Before the

######### Federal Communications Commission

######### Washington, D.C. 20554

In re Applications of )

)

BCP CommNet, L.P. )

Transferor, )

) DA 99-1876

AND ) File Nos. 0000018208, *et al.*

)

VODAFONE AIRTOUCH, PLC. ) WTB Rpt. No. 346

Transferee, ) File Nos. 0000033522, *et al.*

)

For Consent to Transfer of Control of )

Licenses )

**MEMORANDUM OPINION AND ORDER**

Adopted: December 23, 1999 Released: December 27, 1999

**By the Chief, Wireless Telecommunications Bureau:**

#  INTRODUCTION and Summary

1 On August 16, 1999, Vodafone AirTouch Plc ("Vodafone") and BCP
CommNet, L.P ("Blackstone") (collectively "Applicants") filed
applications seeking Commission consent to transfer control of all of
CommNet Cellular Inc.'s ("CommNet") interests in Part 22 cellular and
Part 101 common carrier microwave licenses and authorizations from
Blackstone to Vodafone. CommNet, which holds interests in 53 cellular
and 88 common carrier microwave licenses, is controlled by Blackstone.
On October 13, 1999, Applicants filed three additional applications
seeking consent to transfer control to Vodafone of certain CommNet
cellular interests that had not originally been part of the acquisition
plan.[^1] Upon completion of this transaction, all of CommNet's current
interest in these licenses will be controlled by Vodafone. As discussed
more fully below, we grant the applications.

2 On September 14, 1999, the Wireless Telecommunications Bureau
("Bureau"), by delegated authority, issued a Public Notice announcing
that the applications had been accepted for filing and establishing a
pleading cycle to permit interested parties an opportunity to comment on
the proposed transaction. One Petition to Deny was filed jointly on
October 14, 1999, by Platte River Cellular Limited Partnership, Saguache
Limited Partnership, San Isabel Cellular of Colorado Limited
Partnership, and Wyoming 1 -- Park Limited Partnership (collectively,
"Joint Petitioners"). As described below, the Joint Petitioners fail to
satisfy both the procedural and substantive statutory requirements for a
petition to deny, as set forth in section 309(d) of the Communication
Act.[^2] Accordingly, we deny the Petition to Deny.

#  Discussion

## Statutory Authority

3 Section 310(d) of the Communications Act of 1934, as amended ("the
Act"), provides in pertinent part that "\[n\]o construction permit, or
station license, or any rights thereunder, shall be transferred,
assigned, or disposed of in any matter, voluntarily or involuntarily,
directly or indirectly, or by transfer of control of any corporation
holding such permit or license, to any person except upon application to
the Commission and upon finding by the Commission that the public
interest, convenience, and necessity will be served thereby."[^3]
Section 310(d) also requires the Commission to consider the license
transfer or assignment application as if it were filed pursuant to
Section 308 of the Act, which governs applications for new facilities
and for renewal of existing licenses.

## Qualifications

4 As a regular part of our public interest analysis, we determine
whether the proposed licensee is qualified to hold a Commission license
and whether grant of the application would violate any Commission rules.
Vodafone is a corporation chartered in the United Kingdom. The Bureau
has previously found Vodafone qualified as a licensee and authorized
Vodafone to hold similar licenses.[^4] The acquisition of CommNet raises
no new issues that warrant further foreign ownership analysis at this
time. Accordingly, consistent with the prior finding, we find that
Vodafone is qualified as a transferee.

5 We reject arguments by the Joint Petitioners that Blackstone has not
met its burden to establish its qualifications as a transferor. The
Joint Petitioners are limited partnerships that hold interests in four
of the cellular and three of the microwave licenses that are the subject
of these Applications. Joint Petitioners base their argument against
Blackstone on the contention that CommNet does not have either *de jure*
or *de facto* control of the licensees in question and, therefore,
should not have filed these applications as substantial transfers of
control.[^5] Further, Joint Petitioners claim that processing these
applications as substantial transfers of control prejudices their rights
in the licenses and licensees.[^6]

