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 Federal  Communications  Commission  DA  01-  947 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 
 In  re  Applications  of  ) 
 ) 
 Motorola,  Inc.;  Motorola  SMR,  Inc.;  and  )  DA  00-  2352 
 Motorola  Communications  and  Electronics,  Inc.  ) 
 Assignors;  )  File  Nos.  0000224876 
 )  0000224877 
 )  0000224878 
 and  ) 
 ) 
 ) 
 FCI  900,  Inc.  ) 
 Assignee,  ) 
 ) 
 ) 
 For  Consent  to  Assignment  of  900  MHz  ) 
 Specialized  Mobile  Radio  Licenses  ) 

 ORDER 
 Adopted:  April  16,  2001  Released:  April  17,  2001 
 By  the  Chief,  Wireless  Telecommunications  Bureau: 
 TABLE  OF  CONTENTS  Paragraph 

 I.  INTRODUCTION  ...................................................................................................................  2 
 II.  BACKGROUND  ....................................................................................................................  2 
 III.  DISCUSSION  .......................................................................................................................  5 
 A.  Statutory  Authority  ..............................................................................................  6 
 B.  Qualifications  .......................................................................................................  7 
 C.  Public  Interest  Impacts  .........................................................................................  9 
 1.  Competitive  Framework  ............................................................................  9 
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 2.  Relevant  Markets  ....................................................................................  11 
 a.  Product  Markets  ..........................................................................  11 
 b.  Geographic  Markets  ....................................................................  25 
 3.  Market  Analysis  ......................................................................................  26 
 a.  Interconnected  Mobile  Voice  Services  .........................................  26 
 b.  Trunked  Dispatch  Services  ..........................................................  27 
 i.  Urban  Markets  .................................................................  27 
 ii.  Rural  Markets  ..................................................................  34 
 4.  Analysis  of  Public  Interest  Benefits  .........................................................  35 
 D.  Roaming  .............................................................................................................  37 
 E.  Conclusion  .........................................................................................................  38 

 IV.  ORDERING  CLAUSES  ......................................................................................................  39 

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

 II.  BACKGROUND 
 2.  On  September  25,  2000,  pursuant  to  section  310(  d)  of  the  Communications  Act  of  1934,  as  amended  (  the  Communications  Act),  3  Motorola  and  Nextel  filed  applications  seeking 
 Commission  consent  for  Motorola  to  assign  59  900  MHz  SMR  licenses  to  Nextel.  4  Nextel  has  a 
 nationwide  licensed-  area  footprint,  and  is  the  largest  service  provider  using  SMR  frequencies, 
 with  approximately  6.  7  million  subscribers  in  the  United  States  at  the  end  of  2000.  5  Nextel  uses 

 1  Applications  of  Motorola  for  Consent  to  Assign  Licenses  to  FCI  900,  Inc.,  filed  Sept.  23,  2000,  ULS  File  Nos. 
 0000224876,  0000224877,  0000224878  (  Applications). 
 2  See  Comments  of  Southern  LINC,  filed  Nov.  20,  2000  (  Southern  Comments). 

 3  47  U.  S.  C.    310(  d). 
 4  The  900  MHz  SMR  band  refers  to  spectrum  allocated  in  the  896-  901  and  935-  940  MHz  bands.  See  47  C.  F.  R. 
 90.603.  Other  SMR  frequencies  are  found  in  the  800  MHz  band,  which  refers  to  spectrum  allocated  in  the  806- 
 824  and  851-  869  MHz  bands.  See  47  C.  F.  R.  90.603;  see  also  47  C.  F.  R.    90.7  (defining  specialized  mobile  radio 
 system). 
 5  See  Nextel  website  at  www.  nextel.  com/  about/  information/  corporate/  profile.  shtml.  See  also  The  State  of  the  SMR 

 Industry:  Nextel  and  Dispatch  Communications,  Strategis  Report,  September  2000  (  Strategis  Report,  SMR),  at  5; 
 In  the  Matter  of  Implementation  of  Section  6002(  b)  of  the  Omnibus  Budget  Reconciliation  Act  of  1993,  Annual 
 Report  and  Analysis  of  Competitive  Market  Conditions  With  Respect  to  Commercial  Mobile  Services,  15  FCC  Rcd 
 17,660,  (rel.  Aug.  18,  2000)  (  Fifth  CMRS  Competition  Report),  at  70.  The  second  largest  service  provider  using 
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 its  facilities  in  the  900  MHz  band  for  analog  dispatch  service.  However,  the  vast  majority  of 
 Nextels  subscribers  purchase  any  of  a  variety  of  services  over  a  digital,  wide-  area  SMR  network 
 using  Nextels  800  MHz  SMR  licenses,  provided  by  Nextel  on  a  single  handset.  On  this  handset, 
 Nextel  offers  a  bundled  service  that  provides  a  customer  with  interconnected  mobile  voice  along 
 with  trunked  dispatch  service  (marketed  under  the  brand  name  Direct  Connect    )  that  allows 
 instant,  real-  time  conferencing  on  a  one-  to-  one  or  one-  to-  many  basis.  6  Customers  can  also 
 subscribe  to  other  optional  services,  including  paging,  text/  numeric  messaging,  and  wireless 
 Internet  access.  7  In  addition  to  its  800  MHz  and  900  MHz  SMR  holdings,  Nextel  holds  licenses 
 in  the  220  MHz  band  and  Guard  Band  manager  licenses  in  the  700  MHz  band.  8  Nextel  also  has 
 an  attributable  interest  in  Nextel  Partners,  Inc.,  which  provides  digital  wireless  communications 
 services  on  its  own  800  MHz  SMR  frequencies  in  mid-  sized  and  smaller  markets  throughout  the 
 United  States.  9 

 3.  Mot  orola  is  the  sole  supplier  of  Next  els  wide-  area  SMR  handset  s  10  and  owns  approximately  15  percent  of  Nextel.  11  Mot  orola  provides  the  iDEN  12  infrastructure  and  subscriber  unit 
 equipment  used  throughout  Next  els  domest  ic  market  s  and  most  of  its  int  ernat  ional  market  s.  Next  el  works  closely  with  Motorola  to  improve  existing  products  and  develop  new  technologies.  In  urban 

 markets,  Motorola,  like  Nextel,  uses  its  900  MHz  SMR  facilit  ies  to  provide  analog,  non-  int  erconnect  ed  dispatch  services.  13  In  non-  urban  markets,  Motorola  has  not  yet  built  out  its  900  MHz  systems.  14 

 SMR  frequencies  is  Southern  with  approximately  200,000  subscribers.  See  Southern  LINC  website  at 
 www.  SouthernLINC.  com,  Press  Release  (Aug.  29,  2000). 
 6  Direct  Connect    provides  trunked  dispatch  customers  with  an  expanded  dispatch  service  area  and  higher  voice 

 quality  and  extra  security  than  analog  trunked  dispatch.  See  Letter  from  Laura  L.  Holloway  to  Magalie  Roman  Salas, 
 Secretary,  Federal  Communications  Commission,  dated  March  8,  2000  (  Nextel  March  8  Ex  Parte  Presentation)  at 
 Attachment  1,  Affidavit  of  Greg  Rosston  (  Rosston  Affidavit)  at  14.  Upon  request,  Direct  Connect    may  be 
 purchased  separately  from  interconnected  mobile  voice. 
 7  Applications,  Exhibit  B  (  Public  Interest  Statement)  at  2-  3;  Nextel  Reports  Record  Year  2000  Financial  Results, 

 News  Release,  Nextel  Communications,  Inc.  (Feb.  16,  2001). 
 8  In  the  Matter  of  Implementation  of  Section  6002(  b)  of  the  Omnibus  Budget  Reconciliation  Act  of  1993  Annual 

 Report  and  Analysis  of  Competitive  Market  Conditions  With  Respect  to  Commercial  Mobile  Services,  14  FCC  Rcd 
 10,145,  10,176    32  (citing  Nextel  Reports  1998  Results,  News  Release,  Nextel  Communications,  Inc.,  Feb.  23, 
 1999). 
 9  See  Strategis  Report,  SMR  at  47;  see  also  47  C.  F.  R.    20.6(  d)(  2). 

 10  Public  Interest  Statement  at  1-  2. 
 11  Nextel  SEC  Form  10K  Statement  (filed  March  30,  2000)  at  6  (providing  information  for  period  ending  December  31, 
 1999). 
 12  Motorola  developed  iDEN,  a  digital  technology  that  allows  users  to  integrate,  into  one  unit,  the  features  of  dispatch 

 radio,  interconnected  mobile  voice,  short  message  service,  and  data  transmission.  This  technology,  which  is  currently 
 available  only  on  800  MHz  channels,  allows  service  providers  to  have  six  times  the  capacity  as  on  an  analog  SMR 
 network.  See  www.  motorola.  com. 
 13  Public  Interest  Statement  at  2. 

