Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-96-01327/USCOURTS-caDC-96-01327-0/pdf.json

Parties Involved:
BellSouth Mobility Inc.
Intervenor
Columbia Cellular, Inc.
Intervenor
Federal Communications Commission
Appellee
MobileTel, Inc.
Appellant

Document Text:

<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 31, 1997 Decided March 7, 1997

No. 96-1327

MOBILETEL, INC.,

APPELLANT

v.

FEDERAL COMMUNICATIONS COMMISSION,

APPELLEE

COLUMBIA CELLULAR, INC. AND

BELLSOUTH MOBILITY INC.,

INTERVENORS

-

APPEAL OF AN ORDER OF THE

FEDERAL COMMUNICATIONS COMMISSION

-

Bruce D. Sokler argued the cause for appellant, with whom Howard J. Symons and James A.

Kirkland were on the briefs.

Joel Marcus, Counsel, Federal Communications Commission, argued the cause for appellee, with

whom William E. Kennard, General Counsel, Daniel M. Armstrong, Associate General Counsel,

John E. Ingle, Deputy Associate GeneralCounsel, and Roberta L. Cook, Counsel, were on the brief.

Kenneth E. Hardman, L. Andrew Tollin and Michael Deuel Sullivan were on the joint brief for

intervenors Columbia Cellular, Inc. and BellSouth Mobility Inc. David G. Frolio, Jim O. Llewellyn,

Robert G. Kirk, Walter H. Alford and William B. Barfield entered appearances.

Before: EDWARDS, Chief Judge, WALD and SENTELLE, Circuit Judges.

Opinion for the Court filed by Circuit Judge WALD.

WALD, Circuit Judge: On August 14, 1996, the Federal Communications Commission ("the

Commission") released an order dismissing the application of MobileTel, Inc. ("MobileTel") to

provide cellularservice in two Rural Service Areas("RSAs") in Louisiana using frequenciesreserved

for applicantsthat alreadyprovide "public landlinemessage telephone service," 47C.F.R. § 22.902(b)

USCA Case #96-1327 Document #257374 Filed: 03/07/1997 Page 1 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

(1988), in those areas. See In re Applications of MobileTel, Inc., FCC 96-345, 1996 WL 459977

(F.C.C.) (August 14, 1996). The Commission concluded that MobileTel was ineligible for the

reserved frequencies in these RSAs because the company provided telephone service to customers

in these areas onlybymeans ofradio links, and the regulation making the provision of "public landline

message telephone service" a condition of eligibility excluded companies serving customers only by

means of radio links. MobileTel appealed the Commission's order to this court. We affirm.

I. BACKGROUND

The Commission established rules to govern the implementation of cellular communications

service in 1981. See Cellular Communications Systems, 86 FCC 2d 469 (1981), modified, 89 FCC

2d 58 (1982), further modified, 90 FCC 2d 571 (1982), petition forreviewdismissed, United States

v. FCC, No. 82-1526 (D.C.Cir.1984). To promote competition in cellular markets, the Commission

divided the radio spectrum into two frequency blocks, ensuring that two cellular systems would

compete in each market. See id. at 487-93. In making its initial allocation of cellular frequencies, the

Commission made the "Block A" frequenciesin each market available to "[c]ommon carriers not also

engaged in the business of affording public landline message telephone service," 47 C.F.R. §

22.902(b) (emphasis added), and reserved the "Block B" frequencies for common carriers that were

engaged directlyor indirectlyin the provision of "public landline message telephone service." Id. The

Commission eliminated thissystem ofseparate allocationsfor landline and non-landline applicantsin

1994. See Revision of Part 22 of the Commission's Rules, 9 FCC Rcd 6513 (1994).

The Commission reserved the Block B frequenciesfor companies already providing landline

service because it wanted to take advantage ofthe technical expertise and knowledge oflocalmarkets

that AT&T and other experienced providers ofbasic localtelephone service had accumulated through

years of providing local service. See Cellular Communications Systems, 86 FCC 2d at 488-89

