enforcement, and public safety
issues raised in the DOJ/FBI Petition.[^136] The DOJ/FBI Agreement
provides, *inter alia*, that VoiceStream shall (1) ensure that its
network is configured so as to be capable of complying with lawful U.S.
process; (2) make available in the United States certain call and
subscriber data, if VoiceStream stores such data;[^137] and (3) take
reasonable measures regarding use of facilities used in domestic
telecommunications (specifically, with respect to personnel holding
sensitive positions),[^138] information storage,[^139] and access to
foreign entities.[^140] The parties also have agreed to adopt and
maintain policies with regard to confidentiality and security of
electronic surveillance orders and authorizations, legal process, and
statutory authorizations and certifications related to subscriber
records and information.

49 In fulfilling our public interest mandate, we take into account the
record and afford the appropriate level of deference to Executive Branch
expertise on national security and law enforcement issues.[^141] We
recognize that, separate from our licensing process, the applicants have
entered into a voluntary agreement with the DOJ and FBI and that this
Agreement expressly states that the DOJ and FBI will not object to grant
of the pending applications provided that the Commission approves the
agreement and conditions grant of the Applications on compliance with
it.[^142]

50 We note that the DOJ/FBI Agreement, the negotiation of which delayed
resolution of this proceeding, reflects a unique situation and contains
certain provisions 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 agreement on a case-by-case basis. However, notwithstanding
these concerns about the broader implications of the DOJ/FBI Agreement,
we see no reason to modify or disturb the agreement of the parties on
this matter. Therefore, in accordance with the request of the DOJ and
FBI and the discussion above, we condition our grant of the Applications
to transfer or assign certain licenses and authorizations in connection
with the proposed merger on compliance with the DOJ/FBI Agreement.

#  CONCLUSION

51 Based upon our reviews under sections 214(a) and 310(d) of the Act,
we determine that this merger will not likely result in harm to
competition in any relevant market. We also determine that the proposed
merger will likely result in several public interest benefits. We
therefore conclude that, on balance, Applicants have demonstrated that
these transfers serve the public interest, convenience, and necessity.
Accordingly, we grant the Applications, subject to the conditions set
forth herein.

#  Ordering clauses

52 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, 310(d), that the Petition to Deny filed by QUALCOMM Incorporated IS
DENIED.

53 IT IS ORDERED that, pursuant to sections 4(i) and (j), 309, and
310(d) of the Communications Act of 1934, as amended, 47 U.S.C.
§§154(i), 154(j), 309, 310(d), the Comments and Intervention Motion of
Advanced Cordless Technologies IS DISMISSED.

54 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), 154(j), 214(a) and (c), 309, 310(b) and (d), that
the Petition to Defer, Pending an Agreement Resolving National Security
and Law Enforcement Concerns, and the Imposition of Appropriate
Conditions to The Licenses filed by the Federal Bureau of Investigation
and the U.S. Department of Justice IS GRANTED.

55 IT IS 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), 154(j), 214(a) and (c), 309, 310(b) and
(d), the authorizations and licenses related thereto are subject to
compliance with provisions of the Agreement between VoiceStream, the
United States Department of Justice, and the United States Federal
Bureau of Investigation, dated January 26, 2000, filed with the
Commission on January 28, 2000 and attached hereto as Appendix A, which
Agreement is fully binding upon VoiceStream and its subsidiaries,
successors, and assigns 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.

56 IT IS ORDERED that, pursuant to sections 4(i) and (j), 309, and
310(d) of the Communications Act of 1934, as amended, 47 U.S.C.
§§154(i), 154(j), 309, 310(d), the authorizations and licenses related
thereto are subject to the condition that the parties come into
compliance with 47 C.F.R. § 20.6 within 90 days of the date that the
transaction is consummated, or within 180 days of the release of this
Order, whichever is earlier.

57 IT IS ORDERED that, pursuant to sections 4(i) and (j), 309, and
310(d) of the Communications Act of 1934, as amended, 47 U.S.C.
§§154(i), 154(j), 309, 310(d), the condition attached to Omnipoint's New
York MTA A Block PCS license that requires Omnipoint to build a PCS
system in the New York MTA that substantially uses the design and
technology upon which its pioneer's preference award is based IS WAIVED.