 14  Id.  at  14. 
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 4.  On  October  19,  2000,  by  delegated  authority,  15  the  Wireless  Telecommunications  Bureau  (  Bureau)  issued  a  Public  Notice  to  announce  that  the  applications  for  consent  to  assign 
 licenses  to  Nextel  had  been  accepted  for  filing  and  to  est  ablish  a  pleading  cycle  to  enable  int  erest  ed  parties  to  comment  on  the  proposed  transaction.  16  In  response  to  this  Public  Notice,  Southern  filed 

 comments  requesting  that  we  deny  the  Applications.  17 

 III.  DISCUSSION 
 5.  As  explained  below,  we  find  that  the  assignment  of  the  licenses  to  Nextel  does  not  pose  an  undue  risk  of  harm  to  competition  in  U.  S.  telecommunications  markets.  In  addition,  we  find  that 
 these  assignments  should  result  in  certain  public  benefits.  Accordingly,  we  conclude  that,  pursuant  to  section  310(  d)  of  the  Communications  Act,  grant  of  the  pending  requests  for  assignment  of  the  licenses 

 to  FCI  900  would  serve  the  public  interest.  18  Hence,  we  deny  the  Southern  Petition  and  grant  the  specified  applications. 

 A.  Statutory  Authority 
 6.  Pursuant  to  Section  310(  d)  of  the  Communications  Act,  the  Commission  must  determine  whether  the  proposed  assignment  will  serve  the  public  interest,  convenience,  and 
 necessity.  19  Section  310(  d)  further  requires  that  we  consider  the  applications  as  if  the  proposed 
 assignee  were  applying  for  the  licenses  directly  under  section  308.  20  Thus,  we  must  examine 

 15  47  C.  F.  R.    0.331. 
 16  See  Motorola,  Inc.  and  Nextel  Communications,  Inc.  Seek  Consent  to  Assign  900  MHz  SMR  Licenses,  Public 
 Notice,  DA  00-  2352  (rel.  Oct.  19,  2000). 
 17  See  Southern  Comments.  In  the  course  of  this  proceeding,  we  note  that  Nextel,  Motorola,  and  Southern  have  each 

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

 which  has  not  challenged  Nextels  proposed  acquisition  of  Motorolas  licenses. 
 19  47  U.  S.  C.    310(  d). 

 20  Section  310  provides  that  the  Commission  shall  consider  any  such  applications  as  if  the  proposed  transferee  or 
 assignee  were  making  application  under  Section  308  for  the  permit  or  license  in  question.  47  U.  S.  C.    310(  d). 
 Furthermore,  the  Commission  is  expressly  barred  from  considering  whether  the  public  interest,  convenience,  and 
 necessity  might  be  served  by  the  transfer,  assignment,  or  disposal  of  the  permit  or  license  to  a  person  other  than  the 
 proposed  transferee  or  assignee.  Id. 
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 Nextels  qualifications  to  hold  licenses.  In  discharging  these  statutory  responsibilities,  we  weigh 
 the  potential  public  interest  harms  of  the  proposed  transactions  against  the  potential  public 
 interest  benefits  to  ensure  that,  on  balance,  the  assignments  serve  the  public  interest  and 
 convenience.  21 

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

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

 C.  Public  Interest  Impacts 
 1.  Competitive  Framework 

 9.  Southern  contends  that  the  overall  effect  of  this  transaction  will  be  to  decrease  competition  in  a  trunked  dispatch  market  such  that  approval  of  these  applications  is  not  in  the 
 public  interest.  To  analyze  Southerns  claims,  we  first  determine  the  markets  potentially  affected 
 21  In  the  Matter  of  AT&  T  Corp.,  British  Telecommunications,  Plc,  VLT  Co.,  L.  L.  C.,  Violet  License  Co.,  L.  L.  C.,  and 
 TNV  [Bahamas]  Limited  Applications  for  Grant  of  Section  214  Authority,  Modification  of  Authorizations  and 
 Assignment  of  Licenses  in  Connection  with  the  Proposed  Joint  Venture  Between  AT&  T  Corp.  and  British 
 Telecommunications,  Plc,  14  FCC  Rcd  19410  (1999);  Applications  of  WorldCom,  Inc.  and  MCI  Communications 
 Corporation  for  Transfer  of  Control,  CC  Docket  No.  97-  211,  Memorandum  Opinion  and  Order,  13  FCC  Rcd  18,025, 
 18,030-  33  at    9-  12  (1998)  (  WorldCom/  MCI  Order);  Craig  O.  McCaw  and  American  Telephone  and  Telegraph 
 Company,  9  FCC  Rcd  5836  (1994),  recon.  denied  on  other  grounds,  Memorandum  Opinion  and  Order  on 
 Reconsideration,  10  FCC  Rcd  11,786  (1995),  aff'd  sub  nom.  SBC  Communications,  Inc.  v.  FCC,  56  F.  3d  1484  (D.  C. 
 Cir.  1995). 
 22  See  Mobilemedia  Corporation  et  al.,  14  FCC  Rcd  8017  (rel.  Feb.  5,  1999)  (citing  Jefferson  Radio  Co.  v.  FCC,  340 

 F.  2d  781,  783  (D.  C.  Cir.  1964));  see  also  Stephen  F.  Sewell,  Assignments  and  Transfers  of  Control  of  FCC 
 Authorizations  Under  Section  310(  d)  of  the  Communications  Act  of  1934,  43  Fed.  Comm.  L.  J.  277,  339-  40  (1991). 
 The  policy  of  not  approving  assignments  or  transfers  when  issues  regarding  the  licensees  basic  qualifications  remain 
 unresolved  is  designed  to  prevent  licensees  from  evading  responsibility  for  misdeeds  committed  during  the  license 
 period.  Id. 
 23  See  In  re  applications  of  Various  Subsidiaries  and  Affiliates  of  Geotek  Communications,  Inc.  and  FCI  900,  Inc., 

 Memorandum  Opinion  and  Order,  15  FCC  Rcd  790  (WTB  rel.  Jan.  14,  2000)  at    10  (  Geotek  Order)  (citing  In  re 
 applications  of  AirTouch  Communications,  Inc.  and  Vodafone  Group,  Plc,  Memorandum  Opinion  and  Order,  DA 
 99-  1200,  1999  WL  413,237  (WTB  rel.  June  22,  1999)  at    5-  9). 
 24  See,  e.  g.,  Geotek  Order  at    21. 
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 by  the  proposed  transaction.  25  Second,  we  assess  the  effects  that  the  transaction  may  have  on 
 competition  in  these  markets.  26  Third,  we  consider  whether  the  proposed  transaction  will  result  in 
 transaction-  specific  public  interest  benefits.  27  Ultimately,  we  must  weigh  any  harmful  and 
 beneficial  effects  to  determine  whether,  on  balance,  the  transaction  is  likely  to  enhance 
 competition  in  the  relevant  markets. 

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

 2.  Relevant  Markets 
 a.  Product  Markets 

 11.  In  evaluating  the  competitive  effects  of  this  transaction,  the  Applicants  and  Southern  employ  significantly  different  product  market  definitions.  30  As  discussed  further  below, 

 25  Our  determination  of  the  affected  markets  requires  us  to  identify  the  Applicants  existing  and  potential  product 
 offerings,  and  may  require  us  to  determine  which  products  offered  by  other  firms  compete  or  potentially  compete  with 
 these  offerings.  In  re  Applications  of  Neoworld  Holdings,  Inc.  and  Hughes  Electronics  Corporation  and  Wilmington 
 Trust  Company,  Liquidating  Trustee,  Memorandum  Opinion  and  Order,  15  FCC  Rcd.  13,410  (WTB  rel.  Aug.  4, 
 2000)  (  Neoworld  Order)  at    16,  n.  30. 
 26  Depending  on  circumstances,  this  step  may  include  the  identification  of  market  participants  and  analysis  of  market 

 structure,  market  concentration,  and  potential  entry.  Neoworld  Order  at    16,  n.  31. 
 27  These  include,  but  may  extend  beyond,  factors  relating  to  cost  reductions,  productivity  enhancements,  or  improved 

 incentives  for  innovation.  Neoworld  Order  at    16,  n.  31  (citing  Applications  of  Aerial  Communications,  Inc.  and 
 VoiceStream  Wireless  Holding  Corporation,  Memorandum  Opinion  and  Order,  15  FCC  Rcd  10,089,    30,  n.  82 
 (WTB/  IB  2000);  In  re  Applications  of  Vodafone  AirTouch  PLC  and  Bell  Atlantic  Corporation,  15  FCC  Rcd.  16,507, 
   25,  n.  49  (WTB/  IB  2000);  Horizontal  Merger  Guidelines  Issued  by  the  U.  S.  Department  of  Justice  and  the  Federal 
 Trade  Commission,  57  Fed.  Reg.  41,552,    2.1,  2.2,  4  (dated  Apr.  2,  1992,  as  revised,  Apr.  8,  1997)  (  Revised 
 Horizontal  Merger  Guidelines). 
 28  See  47  C.  F.  R.    20.6.  As  part  of  all  applications  for  assignment  or  transfer  of  control  of  CMRS  licenses,  the  assignee 

 or  transferee  must  certify  that  grant  of  the  application  would  not  cause  the  assignee  or  transferee  to  be  in  violation  of 
 the  spectrum  aggregation  limit.  See  FCC  Wireless  Telecommunications  Bureau  Application  for  Assignments  of 
 Authorization  and  Transfers  of  Control  (FCC  Form  603). 
 29  See  47  C.  F.  R.    20.6(  b). 