("GivenAT&T's distinctive technical capabilities, and its operation in most major markets, we are left

with little doubt that only AT&T is in a position today to place cellular systems in operation around

the country in the immediate future."). The Commission also hoped in this way to minimize the

number of applications competing for the Block B frequenciesin each market. Although in previous

USCA Case #96-1327 Document #257374 Filed: 03/07/1997 Page 2 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

license distributions it had allowed providers of landline service to qualify for landline set-aside

frequenciesin any market, see In re Application of Bonduel Telephone Co., 68 FCC 2d 497 (1978),

the Commission deliberately abandoned the Bonduel approach in creating the Block B cellular

landline set-aside, deciding instead to permit landline companiesto apply for cellular frequencies only

in the marketsin which they were already providing landline service. See Cellular Communications

Systems, 86 FCC 2d at 490 n.56. In this way the Commission hoped to guarantee that in all but a few

markets, only one wireline carrier would be eligible for the Block B frequencies, which would

eliminate the delay caused by the often drawn-out comparative hearings required for dealing with

mutually-exclusive applications under Ashbacker Radio Corp. v. FCC, 326 U.S. 327 (1945). The

Commission also expected that rapid approval of the local landline company's application for the

Block B frequenciesin a market would give competing applicantsfor the Block A frequenciesin that

market an incentive to reach a settlement agreement, to prevent the company operating in the Block

B frequencies from getting a head start. See Cellular Communications Systems, 86 FCC 2d at 490-

91. Except where they threaten its goal of preserving competition, the Commission generally favors

measures that streamline the license distribution processfor example by encouraging settlement

agreements between competing applicantsin light of its statutory mandate "to make available, so

far as possible, to all the people of the United States a rapid, efficient, Nation-wide, and world-wide

wire and radio communication service with adequate facilities at reasonable charges...." 47 U.S.C.

§ 151.

When theCommissionreplaced the comparative hearing systemwith a lotterysystemin 1983,

it expressly declined to discontinue the set-aside for landline companies operating in the relevant

market, despite arguments that the abandonment of the comparative hearing system eliminated the

need for set-asides designed to streamline the selection process. See Cellular Lottery Rulemaking,

98 FCC 2d 175 (1984), modified, Cellular Lottery Reconsideration Order, 101 FCC 2d 577 (1985),

affirmed in pertinent part, Maxcell Telecom Plus, Inc. v. FCC, 815 F.2d 1551 (D.C. Cir. 1987). The

Commission defended the retention of the landline set-aside on the ground that it continued to

promote important goals, notwithstanding the switch to a lottery system. See id. at 192-98. First,

USCA Case #96-1327 Document #257374 Filed: 03/07/1997 Page 3 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

the set-aside protected local landline telephone companies from being shut out of their local cellular

markets. Were they to be shut out of the local cellular market, these companies would lose customers

to the local providers of cellular service, especially in rural areas where the cost of providing landline

service is high; eventually the local companies could be forced out of business by their cellular

competitors. See id. at 194-95. Individuals served by these small local telephone companies would

then be left without telephone service, an outcome which would conflict with the Commission's

objective ofachieving universaltelephone service. Second, the Commission believed that the separate

allocation systemlent the cellular markets a structure which would foment healthy competition,since

the two types of communications carriers would draw upon their respective "traditions of service"

to compete for customers. See id. at 196. Third, the set-aside continued to encourage settlement

agreements by limiting the number of competing applications, and settlement agreements were still

(despite the obviation of comparative hearings by the introduction of a lottery system) thought to

serve the public interest by creating synergies between heterogeneous companies and minimizing the

administrative burden, delay, and expense involved in dealing with petitions challenging cellular

frequency allocations. See id. at 196-97. Fourth, eliminating the set-aside would be unfair to the

local telephone companies, because they had previously been precluded by the terms of the set-aside

from competing for Block B frequencies in areas where they did not provide landline service. See

id. at 197.

