Before the

Federal Communications Commission

Washington, D.C. 20554

In re Applications of )

)

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

Motorola Communications and Electronics, Inc. )

Assignors; ) File Nos. 0000224876

) 0000224877

) 0000224878

and )

)

)

FCI 900, Inc. )

Assignee, )

)

)

For Consent to Assignment of 900 MHz )

Specialized Mobile Radio Licenses )

**ORDER ON RECONSIDERATION**

Adopted: August 10, 2001 Released: August 13, 2001

By the Chief, Wireless Telecommunications Bureau:

#  INTRODUCTION

1 We have before us a petition filed by Southern LINC ("Southern")[^1]
requesting that the Wireless Telecommunications Bureau ("Bureau") both
clarify and reconsider its April 17, 2001 decision to grant applications
to assign various 900 MHz Specialized Mobile Radio

("SMR") [^2] licenses from Motorola, Inc., Motorola SMR, Inc., and
Motorola Communications and Electronics, Inc. (collectively, "Motorola")
to FCI 900, Inc., a subsidiary of Nextel Communications, Inc.
("Nextel").[^3] For the reasons discussed below, we deny Southern's
petition.

#  Discussion

2 Reconsideration is appropriate only where the petitioner either shows
a material error or omission in the original order or raises additional
facts not known or not existing until after the petitioner's last
opportunity to present such matters.[^4] As explained below, Southern
has neither demonstrated an error or omission nor raised new facts that
would cause the Bureau to reconsider its decision.

3\. Southern bases its Petition on alleged errors in the Bureau's
methodology for determining the relevant product market for analyzing
the transaction, challenging the assumptions underlying the Bureau's
calculation of Herfindahl-Hirschman Indices ("HHIs") in this case.[^5]
Specifically, Southern contends that the Bureau's conclusions regarding
which spectrum should be included in an analysis of a trunked dispatch
market caused the Bureau wrongly to: (1) exclude some spectrum in the
800 MHz band licensed to Nextel and (2) include a portion of spectrum
allocated at 450-470 MHz. Had we adopted Southern's assumptions,
Southern argues, we would have found that the proposed transaction would
result in undue concentration levels in the affected markets, requiring
denial of the Applications as against the public interest. We disagree.
We reaffirm the assumptions made in the HHI calculations. Moreover, as
explained in the *Order*, the HHI calculations were only one factor in
the overall analysis conducted by the Bureau, several other factors
supported the Bureau's conclusion, and the Bureau did not rely on the
HHI calculations in finding that the assignment was in the public
interest.

4\. We, first, reject Southern's contention that the Bureau's HHIs
reflected overly low concentration levels because the Bureau erroneously
included a portion of the 800 MHz SMR spectrum licensed to Nextel in an
interconnected mobile voice market, instead of assigning that spectrum
entirely to a trunked dispatch market.[^6] Southern's argument that no
portion of this spectrum belongs in the interconnected mobile voice
market is both unreasonable and incorrect. As explained in the *Order*,
Commission policy permits the provision of various services on 800 MHz
SMR spectrum, including interconnected mobile voice and dispatch,[^7]
and Southern does not dispute that Nextel currently offers both
interconnected mobile voice and trunked dispatch services via 800 MHz
SMR licenses.

5\. Southern bases its position that all of Nextel's 800 MHz spectrum
should be assigned to a trunked dispatch market on a hypothetical
possibility that if, in the future, prices for existing trunked dispatch
service increased, "Nextel's entire 800 MHz spectrum capacity could
easily be used for trunked dispatch service\[.\]"[^8] We reject that
analysis for a number of reasons. First, one could just as easily
hypothesize that changing market circumstnaces, such as growth in demand
for interconnected mobile voice service could lead Nextel to use its
entire 800 MHz spectrum capacity for interconnected mobile voice
service. Therefore, in our view, it is unreasonable and produces a
highly inaccurate result to assign the entire amount of spectrum to any
one market. Second, taken to its logical conclusion, Southern's argument
would require us to include all spectrum used for interconnected mobile
voice service in a trunked dispatch market, which would produce
extremely low concentration levels in the relevant markets.[^9] Third,
we disagree that focusing on Nextel's current usage patterns "defies
practical reality" because "Nextel's customers, not Nextel, control
whether trunked dispatch or two-way interconnected service is
used."[^10] Southern offers no rationale for ignoring those customers'
current usage patterns or for adopting the thoroughly unrealistic
position that consumers might in the future demand purely trunked
dispatch service from Nextel. We find that our approach better reflects
practical reality. Finally, and perhaps most importantly, Southern's
argument ignores that, in the event of a future price increase for
Nextel's trunked dispatch service, there are various alternatives
available for consumers, so the most likely outcome is not the use of
all of Nextel's 800 MHz spectrum for trunked dispatch service, but the
loss of trunked dispatch customers to other services.[^11] Therefore, a
portion of the 800 MHz spectrum licensed to Nextel was correctly
assigned to an interconnected mobile voice market in the Bureau's
calculations.[^12]

6\. Southern also contends that the Bureau's HHIs reflect overly low
concentration levels because the Bureau erroneously included a portion
of spectrum allocated in the 450-470 MHz frequency band in the trunked
dispatch market.[^13] Southern's argument ignores that there is
currently trunked dispatch service available on the 450 MHz band, and
that current trends indicate that such usage is increasing.[^14]
Southern's emphasis on the Bureau's decision not to adopt geographic
licensing and competitive bidding rules for this spectrum does not
contradict the conclusion relevant to the analysis that trunked dispatch
services on this band exist and are increasing. [^15] Accordingly, we
reaffirm our inclusion of a portion of the 450 MHz band in a trunked
dispatch market.