 30  See  Public  Interest  Statement;  Southern  Comments;  Ex  Parte  Presentation  submitted  by  Southern,  Affidavit  of 
 Michael  G.  Baumann  and  Stephen  E.  Siwek  of  Economists,  Inc.  (Feb.  8,  2001)  (  Baumann  and  Siwek  Affidavit); 
 Ex  Parte  Letter  from  Laura  L.  Holloway,  Director  Government  Affairs,  Nextel  to  Lauren  Kravetz,  Policy  and  Rules 
 Branch,  Commercial  Wireless  Division,  Wireless  Telecommunications  Bureau,  Federal  Communications 
 Commission,  filed  Feb.  22,  2001;  Rosston  Affidavit;  Ex  Parte  Presentation  submitted  by  Southern,  Supplemental 
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 Southern  would  limit  the  product  market  to  trunked  dispatch  services  being  provided  only  by 
 SMR  operators  at  800  MHz  and  900  MHz.  31  By  contrast,  the  Applicants  would  employ  a 
 product  market  definition  encompassing  all  CMRS  providers. 

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

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

 Affidavit  of  Michael  G.  Baumann  and  Stephen  E.  Siwek  of  Economists,  Inc.,  filed  March  20,  2001  (  Baumann  and 
 Siwek  Supplemental  Affidavit).  Nextel  and  Southern  also  presented  their  arguments  during  various  ex  parte 
 presentations  to  the  Bureau  (Southern  on  February  8,  2001  and  April  2,  2001;  Nextel  on  March  14,  2001). 
 31  Southern  argues  that  trunked  dispatch  is  the  only  market  that  need  be  considered  in  this  transaction.  Nevertheless, 

 even  adding  in  the  interconnected  mobile  voice  market  would  yield  the  same  result,  Southern  contends,  because  the 
 benefits  to  Nextel  of  gaining  a  minimal  amount  of  additional  spectrum  to  compete  against  other  interconnected 
 mobile  voice  service  providers  are  vastly  outweighed  by  the  competitive  harms  in  the  trunked  dispatch  market. 
 Southern  Comments  at  3  and  9. 
 32  Fifth  CMRS  Competition  Report  at  69. 

 33  See  Strategis  Report,  SMR  at  7;  Strategis  Group,  U.  S.  Dispatch  Markets,  Executive  Summary,  January  2000 
 (  Strategis  Report,  Dispatch)  at  1. 
 34  Id. 
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 14.  Commission  policy  permits  flexible  use  of  800  and  900  MHz  SMR  spectrum,  permitting  the  provision  of  paging,  dispatch,  mobile  voice,  mobile  data,  facsimile,  or  combinations 
 of  these  services.  35  Like  Motorola,  Nextel  provides  trunked  analog  dispatch  services  with  its  900 
 MHz  licenses.  Nextel  has  applied  a  digital  technology  to  its  800  MHz  frequencies,  allowing  it  to 
 offer  a  bundled  service  on  these  frequencies  that  includes  interconnected  mobile  voice,  paging, 
 and  text  messaging,  as  well  as  trunked  dispatch  communications  that  allow  instant  conferencing.  36 
 The  digital  technology  (iDEN)  allows  Nextel  to  provide  wide-  area  coverage  and  a  nationwide 
 network.  37  By  contrast,  the  analog  service  being  provided  on  the  900  MHz  band  consists 
 primarily  of  localized  instant  group  communications  for  small  and  mid-  sized  businesses,  and  is 
 generally  offered  at  lower  prices  than  digital  service.  38  The  900  MHz  frequency  band  also  is  well 
 suited  technically  for  the  provision  of  paging,  dispatch,  mobile  voice,  mobile  data,  or 
 combinations  of  these  services.  Although  technology  is  not  presently  available  to  provide  the 
 same  digital  services  available  at  800  MHz  using  the  900  MHz  SMR  frequency,  Nextel  indicates 
 that  it  is  developing  a  900  MHz  iDEN  service  with  Motorola  that  will  be  integrated  into  its  800 
 MHz  iDEN  system.  39 

 15.  Our  prior  cases  have  analyzed  similar  transfers  and  assignments  with  respect  to  two  product  markets:  interconnected  mobile  voice  services  and  trunked  dispatch  services.  Most 
 recently,  in  the  Geotek  Order,  40  we  stated  that  the  relevant  market  participants  in  the 
 interconnected  mobile  voice  market  are  firms  providing  commercially  available  two-  way,  mobile 
 voice  services  that  access  the  public  switched  telephone  network,  such  as  those  provided  by 
 cellular  companies,  PCS  providers,  and  interconnected  trunked  SMR  carriers,  such  as  Nextel  and 
 Southern.  We  defined  the  relevant  market  participants  in  the  trunked  dispatch  market  as  firms 
 offering,  on  a  commercial  basis,  both  one-  to-  one  and  one-  to-  many  calling  services  on  either 
 analog  or  digital  trunked  systems,  41  and  noted  that  such  services  were  provided  primarily  by 

 35  Principles  for  Reallocation  of  Spectrum  to  Encourage  the  Development  of  Telecommunications  Technologies  for  the 
 New  Millennium,  Policy  Statement,  14  FCC  Rcd.  19868  (1999);  see  also  Geotek  Order  at    25. 
 36  Public  Interest  Statement  at  2-  3. 

 37  Strategis  Report,  SMR  at  45. 
 38  Id.  at  25  and  45. 
 39  See  Letter  to  Thomas  J.  Sugrue,  Chief,  Wireless  Telecommunications  Bureau,  FCC,  from  Robert  Foosaner,  Senior 
 Vice  President,  Government  Affairs,  Nextel  Communications,  filed  Jan.  9,  2001  (  Nextel  Waiver  Request);  see  also 
 Rosston  Affidavit  at  5.  Nextel  is  working  with  Motorola  to  develop  a  dual  band  iDEN  system  that  will  integrate  both 
 Nextels  800  MHz  and  900  MHz  spectrum.  Rosston  Affidavit  at  5. 
 40  Geotek  Order  at    30. 

 41  In  the  Geotek,  Order  we  recognized  that  legitimate  questions  can  be  raised  about  the  suitability  of  [these]  market 
 definitions,  and  declared  that  the  convergence  of  mobile  data,  mobile  voice,  digital  trunked  dispatch,  paging,  and 
 messaging  services  suggests  that  consumers  may  begin  to  use  more  of  these  wireless  services  interchangeably  (and 
 that  carriers  may  increasingly  market  such  services  to  the  same  set  of  consumers).  Geotek  Order  at    27.  However, 
 we  decided,  at  that  time,  not  to  address  the  market  definition  question  in  detail  because  the  applications  could  be 
 approved  even  under  this  narrower  approach,  which  was  used  in  a  prior  order  undertaking  a  similar  analysis.  Geotek 
 Order  at    26-  28  (discussing  Pittencrieff  Communications,  Inc.,  Transferor,  and  Nextel  Communications,  Inc., 
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 carriers  operating  at  800  MHz,  900  MHz,  and  220  MHz,  and  also  by  qualified  private  land  mobile 
 operators.  42  The  Applications  now  raise  the  issue  whether  the  market  definitions  employed  in  our 
 analyses  of  these  earlier  transactions  are  still  valid. 

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

 17.  In  defining  a  product  market,  we  generally  include  firms  offering  services  competing  with  those  offered  by  the  assignor  and  assignee.  45  For  the  purposes  of  this  transaction, 
 we  will  analyze  such  competition  narrowly,  and  will  limit  our  review  to  an  interconnected  mobile 
 voice  market  and  a  trunked  dispatch  market  without  foreclosing  the  possibility  that  we  may  adopt 
 an  expanded  market  definition  in  a  future  transaction.  Motorola,  the  assignor,  provides  analog 
 trunked  dispatch  services  with  its  900  MHz  licenses.  In  the  Pittencrieff  Order  and  the  Geotek 
 Order,  we  described  Nextels  services  as  straddling  both  the  interconnected  mobile  voice  and 
 trunked  dispatch  markets,  46  and  this  description  remains  accurate.  47  Nextel  is  currently  using  its 
 900  MHz  licenses  to  provide  analog  trunked  dispatch  services,  but  has  indicated  its  intention  to 
 convert  this  spectrum  to  digital  use  so  that  it  may  offer  additional  services  on  this  band.  48 

 Transferee,  For  Consent  to  Transfer  Control  of  Pittencrieff  Communications,  Inc.  and  its  Subsidiaries, 
 Memorandum  Opinion  and  Order,  13  FCC  Rcd  8935  (WTB  1997)  (  Pittencrieff  Order)). 
 42  See  Geotek  Order  at    32;  Pittencrieff  Order  at    30.  Private  land  mobile  operators  originally  were  focused  on 

 supporting  the  internal  communication  needs  of  various  businesses  and  organizations.  These  include  public  safety, 
 state  and  local  governments,  utilities,  and  business  and  industrial  users.  These  systems  may  be  trunked  or  non-trunked. 