In October of 1988, MobileTelan affiliate of Lafourche Telephone Company, Inc.

("Lafourche")applied for Block B cellular frequencies in the St. James and Plaquemines RSAs in

swampy areas on the gulf coast of Louisiana. Competing applications for the St. James RSA were

filed by BellSouth Mobility, Inc. ("BellSouth") and Columbia Cellular, Inc. ("Columbia"), and

BellSouth also filed a competing application for the Plaquemines RSA. Columbia's (undisputed)

claimof eligibility as a "[c]ommon carrier[ ] engaged directly or indirectly in the business of affording

public landline message telephone service" in the St. James RSA was based on its affiliation with

USCA Case #96-1327 Document #257374 Filed: 03/07/1997 Page 4 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

1The term "wireline" describes a system in which the connections between individual

customers and central offices are made by wires, as opposed to alternative technologies such as

radio links. 

Reserve Telephone Company, a small, independent, rural telephone company operating a wireline1

local telephone service in the St. James RSA. MobileTel's claim of eligibility was based on its

affiliation with Lafourche, which operated wireline local telephone service outside of the St. James

and Plaquemines RSAs, and which had recently instituted local service to one customer inside each

of these RSAs using Basic Exchange Telecommunications Radio Service ("BETRS") in place of

wireline technology. BETRS is an alternative to wireline technology that is used to connect

individual customers' telephones to the service provider's central office; instead of wires, BETRS

connects customers to central offices by means of radio transmissions. Where the terrain between

the central office and individual customers is rugged (in this case, swampy), and therefore difficult

or impossible to span with wires, BETRS facilitatesthe provision oflocalservice to those customers.

The Commission authorized the use of BETRS by local telephone companies in 1988, seven years

after the establishment of the landline set-aside, and did not modify the set-aside subsequent to this

authorization. See In the Matter of Basic Exch. Telecomm. Radio Serv., 3 FCC Rcd 214 (1988)

("BETRS Order").

MobileTel won the lottery for the Block B frequencies in the St. James and Plaquemines

RSAs, and was named the tentative selectee for both. After BellSouth and Columbia formed a limited

partnership, BellSouth petitioned the Commission's Mobile Services Division ("MSD") to deny

MobileTel's applications on the ground that MobileTelwasineligible because neither it nor its affiliate

Lafourche providedwireline telephone service intheseRSAs. BellSouth argued that the requirement,

under § 22.902(b), that an applicant be providing "landline" service in the area for which it is applying

to provide cellular service required the exclusion of applicants serving these areas only by means of

non-wireline technologies such as BETRS. The MSD granted MobileTel's applications in October

of 1990. See In re Applications of MobileTel, Inc., 5 FCC Rcd 5854 (MSD 1990). Although it

acknowledged that the Commission had commonly referred to the Block B frequencies as the

"wireline set-aside," and that the provision of BETRS-based service "does not qualify an applicant

USCA Case #96-1327 Document #257374 Filed: 03/07/1997 Page 5 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

as a wireline for purposes of Section 22.902(b)," id. at 5855, the MSD reasoned that allowing

companies providing local telephone service in particular cellular markets only through BETRS to

compete for these frequencies was consistent with the Commission's intent in creating the set-aside.

See id. at 5855-56. BellSouth and Columbia each filed petitions for reconsideration of the MSD

order, arguing that to allow an applicant providing only non-wireline service to apply for frequencies

set aside for providers of "landline" service would violate the plain meaning of the regulation.