6 The Applicants respond that CommNet holds both general and limited
partnership interests in each of the relevant licensees, and that the
parties were required to request authority for a substantial transfer of
control to transfer these interests.[^7] We are satisfied that
Blackstone, as transferor, has provided adequate information to the
Commission to analyze these applications, and we agree with the
Applicants that CommNet's interests are considered controlling under
Commission precedent. CommNet's interest in each of the relevant
licensees involves a general partnership interest, which the Commission
considers to be a controlling interest.[^8] The transfer of those
interests, therefore, involves the transfer of a substantial ownership
interest, which generally requires processing as a substantial transfer
of control that provides for public comment prior to grant. Further, we
reject the argument of Joint Petitioners that, by considering CommNet's
interests to be controlling, we are determining who ultimately is in
control of the licenses involved or somehow affecting the rights of
Joint Petitioners in the licensees and licenses.[^9]

7 With respect to Blackstone's obligation to establish its
qualifications, we therefore disagree with Joint Petitioners that
Applicants have not established their qualifications.[^10] Furthermore,
in evaluating assignment and transfer applications under section 310(d)
of the Act, 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.[^11]

## Public Interest Analysis

8 In addition to ensuring that transferor and transferee are duly
qualified and comply with our rules, we also consider the effects on
competition of a proposed transfer of control as part of our examination
under the "public interest, convenience, and necessity" standard of
section 310(d) of the Communications Act.[^12] At a minimum, this
requires that a merger not interfere with the objectives of the
Communications Act and must include, among other things, consideration
of the possible competitive effects of the transfer.[^13] Under
Commission precedent, our public interest analysis is not limited to
traditional antitrust principles,[^14] but also encompasses the broad
aims of the Communications Act,[^15] including evaluating whether any
public interest benefits may result from the merger.[^16] Applicants
bear the burden of proving that the proposed transaction serves the
public interest,[^17] and we must determine whether they have met this
burden.[^18]

### Competitive Framework

9 Where the transfer or assignment of licenses involves
telecommunications service providers, the Commission's public interest
determination is guided primarily by the Communications Act, as
amended.[^19] Our analysis of competitive effects under the Commission's
public interest standard generally consists of four steps. First, we
define the relevant product and geographic markets.[^20] 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 proposed transaction may
have on competition in the relevant markets.[^21] Fourth, we consider
whether the proposed transaction will result in transaction-specific
efficiencies, such as cost reductions, productivity enhancements, or
improved incentives for innovation.[^22] Ultimately, we weigh any
harmful and beneficial effects to determine whether, on balance, the
transaction is likely to enhance competition in the relevant markets.

### Analysis of Potential Adverse Effects

10 To determine the relevant product and geographic markets, we identify
the products offered by Vodafone and CommNet, and evaluate the extent to
which services offered by other communications companies compete for the
business conducted by the Applicants. Vodafone and CommNet provide CMRS
service in various geographic markets. According to Applicants, the
proposed transfers of control would have no adverse effect on existing
competition in CMRS markets because Vodafone and CommNet do not compete
directly in any geographic market, and the acquisition of CommNet by
Vodafone will not eliminate a competitor in any U.S. market. No party
has raised any arguments to the contrary. We therefore agree that the
acquisition is not likely to have an adverse effect on CMRS competition.

11 Further, we find that the proposed transaction will not result in
violation of any Commission rules, such as the CMRS spectrum aggregation
limit[^23] or the cellular cross-interest rule.[^24] Applicants have
eliminated the one potential competitive issue, which involved
overlapping cellular interests in the Wichita, Kansas MSA.[^25]

### Public Interest Benefits

12 Applicants contend that the public interest will be served by grant
of this application. As a result of this transaction, Vodafone will move
closer to a nationwide footprint.[^26] Further, Applicants say that
operations in CommNet's service areas will be able to obtain significant
discounts for purchases of cellular handsets, cellular infrastructure,
and other assets, and will have more resources available to them to
enhance service in many of the rural areas where CommNet currently
provides service.[^27] Applicants add that this transaction also will
enable Vodafone to amortize development costs over a modestly broader
subscriber base; that Vodafone will also be able to offer more seamless
service to the public and, thereby, better meet the demands of the
competitive wireless marketplace; and that operations in CommNet's
service areas will benefit through the implementation of global "best
practices" generated by Vodafone.