 43  Id.  at    32;  Southern  Comments  at  4-  6.  Southern  argues  that,  even  if  the  Commission  also  considers  an 
 interconnected  mobile  voice  market  to  be  relevant,  the  end  result  would  not  change.  See  note  31  supra. 
 44  Public  Interest  Statement  at  8;  Rosston  Affidavit  at  9.  However,  Nextel  also  evaluates  the  acquisitions  competitive 

 effects  on  the  trunked  dispatch  and  interconnected  mobile  voice  services  markets  for  consistency  with  the  Bureaus 
 prior  analyses  in  the  Pittencrieff  Order  and  the  Geotek  Order.  Public  Interest  Statement  at  5-  6. 
 45  In  order  to  determine  which  services  are  competitive,  we  look  at  relevant  demand  substitution  factors.  For  this 

 transaction,  these  factors  include  service  availability  and  functionality,  which  have  been  the  focus  of  comments  made 
 by  Southern  and  the  Applicants.  Revised  Horizontal  Merger  Guidelines  at    1.  See  also  Pittencrieff  Order  at    18. 
 46  See  Pittencrieff  Order  at    23;  Geotek  Order  at    26;  see  also  Fifth  CMRS  Competition  Report  at  70. 

 47  See    14  supra.  The  trunked  dispatch  service  that  Nextel  offers  using  its  800  MHz  licenses,  Direct  Connect    ,  is 
 available  separately  to  customers  who  do  not  desire  any  of  Nextels  other  services.  See  Rosston  Affidavit  at  14. 
 48  Id.  at  5.  We  note  that  Nextel  has  also  indicated  that  it  may  use  some  of  its  900  MHz  licenses  to  relocate  other 

 licensees  operating  in  the  800  MHz  bands,  permitting  Nextel  to  expand  its  service  at  800  MHz.  See  Public  Interest 
 Statement  at  16. 
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 Therefore,  we  analyze  the  Applications  as  they  affect  both  interconnected  mobile  voice  and 
 trunked  dispatch  services  markets,  but  we  do  not  foreclose  the  possibility  that  we  may  adopt  an 
 expanded  market  definition  in  reviewing  a  future  transaction. 

 18.  While  we  examine  these  Applications  in  the  context  of  a  trunked  dispatch  market,  we  reject,  for  several  reasons,  Southerns  limited  definition  of  such  a  market,  which  would  confine 
 our  analysis  solely  to  services  being  provided  at  800  and  900  MHz.  First,  trunked  dispatch 
 service  is  now  available  on  the  220  MHz  band  in  addition  to  the  800  and  900  MHz  bands.  49 
 Southern  asserts  that  the  220  MHz  spectrum  is  not  a  reasonable  alternative  to  800  MHz  and  900 
 MHz  SMR  trunked  dispatch  services,  arguing  that  the  quality  of  the  spectrum  is  poor,  there  is 
 insufficient  incentive  to  provide  service  on  this  frequency,  and  there  is  a  chronic  equipment  supply 
 problem.  50  We  disagree.  We  have  previously  found  that  quality  of  this  spectrum  is  not  a  concern.  51  Further,  there  is  evidence  that  entry  into  a  trunked  dispatch  market  using  the  220  MHz 

 frequency  band  is  continuing,  primarily  in  major  metropolitan  areas.  52  Although  growth  of  this 
 segment  has  not  been  as  rapid  as  initially  expected,  53  we  believe  this  is  not  due  to  a  lack  of 
 incentive  to  provide  service  on  this  frequency  or  a  chronic  problem  with  the  spectrum  or 
 equipment.  While  there  is  evidence  that  delivery  of  equipment  necessary  to  provide  trunked 
 dispatch  service  at  220  MHz  has  experienced  short-  term  delays,  the  pace  of  orders  placed  during 
 2000  indicates  that  there  is  continued  demand  for  such  equipment,  54  and  we  expect  an  increase  in 
 the  provision  of  trunked  dispatch  services  at  220  MHz  as  licensees  continue  to  build  out  their 
 licensed  areas.  Industry  analysts  also  predict  that  growth  will  continue.  55  The  present  and 
 anticipated  development  of  the  220  MHz  band  for  the  provision  of  dispatch  services  therefore 
 warrants  its  inclusion  in  a  trunked  dispatch  market. 

 19.  Second,  trunked  dispatch  services  currently  are  being  provided  on  the  217-  219  MHz  frequency  band,  commonly  referred  to  as  Automated  Maritime  Telecommunications  System 
 (  AMTS)  spectrum.  The  Commission  in  1997  adopted  a  rule  permitting  current  AMTS  public 
 49  The  220  MHz  band  refers  to  spectrum  allocated  in  the  220-  222  MHz  band. 
 50  See  Southern  Reply  at  9-  10 
 51  See  Geotek  Order  at  39;  see  also  Strategis  Report,  SMR  at  18. 
 52  For  example,  the  SMR  Advisory  Group,  one  of  the  largest  holders  of  220-  222  MHz  spectrum,  provides  service  in  19 
 states  and  32  of  the  50  largest  cities.  See  SMR  Advisory  Group  website  at  www.  smradvisory.  com.  Other  providers 
 that  are  offering  service,  or  plan  to  offer  service  soon,  include  Rush  Network  Corporation,  Northwest 
 Telecommunications  Corporation,  Comtran  Associates,  Inc.,  and  Securicor  Wireless.  Although  Southern  alleges  that 
 Securicor  is  unable  to  deliver  its  planned  220  MHz  dispatch  system,  see  Baumann  and  Siwek  Supplemental  Affidavit 
 at  9,  it  appears  that  Securicor  is  currently  providing  service  in  several  markets,  including  San  Diego,  Los  Angeles, 
 San  Francisco,  and  Boston.  See  Strategis  Report,  SMR,  at  45. 
 53  Strategis  Report,  SMR  at  3-  5,  18  and  25. 

 54  See  Datamarine  International  Inc.,  SEC  Form  10K,  for  the  fiscal  year  ended  September  30,  2000  (January  16,  2001) 
 and  Datamarine  International  Quarterly  Report,  SEC  Form  10QSB  (Feb.  13,  2001)  (reflecting  that  the  companys 
 backlog  has  increased). 
 55  Strategis  Report,  SMR  at  5. 
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 coast  stations  to  serve  units  on  land,  56  and  land-  based  service  is  now  becoming  available  on  that 
 spectrum.  57  Furthermore,  the  Commission  is  required  to  auction  additional  spectrum  at  218-  219 
 MHz  by  September  30,  2002.  58  AMTS  signals  propagate  far  inland  and,  therefore,  may  be  able  to 
 serve  major  population  centers  located  on  or  near  the  coast.  59  Though  the  service  has  certain 
 technical  constraints  (i.  e.,  call  times  may  be  limited  to  short  duration),  60  AMTS  trunked  dispatch 
 is  a  viable  alternative  for  at  least  some  inland  customers. 

 20.  Third,  some  commercial  providers  in  the  450  MHz  frequency  band  61  offer  trunked  dispatch  service.  62  Nextel  argues  that  450  MHz  spectrum  should  be  included  in  an  analysis  of  a 
 trunked  dispatch  market  because  all  450  MHz  licensees  are  authorized  to  provide  commercial 
 dispatch  service.  63  While  neither  the  Applicants  nor  Southern  have  provided  us  with  specific 
 information  regarding  how  many  450  MHz  systems  have  been  trunked,  we  note  that  at  least  one 
 industry  report  notes  that  migration  by  Nextels  former  800  MHz  trunked  dispatch  customers  has 
 spurred  growth  in  the  450  MHz  band.  64  Trunked  dispatch  service  has  been  slow  to  develop  in  the 
 450  MHz  band  because  the  band  is  licensed  on  a  shared  basis,  meaning  that  multiple  co-  channel 
 licenses  may  be  granted  in  the  same  service  area.  65  However,  there  has  been  a  generally  high  rate 
 of  growth  of  dispatch  subscribers  on  450  MHz  systems.  66  Subscribership  increased  by  49  percent 

 56  See  47  C.  F.  R.    80.123. 
 57  Mobex  Communications,  through  its  subsidiary  Regionet  Wireless  LLC,  holds  AMTS  licenses  that  currently  provide 
 land-  based  AMTS  dispatch  service  on  the  East  and  West  Coasts  and  in  the  Great  Lakes  area.  See  www.  mobex.  com; 
 see  also  Kristen  Beckman,  Regionet  Uses  Maritime  Licenses  to  Offer  SMR  Service,  Radio  Communications  Report 
 (Aug.  16,  1999).  Nextel  intends  to  purchase  a  15%  equity  interest  in  Regionet.  See  Application  for  Transfer  of 
 Licenses  from  Mobex  Communications,  Inc.  to  FCI  900,  Inc.,  File  No.  0000285336  at  Attachment. 
 58  The  Balanced  Budget  Act  of  1997  requires  the  commission  to  complete  all  actions  to  permit  assignment  of  this 

 spectrum  by  Sept.  30,  2002.  Pub.  L.  No.  105-  33,  Title  III,  111  Stat.  251  (1997),    3002(  c)(  1).  See  also 
 www.  fcc.  gov/  wtb/  prs/  ivds.  html. 
 59  Propagation  of  AMTS  signals,  which  can  travel  150-  200  miles  on  land,  varies  depending  on  site  location. 

 60  See  Baumann  and  Siwek  Supplemental  Affidavit  at    103.  We  note  there  is  no  evidence  in  the  record  indicating  that 
 trunked  dispatch  customers  demand  significantly  longer  call  times,  making  AMTS  an  unattractive  alternative. 
 Indeed,  Southern  acknowledges  that  a  shorter  call  time  can  be  a  beneficial  feature  for  employers.  Baumann  and 
 Siwek  Affidavit  at    62. 
 61  The  450  MHz  band  refers  to  spectrum  allocated  in  the  450-  470  MHz  band. 