On January 27, 1995, the Commission adopted (but did not release) an order reversing the

MSD and dismissing MobileTel's applications as unacceptable for filing, on the ground that "BETRS

is indisputably a radio, not a "landline' (or "wireline') service," and that therefore MobileTel did not

provide "landline" service in the St. James or Plaquemines RSAs as required for eligibility under §

22.902(b). On February 6, 1995, the Commission announced this order in a press release. On March

23, 1995, the Commission released an order vacating its (still-unreleased) January 27 order, and

remanding the matter to the Wireless Telecommunications Bureau ("WTB") with directions that the

WTB consider the relevance to the January 27 order of BellSouth's request to withdraw its petition

andColumbia'srequestfor approvalofitssettlement withMobileTelfacts ofwhichtheCommission

had been unaware when it issued the January 27 order. See In re Applications of MobileTel, Inc.,

10 FCC Rcd 10657 (1996). The WTB later recused itself from further participation in the licensing

proceeding for reasons unrelated to the issuesin this appeal, and the Commission's Office of General

Counsel assumed responsibility for making recommendations to the Commission on the remanded

matters.

On August 14, 1996, the Commission returned to the conclusion it had reached in the

never-released January 27 order: MobileTel was ineligible for the Block B frequencies in the St.

James and Plaquemines RSAs, because the set-aside for providers oflocal "landline" service required

the exclusion of applicants providing service only by means of non-wireline technologies such as

BETRS. See In re Applications of MobileTel, Inc., 1996 WL 459977 (F.C.C.) at 9. The

Commission rejected MobileTel's argument that the provision of BETRS service in an RSA could

create eligibility for the set-aside, finding thisinterpretation inconsistent with the plain meaning ofthe

USCA Case #96-1327 Document #257374 Filed: 03/07/1997 Page 6 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

term "landline," the Commission's prior decisions, and the purposes for which the set-aside was

implemented. See id. at 4-8. The Commission also observed that allowing BETRS links to create

eligibilityunder § 22.902(b) could enable applicantsto undermine the set-aside system. The set-aside

wasintended to give a leg up to local telephone companies with an established presence in particular

geographical areas, on the rationale that these local companies would have a unique reserve of

expertise and knowledge about these areas. Because BETRS "loops" linking individual customers

in particular RSAs to pre-existing central offices could be thrown up relatively quickly and cheaply,

a company operating only BETRS-based local service in an RSA might well have been operating in

the area only a very short while, and thus have no such local expertise. See id. at 8.

MobileTel filed this appeal from the August 14 order, and Columbia and Bell South

intervened.

II. DISCUSSION

A. The Commission's Construction of the Term "Landline"

When we review a challenge to an agency's interpretation of its own regulations, we will

accept the agency's interpretation unless it is "plainly wrong." General Carbon Co. v. Occupational

Safety & Health Review Comm'n, 860 F.2d 479, 483 (D.C. Cir. 1988) (citing United States v.

Larionoff, 431 U.S. 864, 872 (1977) and Udall v. Tallman, 380 U.S. 1, 16 (1965)).

MobileTel argues that the Commission's construction of the term "landline" in § 22.902(b)

of its regulations was plainly wrong because, by construing the term to exclude BETRS-based

service, the Commission ignored and undermined the policies underlying the set-aside which that

regulation created. Conceding that the Commission commonly used the terms "landline" and

"wireline" interchangeably when it instituted what was generally referred to as the "wireline setaside," MobileTel arguesthat theCommission's use ofthese terms prior to the 1988 order authorizing

the use of BETRS technology must in retrospect be construed as describing the provision of local

telephone service by BETRS, as well as by wires. MobileTel asserts that this must be the case,

because excludingBETRS-based service fromthe set-aside conflictswiththe policies underlying both

the "wireline set-aside" and the Commission's order authorizing the use of BETRS by local service

USCA Case #96-1327 Document #257374 Filed: 03/07/1997 Page 7 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

providers.