58 IT IS ORDERED that, pursuant to Section 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), the approval of the assignment of C Block and F
Block PCS licenses controlled by Omnipoint to CIVS II or CIVS III is
conditioned upon the execution by the assignees, assignor and the
Commission of all Commission loan documents, unless the licenses being
assigned have been paid in full. Unless the licenses that will be
assigned to CIVS II or CIVS III have been paid in full, this approval is
conditioned upon CIVS II's and CIVS III's execution of the applicable
financing statements (i.e., the UCC-1 Forms) and payment, on or before
the consummation date, of all costs associated with the preparation and
recordation of the financing statements. In addition, all installment
payments must be current on the consummation date. To be current, the
installment payment may not be in the non-delinquency period or grace
period. In addition, there must be no outstanding fees, including late
fees, due to the Commission. No licenses will be issued to the assignees
until the Commission receives notification pursuant to section 1.948(d)
of the Commission's rules, 47 C.F.R. § 1.948(d), that all conditions
that must be met at or before consummation have been satisfied,
including execution of the appropriate financing documents. Failure of
the parties to comply with any of the financial obligations described
above will result in automatic cancellation of the Commission's approval
hereunder and in dismissal of the relevant assignment applications.

59 Accordingly, having reviewed the applications and the record in this
matter, IT IS ORDERED, pursuant to sections 4(i) and (j), 214(a) and
(c), 309, and 310(b) and (d) of the Communications Act of 1934, as
amended, 47 U.S.C. §§ 154(i), 154(j), 214(a), 214(c), 309, 310(b),
310(d), that the above-referenced applications filed by Omnipoint
Corporation, VoiceStream Wireless Corporation, VoiceStream Wireless
Holding Company, Cook Inlet/VS GSM II PCS, LLC, and Cook Inlet/VS GSM
III PCS, LLC in the above-captioned proceedings ARE GRANTED subject to
the above conditions.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

**[APPENDIX A]{.underline}**

**DOJ/FBI Agreement**

**[APPENDIX B]{.underline}**

**Parties Filing Petitions or Comments**

**[Parties Filing Petitions or Comments]{.underline}**

QUALCOMM Incorporated

U.S. Department of Justice and Federal Bureau of Investigation

Advanced Cordless Technologies

National Telecom PCS, Inc. (withdrawn)

**[Parties Filing Oppositions]{.underline}**

VoiceStream Wireless Corporation

Omnipoint Corporation

**[Parties Filing Replies]{.underline}**

QUALCOMM Incorporated

National Telecom PCS, Inc. (withdrawn)

[^1]: 47 U.S.C. §§ 214, 310(d), 310(b).

[^2]: 47 C.F.R. § 0.331.

[^3]: *See VoiceStream Wireless Corporation, Omnipoint Corporation, Cook
    Inlet/VS GSMII PCS, LLC, and Cook Inlet/VS GSM III PCS, LLC Seek FCC
    Consent for Transfer of Control and Assignment of Licenses and
    Authorizations*, Public Notice, DA 99-1634 (rel. Aug. 16, 1999)
    ("*Acceptance Notice*").

[^4]: Applications of VoiceStream Wireless Corporation, VoiceStream
    Wireless Holding Company, and Omnipoint Corporation for Transfer of
    Control, File No. 0000016501 (lead application), filed July 15,
    1999, Attachment 1 (Description of the Transaction and Public
    Interest Considerations) to Form 603 at 1, 6 ("VoiceStream/Omnipoint
    Public Interest Statement").

[^5]: *See* 47 C.F.R. §§ 24.709, 27.209.

[^6]: VoiceStream/Omnipoint Public Interest Statement at 1.

[^7]: *Id.* at 6.

[^8]: *Id.* at 1.

[^9]: *Id.* at 4.

[^10]: Applications of Omnipoint Corporation and Cook Inlet/VS GSM II
    PCS, LLC, File No. 0000016601 (lead application), filed July 15,
    1999, Attachment 1 (Description of Transaction) to Form 603 at 1
    ("Omnipoint/Cook Inlet Public Interest Statement").

[^11]: *Id.* (citing 43 U.S.C. § 1601 *et seq.*).

[^12]: Applications of Omnipoint Corporation and Cook Inlet/VS GSM II
    PCS, LLC, File No. 0000016601 (lead application), filed July 15,
    1999, Attachment 2 (Eligibility for Assignment as Entrepreneur) to
    Form 603 at 1(citing 47 C.F.R. §§ 24.720(l)(11), 24.709(a)(2))
    ("Omnipoint/Cook Inlet Eligibility Statement").

[^13]: *Id.* at 2. The DE licenses that Omnipoint acquired in Auction
    No. 22 will be held by CIVS III, and the rest of Omnipoint's DE
    licenses will be held by CIVS II.

[^14]: Omnipoint/Cook Inlet Public Interest Statement at 2.