 62  There  is  not  sufficient  information  in  the  record  regarding  how  widespread  trunking  is  at  450  MHz. 
 63  Rosston  Affidavit  at  15. 
 64  Strategis  Report,  Dispatch  at  72. 
 65  In  1997  the  Commission  implemented  a  set  of  rules  for  trunking  at  less  than  800  MHz.  See  Replacement  of  Part  90 
 by  Part  88  to  Revise  the  Private  Land  Mobile  Radio  Services  and  Modify  the  Policies  Governing  Them,  PR  Docket 
 No.  92-  235,  Second  Report  and  Order,  12  FCC  Rcd  14,307  (rel.  Mar.  12,  1997).  In  1999  there  was  a  rulemaking 
 that  changed  the  rules  to  permit  additional  trunking  in  the  frequencies  below  512  MHz.  See  Replacement  of  Part  90 
 by  Part  88  to  Revise  the  Private  Land  Mobile  Radio  Services  and  Modify  the  Policies  Governing  Them,  PR  Docket 
 No.  92-  235,  Third  Memorandum  Opinion  and  Order,  14  FCC  Rcd  10,922  (rel.  Jul.  1,  1999). 
 66  Strategis  Report,  Dispatch  at  71-  74. 
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 from  1999  to  2000,  reflecting  a  continued  demand  for  low-  priced  analog  dispatch  services.  67  It  is 
 reasonable  to  assume  that,  if  there  is  an  increase  in  demand  for  trunked  dispatch  services  at  450 
 MHz,  additional  licensees  may  find  it  beneficial  to  trunk  their  systems.  We  therefore  find  that 
 trunked  dispatch  service  offered  at  450  MHz  is  a  viable  substitute  for  some  customers  and  should 
 be  included  as  part  of  our  market  analysis. 

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

 22.  For  the  following  reasons,  we  do  not  include  group  calling  plans  offered  by  cellular  and  PCS  carriers  in  a  trunked  dispatch  market  for  purposes  of  this  transaction.  69  There  is 
 evidence  that  dispatch-  like  group  services  to  businesses  are  emerging  in  the  service  offerings  of 
 cellular  and  PCS  carriers,  and  that  some  cellular  and  PCS  companies  appear  to  be  positioning 
 themselves  to  compete  specifically  with  Nextels  Direct  Connect    service.  70  We  find  that  cellular 
 and  PCS  group  calling  and  conferencing  features  may  appeal  to  some  customers  with  dispatch 
 needs,  71  even  if  these  plans  do  not  offer  the  same  degree  of  one-  to-  many  functionality  found  in 
 dispatch  services.  72  However,  we  do  not  have  information  in  the  record  as  to  the  nature  of 

 67  Strategis  Report,  SMR  at  3  and  26. 
 68  See  also  Strategis  Report,  SMR  at  1  (SMR  and  SMR-  like  services  are  provided  in  the  800  MHz,  900  MHz,  220-  222 
 MHz,  and  450-  512  MHz  bands). 
 69  Applicants  urge  us  to  include  such  group  calling  plans  in  a  trunk  dispatch  market.  Public  Interest  Statement  at  13-14; 

 Rosston  Affidavit  at  14.  By  contrast,  Southern  questions  the  ability  and  inclination  of  cellular/  PCS  providers  to 
 provide  dispatch.  Southern  Comments  at  7;  Southern  Reply  at  5.  Southern  claims  that  cellular/  PCS  technology 
 would  need  to  be  retrofitted  in  order  to  provide  a  push-  to-  talk  dispatch  feature  and  finds  no  evidence  that  a  true 
 dispatch  (push-  to-  talk)  feature  is  part  of  any  interconnected  mobile  voice  providers  business  plans.  Id. 
 70  For  example,  AT&  T  offers  unlimited  mobile-  to-  mobile  calling  between  group  members,  for  groups  ranging  in  size 

 from  two  to  200,  as  well  as  unlimited  calls  from  the  group  to  five  fixed  lines.  See  Radio  Comm  Report,  Lynnette 
 Luna,  Group  Calling  is  Weapon  in  Wireless  War,  June  28,  1999;  Radio  Comm  Report,  AT&  T  Wireless  Offers 
 Business  Group  Calling,  June  14,  1999.  AT&  T  claims  that  its  group  calling  plan  is  designed  for  local,  mobile 
 businesses  such  as  sales  and  service,  delivery  and  distribution,  dispatch  and  contractors  that  operate  within  a  specific 
 geographic  area.  Id.  Qualcomm  is  developing  its  Q-  Chat  handset,  which  will  allow  push-  to-  talk  group  mobile 
 conferencing.  According  to  Southern,  this  service  is  expected  to  become  available  between  2002  and  2004. 
 Baumann  and  Siwek,  Supplemental  Affidavit  at    125.  Qualcomm  is  also  marketing  its  OmniExpress  Mobile 
 Communications  System  infrastructure,  which  will  provide  mobile  instant  group  data  dispatch  conferencing  over 
 cellular  and  PCS  networks,  and  also  offer  the  option  of  access  to  Sprints  wireless  voice  services.  See 
 http://  www.  qualcomm.  com,  QUALCOMM  Announces  Roadway  Express  to  Purchase  OmniExpress  Mobile 
 Communications  System,  News  Release,  January  31,  2001;  see  also  Nextel  March  8  Ex  Parte  Presentation  at  7-  8. 
 71  These  services  will  most  likely  appeal  to  growing  companies  with  dispatch  needs,  especially  in  urban  markets,  and 

 will  attract  customers  that  want  wide-  area  coverage,  low  start-  up  costs,  interconnected  services,  and  a  rapid 
 deployment  time.  See  Strategis  Group,  U.  S.  Dispatch  Markets,  Executive  Summary,  January  2000  at  10. 
 72  According  to  Southern,  the  maximum  group  size  permitted  by  cellular  and  PCS  group  calling  plans  for  mobile 

 conferencing  is  only  four  units,  at  this  time.  See  Baumann  and  Siwek  Supplemental  Affidavit  at    116.  Our 
 independent  research  indicates  that  AT&  T  offers  mobile  group  conferencing  with  up  to  five  units.  See  AT&  T 
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 customer  dispatch  usage  to  make  a  determination  regarding  the  extent  to  which  cellular  and  PCS 
 group  calling  plans  should  be  included  in  a  trunked  dispatch  market.  73  We  concluded  in  the 
 Geotek  Order,  and  continue  to  believe,  that  cellular  and  PCS  firms  have  the  ability  to  increase 
 their  presence  in  a  trunked  dispatch  market  easily  and  significantly  because  they  hold  spectrum 
 licenses,  have  relevant  physical  assets  in  place,  have  expertise  in  wireless  technologies  and 
 markets,  are  ongoing  businesses  with  recognizable  brand  names,  and  have  adequate  capital 
 resources  to  offer  new  products  and  services.  74  As  explained  below,  therefore,  such  group  calling 
 plans,  even  though  not  in  the  product  market,  do  place  some  constraints  on  possible  exercise  of 
 market  power  by  Nextel.  75 

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

 24.  Therefore,  we  will  analyze  the  assignment  of  Motorolas  900  MHz  licenses  to  Nextel  for  its  effects  on  two  separate  markets:  (a)  interconnected  mobile  voice  and  (b)  trunked 
 dispatch,  where  trunked  dispatch  includes,  at  the  very  least,  services  provided  at  800  MHz,  900 

 website,  at  www.  attws.  com/  business/  lcorp/  expl  ones/  grp_  calling/  extend_  wkgrp_  comm.  shtml.  In  either  case,  the 
 maximum  group  size  currently  marketed  by  cellular  and  PCS  carriers  is  significantly  fewer  than  the  group  size 
 available  using  dispatch  services  at  800  MHz,  900  MHz,  450  MHz,  220  MHz  or  217-  219  MHz,  which  can  reach 
 thousands  of  units. 
 73  For  example,  the  more  trunked  dispatch  service  is  used  for  groups  fewer  than  six  units,  the  more  substitutable  cellular 

 and  PCS  group  calling  functions  become.  Also,  the  call  set-  up  time  using  trunked  dispatch  is  generally  shorter  than 
 using  interconnected  mobile  voice  services.  See  Baumann  and  Siwek  Affidavit  at    61-  62.  The  less  important  this 
 call  set-  up  time  difference  is  to  customers,  the  more  substitutable  for  trunked  dispatch  the  cellular  and  PCS  group 
 calling  functions. 
 74  Geotek  Order  at    35. 