TheCommission'sstated intent in creating the set-aside, and inpreserving it despite the switch

to a lottery system, was to protect telephone companies that were small, that had a presence in the

particular area in which cellular service was to be licensed, that might be squeezed out of the market

altogether if they failed to land a local cellular license, and the demise of which would leave some

customers with no local telephone service at all. See Cellular Lottery Rulemaking, 98 FCC 2d at

192-98. MobileTel argues that all of these factors should apply to companies providing local service

via BETRS, and claimsthat as a provider oflocalBETRS-based service to customersin the St.James

and Plaquemines RSAs, it hasthe same expertise and knowledge of these markets as a company that

had set up wireline linksin theseRSAs would have. MobileTel also accuses the Commission of unfair

and contradictorybehavior, arguing that the Commission first encouraged localtelephone companies

to use BETRS, and then "puni[shed]" companies who took the bait by denying themeligibility for the

"wireline set-aside" frequencies. Amended Brief for Appellant at 33.

When MobileTel filed its application, the Commission's rules included no definition of the

term"landline" or ofthe phrase "public landline message telephone service." The Commission points

out that a 1986 dictionary of industry terms defined "landline" in such a way as to include only

wire-based or cable-based service,seeBrieffor Appellee at 22, while MobileTel cites a 1993 industry

dictionary including fiber optic and microwave links in the definition. See Reply Brief for Appellant

at 8 n.20. Given the facts that no statutory definition accompanied the regulation, and that industry

dictionaries offer conflicting definitions which arguably could reflect the very sort of technological

"updating" on which MobileTel's argument is premised, we obviously cannot resolve this dispute

solely on the basis of the "plain meaning" of the word "landline" or of the phrase "public landline

message telephone service" divorced from the policies underlying the set-aside. Cf. In the Matter of

Xerox Corp. and MCI Communications Corp., 90 FCC 2d 547, 550-54 (1982) (finding that the lack

of a statutory definition of the term "public landline message telephone service" precluded a "plain

meaning" answer to the question of whether a service not in existence at the time the regulation was

drafted should fall within the scope of the phrase, and turning to other Commission policies and

USCA Case #96-1327 Document #257374 Filed: 03/07/1997 Page 8 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

decisions to answer the question). The Commission's interpretation of "landline," and of the phrase

in which it appeared in § 22.902(b), certainly was not clearly wrong under any "plain meaning"

analysis, and thus we turn to the other grounds on which MobileTel challenges the Commission's

interpretation.

The "wireline set-aside" was intended to benefit small telephone companies with a presence

in a local marketcompanies with local expertise and experience, that could be squeezed out of

business if they failed to land a local cellular license. MobileTel's argument that it was unreasonable

for the Commission to exclude from this category companies that serve a market only via BETRS

"loops" is disproved by the record in this case, which indicates that the sum and substance of

MobileTel's "presence" and "experience" in the St. James and Plaquemines RSAs was the extension

of radio service to one customer in each RSAand even these minimal excursions were set up just

in time to support MobileTel's applications for the Block B cellular frequencies in these areas. The

Commission's additionalrationale based on its desire to minimize the number of competing applicants

for each RSA also was served by the Commission's interpretation barring providers of only

BETRS-based service. Thus we must reject MobileTel's argument regarding the policies underlying

the "wireline set-aside" because the Commission's construction of the term "landline" is consistent

with several of these policies, and because only the Commission may decide how much precedence

particular policies will be granted when several are implicated in a single decision.

Nor istheCommission's authorization ofthe use ofBETRS to provide local telephone service

fundamentally incompatible with its refusal to permit BETRS links alone to create eligibility for the

"wireline set-aside." Had the Commission, in authorizing the provision of local service via BETRS,

intended for BETRS service to be treated identically with wireline service in all respects, we doubt

that theCommission would have enumerated certain contextsinwhich it intended for BETRS service

and wireline service to be treated similarly. See BETRS Order, 3 FCC Rcd at 223 n.10 ("It is our

intention that wire and radio basic exchange service be treated similarly with regard to eligibility for

high cost assistance."). Merely declining to extend them eligibility for a special set-aside cannot fairly

be described as "punishing" companies that set up BETRS links. Nor can we accept MobileTel's