[^15]: VoiceStream/Omnipoint Public Interest Statement at 6, 11. The
    parties state that the combined company will hold licenses to
    provide service to over 175 million people. *Id.* at 6.

[^16]: *Id.*

[^17]: Petition to Deny, filed Sept. 16, 1999 by QUALCOMM Incorporated
    ("QUALCOMM Petition").

[^18]: *See* Petition to Defer, Pending an Agreement Resolving National
    Security and Law Enforcement Concerns, and the Imposition of
    Appropriate Conditions to the Licenses, filed October 5, 1999, by
    the United States Department of Justice and the Federal Bureau of
    Investigation ("DOJ/FBI Petition"). Though late-filed, we address
    the request of the agencies.

[^19]: Comments and Intervention Motion by Advanced Cordless
    Technologies, filed October 15, 1999.

[^20]: *See* *Wireless Telecommunications Bureau Approves Withdrawal of
    Three Petitions to Deny and Two Applications for Review*, Public
    Notice, DA 99-2877 (rel. Dec. 17, 1999) (approving the withdrawal of
    three petitions to deny and two applications for review filed by
    National Telecom PCS, Inc. in various proceedings).

[^21]: The application for these assignments was filed on November 1,
    1999, *see* File No. 0000041919, and was accepted for filing on
    November 10, 1999 , *see* WTB Report No. 365, rel. Nov. 10, 1999.

[^22]: *See* *Wireless Telecommunications Bureau Grants Consent to
    Assign F Block Broadband PCS Licenses*, Public Notice DA 00-261
    (rel. Feb. 11, 2000).

[^23]: *See* File No. 50001-CW-AL-00.

[^24]: *See* *Omnipoint Corporation and Cook Inlet/VS GSM II PCS, LLC
    Seek FCC Consent to Assign Broadband PCS Designated Entity
    Licenses*, Public Notice, DA 99-2737, rel. Dec. 6, 1999.

[^25]: *See* File No. 0000054383.

[^26]: *See* WTB Report No. 405 (rel. Dec. 15, 1999).

[^27]: 47 U.S.C. § 214(a). *See* *Applications of WorldCom and MCI
    Communications Corporation,* CC Dkt. No. 97-211, Memorandum Opinion
    and Order, 13 FCC Rcd 18,025, 18,030, at ¶ 8 (1998) ("*WorldCom/MCI
    Order*"). As delineated in the *Acceptance Notice*, Omnipoint
    affiliates have requested Commission consent to transfer control of
    eight international 214 authorizations. *See* *Acceptance Notice* at
    4.

[^28]: 47 U.S.C. § 310(d). With the exception of the international 214
    authorizations discussed above, the remaining licenses for which the
    Applicants seek consent to transfer control or assign are for
    wireless services and subject to the requirements of Section 310(d).

[^29]: Section 310(d) 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." 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*.

[^30]: *Applications of Ameritech Corp. and SBC Communications Inc. for
    Transfer of Control*, CC Docket No. 98-141, Memorandum Opinion and
    Order, FCC 99-279, at ¶¶ 46-49 (rel. Oct. 8, 1999) ("*SBC/Ameritech
    Order*"); *WorldCom/MCI Order*, 13 FCC Rcd at 18,030-33, ¶¶ 9-12.
    The Commission also has independent authority under Sections 7 and
    11 of the Clayton Act to disapprove the acquisition of common
    carriers engaged in wire or radio communications or radio
    transmissions of energy in any line of commerce in any section of
    the country where the effects of such an acquisition may
    substantially lessen competition, or tend to create a monopoly. 15
    U.S.C. §§ 18, 21(a). The Bureau, acting pursuant to delegated
    authority, 47 C.F.R. § 0.331, chooses not to exercise its statutory
    authority under the Clayton Act in this case because the
    Commission's jurisdiction under the Communications Act is sufficient
    to address all questions regarding the competitive effects of the
    proposed assignments, including the issue of whether the assignment
    may substantially lessen competition or tend to create a monopoly.
    *See, e.g., Craig O. McCaw and American Telephone and Telegraph
    Company*, Memorandum Opinion and Order, 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).

[^31]: *Satellite Business Systems*, 62 F.C.C.2d 997, 1069, 1088 (1977),
    *aff'd. sub nom. United States v. FCC*, 652 F.2d 72 (D.C. Cir. 1980)
    (*en banc*); *SBC/Ameritech Order* FCC 99-279 at ¶ 49.

[^32]: *WorldCom/MCI Order*, 13 FCC Rcd at 18,030 ¶ 9 (citing
    Applications of NYNEX Corporation and Bell Atlantic Corporation, 12
    FCC Rcd 19,985, 19,987 ¶ 2 & n.2 (1997) ("*Bell Atlantic/NYNEX
    Order*")).

