Opinion ID: 496700
Heading Depth: 3
Heading Rank: 3

Heading: The Commission's Evaluation of the Applicants' Demand Studies--Subissue (a)(2)

Text: 25 Under criterion (a)(2), cellular applicants are required to provide estimates of consumer demand for mobile telephone service in their proposed coverage areas. Each of the Phoenix applicants conducted some form of direct market study to arrive at its demand projections. The ALJ declined to award any applicant a preference under this subissue, finding that [a]ll three applicants have conducted research which is flawed in several respects. See Phoenix Initial Decision, at p 73, J.A. at 28. Specifically the ALJ found that: 26 Although Gencom and CMS conducted extensive market research, both relied on a variety of underlying assumptions which are not documented by the record. For example, both applicants assume that businesses will be the primary users of cellular service. As a result, both excluded from their consideration and research the entire market potential of non-business users. A second assumption is that pager service is the precursor of cellular radio, and CMS's chosen universe for much of its research was limited to previously ascertained pager users because of this assumption. 27 Phoenix Initial Decision, at p 73, J.A. at 28. 28 As to Metro Mobile's market survey, the ALJ found it played no part in projecting demand but was used only to confirm data obtained from demographic, traffic and other research. In fact, the ALJ found that none of the applicants has persuasively demonstrated a relationship or nexus between its demand projections and its market research. Id. The full Commission affirmed the ALJ's refusal to award any applicant a preference for its assessment of demand in the Phoenix market. See Phoenix Final Decision, 56 Rad.Reg.2d (P & F) at 1603. It agreed with the judge that Gencom's research was flawed primarily due to its unsubstantiated assumption that businesses would be the primary users of cellular. Id. at 1604. Additionally, the Commission noted that the ALJ had found that both Gencom and CMS had assumed that the use of paging, a one way radio service, was an accurate proxy for purposes of predicting cellular demand. Id. 29 Gencom did not raise the demand survey issue in its Petition for Limited Reconsideration of the Commission's final decision. Nonetheless, the FCC used its reconsideration in the Phoenix proceeding to clarify the standard we apply under this issue. See Phoenix Reconsideration, 60 Rad.Reg.2d (P & F) at 579. The Commission wished to dispel any impression left by the language of the Phoenix Final Decision that an applicant's failure to assess nonbusiness demand, in itself, precludes the award of a preference under the relative demand issue. Phoenix Reconsideration, 60 Rad.Reg.2d (P & F) at 579 (emphasis added). Rather, the Commission emphasized, its approach was a flexible one, taking into account all the flaws and advantages of the competing applicants' demand assessments, and then compar[ing] the applications to determine if any applicant has provided a 'significantly more reliable analysis of the extent and distribution of demand.'  Id. (quoting Rogers Radiocall, Inc. (Chicago Final Decision), 96 F.C.C.2d 1172, 1219 (1984), aff'd sub nom. Cellular Mobile Systems of Illinois, 782 F.2d 214 (D.C.Cir.1986)). 30 Under this standard the Commission reaffirmed its decision not to award Gencom any preference for its demand study. In addition to its unsubstantiated business-user assumption, the Commission pointed to at least one other significant flaw in its market research, namely, the assumption that pager use was an accurate predictor of future cellular demand. Phoenix Reconsideration, 60 Rad.Reg.2d (P & F) at 579. 31