USCA Case #96-1327 Document #257374 Filed: 03/07/1997 Page 9 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

2A portion of the Commission's 1988 regulations not directly involved in this case

demonstrates that all of the technologies encompassed by the Rural Radio Service were, at the

time of MobileTel's application, explicitly treated by the Commission as alternatives to "wireline"

service, rather than as types of service subsumed within the definition of "wireline." See 47

C.F.R. § 22.609(a) (1988) ("Each application in [the Rural Radio Service] shall be accompanied

by a showing why it is impracticable to provide the required communication service by means of

wireline facilities."). 

argument that the introduction of BETRS technology implied a radical alteration in the definitions

of the terms "landline" and "wireline"; we note that BETRS is not the first technology to substitute

for wires in the provision of local telephone servicethe replacement of wireline links with cellular,

fiber optic, or "point-to-point microwave" service predated the authorization of BETRS service, and

none of these technologies was thought to have implied any redefinition of the terms "landline" or

"wireline."2

MobileTel also arguesthat even if the Commission'sinterpretation of the term "landline" was

not plainly wrong, the Commission was obliged to waive the eligibility requirement for MobileTel in

light of the policies underlying the set-aside and the authorization of BETRS service. See Amended

Brief for Appellant at 36-39. In its order, the Commission expressly declined to waive the eligibility

rules for MobileTel because it was "unpersuaded that the purposes underlying [the] eligibility rule

would be frustrated absent a waiver," In re Applications of MobileTel, Inc., 1996 WL 459977

(F.C.C.) at 7, and cited the same policy justifications that it applied in support of its construction of

the term "landline." These justifications adequately support the Commission's refusal to grant

MobileTel a waiver, particularly in light of the fact that MobileTel's extension of local service in the

St.James and Plaquemines RSAs was extremely limited in tenure and scope, and thus MobileTelwas

distinctly not in the genre of companies that the Commission intended for the set-aside to benefit.

Because the Commission's interpretation of the term "landline" as used in § 22.902(b) of its

regulations was reasonable and consistent with several of the Commission's relevant policies, we

easily conclude that this interpretation was not "plainly wrong."

B. The Commission's Notice to Applicants

MobileTel next argues that even if the Commission's construction of its rule was not plainly

wrong and the Commission wasjustified in refusing to waive the rule, we should overturn the August

USCA Case #96-1327 Document #257374 Filed: 03/07/1997 Page 10 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

14 order because the regulation "as written," and theCommission'sinterpretation ofit in prior orders,

had given MobileTel the reasonable impression that the set-aside "covered all parties who provide

local telephone service in an area," whether bywires or by an alternative technology. Amended Brief

for Appellant at 40-41 (citing McElroy Elec. Corp. v. FCC, 990 F.2d 1351, 1358-63 (D.C. Cir.

1993)). MobileTel bases this argument on the same theories it offered in support of its assertion that

the Commission's interpretation of the regulation was unreasonable.

In McElroy, we reversed a Commission order dismissing several applications for cellular

licenses as untimely filed because we found that under a "fair reading," the Commission's order

establishing the timeline for applications failed to give prospective applicants for the licenses notice

of the proper time window for filing. Id. at 1358. Because we doubted that the Commission's

interpretation of its order was "reasonably comprehensible to [people acting in] good faith" at the

time the order was issued, id. (quoting Maxcell Telecom Plus, Inc., 815 F.2d at 1558 (quoting

Bamford v. FCC, 535 F.2d 78, 82 (D.C. Cir. 1976) (quoting Radio Athens, Inc. (WATH) v. FCC,

401 F.2d 398, 404 (D.C. Cir. 1968))) (emphasis added by the Maxcell court)), we ordered the

reinstatement of several applications.