[^33]: *SBC/Ameritech Order*, FCC 99-279 at ¶ 49; *Bell Atlantic/NYNEX
    Order*, 12 FCC Rcd at 20,063 158; *Applications of MCI
    Communications Corporation and British Telecommunications P.L.C.*,
    Memorandum Opinion and Order, 12 FCC Rcd 15,351, 15,367 ¶ (1997)
    ("*BT/MCI Order*").

[^34]: *WorldCom/MCI Order*, 13 FCC Rcd at 18,031 ¶ 10n.33 (citing 47
    U.S.C. § 309(e) (burdens of proceeding and proof rest with the
    applicant) and *Le Flore Broadcasting Co.*, 66 F.C.C.2d 734, 736-37
    ¶¶ 2-3 (1975) (Initial Decision) (burden of proof is on licensee on
    issue of whether applicants have the requisite qualifications to be
    or to remain Commission licensees and whether grant of applications
    would serve public interest, convenience and necessity)).

[^35]: *Bell Atlantic/NYNEX Order*, 12 FCC Rcd at 20,001, 20,007, ¶¶ 29,
    36; *BT/MCI Order*, 12 FCC Rcd at 15,367, ¶ 33.

[^36]: *Bell Atlantic/NYNEX Order*, 12 FCC Rcd at 20,063, ¶ 157.

[^37]: *SBC/Ameritech Order*, FCC 99-279, ¶ 48.

[^38]: We 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. *See Mobilemedia Corporation et al.,* 14 FCC Rcd 8017,
    8018, ¶ 4 (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). No such issues have been raised in this matter.

[^39]: 47 U.S.C. §310 (b)(4); *see also* *Rules and Policies on Foreign
    Participation in the U.S. Telecommunications Market*, Report and
    Order, 12 FCC Rcd 23,890, 23,935 ¶ 97, *recon. pending* ("*Foreign
    Participation Order*").

[^40]: *Id.*

[^41]: *See* VoiceStream/Omnipoint Public Interest Statement at 4.

[^42]: *Foreign Participation Order*, 12 FCC Rcd at 23,935 ¶ 97.

[^43]: *See* *Western Wireless Corporation and Western PCS Corporation*,
    Order, 13 FCC Rcd 64 ¶ 1 (IB, Telecom. Div. 1997) ("*Western
    Wireless Order*").

[^44]: *See id.* at 71 ¶ 21.

[^45]: *See* *Market Entry and Regulation of Foreign-Affiliated
    Entities*, Report and Order, 11 FCC Rcd 3873 (1995) ("*Foreign
    Carrier Entry Order*").

[^46]: *See* *Western Wireless Order*, 13 FCC Rcd at 68 ¶ 8.

[^47]: *See Foreign Participation Order*, 12 FCC Rcd at 23,940 ¶ 111.

[^48]: *Id.* at 23,913, 23,941-42 ¶¶ 50, 113, 116.

[^49]: *See Foreign Participation Order*, 12 FCC Rcd at 23,941 ¶ 114
    (accepting the FBI's assertion that increases in foreign ownership
    or influence may present concerns that Executive Branch agencies may
    need an opportunity to evaluate before the Commission allows an
    increased level of foreign ownership).

[^50]: *See Foreign Carrier Entry Order*, Report and Order, 11 FCC Rcd
    at 3951 ¶ 207 (listing five factors). *See also, e.g., AT&T Corp.
    and Loral Spacecom Corporation*, Order and Authorization, 12 FCC Rcd
    925 (1997) (applying the principal place of business test);
    *Melbourne International Communications Ltd.*, 12 FCC Rcd 898
    (1997)(same); *In the Matter of* *Global Crossing Ltd. and Frontier
    Corporation*, Memorandum Opinion and Order, 14 FCC Rcd 15,911,
    15,918-19 ¶¶ 16-17 (rel. Sept. 21, 1999) ("*Global Crossing/Frontier
    Order*").

[^51]: *See* Letter from Louis Gurman, Counsel for Applicants, to
    Magalie Roman Salas, Secretary, Federal Communications Commission,
    filed Jan. 24, 2000 ("*VoiceStream January 24* *Ex Parte Letter").*

[^52]: *Id.* at 2.

[^53]: *Id.*

[^54]: *Id.*

[^55]: *Id.* at 3.