13 We determine that at least some of these claimed benefits are likely
to materialize, though we are unable to gauge the magnitude of these
benefits based on the information in this record. Largely because of the
absence of any risk of public interest harms, we conclude that
Applicants have furnished sufficient information regarding prospects for
public interest benefits.

### Conclusion

14 Based upon our review under Section 310(d), we determine that this
transaction is unlikely to result in the erosion of competition in any
relevant market. We also determine that some tangible public interest
benefits are likely to be forthcoming. We therefore conclude that, on
balance, Applicants have demonstrated that these transfers serve the
public interest.

## Additional Issue Raised by Joint Petitioners

15 Finally, we reject the argument of Joint Petitioners that this
proceeding was improperly assigned permit-but-disclose *ex parte*
status.[^28] The Commission has broad discretion with respect to
assigning *ex parte* status and routinely assigns permit-but-disclose
status to applications involving mergers and acquisitions.[^29]

#  CONCLUSION

16 For all the foregoing reasons, we conclude that Applicants have met
their burden of showing that the proposed transaction will serve the
public interest, convenience, and necessity. We, therefore, grant the
Applications.

#  ordering clauses

17 Accordingly, having reviewed the applications and the record in this
matter, IT IS ORDERED, pursuant to sections 4(i) and (j), 214(a) and
(c), 309, and 310(d) of the Communications Act of 1934, as amended, 47
U.S.C. §§ 154(i), 154(j), 214(a), 214(c), 309, 310(d), that the
applications filed by Vodafone-AirTouch PLC and BCP-CommNet L.L.P, Inc.
in the above-captioned proceeding ARE GRANTED.

18 IT IS FURTHER ORDERED that the Petition to Deny the Applications of
Vodafone-AirTouch PLC and BCP-CommNet L.L.P. filed by Platte River
Cellular Limited Partnership, Colorado 7 -- Saguache Limited
Partnership, San Isabel Cellular of Colorado Limited Partnership, and
Wyoming 1 -- Park Limited Partnership for transfer of control is DENIED
for the reasons stated herein.

FEDERAL COMMUNICATIONS COMMISSION

Thomas J. Sugrue

Chief, Wireless Telecommunications Bureau

[^1]: *See* ULS File Nos. 0000033522, 0000033529, 0000033539. These
    applications were placed on public notice in WTB Report No. 346
    (rel. Oct. 20, 1999). No petitions to deny any of these applications
    were received.

[^2]: 47 C.F.R. § 309(d).

[^3]: 47 U.S.C. § 310(d).

[^4]: *See* In re Applications of AirTouch Communications, Inc. and
    Vodafone Group, Plc*, Memorandum Opinion and Order,* DA 99-1200, ¶9
    (WTB June 22, 1999) ("*Vodafone AirTouch Order*").

[^5]: Joint Petition at 5-11. The Joint Petitioners are also Applicants
    for Review with respect to two pending Applications for Review of
    the grant of a previous transfer of control of CommNet. In 1997,
    Blackstone acquired control of CommNet. Joint Petitioners objected
    to eight of the 1997 applications on the ground that CommNet did not
    control the licensees involved, essentially the same argument they
    raise here. Over the objections of Joint Petitioners, the Commercial
    Wireless Division and the Public Safety and Private Wireless
    Division consented to Blackstone's acquisition of control of
    CommNet. *See* In re Applications of Pueblo MSA Limited Partnership
    Station KNKA519, *et al.*, *Order*, 13 FCC Rcd 131 (CWD/WTB 1997),
    *application for review pending* ("CWD Order"); In re applications
    of Pueblo MSA Limited Partnership Station WLK751, *et al.*, *Order*,
    13 FCC Rcd 2583 (CWD/PSPWD/WTB 1998), *application for review
    pending* ("CWD/PSPWD Order"). Our grant of the applications at issue
    here is necessarily subject to the outcome of the pending
    applications for review of Blackstone's acquisition of control of
    CommNet.

[^6]: Joint Petition at 12-17.