 75  See    31,  infra. 
 76  Rosston  Affidavit  at  15.  Licensing  of  the  700  MHz  guard  band  spectrum  has  largely  been  completed.  See  DA  00-2882 
 (rel.  Dec.  21,  2000)  (granting  70  700  MHz  guard  band  licenses)  and  DA  01-  408  (rel.  Feb.  14,  2001)  (granting 
 26  700  MHz  guard  band  licenses). 
 77  Ex  Parte  Letter  from  Laura  L.  Holloway,  Director  Government  Affairs,  Nextel  to  Susan  Singer,  Economist, 

 Commercial  Wireless  Division,  Wireless  Telecommunications  Bureau,  Federal  Communications  Commission,  filed 
 Dec.  13,  2000. 
 78  See  In  the  Matter  of  Service  Rules  for  the  746-  764  and  776-  794  MHz  bands,  and  Revision  to  Part  27  of  the 

 Commissions  Rules,  Third  Report  and  Order,  WT  Docket  99-  168  2001  WL  55614  (rel.  Jan.  23,  2001);  see  also  47 
 U.  S.  C.    309(  j)(  14). 
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 MHz,  220  MHz,  217-  219  MHz  (land-  based  AMTS  spectrum)  and  commercial  450  MHz.  We 
 recognize  that  these  product  markets  continue  to  evolve  so  that  the  dividing  line  between  these 
 two  markets  is  becoming  less  clear,  but  we  need  not  consider  a  significantly  expanded  market 
 definition  in  this  transaction,  because  we  approve  these  applications  even  under  the  narrower 
 market  analysis. 

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

 3.  Market  Analysis 
 a.  Interconnected  Mobile  Voice  Services 

 26.  U.  S.  interconnected  mobile  voice  markets  are  characterized  by  six  carriers  with  nationwide  or  near  nationwide  licensed  areas:  Verizon  Wireless,  Cingular  Wireless,  AT&  T 

 79  Revised  Horizontal  Merger  Guidelines  at    1.21.  See  also  Pittencrieff  Order  at    37  (citing  Tampa  Elec.  Co.  v. 
 Nashville  Co.,  365  U.  S.  329  (1961)). 
 80  Public  Interest  Statement  at  10;  see  also  Pittencrieff  Order  at    37-  41.  Southern  has  not  addressed  this  issue. 

 81  Rural  markets  have,  however,  begun  to  see  an  increase  in  service,  which  will  continue  as  interconnected  mobile  voice 
 providers  build  out  their  licensed  areas.  For  PCS  licenses,  Commission  rules  require  PCS  licensees  to  construct  their 
 systems  so  that  there  is  sufficient  signal  strength  to  provide  adequate  service  to  one-  third  of  the  population  of  the 
 market  within  five  years  and  two-  thirds  within  10  years.  See  47  C.  F.  R.    24.203(  a)  and  (b).  900  MHz  Major 
 Trading  Area  (  MTA)  licenses  are  required  to  build  out  their  systems  to  cover  one-  third  of  the  MTA  population 
 within  three  years  and  two-  thirds  of  the  MTA  population  within  five  years  of  the  license  grant.  See  47  C.  F.  R. 
 90.665. 
 82  Strategis  Report,  SMR  at  66. 

 83  Pittencrieff  Order  at  39;  Strategis  Report,  SMR  at  66. 
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 Wireless,  Sprint  PCS,  Nextel,  and  VoiceStream  Wireless.  84  There  are  also  a  large  number  of 
 regional  carriers,  including  ALLTEL  and  U.  S.  Cellular,  and  medium  or  smaller  regional  carriers, 
 such  as  Southern.  Of  the  total  U.  S.  population,  88  percent  live  in  a  county  where  at  least  three 
 different  providers  offer  interconnected  mobile  voice  services.  85  Motorola,  however,  does  not 
 provide  interconnected  mobile  voice  services  with  its  900  MHz  licenses.  Therefore,  our 
 competitive  analysis  of  this  transaction  yields  the  identical  conclusion  in  both  urban  and  rural 
 interconnected  mobile  voice  markets.  The  number  of  significant  competitors  will  not  be  reduced 
 due  to  the  assignment  of  these  licenses.  Consequently,  the  assignment  of  Motorolas  licenses  to 
 Nextel  will  not  harm  competition.  Moreover,  the  transaction  may  have  pro-  competitive  effects  in 
 interconnected  mobile  voice  markets.  Although  Nextel  is  currently  not  offering  interconnected 
 mobile  voice  services  with  its  900  MHz  licenses  in  either  urban  or  rural  areas,  it  has  recently 
 indicated  that  technology  to  make  this  possible  will  soon  be  available.  86  This  transaction  will 
 increase,  by  a  small  amount,  the  capacity  held  by  Nextel,  a  firm  that  currently  has  less  spectrum 
 than  other  large  rivals  providing  interconnected  mobile  voice  services,  87  enabling  it  to  better 
 compete  in  this  product  market.  In  sum,  approval  of  these  applications  may  further  the 
 development  of  competition  in  relevant  interconnected  mobile  voice  markets. 

 b.  Trunked  Dispatch  Services 
 i.  Urban  Markets 

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

 84  Fifth  CMRS  Competition  Report  at  10. 
 85  Id.  at  18. 
 86  See  Nextel  Waiver  Request  at  2. 
 87  Public  Interest  Statement  at  18-  19. 
 88  Baumann  and  Siwek  Affidavit  at  Tables  EI_  6.1-  69  and  EI_  7.1-  7.9. 
 89  See  notes  56  (AMTS)  and  65  supra  (450  MHz);  notes  107  and  108  infra  (B/  ILT). 
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 28.  We  first  find  that  Southerns  analysis  is  flawed,  yielding  an  unreasonably  high  picture  of  concentration.  Southern  maintains  that  the  trunked  dispatch  market  is  already  highly 
 concentrated  and  will  become  even  more  dominated  by  Nextel  should  the  Commission  grant  an 
 assignment  of  Motorolas  licenses.  90  Southern  calculates  market  concentration  at  both  the 
 national  and  local  levels  using  Herfindahl-  Hirschman  Indices  (  HHIs),  91  and  shows  very  high 
 market  concentration  for  the  top  nine  urban  markets.  92  Southerns  analysis  adopts  the  trunked 
 dispatch  market  definition  from  the  Geotek  Order,  which  included  trunked  dispatch  services 
 provided  at  800  MHz,  900  MHz,  and  220  MHz.  93  While  Southern  argues  that  we  should  not 
 include  the  220  MHz  spectrum  in  the  product  market  its  HHI  analysis  includes  that  spectrum 
 making  the  market  appear  less  concentrated.  Southerns  analysis,  however,  does  exclude  800 
 MHz  site  licensees,  non-  SMR  800  MHz  licensees  that  are  providing  commercial  trunked  dispatch 
 service,  commercial  trunked  450  MHz,  and  land-  based  AMTS  at  217-  219  MHz.  Essentially, 
 Southern  argues  that  the  trunked  dispatch  market  should  be  limited  to  SMR  spectrum  at  800  and 
 900  MHz.  Conversely,  Southern  overstates  Nextels  position  by  including  all  of  Nextels  800 
 MHz  spectrum  in  the  trunked  dispatch  market.  Because  this  spectrum  is  used  for  both  trunked 
 dispatch  and  interconnected  mobile  voice  services,  it  is  not  appropriate  to  assign  Nextels  800 
 MHz  capacity  entirely  to  the  trunked  dispatch  market  as  Southern  urges.  94  Overall,  we  believe 
 that  Southerns  HHI  calculations  are  significantly  inflated. 

 29.  While  the  Applicants  analysis  somewhat  understates  concentration  in  a  trunked 
 dispatch  market,  we  find  the  Applicants  approach  in  analyzing  trunked  dispatch  market 
 concentration  more  defensible  than  that  of  Southern.  The  Applicants  furnish  HHI  analyses  that 
 show  a  much  lower  level  of  concentration  in  the  top  nine  urban  markets  under  its  trunked  dispatch 
 definition.  95  The  Applicants  analysis  shows  an  unconcentrated  trunked  dispatch  market  based  on 
 an  estimate  of  Nextels  and  Southerns  portion  of  spectrum  that  is  used  for  trunked  dispatch 
 service,  other  800  MHz  and  900  MHz  spectrum,  220  MHz  spectrum,  450  MHz  spectrum,  and 

 90  Southern  Comments  at  6-  9;  Southern  Reply  at  6. 
 91  The  HHI  is  used  as  an  aid  in  evaluating  market  data  to  determine  the  degree  of  market  concentration.  The  HHI  is 
 calculated  by  summing  the  squares  of  the  individual  market  shares  of  all  the  participants  in  the  relevant  markets.  In 
 general,  if  the  resulting  number  is:  (1)  below  1,000,  the  market  is  considered  to  be  unconcentrated;  (2)  between  1,000 
 and  1,800,  the  market  is  considered  moderately  concentrated;  (3)  greater  than  1,800,  the  market  is  considered  to  be 
 concentrated.  However,  even  a  number  above  1,  800  may  not  raise  competitive  concerns,  depending  on  the 
 differential  between  the  pre-  and  post-  merger  numbers.  See  Revised  Horizontal  Merger  Guidelines  at    1.5. 
 Southern  calculates  post-  assignment  HHIs  ranging  from  3,776  to  7,060  in  the  top  nine  urban  markets.  See  Baumann 
 and  Siwek  Affidavit  at  Tables  EI_  6.1-  6.9  and  EI_  7.1-  7.9. 
 92  Baumann  and  Siwek  Affidavit  at  12-  14.  Southern  calculates  post-  assignment  HHIs  ranging  from  3,776  to  7,060  in 

 the  top  nine  urban  markets.  See  id.  at  Tables  EI_  6.1-  6.9  and  EI_  7.1-  7.9)  (Nextel-  Motorola  calculations). 
 93  Id.  at  7. 