[^56]: *See International Authorizations Granted*, Public Notice, DA
    99-1059 (IB, Telecom. Div. rel. June 4, 1999) ("*June 4th Public
    Notice*")*.* By this Public Notice, the Division also approved a
    15-percent investment in VoiceStream by Northern Telecom, a Delaware
    corporation owned and controlled by Canadians. It is our
    understanding, however, that this investment did not occur.

[^57]: *See* VoiceStream/Omnipoint Public Interest Statement at 4-5.

[^58]: The *June 4th Public Notice* states that the Commission indicated
    that the increase in the level of permissible alien ownership in
    VoiceStream is in the public interest only in the manner described
    in the party's petition. *See June 4th Public Notice.* We read the
    *June 4th Public Notice* to approve Northern Telecom's investment in
    the amount stated in the petition (15 percent) and to approve an
    increase in the overall level of permissible foreign ownership in
    VoiceStream to 49.9 percent to allow for additional unnamed foreign
    investors acquiring publicly traded shares (provided that not more
    than 25 percent of VoiceStream's shares would be held by non-WTO
    investors). We note that Hutchison's then alien ownership of 19.9
    percent was approved previously by the Commission. *See, generally,
    Western Wireless Order*, 13 FCC Rcd 64.

[^59]: *See Foreign Participation Order*, 12 FCC Rcd at 23,941 ¶ 114.

[^60]: We note that the 1996 amendments to the Communications Act were
    specifically intended to produce competitive telecommunications
    markets. *AT&T Corporation, et al., v. Iowa Utils. Bd.,* 119 S. Ct.
    721, 724 (1999).

[^61]: The commitments undertaken as a result of the WTO basic
    telecommunications services negotiations are incorporated into the
    General Agreement on Trade in Services (GATS) by the Fourth Protocol
    to the GATS. *Fourth Protocol to the General Agreement on Trade in
    Services (WTO 1997),* 36 I.L.M. 354, 366 (1997). These commitments
    are colloquially referred to as the WTO Basic Telecom Agreement,
    though they are not technically contained in a stand-alone
    agreement.

[^62]: *See Bell Atlantic/NYNEX Order*, 12 FCC Rcd at 20,014, ¶ 49;
    *BT/MCI Order*, 12 FCC Rcd at 15,368, ¶ 35.

[^63]: Horizontal Merger Guidelines Issued by the U.S. Department of
    Justice and the Federal Trade Commission, 57 Fed. Reg. at 41,558 §§
    2.1, 2.2.

[^64]: *See* Horizontal Merger Guidelines Issued by the U.S. Department
    of Justice and the Federal Trade Commission (Revised, April 8,
    1997).

[^65]: VoiceStream/Omnipoint Public Interest Statement at 1. We do not
    further discuss competitive issues regarding these LMDS licenses
    because Omnipoint is neither a local exchange carrier nor a
    multi-channel video programming distributor (cable operator).

[^66]: *See generally* §§ 20.6(d) and 22.942(d).

[^67]: Except as noted, *infra*, notes 76 and 88.

[^68]: VWHC holds a 49.9 percent equity interest in Cook Inlet Region,
    Inc. VoiceStream/Omnipoint Public Interest Statement at 6.
    VoiceStream and Western Wireless also have at least one common
    officer or director as a consequence of the May 1999 spin off of
    VoiceStream by Western Wireless. *Id.* at 14 n.17.

[^69]: VoiceStream's licenses in the eastern United States include major
    metropolitan markets in Ohio and Virginia. Donaldson, Lufkin &
    Jenrette, *The Global Communications Industry* (Summer 1999) at
    167-68.

[^70]: VoiceStream/Omnipoint Public Interest Statement at 17.

[^71]: Attributable overlaps include markets in Colorado, Illinois,
    Kansas, Missouri, Ohio, Oregon, Pennsylvania, Texas and Virginia.
    VoiceStream/Omnipoint Public Interest Statement at 14-17 and
    Applications of VoiceStream Wireless Corporation, VoiceStream
    Wireless Holding Company, and Omnipoint Corporation for Transfer of
    Control, File No. 0000016501 (lead application), filed July 15,
    1999, Attachment 3 (Licenses and Applications Being Assigned or
    Transferred from VoiceStream Wireless Corporation and Omnipoint
    Corporation to VoiceStream Wireless Holding Corporation and to the
    Cook Inlet Entities), pp. 27-29 ("VoiceStream/Omnipoint/ Cook Inlet
    License Holdings").