7\. Moreover, the market concentration levels reflected by the Bureau's
HHI calculations played only a limited role in our analysis that the
assignment would not cause competitive harm in urban trunked dispatch
markets. The Bureau's grant of the Applications was largely based on a
number of other factors, none of which Southern contests in its
Petition, including: (1) the number of current alternatives available
for consumers desiring trunked dispatch services;[^16] (2) the potential
for additional entry into the trunked dispatch market;[^17] and (3)
other dispatch-like services not included in the market but nonetheless
providing effective competitive alternatives for some trunked dispatch
consumers.[^18] Indeed, Southern cites a Department of Justice finding
that significant entry into dispatch markets may come from licensees in
other services.[^19] The *Order* explained, and Southern does not
dispute, that all of these factors would prevent Nextel from charging
supracompetitive prices to trunked dispatch customers or otherwise
behaving anticompetitively.[^20] Accordingly, any additional discussion
of the HHI calculations, as requested by Southern, would not alter the
final analysis.[^21]

8\. In sum, Southern has failed to raise an error or omission that would
cause the Bureau to reconsider its *Order* and/or rescind the grant of
the Applications. Accordingly, we deny the Petition, except to the
extent that the above further clarifies the *Order*.

#  Ordering clauses

9\. ACCORDINGLY, IT IS ORDERED, pursuant to sections 4(i) and (j), 309,
and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§
154(i), 154(j), 309, and 310(d), that the Petition for Reconsideration
filed on May 17, 2001 by Southern LINC IS DENIED to the extent indicated
herein.

10\. This Order on Reconsideration is taken on delegated authority under
section 0.331 of the Commission's rules, 47 C.F.R. § 0.331. Applications
for review under section 1.115 of the Commission's rules, 47 C.F.R. §
1.1115, may be filed within thirty days of the date of the public
notice.

FEDERAL COMMUNICATIONS COMMISSION

Thomas J. Sugrue

Chief, Wireless Telecommunications Bureau

[^1]: Petition for Clarification and Reconsideration of Southern LINC
    (filed May 17, 2001) ("Southern Petition"). Motorola, Inc. and
    Nextel Communications, Inc. each filed an opposition to Southern's
    Petition. *See* Opposition to Petition for Reconsideration, filed
    May 31, 2001 by Motorola, Inc. ("Motorola Opposition"); Opposition
    of Nextel Communications, Inc. to Southern LINC's Petition for
    Clarification and Reconsideration, filed May 31, 2001 ("Nextel
    Opposition").

[^2]: The "900 MHz" SMR band refers to spectrum allocated in the 896-901
    and 935-940 MHz bands. *See* 47 C.F.R. §90.603.

[^3]: *In re Applications of Motorola, Inc., et al*., Order, DA 01-947
    (rel. Apr. 17, 2001) ("*Order*"). *See also* Applications of
    Motorola for Consent to Assign Licenses to FCI 900, Inc., filed
    Sept. 25, 2000, ULS File Nos. 0000224876, 0000224877, 0000224878
    ("Applications").

[^4]: 47 C.F.R. § 1.106; *LMDS Communications, Inc.,* Order on
    Reconsideration, DA 00-2674, at ¶ 6 (WTB, rel. Nov. 30, 2000)
    (citing *WWIZ, Inc.,* 37 FCC 685, 686 (1964), *aff'd sub nom. Lorain
    Journal Co. v. FCC,* 351 F.2d 824 (D.C. Cir. 1965), *cert. denied,*
    383 U.S. 967 (1966)).

[^5]: *See Order* at ¶ 28 and note 91 for an explanation of HHIs.

[^6]: Southern Petition at 4.

[^7]: *Order* at ¶ 14 (citing *Principles for Reallocation of Spectrum
    to Encourage the Development of Telecommunications Technologies for
    the New Millennium,* Policy Statement*,* 14 FCC Rcd. 19868 (1999);
    *see also In re Applications of Various Subsidiaries and Affiliates
    of Geotek Communications Inc. and FCI 900, Inc.,* Memorandum Opinion
    and Order*,* 15 FCC Rcd 790 ¶ 25 (WTB 2000).

[^8]: Southern Petition at 5.

[^9]: *See also* Nextel Opposition at 4; Motorola Opposition at 5.

[^10]: Southern Petition at 5.

[^11]: *See Order* at ¶ 32.

[^12]: We also do not believe, as Southern suggests, that we are bound
    to follow the analysis suggested by the Department of Justice's
    Merger Guidelines. *See* Southern Petition at 4.

[^13]: *Id.* at 6-7.

[^14]: *See Order* at ¶ 20; *see also* Nextel Opposition at 6.

[^15]: *See* Southern Petition at 7-8.

[^16]: *See Order* at ¶¶ 27, 32.

[^17]: *See* *Order* at ¶¶ 27, 31.

[^18]: *See Order* at ¶¶ 22, 27.

[^19]: Southern Petition at 7.

[^20]: *See Order* at ¶¶ 27, 31-33; *see also* Motorola Opposition at
    2-4.

[^21]: *See* Southern Petition at 2-3 (requesting "clarification" of
    certain HHI calculation factors). The Bureau's estimates of market
    concentration were more conservative than those provided by the
    Applicants, and sufficient detail regarding those calculations was
    provided in the *Order* and in further correspondence with Southern.
    *See Order* at ¶¶ 28-30; *see also* Letter from James D.
    Schlichting, Deputy Bureau Chief, Wireless Telecommunications
    Bureau, to John R. Delmore, McDermott, Will & Emery, Counsel for
    Southern LINC, dated April 27, 2001.