[^7]: Opposition to Petition to Deny, filed October 21, 1999 by Vodafone
    AirTouch Plc and BCP CommNet, L.P ("Opposition"), at 4. The
    Applicants state that CommNet holds the following interests in the
    relevant licensees: (i) Platte River Cellular of Colorado Limited
    Partnership -- CommNet holds a 46.5% general partnership interest
    and a 2.5% limited partnership interest, and CommNet's wholly owned
    subsidiary holds a 25% interest in the licensee's controlling
    general partner; (ii) Colorado 7 - Saguache Limited Partnership --
    CommNet holds a 48% general partnership interest and a 1% limited
    partnership interest in the controlling general partner, and
    CommNet's wholly owned subsidiary holds a 40% limited partnership
    interest in the licensee; (iii) San Isabel Cellular of Colorado
    Limited Partnership \-- CommNet holds a 48% general partnership
    interest and 1% limited partnership interest; (iv) Wyoming 1 - Park
    Limited Partnership \-- CommNet holds a 48% general partnership
    interest and 1% limited partnership interest in the partnership's
    controlling general partner, and a CommNet wholly owned subsidiary
    holds a 33.33% limited partnership interest. *Id.* at 3.

[^8]: *See* 47 C.F.R. § 20.6(d); In the Matter of Revision of Part 22
    and Part 90 of the Commission's Rules to Facilitate Future
    Development of Paging Systems and Implementation of Section 309(j)
    of the Communications Act -- Competitive Bidding, 14 FCC Rcd 10,030,
    10,087-88 ¶¶ 104, 105 (1999); In re Applications of Global Crossing
    Ltd. and Frontier Corporation, *Memorandum Opinion & Order*, DA
    99-1930 (CCB/WTB/IB, rel. Sept. 21, 1999) at ¶ 9. While we
    understand the Applicants' reliance on the CWD Order and the PSPWD
    Order with respect to the need for "long form" processing, we
    believe the critical aspect of our analysis here is that the
    interests of which CommNet seeks to transfer control involve general
    partnership interests. *See* Opposition at 4.

[^9]: *See* Joint Petition at 12-17; *see also* note 5, *infra.*

[^10]: *Id.* at 4.

[^11]: *See* In re Applications of Mobilemedia Corporation *et al.,*
    *Memorandum Opinion and Order,* 14 FCC Rcd 8017, 8018, ¶4 (1999)
    (citing *Jefferson Radio Co. v. FCC,* 340 F.2d 781, 783 (D.C. Cir.
    1964)); In re Applications of AirTouch Communications Inc. and
    Vodafone Group Plc, *Memorandum Opinion and Order,* DA 99-1200 (WTB,
    rel. June 22, 1999). This policy is designed to prevent licensees
    from evading responsibility for misdeeds committed during the
    license period. Joint Petitioners do not allege any such wrongdoing
    on the part of Blackstone or CommNet.

[^12]: Applications of WorldCom, Inc. and MCI Communications
    Corporation*, Memorandum Opinion and Order,* 13 FCC Rcd 18,025,
    18,030-33, ¶¶ 9-12 (1998) ("*MCI-WorldCom Order*"). The Commission
    also has independent authority under sections 7 and 11 of 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). Acting pursuant to
    delegated authority in 47 C.F.R. § 0.331, the Wireless
    Telecommunica-tions Bureau 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 transfer, including the issue of whether the transfer may
    substantially lessen competition or tend to create a monopoly. *See,
    e.g., McCaw/AT&T Order*, 9 FCC Rcd 5836 (1994), *aff'd sub nom.*
    *SBC Communications Inc., et al., v. FCC*, 56 F.3d 1484 (D.C. Cir.
    1995).

[^13]: *MCI-WorldCom Order*, 13 FCC Rcd at 18,030-33 at ¶¶ 9-12.

[^14]: *See 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*).

[^15]: *MCI-WorldCom 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*").

[^16]: *Bell Atlantic-NYNEX Order*, 12 FCC Rcd at 20,063, ¶ 158*;
    Applications of MCI Communications Corporation and British
    Telecommunications P.L.C.*, 12 FCC Rcd 15,351, 15,367 ¶ 33 (1997)
    ("*BT-MCI Order*").