    A spectrum cap analysis is also warranted with respect to possible
    overlaps involving St. Louis, MO BTA (#5); Rolla, MO BTA (#6);
    Poplar Bluff, MO BTA (#7); Cape Girardeau-Sikeston, MO BTA (#11);
    Salina, KS BTA (#8); Wichita, KS BTA (#12); and Mt. Vernon, IL BTA
    (#10). VoiceStream/Omnipoint Public Interest Statement at 15-17. Of
    these, VoiceStream provides service only in Wichita. *Id.* at 6.

[^72]: Amendment to File No. 0000016518, submitted January 21, 2000, at
    Attachment 1, p. 1 ("*VoiceStream January 21^st^ Amendment*").

[^73]: VoiceStream/Omnipoint Public Interest Statement at 6.

[^74]: *Id*.

[^75]: *Id.* at 15-16; VoiceStream/Omnipoint/Cook Inlet License Holdings
    at 27.

[^76]: *Id.* at 27-28. We exclude here a potential overlap involving the
    Aberdeen, SD C-block PCS license that was assigned on September 27,
    1999 to Cook Inlet Region, Inc. of Georgia, a subsidiary in which
    VoiceStream holds no ownership interest. *See VoiceStream January
    21^st^ Amendment.*

[^77]: Specifically, these cellular-PCS overlaps involve Kansas RSA Nos.
    3, 8, 9, 10, and 14. VoiceStream/Omnipoint Public Interest Statement
    at 16-17; VoiceStream/Omnipoint/Cook Inlet License Holdings at 27.

[^78]: *See In the Matter of 1998 Biennial Regulatory Review Spectrum
    Aggregation Limits for Wireless Telecommunica-tions Carriers*,
    *etc.,* WT Dkt. Nos. 98-205 and 96-59, GN Dkt. No. 93-252, Report
    and Order, FCC 99-244, rel. Sept. 22, 1999, a ("*Spectrum Cap
    Order*").

[^79]: VoiceStream/Omnipoint/Cook Inlet License Holdings at 27-29. Cases
    in which aggregation occurs are denoted by "No" designation in
    column with header "Competitor Substituted By Merger Rather Than
    Eliminated By Merger."

[^80]: *See In the Matter of Western PCS II License Corporation Request
    for Waiver of Section 20.6 of the Commission's Rules in the Denver
    MTA*, Order, DA 99-2533 (CWD, rel. Nov. 16, 1999).

[^81]: VoiceStream/Omnipoint Public Interest Statement at 14-17.

[^82]: *See* 47 C.F.R. §20.6(c).

[^83]: *See* *In the Matter of Pioneer Telephone Association, Inc., et
    al.,* Order, DA 99-1823 (WTB, rel. Sept. 8, 1999); *see also* File
    No. 0000012978.

[^84]: *See* Request for Extension of Rule Waiver, filed December 7,
    1999 by OPCS Three, LLC (File No. 0000012978).

[^85]: *Id.* at 4-5.

[^86]: *See* *Wireless Telecommunications Bureau Seeks Comment on OPCS
    Three, LLC Request for Extension of Waiver of Section 20.6 of the
    Commission's Rules*, Public Notice, DA 99-2767 (CWD, rel. Dec. 9,
    1999).

[^87]: *See* Letter from William W. Kunze, Deputy Chief, Commercial
    Wireless Division, to E. Ashton Johnston, Piper Marbury Rudnick &
    Wolfe, LLP, Counsel for OPCS Three, LLC, dated December 21, 1999.

[^88]: VoiceStream/Omnipoint Public Interest Statement at 15-17.
    Applicants have recently modified this request by (1) deleting the
    request for an interim waiver in the Aberdeen, SD BTA and (2) adding
    a request for an interim waiver in the El Dorado-Magnolia, AR BTA.
    *See VoiceStream January21st Amendment*. With respect to the Ed
    Dorado-Magnolia, AR BTA, on November 24, 1999, the Commission
    recorded the consummation of the assignment of the A-block cellular
    license for Hempstead, Arkansas 11 RSA to GCC License L.L.C.
    ("GCC"). GCC is a wholly-owned subsidiary of General Cellular
    L.L.C., which in turn is a wholly-owned subsidiary of Western
    Wireless and, therefore, is attributed to VoiceStream. When this
    newly acquired cellular license is combined with Omnipoint's El
    Dorado E-block BTA license and CIVS' El Dorado C-block license, the
    total amount of CMRS spectrum attributable to VWHC in the AR-11
    rural service area would be 65 MHz.

    In addition, on September 27, 1999, CIVS notified the Commission of
    a *pro forma* assignment of PCS station WPOJ731 for Aberdeen, SD
    from CIVS to Cook Inlet Region, Inc. of Georgia, a company in which
    VoiceStream holds no ownership interest. *See* File No. 0000028693.