In this case, MobileTel itself describes the Commission's construction of the term "landline"

as "literalistic," Amended Brief for Appellant at 19, suggesting that MobileTel's notice argument is

premised on the extraordinary assertion that a "good faith" applicant trying to give the regulation a

"fair reading" would not have understood that the term "landline" was to be read "literally." What

makes it even more implausible that MobileTel could have misunderstood the term "landline" is the

fact that only two months before Lafourche set up BETRS links in St. James and Plaquemines, the

Commission had announced in In re Application of the Offshore Telephone Co., 3 FCC Rcd 4601

(1988), that the provision of exclusively radio-based service in an RSA does not render a company

eligible for the "wireline set-aside" frequencies in that RSA. (MobileTel was even better situated to

mark the significance of the Offshore decision than were other "good faith" readers of the

Commission's regulation, because MobileTel's parent SJI, Inc. was a party to the Offshore case.)

Because we believe a good faith prospective applicant for the Block B frequencies in the St.

USCA Case #96-1327 Document #257374 Filed: 03/07/1997 Page 11 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

James and Plaquemines RSAs would, upon giving § 22.902(b) ofthe Commission'sregulations a fair

reading, have understood that the provision of only BETRS-based service in these RSAs would not

create eligibility for these frequencies, we reject MobileTel's notice argument.

C. The Commission's Refusal to Consider MobileTel's Settlement Agreement With Columbia

Finally, MobileTel arguesthat theCommission acted arbitrarilyand capriciouslyin dismissing

its applications because MobileTel and Columbia had arrived at a settlement agreement, and the

Commission failed to consider the possibility that dismissing MobileTel's application would

contravene the purpose of the Commission's directives encouraging mutually-exclusive applicantsto

create such agreements. The Commission clearly does have a policy of encouraging settlements, see

CellularCommunications Systems, 86 FCC2d at 490-91, but MobileTelitself acknowledgesthat this

policy does not extend so far as to justify the approval of a settlement agreement if that would result

in the grant of a license to an unqualified applicant. See Amended Brief for Appellant at 14 n.40

(citing In re Applications of Kannapolis Television Co., 1 FCC Rcd 1037, 1039 (1986)). Because

MobileTel was ineligible for the Block B frequencies, the Commission did not act arbitrarily or

capriciously in dismissing MobileTel's application despite the fact that MobileTel had entered into a

settlement agreement with an eligible entity.

MobileTel also claims that in remanding the matter to the WTB for its consideration of the

settlement agreement'srelevance, theCommissionmust have relied on the assumption that MobileTel

was eligible for the set-aside frequencies, because otherwise it would by its remand have been

directing the WTB to engage in "the vain act of promoting a settlement with an unqualified party."

Amended Brief for Appellant at 47. But at that point the Commission might have lacked the full

panoply of information needed to determine whether its policy barring the acceptance ofsettlements

involving unqualified entities would apply. For example, a settlement involving an ineligible entity

may be acceptable if, under the agreement, the ineligible entity is to hold only a noncontrolling

interest in the entity to be granted the license. See In re Applications of Advanced Mobile Phone

Serv., Inc., 93 FCC 2d 683, 691-93 (1983). Thus, because the Commission might reasonably have

thought that the possible relevance of the settlement agreement to the January 27 order was a matter

USCA Case #96-1327 Document #257374 Filed: 03/07/1997 Page 12 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

for the WTB to address in the first instance, the March 23 order cannot be viewed as a final

determination-by-implication that MobileTel was eligible for the set-aside frequencies.

For the foregoing reasons, the Commission's August 14 order dismissing MobileTel's

applicationsfor "wireline set-aside" frequenciesin the St. James and Plaquemines RSAs as ineligible

under 47 C.F.R. § 22.902(b) is hereby

Affirmed.

USCA Case #96-1327 Document #257374 Filed: 03/07/1997 Page 13 of 13