**STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS**

**CONCURRING IN PART, DISSENTING IN PART**

 

*Re:       Applications of AT&T Inc. and Dobson Communications
Corporation for Consent to Transfer Control of Licenses and
Authorizations, WT Docket No. 07-153.*

 

In this proceeding I vote (in the closest of calls) to concur in the
underlying transaction, and to dissent (no close call at all) from a
significant portion of the competitive analysis the Commission employs
to justify its decision. The changed analysis is so unwarranted that I
came within an inch of dissenting to the entire item.

Since the Commission's short-sighted decision a few years ago to
eliminate the CMRS spectrum aggregation limit, we have seen a wave of
consolidation among wireless incumbents and a general drawing down on
the storehouse of wireless competition that industry investment and wise
FCC policy throughout the 1990s created. I continue to have concerns
about ever-increasing concentration in the wireless sector. In this
specific transaction, the Order allows an independent wireless company
largely focused on serving rural America to be acquired by one of the
two leading wireless companies -- companies that are owned in whole or
in part by the leading wireline telephone companies. In terms of
intermodal competition, the order is silent, despite the reality that a
parent company may be more than a little reluctant to employ its
spectrum holdings to put competitive pressure on -- or cannibalize
existing revenue from -- its wireline offerings. In terms of intramodal
competition, I fear this concentration could have important effects on
the availability of roaming services and the choices consumers have. The
Order does condition the transaction on divestitures of business units
in four markets in which, post-transaction, there would be fewer than
three facilities-based providers. I would prefer our remedies to be more
extensive, and I am convinced that our statutory obligation to ensure
that mergers are in the public interest provides ample authority for the
Commission to go further than it did. Nevertheless, I ultimately concur
in today's decision because this transaction can serve the public
interest by making upgraded networks, services and products available
more quickly to many of Dobson's rural customers.

I must dissent, however, to the order's dramatic change to the initial
spectrum screen used in our case-by-case competitive analysis of
wireless transactions in the post-spectrum cap world. When we moved away
from the spectrum cap's bright-line test, the Commission committed to
employing a multi-factor, case-by-case analysis that insured, among
other things, that the Commission took a hard look at markets in which a
merged entity would have excessive spectrum holdings. Up until today's
decision, the initial spectrum screen flagged for more detailed
Commission review any market in which the merged entity would hold 70
megahertz, which represents approximately one-third of the existing 200
megahertz of spectrum suitable for mobile telephony purposes. This
initial screen recognizes that spectrum is a publicly owned resource and
is both a critical market input and significant barrier to entry. It is
therefore not surprising that Congress gave the Commission very specific
responsibilities to promote competition, the efficient and intensive use
of spectrum, and diverse control of spectrum by a wide variety of
entities. Today's decision appears to ignore those Congressional
directives, however, and radically inflates the screen to 95 megahertz
-- in essence, finding that there is nothing *per se* problematic from a
competitive standpoint with a single entity holding up to 94 megahertz
of spectrum in a given market. This sets a truly dangerous precedent.

In the Commission's rush to increase the screen's denominator to 280
megahertz by including 80 megahertz of commercial 700 MHz spectrum, we
utterly fail to address the reality that the majority of this spectrum
is quite possibly years away from being a part of any real numerator.
Competition and, more importantly, consumers are put at risk by this
type of sloppy math. The order concludes that the 700 MHz spectrum is
available on a nationwide basis and that a potential competitor can make
a significant market impact by using this 700 MHz spectrum to discipline
the mobile telephony market in "less than a year and a half."
Unfortunately, this conclusion fails to overcome the troubling facts
that (1) the auction and licensing process for the majority of the 700
MHz spectrum has yet to occur, and as a result, we have no idea who will
be the relevant licensees (the identity of which could be highly
important to the maintenance of competition); (2) it is an assumption
based on faith to conclude that all of this spectrum will be immediately
useful for the purposes envisioned herein on February 17, 2009; and, (3)
it is not entirely clear when equipment will be readily available for
mobile telephony purposes in the 700 MHz band. Moreover, the Order
ignores evidence in the record that even the 18 megahertz of 700 MHz
spectrum previously auctioned and licensed currently is not able to
impact the market. One of the petitioners, a current 700 MHz licensee,
argues that its 700 MHz license does not create any near-term prospects
to discipline the mobile telephony market, due largely to the current
unavailability of 700 MHz equipment. Even the Applicants do not request
the order's drastic departure from the existing spectrum screen.
Finally, the encouragement of a competitive wireless environment must
include factors other than simply juggling numerators and denominators;
it must take into account the practical realities of the marketplace.
The only clear formula I see at work here is a formula for more wireless
industry consolidation.

The Commission should not pretend to examine markets in which a merged
entity would have an excessive amount of mobile telephony spectrum,
while it hides its head in the sand by prematurely bumping up the
spectrum screen to preclude such review. I would have preferred that we
wait and see how the mobile telephony market develops before we included
the 700 MHz spectrum in our initial spectrum screen, and AWS and BRS in
the competitive analysis. I am particularly troubled by the fact that
the order breaks with precedent at a time when the Commission has
pending before it several other significant wireless transactions in
addition to petitions for reconsideration of the 700 MHz Second Report
and Order raising the issue of whether some type of spectrum aggregation
limits are necessary in the 700 MHz band in order to meet our
Congressional directives. Frankly, this new methodology---if it goes
uncorrected---does more to dissuade me from future approvals of
transactions than it does to encourage me.

Finally, I also express concerns about AT&T's commitment to subject
itself to an interim cap on the high-cost universal service support the
company receives as a competitive eligible telecommunications carrier
(CETC). As I explained in my partial dissent to the recent
ALLTEL-Atlantis transaction and in my dissent to the Joint Board's
recommendation (in May of this year) for a general CETC cap, piecemeal
Universal Service Fund (USF) reform is actually counter-productive to
the far more important goal of rationally implementing comprehensive
reform, particularly when the Joint Board currently is working hard to
provide the Commission a recommendation on broader reform.