[^89]: VoiceStream/Omnipoint Public Interest Statement at 17.

[^90]: 47 C.F.R. § 1.948(d).

[^91]: 47 C.F.R. § 20.6(e)(1).

[^92]: 47 C.F.R. § 22.942.

[^93]: *WorldCom/MCI Order*, 13 FCC Rcd at 18,071 ¶ 81.

[^94]: *See* International Bureau Report: 1998 Section 43.82 Circuit
    Status Data, Report No. IN 99-36 (rel. Dec. 17, 1999).

[^95]: There is no evidence in the record that either company intends
    to, or is particularly likely to, enter the international services
    market separate and apart from the provision of international
    services as part of the mobile offering. There is also no evidence
    in the record that the companies are among a limited number of
    significant potential competitors in the international services
    market. In addition, as compared to other actual or potential
    competitors, there is no evidence that either company has any
    special capabilities or incentives to enter the international
    services market, whether by virtue of significant financial
    resources or expertise, telecommunications assets or brand name
    reputation. *See generally WorldCom/MCI Order*, 13 FCC Rcd at
    18,025; *Global Crossing/Frontier Order*, 14 FCC Rcd 15,911.

[^96]: *Id.* at 23,951-54 ¶¶ 144-46.

[^97]: *Id.* at 23,954 ¶147. As recently amended, Section 63.09(e) of
    the rules, 47 C.F.R. §63.09(e) provides that "\[t\]wo entities are
    affiliated with each other if one of them, or an entity that
    controls one of them, directly or indirectly owns more than 25
    percent of the capital stock of, or controls, the other one."

[^98]: *See* 47 C.F.R. § 63.18(e)(3) & (m) (stating that any transferee
    that is affiliated with a foreign carrier and that desires to be
    regulated as non-dominant for the provision of particular
    international services to that country should provide information in
    its transfer of control application to demonstrate that it qualifies
    for non-dominant classification pursuant to section 63.10). *See
    also* 47 C.F.R. § 63.11(e)(1) (stating that the Commission may, in
    the case of a notification of foreign carrier affiliation filed
    under this section, impose dominant carrier regulation on the
    authorized carrier for the affiliated route).

[^99]: *See Foreign Participation Order,* 12 FCC Rcd at 23,913-15,
    23,945 ¶¶ 50-53, 128. The Commission may take such action in the
    context of a section 214 application, including an application to
    transfer control of a section 214 authorization, or in the context
    of those notifications of foreign carrier affiliations filed
    pursuant to Section 63.11(a). *See* 47 C.F.R. § 63.11(a) & (e)(2);
    *see also Foreign Participation Order,* 12 FCC Rcd at 24,036 ¶ 333.

[^100]: 47 C.F.R. § 63.18(h)(1).

[^101]: VoiceStream/Omnipoint Public Interest Statement at 4.

[^102]: 47 C.F.R. § 63.10(a)(1), (3) (providing that a U.S. carrier that
    is not affiliated with a foreign carrier in a particular country
    shall presumptively be classified as non-dominant).

[^103]: QUALCOMM Petition at 7. QUALCOMM's petition, therefore, objects
    to the transfer of control of only those licenses in File No.
    0000016538.

[^104]: Because the issue raised by QUALCOMM does not bear on the
    qualifications of the parties or the Merger as a whole, we question
    whether it is appropriate for QUALCOMM to raise these concerns in
    the context of the Merger. However, while we have discretion to
    consider this issue separately, we have chosen to address QUALCOMM's
    argument in this proceeding to minimize the uncertainty for the
    parties that could have resulted from proceeding otherwise.

[^105]: *Id.* at 4.

[^106]: *Id.* at 4 (citing Lynnette Luna, "Pondering the Fate of
    Pioneer's Program," *RCR*, July 23, 1999, at 1, 41).

[^107]: QUALCOMM Petition at 5 (citing Omnipoint Corporation 1998 SEC
    Form 10-K, April 6, 1999, p. 7).

[^108]: QUALCOMM Petition at 5.

[^109]: Opposition to Petition to Deny, filed September 27, 1999, by
    Omnipoint Corporation, at 6 ("Omnipoint Opposition"). Omnipoint also
    argues that QUALCOMM does not have standing to challenge transfer of
    Omnipoint's New York license. *Id.* at 22, 29-30. We need not reach
    the question of whether QUALCOMM has standing in this case because
    we address QUALCOMM's substantive arguments below.