[^17]: *MCI-WorldCom Order*, 13 FCC Rcd at 18,031 ¶ 10 n.33 (citing 47
    U.S.C. § 309(e) (burdens of proceeding and proof rest with the
    applicant)); s*ee, e.g*., *LeFlore Broadcasting Co., Inc*., Docket
    No. 20026, *Initial Decision*, 66 F.C.C.2d 734, 736-37 ¶¶ 2-3 (1975)
    (on issue of whether applicant possesses requisite qualifications to
    be or to remain Commission licensee and whether grant of application
    would serve the public interest, convenience and necessity, burden
    of proof is on licensee).

[^18]: *Bell Atlantic-NYNEX Order,* 12 FCC Rcd at 20,001, 20,007, ¶¶ 29,
    36; *BT-MCI Order,* 12 FCC Rcd at 15,367, ¶ 33.

[^19]: We note that the 1996 amendments to the Communications Act were
    specifically intended to produce competitive telecommunications
    markets. *See AT&T Corporation, et al. v. Iowa Utils. Bd.*, 119 S.
    Ct. 721, 724 (1999).

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

[^21]: 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 ("Guidelines").

[^22]: *See* Horizontal Merger Guidelines Issued by the U.S. Department
    of Justice and the Federal Trade Commission (Revised, April 8, 1997)
    ("1997 Revised Guidelines").

[^23]: 47 C.F.R. § 20.6.

[^24]: 47 C.F.R. § 22.942.

[^25]: At the time these applications were field, Vodafone and CommNet
    had ownership interests in the two cellular licensees in the
    Wichita, Kansas MSA. Vodafone AirTouch controls the A Block license
    for the Wichita, Kansas MSA, and CommNet held a less than 5%
    interest in the B Block license for the B2 portion of the same
    market. Shortly after the filing of the applications at issue here,
    however, CommNet sold its B Block interest to ALLTEL as part of
    ALLTEL's acquisition of Liberty Cellular. *See Public Notice*,
    Wireless Telecommunications Bureau, Common Carrier Bureau, and
    International Bureau Grant Consent for Transfer of Control of
    Licenses of Liberty Cellular to ALLTEL, DA 99-1985 (rel. Sept. 24,
    1999).

[^26]: Applications of Vodafone AirTouch Plc and BCP CommNet, L.P. for
    Transfer of Control, filed Aug. 16, 1999, at Public Interest
    Statement. The Public Interest Statement is included in Exhibit 2 of
    the FCC Form 704 filings with respect to the microwave licenses and
    also as an attachment to the Universal Licensing System filings with
    respect to the cellular licenses.

[^27]: *Id.*

[^28]: Joint Petition at 17-21.

[^29]: In the Matter of Amendment of 47 C.F.R. §§ 1.1200(a), et seq.
    Concerning Ex Parte Presentations in Commission Proceedings, *Report
    and Order*, 12 FCC Rcd 7348 (1997). *See, e.g.,* Vodafone AirTouch
    and Bell Atlantic Seek FCC Consent to Transfer of Control of Bell
    Atlantic's and Vodafone AirTouch's Wireless Licenses, *Public
    Notice*, DA 99-2451 (CWD/WTB, rel. Nov. 5, 1999); *see also* Change
    in Ex Parte Treatment of Sprint's Petition for Declaratory Ruling
    Regarding Ameritech RFP Practices Common Carrier Bureau Consolidates
    Ameritech's and USWest's Petitions for Declaratory Ruling Into
    Single Proceeding With Sprint's Petition for Declaratory Ruling,
    *Public Notice*, 13 FCC Rcd 12,085 (CCB 1998). In this case, we also
    changed the *ex parte* status of certain related proceedings from
    restricted to permit-but-disclose to allow for the broadest airing
    of the issues involved. *See* "Permit But Disclose" *ex parte*
    Status Accorded to Proceedings Involving (1) Applications for Review
    Filed by Pueblo Cellular, Inc. *et al*. Regarding Applications for
    Consent to Transfer Control of CommNet Cellular Inc. to Blackstone
    CCI Capital Partners, L.P., (2) Midwest Wireless Iowa, L.L.C., and
    (3) Applications for Consent to Transfer Control of Various Iowa
    Cellular Licenses to Vodafone AirTouch, Plc, *Public Notice*, DA
    99-2502 (rel. Nov. 9, 1999).