 94  See  Fifth  CMRS  Competition  Report  at  70.  Nextel  estimates  that  47  percent  of  its  minutes  are  used  for  dispatch.  See 
 Rosston  Affidavit  at  16. 
 95  The  Applicants  calculate  post-  assignment  HHIs  ranging  from  530  to  759  in  the  top  nine  urban  markets.  Rosston 

 Affidavit  at  Table  3. 
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 700  MHz  spectrum.  96  We  generally  agree  that  their  approach  on  this  point  is  reasonable.  The 
 Applicants  analysis,  however,  prematurely  assumes  that  iDEN  is  available  on  the  900  MHz  band 
 and,  consequently,  allocates  some  portion  of  Nextels  900  MHz  licenses  to  an  interconnected 
 mobile  voice  market,  when,  at  this  time,  the  900  MHz  licenses  are  only  being  used  to  provide 
 trunked  dispatch  services.  97  Further,  the  Applicants  analysis  overstates  the  spectrum  input 
 markets  by  including  the  entire  220  MHz  spectrum  allocation  and  the  entire  450-  470  MHz 
 spectrum  allocation,  both  of  which  should  only  be  included  in  part,  98  and  the  entire  700  MHz 
 guard  band  spectrum,  which  should  not  be  included  at  all.  99  On  the  other  hand,  Applicants  did 
 not  include  AMTS  spectrum,  which  would  have  slightly  lowered  their  market  concentration 
 calculation.  100 

 30.  Given  our  various  adjustments  to  the  Applicants  numbers,  we  conclude  that  their 
 overall  analysis  is  more  reasonable  than  that  of  Southern.  While  we  believe  that  the  parties  HHI 
 submissions  have  limitations  as  a  means  of  analyzing  the  proposed  transaction,  we  conclude  that 
 the  Applicants  HHI  calculations  are  more  convincing  than  Southerns.  101  When  we  apply  the 
 same  HHI  methodology  used  by  both  parties  to  a  trunked  dispatch  market  as  we  have  defined  it 
 above,  102  the  result  is  that  six  of  the  affected  markets  show  both  pre-  and  post-  transfer  HHIs  of 

 96  Id.  at  Table  3. 
 97  Id.  at  16  ,  Table  2  and  Table  3 
 98  At  the  220  MHz  band,  licensees  have  not  fully  entered  the  market  and  therefore  only  a  portion  of  the  1.55  MHz 
 allocated  to  this  band  is  currently  being  used  to  provide  trunked  dispatch  service.  See    18  supra.  At  the  450  MHz 
 band,  although  trunking  is  permitted,  not  all  licensees  have  trunked  their  systems  and  are  providing  commercial 
 trunked  dispatch  service.  See    20  supra.  Accordingly,  only  a  portion  of  the  20  MHz  of  spectrum  at  this  frequency 
 should  be  considered  in  an  analysis  of  the  trunked  dispatch  market. 
 99  See    23  supra.  However,  we  believe  that  in  long  term,  the  700  MHz  guard  band  spectrum  may  be  another  potential 

 source  of  competition  in  the  trunked  dispatch  market,  since  Commission  rules  preclude  the  provision  of  cellular 
 services  on  this  spectrum.  In  the  Matter  of  Service  Rules  for  the  746-  764  And  776-  794  MHz  Bands,  and  Revisions  to 
 Part  27  of  the  Commissions  Rules,  Second  Report  and  Order,  WT  Docket  No.  99-  168,  FCC  00-  90,  15  FCC  Rcd 
 5299  at  5300  (rel.  Mar.  9,  2000). 
 100  Rosston  Affidavit  at  Tables  2  and  3.  The  AMTS  spectrum  would  have  added  another  2  MHz  of  spectrum  to  the 

 market  analysis.  However,  not  all  2  MHz  of  this  spectrum  is  currently  being  used  to  provide  land-  based  trunked 
 dispatch,  and  therefore,  only  a  portion  of  this  spectrum  should  be  included  in  a  market  concentration  analysis. 
 101  The  Revised  Horizontal  Merger  Guidelines  suggest  using  the  variable  that  best  indicates  firms  future  competitive 

 significance,  which  may  include  sales,  shipments,  production,  capacity,  or  reserves.  Revised  Horizontal  Merger 
 Guidelines  at    1.  41.  Both  the  Applicants  and  Southern  use  spectrum  as  the  underlying  variable  for  their  market 
 concentration  analyses.  Spectrum  is  an  input  in  the  provision  of  telecommunication  services  and  a  measure  of 
 capacity.  For  the  trunked  dispatch  market,  measures  of  output  are  unavailable.  The  choice  of  spectrum  may  be  a 
 reasonable  alternative,  but  when,  as  here,  extensive  build-  out  has  occurred,  spectrum  is  a  less  accurate  measure  of  the 
 firms  future  competitive  significance,  because  other  factors  such  as  technology  choice  may  affect  subscribership  and 
 revenues.  In  the  future,  data  on  output  measures  may  become  available  and  this  data  could  be  used  to  assess  the 
 competitiveness  of  the  trunked  dispatch  market.  See  1998  Biennial  Regulatory  Review,  Spectrum  Aggregation 
 Limits  for  Wireless  Telecommunications  Carriers,  WT  Docket  98-  205,  WT  Docket  96-  59,  GN  Docket  93-  252, 
 Report  and  Order  at    29  (rel.  Sept.  15,  1999). 
 102  Our  analysis  is  based  on  the  limited  information  in  the  record  concerning  the  amounts  of  spectrum  in  the  450  MHz, 

 217-  219  MHz,  and  non-  SMR  800  and  900  MHz  bands  being  used  to  provide  trunked  dispatch,  and  how  ownership 
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 less  than  1000,  indicating  no  market  concentration  either  before  or  after  the  transaction.  The 
 three  remaining  markets  show  pre-  and  post-  assignment  HHIs  in  the  1000  to  1800  range, 
 indicating  moderate  concentration  levels,  but  in  none  of  these  cases  does  the  HHI  index  rise  by 
 more  than  100  as  a  result  of  the  transaction,  which  is  the  threshold  identified  in  the  Revised 
 Horizontal  Merger  Guidelines  as  indicating  a  significant  increase  in  concentration.  103  Overall, 
 these  results  are  significantly  closer  to  those  presented  by  the  Applicants  than  those  presented  by 
 Southern.  104 

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

 of  that  spectrum  is  distributed.  In  addition,  we  have  relied  on  estimates  provided  in  the  record  of  the  percentages  of 
 Nextel  and  Southern  spectrum  holdings  that  are  attributable  to  trunked  dispatch,  rather  than  interconnected  mobile 
 voice  service. 
 103  The  Revised  Horizontal  Merger  Guidelines  identify  changes  of  100  or  more  points  as  potentially  significant  in 

 moderately  concentrated  markets  (markets  with  post-  transaction  HHI  between  1000  and  1800),  and  changes  of  50  or 
 more  points  as  potentially  significant  in  highly  concentrated  markets  (markets  with  post-  transaction  HHI  above 
 1800).  Revised  Horizontal  Merger  Guidelines  at    1.51. 
 104  We  note  that  because  there  are  now  more  providers  of  trunked  dispatch  service  than  was  the  case  at  the  time  of  our 

 Geotek  Order,  using  spectrum  bands  that  were  not  then  being  used  as  widely  for  provision  of  trunked  dispatch,  our 
 calculation  here  actually  results  in  lower  concentration  than  we  would  have  measured  had  we  computed  HHIs  in  the 
 Geotek  Order.  Indeed,  while  we  said  in  the  Geotek  Order  that  the  trunked  dispatch  market  was  concentrated, 
 these  results  suggest  that  this  may  not  be  the  case  today.  See  Geotek  Order  at    31-  34. 

 105  See    18-  20  supra. 

 106  See    22  supra. 
 107  Implementation  of  Sections  309(  j)  and  337  of  the  Communications  Act  of  1934  as  Amended,  WT  Docket  No.  99-  87 
 (FCC  00-  403),  Report  and  Order  and  Further  Notice  of  Proposed  Rule  Making,  (rel.  Nov.  17,  2000)  (  BBA  Order) 
 at    110. 
 108  Id.  at    111.  The  Commission  is  currently  considering  whether  to  extend  this  rule  to  existing  private  licensees  in  the 

 900  MHz  band,  id.  at    144,  which  may  provide  another  potential  source  of  future  competition  in  the  trunked 
 dispatch  market. 
 109  Southern  argues  that  there  will  be  little  incentive  for  private  entities  to  convert  B/  ILT  spectrum  to  commercial  use 

 given  the  prohibition  against  obtaining  new  B/  ILT  spectrum  in  the  same  location  for  one  year  after  such  conversion, 
 and  against  making  such  a  conversion  until  five  years  after  the  initial  grant  date  of  the  license.  See  Baumann  and 
 Siwek  Supplemental  Affidavit  at    19-  31;  see  also  BBA  Order  at    7,  114-  115.  The  purpose  of  this  rule  change 
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 sources  can  mitigate  any  potential  for  Nextel  to  exercise  market  power  in  this  market. 
 32.  Further,  we  believe  that  the  ability  of  at  least  some  consumers  to  use,  in  the 
 alternative,  traditional  dispatch,  110  private  dispatch,  111  and  data  dispatch  provides  additional 
 constraint  against  the  ability  of  Nextel  to  wield  market  power.  112  First,  traditional  dispatch 
 services  are  likely  to  be  viable  competitive  alternatives  for  customers  who  desire  inexpensive 
 dispatch  service  and  do  not  have  privacy  concerns.  113  Second,  owning  and  operating  an  in-  house 
 radio  system  or  private  dispatch  system  may  be  a  competitive  alternative  for  some  large,  trunked 
 dispatch  consumers.  114  Third,  it  appears  that,  for  some  customers,  wireless  data  communications 
 are  increasingly  becoming  a  satisfactory  alternative  to  voice  communications  for  dispatch 
 applications.  115 