[^110]: *Id.* at 7; *Ex Parte* Filing from E. Ashton Johnston, Esq.,
    Piper & Marbury, LLP, to Magalie Roman Salas, Secretary, Federal
    Communications Commission, filed November 5, 1999, Presentation to
    the FCC at 8, 20, 23, 27 ("*November 5th Ex Parte Filing*").

[^111]: Omnipoint Opposition at 10; *November 5^th^ Ex Parte Filing*,
    Presentation to the FCC at 9.

[^112]: Omnipoint Opposition at 8.

[^113]: *Id.* at 9; *November 5^th^ Ex Parte Filing*, Presentation to
    the FCC at 8, 27.

[^114]: Omnipoint Opposition at 10; *November 5^th^ Ex Parte Filing*,
    Presentation to the FCC at 16. Omnipoint sought and obtained
    recognition for IS-661 within the technical community. Omnipoint
    first submitted the technology to the Join Technical Committee of
    the TIA and Committee T1 in November 1993. *Id.* at 35. A year
    later, the technology was approved as IS-661 with the nomenclature
    "Composite CDMA/TDMA." *Id.* The standard was updated in open forums
    continuously throughout 1998 to reflect continued development, and a
    final standard based on IS-661 was adopted as ANSI Standard T1 LB
    779 in October, 1999. *Id.*

[^115]: Omnipoint Opposition at 10.

[^116]: *Id.* at 21.

[^117]: *In the Matter of Amendment of the Commission's Rules to
    Establish New Personal Communications Services*, Third Report and
    Order, 9 FCC Rcd 1337 (1994) ("*Third Report and Order*").

[^118]: *Id.* at 1338, ¶ 3.

[^119]: *Id.* at 1338, ¶ 4.

[^120]: *Id.* at 1338, ¶ 8. Omnipoint's pioneer's preference license
    grant requires that it "construct a 30 MHz broadband Personal
    Communications Services system on Frequency Block A (1850-1865
    MHz/1930-1945 MHz) in the New York MTA that substantially uses the
    design and technology upon which the pioneer's preference award to
    Omnipoint Communications, Inc. was based."

[^121]: *Id.* (citing *In the Matter of Establishment of Procedures to
    Provide a Preference to Applicants Proposing an Allocation for New
    Services*, Report and Order, 6 FCC Rcd 3488, 3492 ¶ 32 (1991)).

[^122]: *Third Report and Order*, 9 FCC Rcd at 1339 n.11.

[^123]: QUALCOMM Reply at 4.

[^124]: *In the Matter of Omnipoint Communications, Inc. New York MTA
    Frequency Block A,* Memorandum Opinion and Order, 11 FCC Rcd 10,785,
    10,789 (1996).

[^125]: Omnipoint Opposition at 10.

[^126]: *November 5^th^ Ex Parte Filing*, Presentation to the FCC at 33.

[^127]: Omnipoint has marketed its IS-661 models at tradeshows, in
    brochures, by direct sales to prospective PCS operators and direct
    sales to major manufacturers, such as Nortel, which paid several
    million dollars for IS-661 licensing rights and, in 1995, began
    marketing IS-661. *Id.* at 36, 41.

[^128]: Omnipoint Opposition at 15-17, 20, 26-28.

[^129]: *Third Report and Order,* 9 FCC Rcd at 1339 n.11.

[^130]: Section 1.3 of our rules, 47 C.F.R. § 1.3, provides that, for
    good cause shown, we may grant waivers of our rules either pursuant
    to a request or on our own motion. As discussed above, we believe
    that Omnipoint has shown that good cause exists for a waiver of the
    substantial use condition.

[^131]: VoiceStream/Omnipoint Public Interest Statement at 6, 11.

[^132]: *Id.* at 6, 12.

[^133]: *See Bell Atlantic/NYNEX Order*, 12 FCC Rcd at 20,063 ¶157.

[^134]: *Foreign Participation Order,* 12 FCC Rcd at 23,891 ¶ 59.

[^135]: DOJ/FBI Petition at 4.

[^136]: *See* Petition to Adopt Condition to Authorizations and
    Licenses, filed by the Department of Justice and the Federal Bureau
    of Investigation, January 28, 2000 ("DOJ/FBI Petition to Adopt"),
    attached hereto as Appendix A.

[^137]: *See* DOJ/FBI Petition to Adopt at Appendix A (DOJ/FBI
    Agreement), Art. 1.

[^138]: *Id.* at Art. 2.

[^139]: *Id.* at Art. 1.

[^140]: *Id.* at Art. 2.

[^141]: *See Foreign Participation Order*, 12 FCC Rcd at 23,919-21 ¶¶
    61-66.

[^142]: DOJ/FBI Agreement at Art. 4.7.