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

 was  to  increase  the  efficient  use  of  spectrum  through  creating  flexibility  for  PLMR  licensees  needing  to  fill  their 
 communications  needs  and  CMRS  licensees  needing  additional  spectrum.  BBA  Order  at    109.  We  do  not  believe 
 these  prohibitions,  which  were  put  in  place  to  prevent  trafficking  in  PLMR  spectrum,  will  significantly  chill  the 
 conversion  of  spectrum  that  is  otherwise  lying  fallow.  Southern  further  argues  that  for  various  reasons,  it  is  unlikely 
 that  electric  utilities  will  convert  their  current  dispatch  operations  to  a  digital  trunked  system  in  order  to  offer 
 commercial  service.  See  Baumann  and  Siwek  Affidavit  at    32-  61.  Southern  fails  to  consider  the  possibility  that 
 some  electric  utilities  may  choose  to  offer  simple  analog  trunked  dispatch  service  within  their  licensed  area,  if  doing 
 so  would  be  profitable.  While  we  cannot  predict  with  certainty  the  extent  to  which  B/  ILT  licenses  will  be  converted 
 to  commercial  use,  there  is  no  question  that  the  potential  of  using  this  spectrum  for  trunked  dispatch  exists. 
 110  Traditional  dispatch  refers  to  non-  interconnected,  non-  CMRS  services  provided  on  a  for-  profit  basis  (typically  non-trunked 

 analog  systems).  Traditional  systems  do  not  offer  a  comparable  level  of  efficiency  or  privacy  to  commercial 
 trunked  systems. 
 111  Private  dispatch  refers  to  in-  house  systems  operated  by  companies  solely  to  support  their  own  business  operations. 

 112  See  Geotek  Order  at    34;  Strategis  Report,  SMR  at  8,  27-  28;  Strategis  Report,  Dispatch  at  10;  Fifth  CMRS 
 Competition  Report  at  66-  67. 
 113  See  Geotek  Order  at    34. 

 114  Id. 
 115  Strategis  Report,  SMR  at  27-  28.  Data  services  are  spectrum  efficient;  permit  group  dispatch,  and  allow  for  wide  area 
 and  nationwide  coverage.  Although  data  dispatch  does  not  offer  real-  time,  voice  communications,  such  providers  are 
 offering  increasingly  sophisticated  fleet  management,  automated  scheduling,  and  dispatch  communications 
 capabilities.  Strategis  Report,  Dispatch  at  10;  Strategis  Report,  SMR  at  8.  These  services  are  provided  by  companies 
 such  as  TeleTrac,  HighwayMaster,  and  BellSouth  Wireless  Data.  Strategis  Report,  SMR  at  8.  See  also  Fifth  CMRS 
 Competition  Report  at  66-  67.  Also,  data  dispatch  features  are  increasingly  being  bundled  with  trunked  dispatch, 
 reflecting  once  again  the  fluidity  of  CMRS  services. 
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 ii.  Rural  Markets 
 34.  Since  Motorola  generally  has  not  provided  dispatch  services  in  rural  areas,  116  the 
 number  of  competitors  in  a  rural  trunked  dispatch  market  will  not  be  reduced  due  to  the 
 assignment  of  these  licenses.  Furthermore,  our  general  policy  is  to  permit  the  aggregation  of 
 CMRS  spectrum  and  interests  therein  up  to  the  limits  permitted  under  the  spectrum  aggregation 
 rule,  provided  that  such  aggregation  neither  reduces  actual  competition  nor  stymies  the 
 development  of  competition  in  any  market.  117  We  find  no  special  circumstances  here  that  warrant 
 adopting  a  different  view. 

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

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

 116  Public  Interest  Statement  at  18. 
 117  See  In  re  Applications  of  VoiceStream  Wireless  Corp.  or  Omniiiont  Corp.  and  VoiceStream  Wireless  Holding  Co., 
 Cook  Inlet/  VS  GSM  II  PCS,  LLC,  or  Cook  Inlet/  VS  GSM  II  PCS,  LLC,  Memorandum  Opinion  and  Order,  15  FCC 
 Rcd.  3341,    26  (2000). 
 118  Public  Interest  Statement  at  4. 

 119  Id.  at  16. 
 120  Id.  at  4. 
 121  See  Nextel  Waiver  Request  and  Nextel  March  8  Ex  Parte  Presentation  at  10. 
 122  In  2000,  Nextel  began  to  offer  international  roaming  using  a  dual  mode/  dual  band  handset  (iDEN/  GSM).  See  Nextel 
 March  8  Ex  Parte  Presentatioan  at  10. 
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 D.  Roaming 
 37.  Southern  also  urges  that,  should  the  Commission  grant  these  applications,  Nextel 
 should  be  required  to  provide  it  roaming  on  Nextels  digital  SMR  frequencies.  123  We  deny  this 
 request.  First,  the  alleged  harm  is  not  caused  by  the  proposed  transaction.  Southern  does  not 
 now  have  roaming  agreements  with  Nextel  or  Motorola,  and  it  will  be  in  the  same  position  after 
 this  transaction.  Second,  the  remedy  proposed  does  not  address  the  harm  claimed.  There  is  no 
 nexus  between  Southerns  roaming  proposal,  which  relates  to  Southerns  interconnected  mobile 
 voice  services,  and  a  trunked  dispatch  market.  Given  that  the  current  state  of  technology  does 
 not  permit  dispatch  calling  in  a  roaming  mode,  such  a  condition  would  not  remedy  any  alleged 
 harm  to  a  trunked  dispatch  marketplace,  which  is  the  basis  for  Southerns  expressed  concerns 
 about  this  transaction.  124  Third,  if,  as  Southern  asserts,  Nextel  is  denying  Southern  manual 
 roaming  in  contravention  of  our  rules,  125  the  appropriate  remedy  would  be  through  an 
 enforcement  action,  126  and  not  a  roaming  condition  on  the  grant  of  an  unrelated  set  of 
 applications.  Finally,  regulation  of  automatic  and  manual  roaming  services  are  the  subject  of  a 
 separate  rulemaking  proceeding,  127  and  broader  issues  related  to  any  proposed  roaming 
 requirements  are  more  appropriately  addressed  in  that  proceeding. 

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

 123  Southern  Reply  at  18-  19.  Southern  argues  that  a  mobile  service  that  does  not  offer  out-  of-  territory  roaming  is 
 significantly  less  valuable.  Baumann  and  Siwek  Supplemental  Affidavit  at    43. 
 124  See  Rosston  Affidavit  at  18. 

 125  Id.  See  also  In  re  Automatic  and  Manual  Roaming  Obligations  Pertaining  to  Commercial  Mobile  Radio  Service; 
 Notice  of  Proposed  Rulemaking,  WT  Docket  No.  00-  193,  15  FCC  Rcd  21628  (rel.  Nov.  1,  2000)  (  Automatic  and 
 Manual  Roaming  NPRM)  at    5-  7  (explaining  current  requirement)  and  Southern  Reply,  Exhibit  A  (Comments  of 
 Southern  LINC  submitted  in  response  to  the  Automatic  and  Manual  Roaming  NPRM  ). 
 126  See,  e.  g.,  47  U.  S.  C.    208,  202.  We  are  not  persuaded  by  Southerns  statement  in  its  comments  in  the  Roaming 

 Proceeding  that  available  enforcement  mechanisms  are  too  cumbersome  and  risky.  Comments  of  Southern  LINC  to 
 Roaming  Proceeding  at  20-  22.  The  fact  that  Southern  has  elected  not  to  pursue  its  available  remedies  does  not  justify 
 placing  an  extraneous  condition  on  a  separate  and  unrelated  transaction. 
 127  See  Automatic  and  Manual  Roaming  NPRM.  In  that  rulemaking,  the  Commission  has  sought  comment  on  whether 

 to  impose  an  automatic  roaming  rule  for  CMRS  and/  or  to  sunset  the  currently  applicable  manual  roaming 
 requirement. 
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 IV.  ORDERING  CLAUSES 
 39.  ACCORDINGLY,  IT  IS  ORDERED,  pursuant  to  sections  4(  i)  and  (j),  309,  and 
 310(  d)  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    154(  i),  154(  j),  309,  and 
 310(  d),  that  the  request  of  Southern  LINC  that  we  deny  these  applications  IS  DENIED. 

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

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

 42.  This  action  is  taken  on  delegated  authority  under  section  0.331  of  the 
 Commissions  rules,  47  C.  F.  R.    0.331. 

 FEDERAL  COMMUNICATIONS  COMMISSION 

 Thomas  J.  Sugrue 
 Chief,  Wireless  Telecommunications  Bureau 
22